Paying Providers to Address Health-Related Social Needs

Many early discoveries of how poverty and other social risk factors shape the trajectory of disease are the result of researchers leveraging large datasets to study rare events. One was the Dutch Hunger Winter, a World War II–era famine affecting millions of people in the Netherlands’ western provinces. Analyzing medical and military records, researchers discovered children born to mothers who experienced food insecurity in the first trimester were much more likely to be diagnosed with schizophrenia 30 to 40 years later.

A reverse experiment is now underway in several U.S. states. Like earlier epidemiological studies, it’s built on a once-in-a generation event: the Affordable Care Act’s expansion of Medicaid, which enabled states to begin tying information about social risks like food and housing insecurity to the medical records of roughly 18 million newly insured Americans. The historical expansion in insurance coverage created the means to evaluate, at a potentially large scale, the merits of a modern idea: paying health plans and providers to intervene when patients’ health is compromised by their living conditions.

Over the past decade, it’s become commonplace to ask patients about their access to safe housing, nutritious food, and other health-related social needs. The practice is driven partly by requirements from accrediting bodies and payers, and partly by a growing body of evidence that connecting people who have complex medical needs and few resources to social and economic supports can improve health, lessen the need for and use of health services, and, under some circumstances, reduce health spending.

Efforts to understand which interventions work best and why, however, have been hindered by U.S. underinvestment in social services, especially compared to other high-income countries. The federally funded Accountable Health Communities Model was designed to assess the impact of having health care providers refer patients with health-related social needs to community-based organizations (CBOs) for help. It yielded mixed results, in part because of the difficulty of finding resources to support patients.

Several states are working around this challenge by granting health plans and providers that have assumed financial risk for Medicaid beneficiaries the flexibility and, in some cases, funding to address patients’ health-related social needs. The goal of paying for healthy meals for patients with heart failure, mold remediation for people with asthma, or appliances to store insulin is not to solve poverty, but to maximize the value of existing health care investments.

In June 2023, the federal Center for Medicare and Medicaid Innovation (CMMI) adopted a similar approach. It offers primary care practices participating in Making Care Primary, an alternative payment model, $2 to $25 per beneficiary per month for providing care management services, which can include assessing and responding to health-related social needs. Higher payments are directed to providers caring for Medicare beneficiaries who receive low-income subsidies and people with complex medical needs who are living in economically depressed areas.

Health care providers and health plans, especially those incentivized to reduce spending, are well positioned to identify people whose health would benefit from additional support. But these dollars must be invested in ways that build community capacity to meet identified social needs. To understand how medical practices are responding to the new incentives and partnering with CBOs to meet patients’ social needs, we looked to Massachusetts and Minnesota. These states were among the first to expand their Medicaid programs to low-income, childless adults. They were also among the first to adjust provider payments to account for social risk factors and to use financial incentives to encourage providers to work with local partners in the community.

In the Land of Ten Thousand Lakes, Letting a Thousand Flowers Bloom

Minnesota’s strategy is linked to an accountable care program the state launched in 2013 that incentivizes providers to coordinate the medical, behavioral health, and social services that Medicaid beneficiaries receive. Most of the state’s largest health systems participate in the Integrated Health Partnerships (IHP) program, which offers them upfront payments for care coordination and a share of the savings they achieve.

From research, state leaders knew that Medicaid enrollees living in poverty and facing challenges like homelessness, prior incarceration, and involvement in the child welfare system have significantly higher rates of chronic disease, higher mortality rates, and potentially avoidable emergency department (ED) visits and hospitalizations. In response, they increased IHPs’ care coordination payments beginning in 2018 to account for social risk factors already evident in state data.

The payment boost was modest — from 7 cents to 25 cents per member per month, totaling as much $80,000 a year for a large system. But it was paired with a requirement that each IHP pilot an intervention to address one or more social risk factors in partnership with CBOs or social service agencies to gain a higher share of savings.

The defining feature of the model is flexibility: IHPs choose the population they want to support and the strategy. “We weren’t overly prescriptive, because we wanted the approach to be driven by the community,” says Mathew Spaan, M.P.A., manager of care delivery and payment reform for the Minnesota Department of Human Services. “We also didn’t want to say to someone who spent four years building a program for legal aid or food supports, ‘That’s great. Now to do something new.’”

