Value-based health care emerged more than two decades ago to improve quality while containing costs. However, its impact on racial health disparities has been limited. Black Americans in particular are more likely than White Americans to suffer from cardiovascular disease, maternal mortality, and poor cancer outcomes. Moreover, Black patients are more likely than White patients to receive care at underresourced safety-net hospitals that consistently score lower on patient experience compared to non-safety-net hospitals. They are also more likely to receive low-value care. For value-based health care to advance the needle toward health equity, it must be grounded in an antiracist, justice-oriented framework that identifies structural racism’s manifestation in medical care and dismantles its grasp on health systems by explicitly incentivizing disparities reduction.
The traditional paradigm of improving quality has focused on measures of central tendency, which can lead to improvements in care “on average” while leaving certain populations further behind. As a result, the evidence behind quality improvement as a path to reduce disparities is mixed. One quality improvement intervention to improve hemodialysis treatment for patients with end-stage renal disease improved care and reduced racial disparities between White and Black patients from a 10 percent gap in receipt of an adequate hemodialysis dose to a 3 percent gap. Across various clinical settings, other quality improvement interventions improved overall health outcomes, yet did not meaningfully reduce existing racial disparities in aspects of diabetes care, glucose and cholesterol control, or blood pressure management. More concerning are quality improvement programs that lead to differential benefit between races and thus widen disparities, as seen in an intervention aimed to improve coronary artery bypass graft outcomes.
Alternative payment models (APMs) also have varied success in reducing disparities. This may be because major APMs, such as the Merit-based Incentive Payment System, do not explicitly name disparities reduction as a performance measure. In some cases, APMs financially penalize practices that disproportionately care for patients with high social risk factors. The underrepresentation of Black patients in accountable care organizations is also concerning as their exclusion can widen the health gap.
With the escalation and persistence of the Black Lives Matter movement, payers and providers have publicly declared support for Black lives and commitments to racial justice. Such gestures will remain nominal if they are not followed by major shifts in the way we care for Black patients. Centering value-based payment models and quality measures around health equity is one way in which payers and providers can take action and dismantle institutional racism. We propose a three-step pathway to incorporate racial justice into value-based health care:
- Include equity in pay-for-performance;
- Invest in evidence-based community health models; and
- Increase accountability for community impact investments.
Include Equity In Pay-For-Performance
As public and commercial payers transition to pay-for-performance, establishing financial incentives for health equity is paramount to ensure that systems prioritize Black people’s health. Implementing a pay-for-performance model grounded in equity requires all hospital quality improvement assessments to include disparities impact assessments and health equity reports. Both serve to monitor whether institution-level policies proactively reduce health disparities. Some hospitals already incorporate equity reports in their quality improvement process, yet payers have not capitalized on the opportunity to hold providers financially accountable for equity improvement. Without financial penalties for missing health equity benchmarks, disparity and equity reports as a branch of quality improvement will be largely performative.
Historically, benchmark process and outcome measures in the pay-for-performance schema rely on comparing differences across hospitals rather than assessing quality differences within single health systems. The benefits of incentivizing disparities reduction within hospital systems is twofold: Safety-net systems are not financially penalized when they do not achieve standards set by highly profitable health systems that avoid caring for poor, non-White, and underinsured patients; and affluent health systems can no longer ignore the poor health outcomes of their most vulnerable populations. To prevent pay-for-performance models from exacerbating funding scarcity in hospitals that disproportionately care for non-White and poor patients, some have suggested sociodemographic-based quality adjustment as the solution. However, this model pathologizes race and threatens to normalize lower quality of care for Black patients. Increasing scrutiny on the use of race in clinical algorithms should also spur careful examination on its use to define quality care. Rather than accepting racial injustice as intrinsic to the human condition and lowering the “quality bar” for Black patients, all actors in health care must intervene to address the root causes of racial health disparities.
