This is one of the few studies regarding the cost impact of Social Determinants of Health (SDOH). I am sure most of you reading this are not surprised that the study determined a higher level of Medicare spending are associated with poor SDOH. This presents a potential Return on Investment (ROI) for health care providers to focus on these issues as part of a move towards value-based care.

SDOH are associated with increased Medicare spending per beneficiary in certain geographic areas, according to a study from the Journal of the American Medical Association.

Addressing social determinants of health in these regions can potentially lead to reduced healthcare spending and better quality healthcare. The results show that Medicare spending was higher in geographic locations where residents had greater rates of SDOH.

The study looked at 3,038 counties across the country, examining Medicare fee-for-service (FFS) spending data, patient demographics, and SDOH measurements. The data was obtained from the 2017 CMS geographic variation public use file. Medicare spending included all services for Medicare Parts A and B.

The study examined 13 social determinants of health that impacted the county residents. The socioeconomic SDOH included median household income, percentage of uninsured residents, unemployment rate, percentage of residents without a high school degree, and food environment index. Race and ethnicity SDOH included the numbers of residents that were Hispanic, non-Hispanic Black, non-Hispanic and a different race, and the number of residents that were not US citizens.

The remaining four SDOH were regarding social relationships and residential and community context. The study noted the number of membership associations per 1,000 population, the percentage of households with severe housing problems, the percentage of residents with access to exercise opportunities, and the percentage of housing units in rural areas.

Clinical risk and the number of healthcare resources available such as specialists, hospital beds, and ambulatory care centers, were also measured in the counties.

SDOH were indirectly and directly associated with Medicare spending, according to the researchers. Indirectly, SDOH can lead to chronic illnesses such as diabetes, cancer, and heart conditions, which call for increased healthcare spending.

SDOH such as socioeconomic determinants can have a direct impact on Medicare spending. Low incomes and other financial disparities can prevent patients from following medical advice, which in turn can lead to ineffective treatment and increased healthcare spending.

The study looked at over 33 million Medicare FFS beneficiaries and found the Medicare per beneficiary spending ranged from $4,447 in the lowest-spending counties to $16,570 in the highest.

In the counties that had the highest Medicare spending, which the study classified as quintile five, there was a higher rate of poor SDOH in the residents compared to the counties with the lowest spending (quintile one).

Quintile five residents had a higher CMS-HCC score when it came to clinical risk, which indicates the residents were less healthy. These counties also had fewer primary care physicians, lower household incomes, and a lower food environment index compared to quintile one.

Quintile five residents saw higher rates of unemployment and no health insurance as well. The high healthcare spending in these counties correlated with higher numbers of residents in racial minority groups.

After incorporating the effects of clinical risk and supply of healthcare resources, SDOH was directly associated with a 5.8 percent reduction in variation between the highest and lowest-spending counties. SDOH indirectly reduced 37.7 percent of variation.

The study findings suggest that addressing social determinants of health in communities may lower healthcare spending and improve overall health outcomes for residents. The results also support the notion of addressing SDOH in value-based care payment programs.

“Critics suggest that disparities of care would widen if SDOH were included in the risk adjustment models of value-based payment programs, because it implies that differences in outcomes by SDOH are expected and accepted,” the JAMA study noted.

More than 50 health systems have already invested at least $2.5 billion in social determinants of health programs, according to a past study published in Health Affairs. These programs planned to help patients with SDOH such as housing, employment, and food security.

We believe this study encourages continued work with SDOH in Medicare high-cost counties as a first step. The focus on SDOH will continue as part of the move towards a population health model.