Many of the social care programs that the IHPs launched are designed to make it easier for people to access food, housing, or education supports — some offered in-house, others provided by CBOs. Others IHPs pursued more care-centric goals, including increasing access to behavioral health services and treatment for opioid use disorder. While the variation makes it difficult to compare results, early findings suggest lessons for other health systems and states. The first is that patients with social needs are often reluctant to accept help.

“People are worried about the judgment they’re going to be subjected to if they admit to having a problem,” says Zuzi Velazquez, who supervises the Community Connect program at Children’s Minnesota, a hospital system with primary care clinics in Minneapolis and St. Paul. Two-thirds of these clinics’ patients live in households with incomes at or near the poverty level, and nearly all have Medicaid as their primary source of insurance.

Families visiting the clinics for well-child visits are asked to fill out a nine-question survey, which asks whether they’ve experienced difficulties accessing food, transportation, household goods, legal services, childcare, or adult education in the past 12 months. Those who screen positive are referred to one of five individuals serving as resource navigators. They can provide emergency food and connect families to other resources, including food pantries, transportation services, housing supports, early childhood education programs, and legal assistance.

Having the navigators on site has been critical for addressing the fears parents have that reporting a social need or accepting help may trigger a child welfare investigation or derail an immigration application. Velazquez estimates that 90 percent of parents alter their answers once they have met face-to-face with one of her staff. “It’s why we try to be their biggest cheerleaders. We say things like ‘Keep going. We’re right behind you,’” she says.

Since Community Connect was launched in 2017, the program has supported more than 11,500 families, nearly all (94%) from communities of color. Children’s Minnesota says participation in the program is associated with more preventive care and well-child visits, fewer ED visits, higher patient and family satisfaction, and better asthma control.

Essentia Health, a multisite, integrated health system headquartered in Minnesota, has screened 169,000 primary care patients for food insecurity, transportation needs, housing instability, and financial strain. Some of its clinics, including those in larger cities like Duluth, reported that 35 percent of patients had at least one need, while other clinics reported that just 7 percent did. Of those who screened positive, only one-third wanted help. “We were surprised by how many people said, ‘Yes, I have all these needs and no, I’m not interested in help,’” says Emily Kuenstler, M.P.H., the health system’s community health director. A follow-up survey suggests that some patients had other resources to lean on, but others were not used to having health care providers offer that kind of nonmedical assistance.

Essentia Health employs community health workers to support those who want help and relies on an online platform to make referrals to CBOs. While the health system doesn’t yet pay CBOs to respond, it will test doing so this year. Instead, it makes $1.7 million in grants each year to cover CBOs’ direct services or to fund infrastructure investments.

In 2023, about 20 percent of the 8,000 patients who were referred to CBOs received help (many other referrals are still pending). The health system is now conducting an evaluation to assess the impact of the program on ED visits, missed appointment rates, and patient and provider satisfaction, among other metrics, with results expected later this year.

How Massachusetts Catalyzes Partnership

Massachusetts takes a more expansive approach than Minnesota, adjusting payment for all Medicaid beneficiaries enrolled in 17 accountable care organizations (ACOs) or other forms of managed care. The state’s overarching goal is to ensure those serving disadvantaged neighborhoods have adequate resources to meet their patients’ medical and social needs.

Massachusetts has evolved its approach over several years. Initially, it made higher payments for specific combinations of medical and social risk (like patients with a substance use disorder who are also homeless) and paid progressively more as patients’ medical requirements grew more complex. It did so by adjusting capitation rates for medical services up or down, using a multiplier that factored in measures of poverty and household stress, as assessed by neighborhood conditions, as well as risk factors often associated with higher medical spending, such as housing instability and involvement with a child welfare agency.

After finding that one part of the formula — the area-based index — didn’t reliably predict costs, state officials stopping using it to adjust medical payments (although the risk adjustment model still accounts for individual risk factors such as homelessness). Instead, the state adjusts the administrative payments that health plans and ACOs receive using the Centers for Disease Control and Prevention’s Social Vulnerability Index, a tool for identifying areas where socioeconomic conditions make residents more vulnerable to disease outbreaks and natural disasters.

For members who live in the most disadvantaged areas (census tracts in the top two deciles of the index), health plans and ACOs receive an extra payment of roughly $10 per member per month, which can be used for population health initiatives. For members in better-resourced areas, administrative budgets are reduced by roughly $3.50 per member per month.