Broadly incentivizing equity across hospital systems will require robust infrastructure development and financial investment to build the workforce and technology needed to streamline monitoring. Identifying the proportion of high-risk patients within systems can build from preexisting work to identify patients’ social determinants of health and capture this data with standardized coding to stratify risk. Recording the magnitude of social inequity within health centers enables robust disparities research and supports payment reforms that reward improvements toward equity. Standardizing codes could also establish a structure to financially reward primary care physicians and systems that disproportionately take care of socially complex patients. Given that low-resourced hospital systems disproportionately serve minority patients and are already overburdened and understaffed, the federal government should support pilot programs that provide financial and technical support for the implementation of such quality improvement measures.
Invest In Evidence-Based Community Health Models
Given historical and contemporary policies that socially and economically oppress Black communities, there is a moral and justice-oriented imperative to divert existing and future funds to bolster care models that safety-net hospitals and community health centers have proven can improve outcomes for vulnerable patients.
Receiving customized support during medical care or while navigating the health care system reduces disparities. Community health worker models eliminate the power dynamics that may inhibit the appropriate psychosocial support patients require to achieve positive outcomes. A systematic review cites that increased emotional support and patient autonomy through patient-centered models contribute to increased trust in the medical system and patient adherence to clinical guidance. Cultivating partnership with patients as they navigate complex models of care delivery fortifies relationships, encourages autonomy, and improves patient outcomes. For example, Medicaid patients face disproportionately high levels of maternal morbidity and mortality but, when offered doula services, they are less likely to have a cesarean section and risk delivery complications. The use of community health workers and patient navigators to help manage their cancer, diabetes, or hypertension also has shown similar success in eliminating racial disparities.
The community health worker model works. Private and public payers should invest in expanding this model as a mechanism to reduce health disparities. The development of a public health corps was rapidly initiated during the COVID-19 pandemic to carry out contact tracing and testing. Using this model and the model of other nations that offer public health service options, the United States should tap into its extensive network of skilled and unemployed young people to build a national community health workforce that aims to enhance access to care for millions of vulnerable Americans.
Accountability For Community Impact Investments
Compared to safety-net and community hospitals, many of the nation’s top medical centers run on high profit margins despite their nonprofit status. They are able to negotiate higher reimbursements from private payers, maintain a payer-mix skewed toward Medicare and private payers, and concurrently benefit from tax exemptions granted by their nonprofit status. Their tax-exemption eligibility is contingent on a commitment to benefit communities through subsidized services and direct investment in the development of underresourced communities. Health systems spend more than $60 billion per year in community benefit spending; however, the extent to which this meaningfully benefits poor communities of color is unclear. Researchers estimate that only $2.5 billion of health system funds directly address upstream determinants of health, such as housing, food security, and job training. A large proportion of community benefit spending goes toward uncompensated medical care, often to cover Medicaid shortfalls.
Investing the majority of community benefit spending on downstream factors, such as subsidized medical care, misses critical points of upstream intervention. A 2016 review underscored that the majority of interventions in areas of housing, nutrition support, and community outreach have either improved health outcomes or reduced health care spending. Furthermore, hospitals in the top quintile of community-directed benefit spending have significantly lower readmission rates than those in the bottom quintile. Given that health disparities are rooted in social inequities and nonprofits divert as much as $4 billion in tax dollars from local governments through property tax exemptions, health systems should prioritize community benefit spending on upstream social factors to maximize community impact.
Valuing Black lives includes valuing and investing in the health systems and communities that serve them. While structural racism in social policies that result in poor social determinants of health play a significant role in health inequity, there are political and economic forces within our health care system that exacerbate disparities. Anti-Black racism is one of many forms of marginalization embedded in medical care. As payers and providers re-evaluate their practices and implement equity targeted policies, they must assess how modifications impact or challenge other forms of social injustice as well. To achieve health equity, hospital systems and payers must build economic will and reorient value-based care around racial and health justice.
Dr. Shah is a board member at Costs of Care, a nonprofit organization that has received grant support from the ABIM Foundation for programs related to teaching value-based health care. He receives royalties from McGraw-Hill for the textbook Understanding Value-Based Healthcare.