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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Suggested Citation:"5 Financing Social Care." National Academies of Sciences, Engineering, and Medicine. 2019. Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation's Health. Washington, DC: The National Academies Press. doi: 10.17226/25467.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

5 Financing Social Care T his chapter begins with a general overview of current health care and social care financing in the United States. Next, five financial barriers are discussed along with promising approaches to dealing with those barriers and financing the integration of health care and social care. The chapter concludes with the committee’s findings. CURRENT HEALTH AND SOCIAL CARE FINANCING Health Care Spending In 2017, an estimated $3.5 trillion was spent in the United States for health care services, or 18 percent of the U.S. gross domestic product (GDP) (CMS, 2017b), a higher percentage of GDP spent on health care than any of the other 34 Organisation for Economic Co-operation and Development (OECD) member countries (Squires and Anderson, 2015). Sources for this spending include publicly and privately funded health in- surance ($2.6 trillion, 74.7 percent of national health expenditure [NHE]), out-of-pocket expenses for individuals ($365.3 billion, 10.5 percent of NHE), other third-party payers ($352.8 billion, 10.1 percent of NHE), and investments such as noncommercial research and structures and equip- ment ($163.9 billion, 4.7 percent of NHE) (see Table 5-1). Historically, U.S. health care spending has increased faster than the general U.S. economy, and it is projected to continue to do so for the fore- seeable future, driven in part by increases in the price of health care ser- vices, worsening health status, and an aging population that is expected 109 PREPUBLICATION COPY—Uncorrected Proofs

110 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE TABLE 5-1  National Health Expenditures (NHEs) in Billions $USD, Aggregate and per Capita Amounts, Share of Gross Domestic Product (GDP), and Average Annual Growth from Previous Year Shown, by Source of Funds, Selected Calendar Years 2013–2026 Source of Funds 2013 2015 2016 2017 2018 2020 2026 NHE $2,879.0 $3,200.8 $3,337.2 $3,489.2 $3,675.3 $4,090.9 $5,696.2 Health consumption 2,725.9 3,047.1 3,179.8 3,325.4 3,504.3 3,901.7 5,437.1 expenditures Out of pocket 325.2 339.3 352.5 365.3 379.8 417.3 555.3 Health insurance 2,087.8 2,382.8 2,486.8 2,607.3 2,755.2 3,075.6 4,351.9 Private 946.4 1,068.8 1,123.4 1,186.6 1,244.1 1.348.8 1,776.0 Medicare 590.2 648.8 672.1 705.8 748.1 873.1 1,366.0 Medicaid 445.4 544.1 565.5 582.0 622.0 696.4 996.2 Federal 256.9 343.1 358.1 360.4 385.8 429.4 613.0 State and local 188.5 201.0 207.5 221.7 236.2 267.0 383.2 Other health 105.9 121.1 125.8 132.8 141.1 157.3 213.8 insurance and public health Other third-party 312.9 325.0 340.5 352.8 369.2 408.8 529.8 payers Investment 153.1 153.7 157.4 163.9 171.1 189.2 259.2 NHE as percent of GDP 17.2% 17.7% 17.9% 18.0% 18.2% 18.4% 19.7% SOURCE: Copyrighted and published by Project HOPE/Health Affairs as Gigi A. Cuckler, Andrea M. Sisko, John A. Poisal, et al. “National Health Expenditure Projections, 2017–26: Despite Uncertainty, Fundamentals Primarily Drive Spending Growth.” Health Affairs (Mill- wood). 2018, Vol. 37, No. 3, pp 482–492, exhibit 1. The published article is archived and available online at www.healthaffairs.org. Adapted with permission from Project HOPE/ Health Affairs. to consume more services (Cuckler et al., 2018). By 2026, health spending is projected to amount to $5.7 trillion, or nearly 20 percent of GDP (Cuck- ler et al., 2018). Per capita health care expenses are also projected to rise from $10,723.50 in 2017 to $16,167.60 in 2026 (Cuckler et al., 2018). The high rate of growth of U.S. health care costs creates budget pres- sures for employers, public officials, and competing public services. Con- sumers also face “underinsurance,” which may negatively affect health outcomes. Underinsurance includes increased cost sharing and limited coverage benefits that occur as employers respond to these price increases (Schoen et al., 2005). Health care spending growth in excess of the general economy also may harm the international competitiveness of the U.S. private sector (Gara, 2018). PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 111 Social Care Spending Spending estimates within the U.S. social services sector are less well defined than those for health care. International economic analyses (e.g., among OECD countries) define social services as public and private spending, including spending for cash transfers and tax treatments for programs in old age, incapacity-related (disability) payments, active labor market policies, unemployment, and housing, among other categories. By this definition, social spending in the United States approaches that of health care spending but accounts for a considerably lower percentage of GDP than social spending in other countries (see Figure 1-1). Health care and social care spending are both related to health out- comes. OECD countries that spend a higher proportion of their GDP on social services than on health care have better health outcomes than those that do not (see Chapter 1 and also Bradley and Taylor, 2013; Rubin et al., 2016). This also holds true within the United States, as states with higher ratios of social-to-health spending appear to have better health outcomes than those with lower ratios (Bradley et al., 2016). Among the OECD industrialized countries, the United States has the lowest ratio of social-to-health spending: for every $1 spent on health care in the United States, about $0.90 is spent on social services, while in OECD countries, for every $1 spent on health care, an average of $2 is spent on social ser- vices (see Figure 1-1). According to a 2016 RAND Europe report, U.S. social care spending (e.g., on unemployment and housing) is lower than it is in other mem- ber countries in the OECD, and spending on old age (e.g., pensions and home-help and residential services) is higher than comparative OECD countries (see Table 5-2). It appears that as the health care sector responds to growing evidence of the importance of the social determinants of health (SDOH) with increasing integration of social care, the challenges of financing the integration of social care with health care are not a mat- ter of how social care spending is divided among different categories, but of definition and rebalancing. These challenges are discussed in the next section. BARRIERS TO FINANCING THE INTEGRATION OF SOCIAL CARE AND PROMISING SOLUTIONS Substantial barriers to the financing of social and health care inte- gration remain. Five primary challenges, with promising solutions, are discussed below: (1) definitions of health care, (2) payment reforms, (3) accountability, (4) fragmented financing for dually eligible beneficiaries, and (5) a lack of administrative capacity for social care providers. PREPUBLICATION COPY—Uncorrected Proofs

