We don’t always think of health insurers as communicators. However, when insurers set reimbursement rates, they provide information that directly influences service delivery. 
When payors reimburse for certain services, they are informing providers these services are valued and providing these services is encouraged. When payors do not reimburse for services, or reimburse at lower rates, payors are signaling to providers that those services are not valued as highly, and providers should direct their time and effort elsewhere.
The Bipartisan Budget Act of 2018 (the Act) allowed Medicare Advantage plans (private, commercial health insurance offerings to the Medicare population) to reimburse for “non-primarily health related supplemental benefits.” The Centers for Medicare and Medicaid Services (CMS) clarified “supplemental benefits” to include services such as transportation, dietary assistance, air-quality equipment, social support, etc. These supplemental benefits address the social determinants of health. Though social risk factors affect health, payments for services addressing them are not yet widespread. Reimbursement for these services will increase their use.
Social Determinants of Health
Social determinants are the conditions in the environment in which people are born, grow, live, work, and age. The concept of social determinants is that everything you do, and interact with, is directly related to your health. Providers know health does not stop at the clinic door and keeping people healthy requires more than medical care. Healthy people require clean air and water, fresh foods, transportation, and safe housing, along with appropriate medical care. Payors are now also beginning to recognize the importance of the social determinants of health.
Medicare Advantage plans have long covered health-related benefits not covered by Medicare Parts A or B, such as dental benefits. Recently some Medicare Advantage plans have also been addressing non-medical services, though not through traditional plan coverage. Since 2011, UnitedHealthcare has been investing in interventions to address social determinants through grants to food banks, school districts, and other community providers. Also, Humana has been addressing transportation, social support, and food insecurity through their Bold Goal initiative launched in 2015.
The Medicare Advantage Program and Value-Based Care
Addressing social determinants has always been financially advantageous for Medicare Advantage plans because of how the program is designed. To participate in the Medicare Advantage program, payors start with a “bid” to CMS. The bid is what the payor proposes to spend per beneficiary to cover at least the services covered by Medicare Parts A and B. If plans are able to provide quality care for less than the per-capita amount, they can keep the difference. If plans spend more, they own the loses. Because of the program design, Medicare Advantage plans are incentivized to keep patients healthy and using fewer health care services.
The same incentives that exist in the Medicare Advantage program are built into value-based care. As opposed to volume-based fee-for-service, value-based care is reimbursement based on quality and value, with a focus on patient outcomes. In a value-based care program, reimbursement is contingent on supporting a healthier population at a lower cost.
Value-based care arrangements exist across insurance markets (Medicaid, Medicare, the non-group market, employer-sponsored, etc.), not only Medicare Advantage. Most payors participating in the Medicare Advantage program also provide benefits in these other markets. As value-based care arrangements become more common, and as payors grow more comfortable addressing social determinants through Medicare Advantage reimbursement, these plan benefits are likely to make their way into other markets.
Rebates, Uniformity, and the Medical Loss Ratio
Prior to the Act, efforts to address social determinants were not reimbursable and investment in these services was funded with Medicare Advantage rebates. Rebates are any negative difference between plan bids and what Medicare would expect to incur through Parts A and B. If the amount a plan bids is higher than the expected Medicare cost, there is no rebate, and beneficiaries pay the difference in the form of a premium. Allowing reimbursement for social services means they can be included in the expected cost of caring for beneficiaries. Social determinants-related care would be covered through the per-capita payments to Medicare Advantage payors, just like medical services.
Additionally, prior to the Act, all services included in a Medicare Advantage benefit package had to obey the uniformity rule. Uniformity required plans “to provide the same services at the same cost-sharing rates to all enrollees in a given service area.” The Act allows plans to expand the types of services offered and to offer services only to targeted beneficiary groups. In return, services should be expected to improve the health of people with chronic conditions. For example, a person with chronic obstructive pulmonary disease may be eligible for air quality testing, while a person with diabetes may have access to food delivery or fitness programs.
Reimbursing for programs to address social determinants also means these services can be included in the numerator of medical loss ratio (MLR) calculations. The MLR is calculated as spending (medical and pharmaceutical claims) over revenue (per capita Government payments and any rebates or premiums). Since 2014, Medicare Advantage plans have been required to maintain a MLR of at least 85 percent or face penalties. Including spending on the social determinants in the numerator increases total MLR, giving plans an additional incentive to offer these services.
Trade-offs and Considerations
While social determinants are important moderating factors with regard to health status, any conversation on the future of health insurance coverage for nonmedical services must consider the trade-offs. The health care system does not have unlimited resources. Expanding services covered may prove burdensome to an already burdened system. Coverage for additional services may lead to increases in the cost of health insurance.
However, failing to consider social determinants in the health care system omits a key factor in achieving better outcomes. We cannot improve population health without considering all the factors that influence health, and this includes non-medical care. As services are integrated into the health care system, we should see an impact on population health. Payors are signaling the importance of addressing social determinants of health through reimbursement.
Emily Gillen