Evaluating Policy Changes for Adjusting Payment to Address Health Disparities

This study analyzes area-level Health Equity Benchmark Adjustment formula changes to demonstrate how policy choices result in resource reallocation.


Introduction
New federal initiatives signal a growing intent to align payment and policies to address social needs. 1 The Center for Medicare and Medicaid Innovation (CMMI) should be commended for pioneering new models that address disparities, but it is just as important that changes direct resources to patients with highest need.
As example, CMMI's Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) model includes a Health Equity Benchmark Adjustment (HEBA) using individual-and area-level social formula components. 2,3The HEBA provides additional money to ACOs caring for beneficiaries with the highest HEBA rankings and a reduction with the lowest HEBA rankings.In program year (PY) 2023, the HEBA formula used a 100% national Area Deprivation Index 4 as its area-level metric. 2 "In response to stakeholder feedback" and "to better identify underserved beneficiaries living in high cost-of-living areas" CMMI changed to a blended 50% national/50% state Area Deprivation Index metric in PY2024. 3To demonstrate how policy choices result in resource reallocation, we analyzed area-level HEBA formula changes.

Methods
Census block groups ranking higher (denoting higher neighborhood-level socioeconomic disadvantage) in PY2024 compared to PY2023 are likely to experience financial gains (conversely losses are more likely for lower rankings).Importantly, this reflects a mathematical reranking rather than an actual change to underlying social circumstances in each block group.
HEBA area-level financial (2024 deciles in eTable 1 in Supplement 1) and rank changes for all census block groups were analyzed.Rank changes within the 50 largest metropolitan areas were also analyzed.Data sources and sample derivation are detailed in eTables 2 and 3, respectively, in Supplement 1.This study did not require institutional review board approval, given the use of publicly available data only, and followed STROBE reporting guidelines.

Financial Gains and Losses
Of 235 947 block groups, 25.8% had a financial adjustment upward or downward based on policy changes (Figure 1).Areas with the highest percentages of block groups facing negative financial

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Discussion
The 2024 ACO REACH HEBA changes generally benefit Northeastern and Western coastal states and cities, while the South and Midwest fare less well.Measured against the Federal Medical Assistance Percentage 5 as an accepted standard of state average per-capita income, these shifts are in the opposite direction of need nationally.In addition, the PY2024 area-level HEBA change helps and hurts nearly the same number of large metropolitan areas.It is possible that HEBA individual factors could mitigate some of the resource shifts seen in this analysis, but approximately 85% of Medicare

Rank losses
Green metropolitan areas are areas where the program year (PY) 2024 formula (blended 50% national/50% state Area Deprivation Index) resulted in a higher average HEBA rank compared to the PY2023 HEBA (which used national Area Deprivation Index alone) and where additional resources were more likely to be assigned.Pink metropolitan areas represent areas where the PY2024 HEBA formula resulted in a lower average HEBA rank compared to the PY2023 formula (less likely to be assigned additional resources).

Figure 1 .
Figure 1.Financial Gains and Losses Across the Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) Model's Health Equity Benchmark Adjustment (HEBA) Area-Level Rank Changes, 2023-2024