112 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE TABLE 5-2  Size of Individual Social Spending Categories, with Examples, as a Share of Overall Social Expenditure (2011 Values) United OECD EU15 Category Example States Average Average Old age Pensions, home-help and residential 66.1% 50.4% 48.9% services for the elderly Survivors Pensions and funeral payments 4.4% 6.2% 6.7% Incapacity-related care services, disability benefits, 11.7% 14.6% 14.8% workers’ injury compensation, employee sickness payments Family Child allowances and credits, 4.5% 13.3% 12.4% childcare support, income support during leave, sole parent payments Active labor Employment services and incentives, 0.8% 2.8% 3.9% market policies training, direct job creation, start-up incentives Unemployment Unemployment compensation, early 5.0% 5.2% 7.4% retirement for labor market reasons Housing Housing allowances, rent subsidies 1.9% 2.7% 2.0% Other Cash benefits to low-income 5.6% 4.9% 3.8% households, food subsidies, other social services SOURCE: Adapted from Rubin et al., 2016. Reprinted with permission from the RAND Corporation. Legal Definitions of Health Care The first challenge to financing the integration of social care and health care has to do with the origins of insurance and medical care. Due to the size and expense of treating medical events, most health care financing is by a third party—either using an insurance model or public financing (Cuckler et al., 2018). Third-party financing, in turn, requires a definition, either via contract or statute, of what services are covered and which are excluded. Furthermore, both public and private coverage standards are based on an exclusively medical model of care; this drives the definition of what constitutes medical care and is to be paid for by third parties (Flexner, 1910). Commercial insurance contracts set standards on covered health care services. These standards typically refer to covered services as being those deemed “medically necessary” by an ordering physician (provider), based on the standards of accepted medical practice. Public financing sources—Medicaid and Medicare—also require services to be medically PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 113 necessary and use evolving definitions of what can be covered if medi- cally necessary. Within this statutory framework, Medicare policies are set by federal payment rules and to some extent by “local coverage deter- minations” made by a Medicare fiscal intermediary or carrier. Medicaid coverage policy parameters are also set by federal regulations, but states have flexibility to adopt optional benefits and to define, particularly with respect to adults, the “amount, scope, and duration” (42 CFR 438.3) of a covered benefit. In addition, Medicaid rules offer health plans additional authority to voluntarily cover additional services (including nonmedical services) for Medicaid beneficiaries whenever a health plan determines those services to be of value to the individual, although the cost of the services cannot be factored into the payment rates (42 CFR 438.3). Financing the integration of social care into the medical model of care requires defining activities of social care (defined by the committee as awareness, adjustment, assistance, and alignment; see Chapter 2 for a description of the committee’s five activities involved in integrating social care into health care) within the constructs of current definitions of medi- cal care (Miller et al., 2010). Federal and state governments are exploring creating the flexibility to broaden the definition of what constitutes medi- cal care in order to make it possible to finance the integration and provi- sion of some types of social care into health care. Most of these increased flexibility efforts are occurring in Medicaid, which pays for the care of people with greater needs. The extent of this increased flexibility is evolv- ing through both state plan definitions (the state plan is the “agreement” between the states and the Centers for Medicare & Medicaid Services [CMS] on what populations and services will be covered in that state) and managed care authorities. The federal government has the authority to allow states to pay for some care and services that otherwise would not be permissible to cover with federal Medicaid funds through both home and community-based waivers and more comprehensive waiver author- ity. The key areas of current flexibility in Medicaid are identified below. Medicaid State Plan Authority Under Medicaid states have the discretion to define the scope of benefits they will offer, subject to federal guidelines. Some Medicaid ben- efits allow states to incorporate aspects of social care into the standard operation of their Medicaid program, broadly or for a targeted popula- tion. Notably, various activities, including assessing needs and provid- ing linkages to services that address those needs, such as homelessness and food assistance, can be financed through Medicaid by incorporating these activities in the state’s definition of case management and health PREPUBLICATION COPY—Uncorrected Proofs

