Description

This article seeks to answer the question, can social determinants of health (SDH) be included in Medicaid payment formulas so as to pay more equitably for the care of socially vulnerable individuals? Managed care payment formulas commonly allocate more money for medically complex populations, but ignore most SDH. Outcomes examined overall were model explanatory power, and overpayments and underpayments for subgroups of interest for all Medicaid reimbursable expenditures excepting long-term support services (mean annual cost = $5590 per member). Overall, the SDH model performed well, but only slightly better than the diagnosis-based model, explaining most of the spending variation in the managed care population and reducing underpayments for several vulnerable populations. Since October 2016, MassHealth has used an expanded model to allocate payments from a prespecified total budget to managed care organizations according to their enrollees’ social and medical risk. Extra payments for socially vulnerable individuals could fund activities, such as housing assistance, that could improve health equity.