Massachusetts requires ACOs and health plans to screen patients annually for food insecurity, housing instability, difficulty paying utility bills, and transportation needs. Services that address housing and nutrition needs are paid separately through the state’s Flexible Services Program.

The Flexible Services Program was launched in 2020 as a pilot and funded jointly by the state and federal government through a Section 1115 Medicaid waiver. At the center is a $149 million fund that Medicaid ACOs can tap to pay for a range of nutrition and housing supports, including help paying security deposits or utility bills. Only MassHealth members with complex physical or behavioral health needs, high-risk pregnancies, or high ED use are eligible for supports through the Flexible Services Program. ACOs and health plans are also encouraged to partner with and pay CBOs for acting on referrals.

Increasing Access to Supports Where Low-Income Patients Seek Care

Soon after the Flexible Services Program was announced, Community Care Cooperative (C3), an ACO that includes 23 federally qualified health centers in Massachusetts, created a team with expertise in housing and food programs to establish partnerships with CBOs. Some provide food supports to patients across the state, while others specialize in addressing housing needs in local markets.

Health center staff screen patients for health-related social needs and refer those who meet program criteria to the CBOs, which are tasked with conducting an initial assessment and developing a detailed plan that spells out the services and goods they will provide. C3 reimburses the CBOs monthly for services, such as help with a housing search or nutrition education. The first payment, covering the initial assessment, is the largest, amounting to as much $700 for a patient who needs help finding housing. Subsequent payments for patients who need ongoing support are based on services rendered. C3 also reimburses CBOs fully for goods, including vouchers for healthy food, the payment of the first month’s rent, or the purchase of a refrigerator to store medications. 

C3 encouraged health centers to concentrate on patients who were receiving support from care managers, as these patients were the ones mostly likely to meet the program’s eligibility criteria. It also offered monthly webinars to train staff on how to inquire about social needs in ways that won’t provoke shame, says Kim Prendergast, R.D.N., M.P.P., C3’s vice president for policy. Food insecurity has been the most prevalent need, with some centers reporting rates as high as 40 percent.

From April 2020 to February 2024, C3 spent $23 million of program funds providing services to more than 13,000 patients, ranging from food vouchers and medically tailored meals to navigation support for people facing evictions or homelessness. Early evaluation data show changes in utilization that yield savings for some populations, including patients with diabetes who received medically tailored meals and patients experiencing homelessness who needed help finding housing.

By addressing their social needs, ACOs build trust with their members, which leads to higher engagement in care management programs, Prendergast says. “I think the special sauce is all of it together,” she says. “It’s not just the meal or the vacuum cleaner or the fact that they got housing.”

How Overlapping Systems Can Form a Safety Net

Fallon Health, a health plan that serves more than 96,000 MassHealth members through partnerships with three Medicaid ACOs, has also seen significant financial and health benefits from the program. The plan screens all members for social needs at least once a year, asking about access to food, safe housing, and transportation, as well as ability to afford utilities and clothing. Between 30 percent and 40 percent of Medicaid members screen positive for at least one risk, often related to food and housing, says Linda Weinreb, M.D., medical director of Medicaid programs and ACOs.

Fallon Health’s ACO partners — health systems, multispecialty groups, health centers, and smaller medical groups — also screen patients during primary care visits or after hospitalizations and ED visits. With one ACO partner, Fallon Health has embedded care managers in its primary care clinics. Other partners rely on a centralized team of care managers and social workers, or they make handoffs to Fallon Health’s care management teams of nurses, social workers, social care managers, and behavioral health workers.

Given the wide variation in need and local capacity to respond, Weinreb says flexibility has been key to filling gaps where there’s high demand or a shortage of staff. With one ACO, the health plan and providers share the results of social needs screenings with one another, enabling the plan’s care managers to respond to urgent matters, like a patient’s pending eviction, while providers respond to less urgent ones. The plan also has encouraged all the ACOs to contract with CBOs focused on homelessness prevention, housing stabilization, and food insecurity, including one that partners with farmers to bring fresh food to members weekly. The CBOs bill the health plan directly for the services they provide.

The health plan has seen declines in medical spending when housing needs are addressed. An earlier program that helped adults experiencing homelessness gain access to housing found medical spending fell by $1,352 per member month, a 38 percent drop, in the year following the intervention compared with the year before. Much of the cost savings stemmed from avoided ED visits and hospitalizations. Moreover, 20 percent of members were housed within six months of enrollment. “It’s been very exciting to see we could make a difference,” Weinreb says.