114 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE home services.1 In addition, state plan services relating to home- and community-based long-term services also can incorporate a broad range of nonmedical services, such as supportive housing services, employment services, and home modifications. Medicaid Managed Care As of September 2018, 39 states and the District of Columbia, which together cover about two-thirds of all Medicaid beneficiaries, had con- tracted with managed care organizations (MCOs) to deliver some or all of their Medicaid-funded services (Kaiser Family Foundation, 2018, 2019). States have made different decisions about which Medicaid benefits are administered by MCOs (“carved in”) and which are administered through Medicaid fee-for-service (“carved out”). The potential for inno- vation by Medicaid health plans in this area is substantial—with funding from the state, accountabilities, and guidance on their limitations, plan administrators can make decisions about what the best use of their pre- mium dollars is. MCOs are obligated to provide care management, which includes the authority for MCOs to use their Medicaid funding to identify social care needs and to link people to available services. In addition, MCOs can use their Medicaid funds to pay for social care as “in lieu of” services or as “value added” services (e.g., to provide medically tailored meals for a homebound individual or an air conditioner for severely asthmatic child) (Bachrach et al., 2018). State Medicaid agency contracts can encourage (through procurement processes or payment incentives) or require MCOs to undertake these activities, and some states require MCOs to contract with existing community-based organizations to provide services such as ombudsman (advocacy) services, nursing home eligibility assessments, and care management (CHCS/ACAP, 2018; Super et al., 2018). Further- more, state Medicaid agencies have flexibility in allowing some social care to qualify as quality improvement activities in the calculation of the numerator of the medical loss ratio of MCOs. To the extent that MCOs are at risk for health care costs, they have a financial incentive to make investments in social care to lower the rates of use of high-cost medical services. However, modifications in rate-setting methodologies, risk adjustments, and incentives often are needed to ad- dress the so-called premium slide, which can serve as a disincentive for plans to make social care investments. This term refers to the phenom- enon whereby plans that invest in effective interventions that results in 1 Case management is described in Section 1915(g)(2) in the Social Security Act and home health services in Section 1946 of the Act. PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 115 lower rates of use of high-cost care may be faced with a rate reduction the next time that rates are reset (California Health Care Foundation, 2018). Premium slide is not exclusive to activities addressing social needs; it can occur when plans are successful in being cost effective and efficient with health care dollars and is a risk with new payment models outside of fee-for-service. Four practices can be employed by state Medicaid agencies with their contracted plans to accelerate the integration of social care into the health care setting: (1) using value-based payments to support provider investment in social interventions; (2) using incentives and withholds to encourage plan investment in social interventions; (3) integrating ef- forts to address social issues into quality improvement activities; and (4) rewarding plans through higher rates for effective investments in social interventions (Bachrach et al., 2018). McGinnis and colleagues, however, reviewed Medicaid agency contracts with their managed care plans and concluded that although there is a growing focus on the SDOH in state- managed care contracts, most states do not provide details on how MCOs can use flexibilities under federal law to provide services that address the SDOH and, furthermore, that payment incentives linked to these determi- nants are not yet commonplace (CHCS/ACAP, 2018). Medicaid Waivers States have the opportunity to innovate in Medicaid under specific agreements with CMS called waivers (Shrank et al., 2018). Two types of waivers—1915(c) and 1115—can offer state Medicaid programs addi- tional, substantial flexibility and, potentially, funding for social care. The more targeted authority is available under section 1915(c) waivers, which authorize Medicaid spending on home and community-based services for people who need long term care (CMS, 2015). More comprehensive section 1115 demonstration waiver authority—that can extend beyond people who need long-term care—has also been used to help finance social care interventions for Medicaid beneficiaries. Under various state waiver programs, some states and their contracted Medicaid plans are experimenting aggressively with paying for specific social services, such as employment supports and housing tenancy (Shrank et al., 2018). Ad- ditionally, social services provided in the context of delivering health care are also funded through other mechanisms federally and at state levels and are discussed further below in the section on accountability (the con- cepts of “braiding and blending”). Some states are making financing the integration of social care a prior- ity (Bachrach et al., 2016). For example, North Carolina’s 1115 demonstra- tion waiver authorizes the state to use Medicaid payment for a defined set PREPUBLICATION COPY—Uncorrected Proofs

116 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE of services relating to priority areas—food insecurity, housing instability, transportation barriers, interpersonal violence, and toxic stress as part of regional pilots. Working closely with MCOs, the effectiveness of these services to improve health outcomes and decrease cost will be tested (NC DHHS, 2018). The North Carolina waiver requires a summative inde- pendent evaluation—as required for all 1115 waivers—and a rapid-cycle assessment process for efficacy testing. This second feature is notable because the utility of formal evaluations varies substantially. The Oregon Health Authority uses coordinated care organizations (CCOs) through its 1115 Medicaid demonstration waiver authority. CCOs are expected to pay for what the states refer to as “flexible services” which can provide housing supports and assistance with food and other social resources (Alderwick et al., 2019; CMS, 2017b). In these arrangements, the state plays a critical