Risk-adjusting for social factors

The New York Times published a piece highlighting the risks of inadequate risk adjustment within the context of value-based payments. People have been increasingly arguing that society should reward outcomes, not the number of procedures -- that payers should pay for value rather than discrete units of work. However, not every patient is an average patient. Some patients have complicating factors, making it more difficult for them to have better outcomes, regardless of which doctor they see for treatment. Hence, the outcomes need to be risk-adjusted so that the doctors won't have too strong of an incentive to only see a certain subset of the population (presumably the healthy patients).

While people generally agree that outcomes need to be risk-adjusted, people often disagree with regards to how to risk-adjust. The author of this piece argues that social factors (such as literacy or ability to afford housing) are often overlooked in favor of medical factors (such as other conditions that patients might also have). The argument is that by omitting social factors from the risk-adjustment methodology (and therefore not financially recognizing the difficulty of providing care for patients who have certain social factors) while at the same time moving more and more of the payments to be value-based, payers give providers a very strong incentive to avoid caring for vulnerable population. (Similar arguments probably floated around when people advocated for capitation, a different reimbursement model that might be thought of as an extreme form of value-based payments.) The author insightfully points out this is far more of a problem for values-based payments rather than fee-for-service: under the older system of paying for procedures, payers would still pay the same amount for procedures regardless of social factors (such as whether the patients themselves could pay). Risk-adjustment is indeed complicated, and if not handled carefully, can meaningfully distort the practice of medicine.