Medical Billing ServicesRevenue Cycle Management (RCM)

Transition to value-based reimbursement is essential for Health disparities

Value-based reimbursement inspires clinicians to care for the whole person, who is essential to addressing health disparities confirmed by claims data from the COVID-19 crisis, CMS says.

Health disparities confirmed by Medicare claims data for the period of the COVID-19 crisis underscore the need to transition to value-based reimbursement, according to CMS.

Health disparities evident in the initial claims data from the pandemic also suggested the impact of social determinants of health, particularly socio-economic status, CMS reported.

Beneficiaries joined in both Medicare and Medicaid had the second-highest overall hospitalization rate behind end-stage renal sickness patients, the claims data showed. These double qualified adults had 473 hospitalizations per 100,000 beneficiaries.

The initial data confirmed not only “long-understood disparities in health outcomes for racial and ethnic minority groups and among low-income populations,” but also the essential to transition to value-based reimbursement, the federal agency stated.

Healthcare providers have generally been hesitant to accept more downside financial risk, and large financial losses incurred during the COVID-19 crisis may make more providers pause before jumping into new risk-heavy models.

Over half of care organizations in the Medicare Shared Savings Program have already shown that they may quit the program due to concerns that COVID-19 could lead massive financial losses. ACOs have got flexibilities in the program during the pandemic, including the help of shared losses back to January 2020. The capability for ACOs to stay in their same risk track next year will help sustain contribution in the program, according to the National Association of ACOs. But financial concerns remain due to COVID-19.

“The disparities in the data reflect longstanding challenges facing minority communities and low income older adults, many of whom face structural challenges to their health that go far beyond what is traditionally considered ‘medical’,” said CMS Administrator Seema Verma.

It is clear that the fee-for-service system is unsatisfactory for the most vulnerable Americans because it limits payment to what a doctor’s office receives reimbursement. The transition to a value-based system is not an urgent requirement. But if it implemented correctly then it encourages clinicians to care for the patient and address the social risk factors. This will help our beneficiaries’ quality of life.

The disparities go beyond race/ethnicity and suggest the impact of social elements of health, particularly socioeconomic status.

Other key data points:

  • End-stage renal disease (ESRD) patients (individuals with chronic kidney disease undergoing dialysis) had the highest rate of hospitalization among all Medicare beneficiaries, with 1,341 hospitalizations per 100,000 beneficiaries.
  • The second-highest rate was among beneficiaries enrolled in both Medicare and Medicaid (also known as “dual eligible”), with 473 hospitalizations per 100,000 beneficiaries.
  • Among racial/ethnic groups, Blacks had the highest hospitalization rate, with 465 per 100,000. Hispanics had 258 hospitalizations per 100,000. Asians had 187 per 100,000 and whites had 123 per 100,000.
  • Beneficiaries living in rural areas have fewer cases and were hospitalized at a lower rate than those living in urban/suburban areas (57 versus 205 hospitalizations per 100,000).

For more information on the Medicare COVID-19 data,

For an FAQ on this data release, visit: https://www.cms.gov/files/document/medicare-covid-19-data-snapshot-faqs.pdf

For a blog by CMS Administrator Seema Verma, visit: https://www.cms.gov/blog/medicare-covid-19-data-release-blog

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