role in providing guidance, direction, flexibility, and accountability for plans and providers. A review of evaluations of Medicaid demonstrations from eight states with high-demonstration expenditures that varied in the number of years the demonstrations had been in effect and by geography found that the evaluations had substantial limitations that “affected their usefulness in informing policy decisions” (GAO, 2018). Efforts to improve the useful- ness of state- and federal-led evaluations are under way. CMS Guidance to States CMS guidance to states on state plan and managed care options and its willingness to approve waiver authority to support social care are also critical. Although such guidance has historically been limited, the 2016 CMS managed care regulations provide some clarity. Still, however, questions remain as to what social care activities can be financed with Medicaid dollars. Machledt states that the regulation encourages Medic- aid agencies to financially incentivize health plans to address social risks by allowing certain nonclinical services to be included as covered services when calculating the capitated rate and medical loss ratios (Machledt, 2017). The issue of how to account for the additional costs of these ad- ditional social needs integration benefits remains to be worked out in practice, and the extent to which the benefits are self-financing depends on how returns are calculated (see below). Medicare Innovations Medicare has begun to follow Medicaid’s lead in this work and has recently given guidance to the health plans it contracts with in the Medi- care Advantage Program regarding particular non-medical services that PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 117 can be considered supplemental benefits available to all or a subset of the plan’s enrollees. These non-medical benefits, made permissible un- der the CHRONIC portion of the Bipartisan Budget Act of 2018,2 are to be coupled with changes in rate-setting methodology for the plans that provide them (Wynne and Horowitz, 2018). The goal of the expanded supplemental benefits is to meet the needs of chronically ill Medicare Advantage enrollees. Early indications are that Medicare Advantage plan organizations are generally interested in the increased flexibility (Long- Term Quality Alliance, 2018). As is the case with Medicaid, it remains to be seen whether Medicare Advantage plans need more specific govern- ment direction. While the legislation enables Medicare Advantage Plans to cover some social care for beneficiaries, traditional Medicare plans still largely do not support social care provision. There is a call for reforming the Medicare Advantage competitive bid- ding process. The original goal of the process was for private health plans to demonstrate care coordination and high-quality care while providing enhanced benefits for beneficiaries and saving money for taxpayers, as compared with traditional Medicare, which is fee-for-service. Research indicates that the current Medicare Advantage bidding structure does not promote competition allowing plans to overbid, retain the dollars, and not pass the savings to their enrollees (Lieberman et al., 2018). Health Care Payment Reform A second challenge to financing social care integration is the method of provider payment, which can have a substantial dampening or acceler- ating effect on n the integration of social care into the health care setting. Health care providers have generally been paid for their services on a fee-for-service basis, where Medicare rates are a point of reference for both Medicaid and commercial insurers. The shortcomings of fee-for-service and Medicare rate setting compensation have been well documented (Laugesen, 2017), and they include incentivizing providers to produce volume over value and to value technical excellence over services of cog- nition and coordination (Bodenheimer et al., 2007). Services of cognition and coordination include various activities of social care integration, such as screening for social needs (awareness) or connecting patients to social care providers (assistance); these activities have not been reimbursable, and thus they are not incentivized under traditional fee-for-service com- pensation methods. While the overall movement in provider payment reform has been away from fee-for-service toward value-based payment, 2 Public Law 123, 115th Cong. (February 9, 2018). https://www.congress.gov/115/plaws/ publ123/PLAW-115publ123.pdf (accessed May 23, 2019). PREPUBLICATION COPY—Uncorrected Proofs

118 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE it is important to explicitly define and acknowledge social care activi- ties as well as expand on which individuals can bill for such services. Doing so provides resources for social care integration in the near term and may inform and foster more advanced payment models. Within the fee-for-service compensation methods, adding billing codes or modifying existing codes in the fee schedule to allow providers to bill for care coor- dination activities may be one opportunity to finance social care (Miller, 2015). For example, Medicare Chronic Care Management Services codes that physicians and other qualified health care providers are eligible to bill also allow for other members of the care team to provide services under the billing providers’ general supervision (CMS, 2016). This expansion of billing codes and explicit inclusion of other qualified health care provid- ers (such as licensed social workers) in being able to contribute to billable services is a key step to enabling health care systems to invest in social care providers. With the passage of the Patient Protection and Affordable Care Act of 20103 and the establishment of the Center for Medicare & Medicaid Innovation (CMMI; a center within CMS), efforts by Medicare to reform provider payments accelerated. While work on population health financ- ing was pursued at CMMI, particularly in state innovation models (Kis- sam et al., 2019) and the seminal work of the Accountable Communities for Health project (Alley et al., 2016), that work is best considered capacity planning and payment model development. CMMI provider payment models, once they have been developed, are to be tested and, if