The focus on clinical care alone is insufficient to sustainably improve population health outcomes and address disparities. Health equity, defined as the absence of avoidable differences in health, requires a financial model that funds upstream interventions. Traditional fee-for-service payment systems fail to reimburse for the non-clinical work necessary to address the root causes of poor health. Organizations must strategically pursue funding that integrates social factors into the economic structure of healthcare delivery. This strategy involves navigating both claim-based reimbursement and alternative, gap-filling funding sources.
Identifying Reimbursable Health Equity Activities
The scope of reimbursable activities is expanding beyond the clinic to include services addressing the Social Determinants of Health (SDOH). These non-traditional services are recognized as having a direct impact on long-term health outcomes and cost reduction. The Centers for Medicare & Medicaid Services (CMS) has begun covering services that integrate social and medical care.
A standalone code (G0136) now exists for administering an evidence-based SDOH risk assessment during a routine medical visit. New codes cover Community Health Integration (CHI) services, involving auxiliary staff like Community Health Workers (CHWs) who help patients navigate the health system and access community resources.
CHI services, which include education and referral for social barriers, are reimbursable under a billing practitioner’s supervision. Principal Illness Navigation (PIN) is another newly covered service, designed to help patients with serious, high-risk conditions connect with needed clinical and social services.
Alternative Payment Models for Equity Outcomes
The most significant financial shift supporting health equity comes from Alternative Payment Models (APMs) that move away from the fee-for-service structure. APMs incentivize providers to invest in preventative social services by rewarding overall patient health and cost savings. Under risk-sharing arrangements, such as those used in Accountable Care Organizations (ACOs), providers assume responsibility for the total cost of care for a defined patient population.
By investing in SDOH interventions, ACOs reduce avoidable hospitalizations and emergency department visits, achieving shared savings that can be reinvested into equity initiatives. Capitated payment models, where a fixed per-member, per-month (PMPM) amount is paid for all services, also incentivize keeping patients healthy and out of high-cost settings.
CMS models like the ACO Realizing Equity, Access, and Community Health (ACO REACH) directly incorporate health equity. They require participants to develop equity plans and adjust financial benchmarks based on the social risk of the patient population served. This adjustment ensures providers serving disadvantaged communities are not penalized for the higher baseline costs associated with social risk factors.
Non-Claim Based Funding for Social Determinants of Health
Non-claim-based funding is necessary for supporting infrastructure and non-medical personnel, complementing APMs and new codes. One significant source is the mandated Community Benefit (CB) investment required of non-profit hospitals to maintain their federal tax-exempt status under IRS rules. These hospitals must conduct a Community Health Needs Assessment (CHNA) every three years and develop an implementation strategy to address identified community needs.
The CB standard encourages hospitals to move beyond traditional charity care and invest in community-building activities that address SDOH, such as transportation programs or partnerships with local food banks. State Medicaid programs often use Section 1115 demonstration waivers to fund non-clinical services like housing supports or employment assistance for specific populations.
Foundation and government grants, including federal block grants, also provide critical gap funding. This funding supports initial development, data infrastructure, and pilot programs for community-based organizations (CBOs) working on equity.
Practical Steps for Documentation and Coding
Accurate documentation is the foundation for securing reimbursement and proving the need for equity-focused services. Providers must systematically screen patients for social needs using standardized tools, such as PRAPARE, to ensure data consistency.
The International Classification of Diseases (ICD-10-CM) provides specific Z-codes (Z55-Z65) to document the presence of SDOH factors, such as homelessness (Z59.0) or food insecurity (Z59.4). These Z-codes are used in conjunction with a patient’s primary medical diagnosis to communicate the complexity of the patient’s condition to the payer.
Documenting a diagnosis or treatment limited by SDOH factors can elevate the level of Medical Decision Making (MDM) used to justify a higher-level Evaluation and Management (E/M) code for a physician visit. Accurate recording of time spent on activities like complex care coordination is necessary to bill the new CPT and G-codes for CHI and PIN services.