Moving Forward

As the Flexible Services Program pilot ends, Massachusetts is expected to shift to a fee-for-service-like system for payment of services that address health-related social needs, the details of which are still being worked out. Defining the services to be covered, establishing billing codes, and adopting the technology systems to implement them is a massive undertaking. But there’s value in pursuing such a system, C3’s Prendergast says, because it sets a minimum standard for the services people receive and the length of the intervention, enabling comparisons across sites.

Minnesota policymakers are also considering other strategies for encouraging social service integration in health care settings, ones that aren’t contingent on the savings that Integrated Health Partnerships achieve. One option is to offer grants to pursue innovative partnerships. Another is to increase the population-based payments while reducing fee-for-service ones. Having data that show the impact of these programs on social service spending may help make the case for greater state investment.

Lessons for State and Federal Policymakers

Adjusting payments to providers and health plans that assume financial risk for Medicaid beneficiaries offers a controlled way to study the impact of social care interventions and encourage participation in value-based contracting arrangements. Even if these investments prove to be cost-saving, the idea may not be palatable to policymakers in all states. Some may see it as imprudent to assign the task to a high-cost sector of the economy that lacks direct expertise in this area.

Others may wish to heed the call of community-based organizations to fund their work directly. North Carolina’s Healthy Opportunities Pilots suggest one pathway for doing so. Approved by the Trump administration, the pilots enabled the state’s Medicaid agency to pay CBOs and local service organizations to address food, housing, and transportation needs. A preliminary evaluation found the program reduced ED use and medical spending by $85 per person per month, after accounting for support services but not other program costs.

For states that want to leverage potential savings from health care to fund these investments, the experience of Massachusetts and Minnesota offers lessons.

Effective evaluation may depend on upfront investment. Both states have made strides in bridging the health and social sectors despite vastly different levels of investment. It remains to be seen which represents the most cost-effective approach for achieving the overarching goal: better health outcomes at lower costs. Massachusetts may have an easier time documenting success because the state mandates screening and has invested substantially more in its program, including offering technical assistance and grants to help CBOs establish the workflows and reporting capabilities necessary to serve payers. An independent evaluation of Massachusetts’ effort, expected this fall, may generate insights for other states.

In contrast, Minnesota’s spartan financing may have compelled providers to collaborate with CBOs. Because the state adjusted payments only for ACOs and not for health plans, the program has had a narrower impact. Less investment also meant the agency could place few demands on providers — for example, there are no requirements for universal screening. This has made comparisons more challenging and may hamper efforts to identify unmet needs.

Social psychology matters, too. Consistent with prior research, many organizations discovered a gap between what people reported as needs and what they wanted in the way of support. If the overarching concern is privacy, being transparent about where the information is stored, and giving patients the opportunity to opt out of sharing it with others, may ease privacy concerns, says Anne Smithey, M.P.H., a program officer at the Center for Health Care Strategies, which oversees a learning collaborative that supports state Medicaid agencies looking at ways of changing primary care provider payment to improve health outcomes and promote equity. It’s also important to build trust by acknowledging child welfare or immigration concerns and responding to skepticism that sharing information about social needs will yield meaningful help.

Specificity helps. Health plans and providers may also see greater uptake if they offer a single, relevant, well-defined benefit — assistance with transportation or a food voucher, for example — rather than a generic offer of support, says Jacob Luria, the president and founder of N1 Health, a Boston-based predictive analytics firm. Luria relies on data from credit bureaus, vehicle registration records, and other sources to help health plans and ACOs identify members whose living conditions may make it harder for them to engage in care. They might live alone or in an apartment where no one — not even a neighbor — has a car to get to a medical appointment or grocery store.

His clients do targeted outreach, and for a modest investment of $15 per member per month, he says, they see quick returns, in part because they’re able to respond more quickly to medical needs and direct people to lower-cost sites of care. For organizations that rely on screenings, he encourages them to solicit information in ways that display sensitivity. “If you want to ask patients [about] their needs, it needs to be done in a protected space. You can’t ask these questions in a waiting room,” he says.

The author thanks Martha Hostetter and Patricia Richardson Schoenbrun for their editorial support.