successful, implemented. They can be categorized in the areas of accountable care, service bundles, and comprehensive primary care. The committee found descriptions in the literature of the work of accountable care organizations for commercially insured and Medicare populations to integrate social care into health care settings, but the number and comprehensiveness of those descriptions were substantially smaller than in the literature for Medicaid, presumably reflecting the lower incidence of needs in those populations. Value based payment models appear to serve a necessary, but not sufficient, mechanism for integrating social care into health care by creating stronger financial incentives for providers to focus on care co- ordination, prevention, and outcomes (McWilliams et al., 2016). However, there is little evidence to indicate that actual integration or savings from these models are being redirected to financing social care (Chaiyachati et al., 2016; KPMG, 2018). Medicare efforts have led to similar movements by Medicaid and commercial payers. This section will not address the relative efficacy of 3 Public Law 148, 111th Cong. (March 23, 2010). https://www.congress.gov/111/plaws/ publ148/PLAW-111publ148.pdf (accessed May 23, 2019). PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 119 the payment reform models in general but will focus instead on efforts in Medicaid—where the care of the population with the highest social needs is financed—to use provider payment reform to facilitate integration and payment of social care. State Medicaid payment reform efforts do not generally require spe- cial waivers or authority from CMMI, although some states have bene- fited by additional waiver funding (e.g., from the Delivery System Reform Incentive Payment Program) or CMMI support. States have established payment reforms in all three CMMI categories—comprehensive primary care, service bundles, and accountable care—particularly through existing Medicaid managed care contracts where MCOs are directed to implement the payment reforms. There is some evidence from the ACA-initiated health homes that Medicaid provider payment reform efforts in the areas of comprehensive primary care have facilitated enhanced integration of social care into the health care setting (ASPE, 2018). Evaluations of the effects of other large state-led Medicaid comprehensive primary care payment reform efforts on the integration of social care could not be located. The most comprehensive Medicaid provider payment reform efforts have been in the area of accountable care, often implemented in tandem with delivery reform waivers. In theory, a group of providers of care to Medicaid beneficiaries, held accountable for population health outcomes, financially incentivized through a reconciliation to a total budget for costs and given the flexibility of new covered services, will spend more time assessing the social needs of their patients and arranging for those needs to be met. Perhaps the most mature programmatic example of this is Or- egon’s CCO model (MN DHS, 2018; Stock and Goldberg, 2017), but other examples include efforts in Minnesota, Colorado, and Vermont, among other states (CHCS, 2018). More recently, Massachusetts has adopted a variation of this approach (MassHealth, 2018). The models differ considerably in their design details—including the role of existing managed care organizations, methods of payment to provider groups related to quality and other accountability measures, guidance on covered benefits, and partnerships with community-based organizations. There is no research available that indicates which, if any, of these accountable care models are, in fact, achieving more social care integration, let alone whether that integration is improving health. In- stead, practitioners—states and providers—are engaged in rapid cycles of experimentation, often facilitated by for-profit and nonprofit technical assistance providers (Crumley and Marlise, 2018). How to discern, dis- seminate, and deploy these lessons from payment reform remains a sub- stantial policy challenge, not only in the realm of social care integration, but also for provider payment reform efforts in general. PREPUBLICATION COPY—Uncorrected Proofs

120 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE A final provider payment model involves salaried providers of health care—whether in fully integrated systems of care such as the Veterans Health Administration and Kaiser Permanente or in Medicare and Med- icaid capitated programs such as the Programs of All-Inclusive Care for the Elderly (PACE)—that may be less susceptible to the incentives of fee- for-service medicine that make the work of integrating social care more challenging. For all three of these models there are examples of attempts to attend to the social care needs of patients (Meyer, 2012). However, in addition to the capital costs required to build a fully integrated salaried model of care, the constraints on patient choice called for in these models, have long been thought to limit their broader attractiveness and applicability (Meyer, 2012). Accountability A third challenge to financing the integration of social care and health care is at once fundamental and complex: For what services and outcomes are plans, health care providers, and social service providers accountable, and how will that accountability be defined and measured? Traditional inputs for accountability in health care are the activities of providers, and these activities are generally measured through the use of disease classification (for e, with the International Classification of Disease-10 [ICD-10]) and procedure codes (e.g., Current Procedures Ter- minology [CPT]). These codes are specified in great detail, reflecting the need for providers to receive reimbursement for the care they deliver and the importance of using these codes as part of risk-adjusting in pay-for- value settings. In keeping with the traditional medical model of health care, neither social care activities (awareness, adjustment, assistance, and alignment) nor social risks and social needs are well documented. However, systems such as ICD-10, LOINC, SNOMED, and CPT now include new disease classification codes (e.g., Z55–Z65 in the ICD-10 system) as a way to be- gin