What is the ADI?

In 2022, CMS began using the ADI to adjust payment rates and quality incentives in certain payment models, including the ACO Realizing Equity, Access, and Community Health (REACH) and the Medicare Shared Savings Program (MSSP). The agency is also considering adding the ADI to the Medicare Advantage Star Ratings, which it says could save Medicare $5.13 billion over 10 years.

According to Hartnett, the ADI is a collection of data points created by the Health Resources and Services Administration to rank neighborhoods by socioeconomic disadvantage. Some factors considered in the ADI include income, education, employment, and housing.

Ali Khan, CMO for value-based care strategy at Oak Street Health, said that using the ADI, as well as other social indicators, to determine reimbursement is an important step in ensuring that structurally marginalized communities get more resources.

Currently, stakeholders are trying to determine how to best identify underserved communities in payment models to incentivize providers to care for high-needs patients. "That examination is happening now in the academic sector, the private sector and the public sector," Khan said. "And that innovation is going to be fostered because CMS took such a bold stance."

Concerns with the ADI's methodology

According to an analysis from Sutter Health and Mount Sinai Health System, some factors used by the ADI, such as average home prices, may not accurately identify health disparities in certain communities, including densely populated urban areas. This could then lead to an underestimation of social vulnerability in these areas.

Similarly, a study published in Health Affairs found that the MSSP failed to capture significant inequities in two New York boroughs, even though they differed on both income and life expectancy. Specifically, low-income areas of the Bronx with lower life expectancies were ranked similarly to high-income communities in Manhattan's Upper East Side neighborhood with higher life expectancies.

Maria Alexander, VP for population health operations at Mount Sinai and one of the study's authors, said that the discrepancy between the rankings and reality could lead CMS to distribute additional resources to communities that don't need them as much, such as wealthier rural neighborhoods, compared to lower-income urban areas.

"We want to make sure that the way they structure that incentive isn't inadvertently discouraging certain provider groups from participating or moving resources to groups that actually don't need those additional resources," Alexander said.

In addition, Oak Street Health has estimated that using the ADI in a Medicare Advantage payment model would potentially transfer resources away from Black beneficiaries who are eligible for both Medicare and Medicaid. In March, Oak Street told federal regulators that the ADI would lead to a $240 reduction in risk-adjusted payments per dual-eligible member per year, with Black dual-eligible beneficiaries seeing an even higher yearly decline of $480.

"The ADI drives a weight away from dense, structurally marginalized neighborhoods and cities, particularly where Black, Latino and low-income Asian patients congregate, and we see that disparity," Khan said.

How the ADI could be improved

In a letter to CMS, provider organizations expressed support for the agency's decision to use the ADI to help socially vulnerable communities, but said the tool's methodology needed to evolve.

Currently, CMS combines data from the ADI with a patient's dual-eligibility status to determine whether they should be considered underserved in both ACO REACH and the MSSP. Although a CMS spokesperson said this method helps capture factors the ADI doesn't take into account, Alexander said dual-eligibility status is an imperfect measure, largely because Medicaid programs vary by state.

In the future, Aisha Pittman, SVP of government affairs at the National Association of Accountable Care Organizations, said social risk adjustment should consider community-level barriers, as well as individual patient needs, when addressing health disparities. She added that the ADI should include regional adjustments to account for income and cost of living differences.

To improve the tool's accuracy, Alexander recommended CMS complement the ADI with different metrics, such as life expectancy. The agency could also eventually make the risk adjustment process more individualized by incorporating both clinical notes and social assessments, though they should also be sure not to alienate safety-net providers with more limited data and reporting infrastructures.

Aside from just the ADI, Khan said CMS should also consider using similar tools, like CDC's social vulnerability index, in their assessments to help determine the most suitable method for identifying high-needs patients.

According to a CMS spokesperson, regulators are currently monitoring how the ADI is implemented and will make adjustments to each model based on any evidence that emerges. "CMS is aware of concerns some providers have shared with the use of the ADI and is examining other variables that might be added to the composite measure used in ACO REACH," the spokesperson said. (Hartnett, Modern Healthcare, 6/28)

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