The traditional fee-for-service (FFS) reimbursement system pays providers for each procedure, test, or visit, rewarding the volume of care delivered. This model fails to support health equity because it does not pay for long-term health, prevention, or addressing the underlying social conditions that account for a significant portion of health outcomes. Securing reimbursement for health equity requires shifting the financial focus from treating illness to sustaining well-being. This involves changing payment structures to reward outcomes, integrating non-clinical services, and establishing rigorous data collection to measure disparity reduction.
Rethinking Payment Models for Equity
Achieving financial sustainability for health equity necessitates a move toward Value-Based Care (VBC) models, which tie provider payments to the quality of care and patient outcomes rather than the quantity of services. VBC arrangements allow providers the flexibility to invest in preventive and non-traditional services that address the root causes of poor health. These models incentivize efficient, coordinated care, benefiting populations facing significant social barriers to health.
Payment models must incorporate mechanisms to account for the higher complexity and cost associated with caring for socially and economically disadvantaged populations. This is accomplished through social risk adjustment methodologies, which modify payments to adequately compensate providers who serve sicker or more vulnerable patients. Without this adjustment, providers may be financially penalized for serving marginalized communities, creating a disincentive to address disparities.
Alternative models, such as capitation or global budgets, offer providers a fixed payment per patient to manage their total care over a period. This structure grants organizations the discretion to allocate funds toward non-clinical needs, like housing or food security programs. By removing the incentive to generate volume, these models encourage investment in upstream interventions that promote long-term health and reduce overall cost.
Integrating Social Determinants of Health Interventions
A practical way to secure reimbursement for health equity is by integrating and billing for non-clinical services that address Social Determinants of Health (SDOH). These services move beyond the traditional clinical encounter to tackle issues such as housing instability, food insecurity, and lack of reliable transportation. State and federal programs, particularly through Medicaid waivers and Centers for Medicare & Medicaid Services (CMS) authorities, are increasingly recognizing these interventions as reimbursable.
A foundational reimbursable service is the SDOH risk assessment, which CMS began covering for Medicare beneficiaries in 2024. This assessment, often billed using a specific CPT code (like G0136), uses a standardized tool to screen patients for unmet needs like housing, food, and transportation. The assessment is a necessary first step for identifying needs and justifying subsequent non-clinical interventions.
Beyond the assessment, payers are incorporating payments for specific interventions, often through capitated payments to managed care organizations (MCOs). Examples of reimbursable support include navigation services for housing and utilities, food security programs, and community health worker services. These payments acknowledge that coordinating community resources and providing non-medical support are legitimate, cost-effective components of comprehensive healthcare.
Operationalizing Data Collection and Measurement
To justify and receive reimbursement for equity-focused care, organizations must implement robust systems for data collection and measurement. This documentation is necessary to demonstrate both the need for intervention and the subsequent reduction in disparities. The foundation of this system involves collecting and stratifying patient data by race, ethnicity, and language (R-E-L).
Collecting R-E-L data allows providers to disaggregate performance metrics, revealing where disparities exist in quality of care or outcomes. Patient self-reporting is the standard for this collection, ensuring the most accurate data for stratification. Organizations use these stratified measures to target interventions and demonstrate to payers that they are actively working to close identified gaps.
Accurate documentation of non-clinical needs is essential for billing and tracking SDOH interventions. This is primarily accomplished through the use of specific Z-codes (Z55-Z65) within the International Classification of Diseases, Tenth Revision (ICD-10-CM) coding system. Z-codes document factors influencing a patient’s health status, such as homelessness (Z59.0) or problems related to education (Z55), which provides context for higher medical utilization and justifies the need for non-clinical spending.
Successful Implementation Strategies for Providers and Payers
Providers and payers must strategically align their infrastructure and contracts to successfully navigate the equity-based reimbursement landscape. A primary strategy for providers is integrating community-based organizations (CBOs) into the care delivery team. CBOs are often best positioned to deliver SDOH interventions, and contracting with them allows providers to expand capacity beyond the clinic walls.
Technological integration is a foundational step, requiring Electronic Health Records (EHRs) to be updated to accurately capture R-E-L and SDOH data. Interoperable data-sharing between providers and payers is necessary to coordinate care and ensure the right financial incentives are applied. Payers can support this by offering up-front grant funding to providers, particularly safety-net organizations, to develop the necessary data and care management infrastructure.
Organizations must strategically negotiate Value-Based Care contracts that include explicit equity metrics. This requires moving beyond standard quality measures to include metrics stratified by R-E-L data, rewarding providers for reducing disparities in specific areas like blood pressure control or mammography screening rates. Policy advocacy is also important to expand coverage for SDOH interventions through state-level programs and drive the standardization of equity-focused payment models.