to measure activities associated with social care. The codes include social risk factors, such as problems related to education and literacy, employment, housing and economic circumstances, and social environ- ment (Arons et al., 2018; Gottlieb et al., 2016). However, while these codes are available, some reports suggest that they are not yet frequently used (AHA, 2018; Torres et al., 2017). Furthermore, there is no similar coding system that providers can use to document and measure the delivery of social needs services. States, plans, and providers who may be at finan- cial risk for the cost of care for populations will need improved ways to assess the accountability of social care delivery. As noted in Chapter 4, PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 121 efforts are under way to develop documentation standards across coding vocabularies used in electronic health records to develop consensus on key concepts; these efforts should improve interoperability in this area. Another accountability issue centers broadly on outputs and out- comes: For what measures—both general measures and those related to social care integration—are providers and plans to be held accountable? Accountability measures, even in the most mature Medicaid account- able care programs, have not been tightly focused; instead, they have included a broad array of measures across several domains with great variety among the states (CHCS, 2017). State Medicaid agencies are de- veloping their own accountability measures dealing with social care. As with payment models, there is no evidence about which measures are more effective or about how they should be implemented and enforced. Specific to the topic of this report, the most important question may be: Is a particular measurement focused on the activities of social care neces- sary, or would the adoption of broader outcome measures encourage the development of effective integration practices in an attempt to succeed at those measures? Providers, states, plans, Medicaid agencies, and their advisers, in the absence of definitive research evidence, continue to try and improve in their measurement efforts. To the extent that providers should be held accountable not just for relative improvement but for performance compared to a standard, how should their performance be adjusted for characteristics and population risks that are beyond the providers’ control? This question is not unique to the challenge of integrating social care and health care, but developing standard practices to answer it will facilitate integration efforts. Research has found that adjusting for additional patient characteristics—includ- ing socioeconomic position; race, ethnicity, and cultural context; gender; social relationships; and residential and community context—narrowed performance differences between those practices that cared for more so- cially and medical complex patients and those that cared for fewer com- plex patients (Joynt et al., 2017). The same researchers expressed concern that inadequate clinical and social risk adjustment may lead to payments being directed away from those practices serving poorer and sicker pa- tients because of perceived poor performance, even though the “poor performance” may not reflect the true quality or efficiency of care. As such, practices that care for a large proportion of high-cost, sicker, poorer, or otherwise vulnerable patients may not have the resources to care for the population and may be forced to avoid caring for them, which may worsen disparities (Roberts et al., 2018). Notably, the conclusion in a National Academies of Sciences, Engi- neering, and Medicine (the National Academies) report on the research evidence for adjustments to Medicare value-based payment programs for social risk factors is directly applicable to this issue: PREPUBLICATION COPY—Uncorrected Proofs

122 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE The committee supports four goals of accounting for social risk factors in Medicare payment programs: reducing disparities in access, quality, and outcomes; improving quality and efficient care delivery for all pa- tients; fair and accurate reporting; and compensating health plans and providers fairly. These goals would best be achieved through payment based on performance measure scores adjusted for social risk factors (or adjusting payment directly for these risk factors) when combined with public reporting stratified by patient characteristics within reporting units. (NASEM, 2017, p. 16) The committee that authored that report could find no evidence of the adoption of these types of risk adjustment practices within Medicaid outcome measurement efforts (NASEM, 2017). Integrating social care into health care will further accelerate the evolution of the use of outcome-based contracting. In particular, while the complexities of developing comparable outcome measures for health care providers are noted above, the use of outcomes-based contracting for social care organizations is nascent. Even if social services accountability measures can be established and appropriately adjusted for factors beyond the control of providers, the possibility remains that the benefits of a managed care organization or at- risk provider investing in efforts to integrate social care needs will accrue only at a later date or to another party, such as the educational or child welfare systems (Taylor and Nichols, 2018). This “wrong pockets prob- lem” often is an issue for children’s services, and it is exacerbated when individuals enter and exit the accountable entity’s population, whether that entity is a provider, a health plan, or a geographic community (Urban Institute, 2017). The immediate cause of entry and exit from a population often is program eligibility, or “churn,” which can be caused by a failure to com- ply with administrative requirements or the nature of the requirements themselves. Although some consider churn to be in the financial interests of the funding agency (usually Medicaid) since it reduces, if temporarily, the number of covered lives and thus payments to plans and providers, the costs of administration and interrupted care have been estimated to outweigh any savings (Swartz et al., 2015), giving rise to federal and state