Manatt on Medicaid: Addressing Patients’ Social Needs: An Emerging Business Case for Provider Investment

by Manatt, Phelps & Phillips, LLP
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Editor’s Note: Despite growing evidence documenting the impact of social factors on health, providers have rarely addressed patients’ social needs in clinical settings. But today, changes in the healthcare landscape are catapulting social determinants of health from an academic topic to an on-the-ground reality for providers, with public and private payers holding providers accountable for patients’ health and healthcare costs and linking payments to outcomes. With support from The Commonwealth Fund, The Skoll Foundation, and the Pershing Square Foundation, Manatt Health prepared a report, “Addressing Patients’ Social Needs: An Emerging Business Case for Provider Investment,” reviewing the range of tools available to providers seeking to incorporate social interventions into their approach to care and the direct and indirect economic benefits of doing so. Below is a summary of the key findings. Click here to view the full report.

Social and economic factors such as income, educational attainment, access to food and housing, and employment status have a profound impact on health. In fact, these nonmedical factors account for as much as 40 percent of health outcomes. Nonetheless, until quite recently, clinicians rarely addressed patients’ unmet social needs.

However, changes in the healthcare landscape are catapulting social determinants of health from a topic for academics to an on-the-ground reality for providers. With millions of low- and modest-income individuals gaining access to stable coverage through the Affordable Care Act (ACA), a growing focus on the Triple Aim of better care, better health, and reduced costs, and the advent of value-based purchasing and other outcomes-based payment models, providers have a strong rationale for investing in interventions that address patients’ social needs. What was once a path pursued by a handful of mission-driven providers and grant-funded social services organizations may soon become the standard of care, demanded by payers, policymakers, and consumers alike.

Strategies to Address Patients’ Unmet Social Needs

Providers looking to address the social needs of their patients can tap a growing number of interventions that break down into two buckets: those that focus broadly on connecting low- and modest-income patients with social supports, and those that target medically complicated, high-cost patients through integrated clinical and social interventions. The broad interventions typically depend on referrals from clinicians in primary care sites, who use a screening tool to identify patients’ social needs and connect them to support services. Targeted interventions, in contrast, integrate social supports into larger care management initiatives for individuals with chronic or debilitating medical conditions.

The evidence that broad interventions improve health outcomes and reduce healthcare spending remains somewhat limited, and isolating the impact of the social component of targeted interventions can be difficult because these interventions target both the clinical and social needs of chronically ill patients. Nonetheless, given the compelling evidence of links between social factors and patient health, and growing evidence of the success of interventions that address patients’ unmet social needs, many providers have concluded that investing in such interventions will in fact improve health outcomes and lower costs. In short, they are not waiting for the final piece of evidence.

The Economic Rationale for Investing in Social Interventions

New public and private payment models – including capitated, global and bundled payments, shared savings arrangements and penalties for hospital readmissions – are holding providers accountable for healthcare quality and costs, offering both an imperative and a financial opportunity for providers to look beyond patients’ medical needs. Almost two-thirds of providers report that they are signing value-based contracts with commercial payers, and provider participation in contracts in which they share financial risk for health outcomes more than doubled between 2011 and 2013. That trend is likely to continue.

Many new payment models do not require providers to address their patients’ social needs, although providers are beginning to do so anyway, finding that such interventions can improve patient outcomes and reduce patient costs, and thereby trigger additional revenue. Other models, such as the patient-centered medical home (PCMH), in contrast, do require providers to address patient social needs as a prerequisite to payment. To achieve PCMH recognition, a provider must meet standards focused on organizing care around patients, by enhancing care coordination and supporting self-care by linking patients to local social service agencies. Public and private payers are offering a range of extra payments to PCMH-recognized providers.

Beyond these direct economic benefits, providers that incorporate social supports into their clinical models can also reap indirect economic benefits. Patient satisfaction rises when providers address patients’ social needs, engendering loyalty. Patient satisfaction can also affect the amount of shared savings a provider receives from payers. Providers that include social supports in their clinical models also report improved employee satisfaction. And interventions that address social factors allow clinicians to devote more time to their patients, allowing them to see more patients and improving satisfaction among both patients and clinicians.

Paying for Social Interventions

Some providers are prepared to commit operating dollars to fund interventions connecting individuals to social supports, having determined that the direct and indirect economic benefits can support their investments. Other providers remain unwilling or unable to commit operating funds. For those providers, “community benefit” spending by hospitals, ACA funding for delivery system reform, Medicaid delivery system reform incentive payment (DSRIP) programs, and social impact bonds may serve as sources of funding to address patients’ social needs.

Conclusion

Today the healthcare system is poised for change, girded by the Triple Aim, supported by expanded insurance coverage, and financed by value-based approaches to reimbursement. With this confluence of sound economics and good policy, investments in interventions that address patients’ social as well as clinical needs are starting to make good business sense.

This paper is supported by The Commonwealth Fund, The Skoll Foundation, and the Pershing Square Foundation.

 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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