Exploring Alternative Payment Models to Fund Health Equity Programs
Rural communities addressing health equity in healthcare should explore alternative
payment models. These programs may fund services that address upstream factors affecting health, such as
food access or housing, to achieve improved healthcare outcomes.
Payment reform is a complex topic. As healthcare costs increase, interest is moving from fee-for-service care to
payment (VBP) models of care. For the past several years, healthcare organizations have been piloting
VBP models to evaluate impacts on cost, patient experience, and population health. Healthcare organizations are
still in the early stages of determining how to design these models and what impact they may have on health
The Centers for Medicare & Medicaid Services (CMS) funds several demonstration programs that address payment
and service delivery models through the Innovation Center.
Demonstration models focus on incentivizing healthcare providers to provide high-quality care, improving access
to primary care, and integrating cost-effective systems of care.
One model being tested by CMS is the Pennsylvania Rural Health
Model. This model uses an annual global budget based on patient volume, revenue, and services instead of
payment for each service provided. Having a predictable annual budget allows rural hospitals to focus on the
specific needs of their communities. These needs may include food access, transportation, or health literacy.
The findings from the model will inform CMS's efforts to address the unique challenges of other rural healthcare
In 2014, the Robert Wood Johnson Foundation funded a national program to test what payment reform initiatives
work to reduce health disparities. Researchers compiled the following key
lessons from their findings:
There is no one-size-fits-all answer to payment reform. Instead, initiatives should be tailored to the
specific patient population, community, organization, and setting.
Initiatives should offer team-based incentives and not reward just the practitioners within the
The collection and management of key demographic data — such as race, ethnicity, and language —
Data should be shared with all team members. Discovering disparities in patient care can be highly
motivating to mobilize change.
Healthcare teams can be moved to act by factors other than financial incentives. For example, seeing
positive advancement in quality of care and health-related measures may be a greater motivator than
VBP should consider funding peer-based staff. For example, patient navigators and community health workers who share characteristics with
groups that experience health inequities can make a big difference in engaging patients.
Collaborators at all levels of the organization — leaders, team members, and patients — should
be involved in designing programs to increase buy-in.
Public and private payers can be key partners in health equity programs. Payers may help access data, make
changes in clinical practices, and assist with funding program costs by making expenses reimbursable. Consider
developing early partnerships with state Medicaid providers, state health plans, and local health systems.
Resources to Learn More
Beyond the Grant: A Sustainable Financing
Guide to help organizations develop action plans for creating long-term, sustainable financing, with a focus on
securing financing and investing options.
Organization(s): ReThink Health
Enhance Team-Based Primary Care
Approaches: Advancing Primary Care Innovation in Medicaid Managed Care
Toolkit outlining strategies to provide high-quality, comprehensive primary care through team-based
Author(s): Crumley, D., Matulis, R., Brykman, K., Lee, B., & Conway, M.
Organization(s): Center for Health Care Strategies, Inc.
Guidance for Structuring Team-Based Incentives in
Defines teamwork in healthcare and how each staff person impacts the outcome of work performed by others.
Discusses the shared accountability for health outcomes and healthcare spending. Identifies the challenges
associated with designing and implementing team-based incentives and performance measures.
Author(s): Blumenthal, D. M., Song, Z., Anupam, B. J., & Ferris, T.
Citation: American Journal of Managed Care, 19(2), e64-e70
in Rural Communities to Achieve Health Equity
An overview of best practices to achieve health equity in rural Georgia identified by The Two Georgias
Initiative, a grantmaking program supporting local partnerships to advance health disparities and improve health
Author(s): Medellin, L. & Tucker, S. B.
Organization(s): Grantmakers in Health
Value-Based Payment Approaches to Promote Health Equity: Key Strategies for Health Care Payers
Identifies six strategies and other factors to guide payers, in collaboration with healthcare organizations,
when developing equity-focused payment approaches that support and encourage the transformation of healthcare
Author(s): Patel, S., Smithey, A., Tuck, K., & McGinnis, T.
Organization(s): Center for Health Care Strategies, Institute for Medicaid Innovation
Solving Disparities Through Payment And
Delivery System Reform: A Program To Achieve Health Equity
An analysis of the Robert Wood Johnson Foundation's Finding Answers: Solving Disparities through Payment and
Delivery System Reform program to determine if alternative payment models can encourage a reduction in
healthcare disparities and promote health equity.
Author(s): DeMeester, R. H., Xu, L. J., Nocon, R. S., et al.
Organization(s): Health Affairs, 36(6)
Systems Practices for the Care of Socially
A comprehensive review of best practices among providers, hospitals, and health plans — serving a higher
share of socioeconomically disadvantaged populations — that have been shown to improve healthcare quality
and healthcare outcomes.
Organization(s): National Academies of Sciences, Engineering, and Medicine