policies promoting continuous eligibility for Medicaid enrollees. Even with continuous eligibility, the returns for investing in the in- tegration of social care can accrue to other parties. Moreover, Medicaid is statutorily forbidden from paying for social services such as housing or food. As a result, other sources of funding are needed. The “braiding and blending” of public sources of funding to pay for prioritized social services creates a local environment where “assistance” and “alignment” activities to social care integration are more likely to happen; for example, PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 123 it makes sense to screen for housing needs in a health care setting if op- tions for meeting the needs exist and can be accessed (Soper, 2017). The “braided” approach may have important consequences; for instance, the human capital required to support multiple sources can make social care programs more difficult to initiate and sustain (Gottlieb et al., 2019). Even with more effective blending of funding sources, the horizon for returns on social investments often remains long and the wrong-pockets problem persists. This is a structural challenge and has been historically a rationale for public-sector accountability and action. Geographically exclusive accountable care organizations, such as those in Oregon’s pro- gram, have the advantage of a longer-time horizon for expecting returns, because they will not be losing population to another provider, but their existence comes with the economic risk of monopoly provider status. Social impact bonds also have been proposed and implemented in cer- tain circumstances to make accountability for performance more direct and clearer than is the case with public sector taxation and budgeting. However, the use of these bonds in health care settings has been limited (Stoesz, 2014). Some researchers have suggested that social care financing should be considered a public good and have theorized about the use of structures of collective governance, investment, and accountability to ad- dress the problems of wrong pocket, free rider, and long-term returns for investments in social care integration and more upstream investment in pediatric populations, which are larger than a single provider but smaller than governmental organizations (Taylor and Nichols, 2018). Others see the traditional hospital role of large civic institutions as the basis for such a collective structure. The ACA imposed clearer obliga- tions on nonprofit hospitals to justify their tax status in annual reports to the Internal Revenue Service (IRS) by identifying the health needs of the communities in which they operate and the value of the non-compensated benefits they were providing to those communities (IOM, 2015). Accord- ing to the statute’s logic, the public reporting of needs and efforts to meet those needs will create greater accountability on the part of hospitals and health systems to address community-specific determinants of poor health, including social conditions. To date however, the potential for community benefit reporting has exceeded its accomplishments, with analyses of reports showing inconsistencies in the information reported to the IRS and limited national or local efforts to hold health systems accountable for the nature, extent, or efficacy of what is being reported (Rubin et al., 2015). In theory, increased and aligned expectations for health systems for how they are responding to the health needs of the communities they serve will result in more effective activities, includ- ing partnerships with other organizations responding to those needs. However, alignment between state and federal obligations varies as does PREPUBLICATION COPY—Uncorrected Proofs

124 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE the extent to which the approach taken to providing community benefits responds to the gap in social care. Efforts continue align the IRS reports with local- and state-level health assessments, improvement plans, and policy (James, 2016; RTI International and RWJF, 2019). Fragmented Financing for Dually Eligible Medicare and Medicaid Beneficiaries A fourth challenge is the fragmented financing for dually eligible Medicare and Medicaid beneficiaries. If low-income populations have high social needs, older adults and people with disabilities with low incomes have some of the highest social needs. Not only do these “dual eligibles” have lives marked by considerable complexity of medical and social needs, but those needs manifest themselves uniquely in each indi- vidual. For instance, a quadriplegic person in rural Oklahoma will have a very different set of needs and resources at his or her disposal than a frail older adult in a nursing home in San Diego. Addressing those needs in effective ways requires substantial commitment and flexibility on the part of care providers and the entities that determine coverage and payment decisions. Compared to Medicare enrollees, dual eligibles are more likely to have three or more chronic conditions and twice as likely to report fair or poor health and have a cognitive or mental impairment (Cubanski et al., 2015). Dual eligibles are one of the highest cost groups for Medicare and Medicaid expenditures (CBO, 2013). The joint financing structure for dual eligibles has not yet provided the financing flexibility needed to care for this complex population. Med- icaid and Medicare each have a list of covered services. A doctor being paid by Medicare must interact with a vendor paid by Medicaid to ar- range for durable medical equipment. Investments by one payer, such as home health aides paid for by Medicaid, can result in the benefits—in this case reduced hospital admissions—accruing to the other. This dilemma is magnified with a service that is covered by neither payer, such as so- cial care integration and services. Medicare has an incentive to cover the service only if the benefits accrue as a reduction in Medicare-covered ser- vices, yet if the integration of social care into the health care setting were to benefit any population it would be the one with the highest social and medical needs (i.e., the dual-eligible groups). Recognizing this, the federal government has made at least three different efforts