Health Plans

How focusing on social determinants of health can help plans advance value-based care

July 11, 2021 | Article | 5-minute read

How focusing on social determinants of health can help plans advance value-based care

In the shift toward value-based care (VBC) models, a key challenge has been driving provider adoption of downside risk models. Among the barriers to providers assuming full risk for the cost of care is their concern that they don’t have purview over all the drivers of patient outcomes and cost. While there are structural features in the care delivery system that impact provider control over patient care, another considerable driver of health spending and outcomes are social determinants of health (SDOH). 


SDOH are increasingly recognized as critical factors in patient outcomes and healthcare spending. Research indicates that the traditional model of healthcare delivery (procedures, hospitalizations, encounters and pharmaceuticals) can only affect a member’s health outcomes around 10% to 20%. The majority (60% to 80%) of health outcomes are outside of direct provider control, including individual behavior and attitudes, along with social and environmental factors. Programs to address SDOH can include a range of interventions, such as providing nutrition support, affordable housing and nonemergency medical transportation.


SDOH must be tackled to help VBC models to thrive. Addressing SDOH can and should be part of health plans’ broader VBC strategies—they’re in a unique position to lead the healthcare ecosystem by bringing ways to address SDOH into focus.

How tackling SDOH should be part of a broader VBC strategy

Many state Medicaid accountable care organization programs are leading the way in incorporating SDOH into VBC arrangements by doing things such as requiring providers to screen for social risks, creating incentives for providers to partner with social services and measuring SDOH quality. Early results suggest these models are working. The state of Oregon, for example, established Medicaid accountable care organizations that included funds to support social services among its other features. This program was associated with a 7% reduction in expenditures, mostly driven by reductions in inpatient utilization and avoidable emergency department visits.


There have been some early efforts on the commercial and Medicare Advantage side as well: United Healthcare and the American Medical Association have both advocated for ICD-10 codes to measure and track SDOH data and Humana’s Bold Goal for SDOH has been providing access to healthy food and reliable transportation for some members. On the commercial side, however, we haven’t seen nearly as many SDOH programs launched in conjunction with VBC arrangements. We believe that until health plans lead the way to launch larger scale, coordinated SDOH interventions as part of VBC arrangements, they won’t move the needle for providers’ comfort in adopting downside risk. 

Why health plans are well positioned to address SDOH

There is undoubtedly value in provider organizations driving SDOH interventions, given their connections to the community and patient care delivery. However, we believe there are several structural advantages for health plans to lead and facilitate these efforts, together with providers and other community partners.


These structural advantages include:

  • Whole-patient responsibility: Like many primary care physician-focused care models, health plans also have responsibility for the “whole patient.” This gives health plans access to nontraditional measurements, such as decreased sick days and increased mental health and productivity, as demonstrable value adds that they can convey to their employer customers.
  • Financial return: Health plans bear the majority of the member risk and are therefore positioned to capture the benefit of better health outcomes. In the case of administrative services only products, the benefit of social programs must be demonstrated to employers who are bearing the insurance risk.
  • Scale: Medium to large health plans have the scale necessary to develop a partnership network to deliver effective interventions.
  • Patient data: Health plans have a wealth of patient data that can inform which member populations or geographies to target through these programs.

Many health plans are investing in communities and programs to tackle health disparities and SDOH. Yet, these programs are often free-standing investments and not directly integrated into VBC arrangements with providers, especially for commercial markets. Going forward, there may be an opportunity to explore risk-sharing programs with providers, employers and perhaps manufacturers to address the social barriers to good health.

What SDOH challenges health plans face

Health plans have sufficient data in most cases, but they often struggle to move beyond correlative analysis. For example, if one was to look at adherence to statins, you would find that income is negatively correlated to adherence. But the lack of financial resources isn’t the underlying driver of the adherence behavior. The lack of financial resources leads to situations like housing instability, lower access to care or transportation issues, which are the true drivers that health plans should be looking to address. Only by developing (or partnering) to determine these underlying drivers can health plans truly be effective in their interventions.


SDOH intervention programs operate in a complex environment. Despite this complexity, measurement is still critical. Understanding where an SDOH intervention program is making an impact will help optimize the program and prove its value to both internal and external stakeholders.

5 key steps that health plans can take for a successful SDOH program

We see the following five key steps for health plans to create a successful SDOH program:

  1. Understand the SDOH drivers that are “root” drivers of relevant outcomes by analyzing current program design, population features and outcomes.
  2. Develop programs to identify members at risk by considering health plan-owned data as well as other sources of consumer and demographic insights.
  3. Deploy and adapt programs in partnership with providers and other stakeholders, including possibly integrating with other VBC initiatives.
  4. Measure the impact and communicate the value of these programs to members, providers, employers and local communities.
  5. Communicate the value of SDOH programs to providers and demonstrate how interventions can support their VBC targets.

Driving meaningful SDOH programs is a necessary step for health plans if they want to focus on VBC. First, they will advance health and quality outcomes for their members and contain medical costs. And when SDOH programs are implemented in conjunction with providers in VBC contracts, we anticipate greater adoption of downside risk and advancement of the health plan’s broader VBC strategy. As health plans compete in a transforming market, their ability to deliver successful value-based models in conjunction with providers will be critical to their ability to contain medical costs, maintain provider relationships and differentiate with employers.

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