to integrate financing for dual eligibles (CMS, 2018). The expectation is that a single stream of financing and one list of covered benefits would free health plans and the providers with whom they contract to increase their awareness of the so- cial needs of these patients, assist them in meeting those needs, and align efforts with other providers. In a letter on April 24, 2019, CMS further PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 125 encouraged the states promoting three models to integrate Medicare and Medicaid financing streams: (1) expanding the Medicare-Medicaid Finan- cial Alignment Initiative, (2) integrating care through a managed fee-for- service model, and (3) encouraging state specific models (CMS, 2019b). Programs of All-Inclusive Care for the Elderly The PACE Innovation Act of 2015 established integrated Medicaid and Medicare financing to integrated delivery systems for services to almost exclusively dual-eligible beneficiaries at high risk for nursing home admissions (CMS, 2017c). Through comprehensive primary care integrated into a day-program setting, the program has a demonstrated ability to delay or postpone nursing home admissions. One study found that, compared with risk-adjusted populations in fee-for-service Medicare and Medicaid, PACE enrollees had fewer hos- pital admissions, more nursing home admissions, higher Medicaid costs (with the difference diminishing over time), no difference in Medicare costs, and lower mortality rates (Ghosh et al., 2014). Enrollment from 2007 to 2017 increased from 1.3 million nationwide to 4 million out of an estimated 9 million dual eligibles (CMS, 2017a). Dual-Eligible Special Needs Programs Dual-eligible special needs programs (D-SNP) seek to direct Medicare Advantage payments and Medicaid capitation payments to a single MCO responsible for administering both benefits. Whereas the 2018 budget agreement permanently authorized their status and estimated that 1.7 million potential beneficiaries reside in the 10 states that require their MCOs working with dual-eligible beneficiaries to become D-SNPs (Allen, 2018), no evaluations could be located by the committee. This perhaps is due to the varying nature of D-SNP programs by state based on state Medicaid dual-eligible strategy and the joint accountability of D-DNP plans to Medicare and Medicaid. In addition, the CHRONIC Care Act of 20184 makes explicit that care coordination and integration are central to the purpose of special needs plans (SNPs) as well as permanently authorizing SNPs and promoting home-based care with the goal of avoiding institutional care. As part of overall integration, the act provides three options for integrating long- term services and supports and behavioral health services by 2021, fur- ther encouraging integrating social care for those who are dually eligible. 4 Title III of the Bipartisan Budget Act of 2018, Public Law 123, 115th Cong. (February 9, 2018). PREPUBLICATION COPY—Uncorrected Proofs

126 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE Finally, the act also requires the Medicare Payment Advisory Commis- sion, in consultation with the Medicaid and Children’s Health Insurance Program Payment and Access Commission, to conduct a study and report to Congress on the quality of D-SNPs. This strengthening and standard- ization of the D-SNPs is a step forward. However, financial alignment demonstrations seek to move further than what D-SNPs offer. Financial Alignment Demonstrations The ACA established an office in CMS to focus on the dual-eligible population and develop a set of financial alignment demonstrations, which resulted in joint agreements between CMS, a state Medicaid agency, and participating health plans on the categories of dual-eligible popula- tions to be covered, covered services, payment rates, and accountabilities. The financial alignment demonstrations allowed participating states to determine the amount of flexibility in how so called “value added” services are defined and financed. These services often were identified as social care for the dually eligible population. The states ranged in the amount of flexibility they allowed. For example, Minnesota defined “ad- ditional services” wherein MCOs were given full discretion to identify and pay for services that are not defined health care benefits and that these additional services must be made broadly available to all enrollees (Walsh, 2018b). Another example is California’s use of “Care Plan Op- tion” services (Walsh, 2018a). These services are optional services outside the defined benefits, which plans can purchase to enhance care, promote community living, and prevent costly and unnecessary hospitalization or prolonged institutional care. The intended outcome for these value-added services included filling in gaps in care, diverting enrollees from hospital or skilled nursing facility placements to promote community living, and improving physical health by addressing social needs (Soper, 2017). The results are early and have been mixed. For example, the initial CMS evaluation in California noted no statistically significant savings un- der Medicare, a result that was attributed to a low initial enrollment and high variability of outcomes between participating MCOs. Ohio’s evalu- ation, however, found lower monthly inpatient admissions and skilled nursing facility admissions, a lower probability of any long-stay nursing facility use, no effect on ER visits or all-cause 30-day readmission, and no effect on the probability of follow-up after inpatient mental health discharges. Washington demonstrated savings of $105.3 million for Medi- care, and Illinois witnessed a 2.2 percent reduction in costs. Each of the evaluations documented challenges in financial sustainability, creativity in addressing social needs, and extension of the demonstration to accrue more data for analysis, given the overall promising results (CMS, 2019a). PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 127 Lack of Administrative Capacity for Social Service Providers A final challenge to integrating social care into the health care setting is the administrative capacity of social service providers, which often are key to the delivery of social care. These providers are generally smaller organizations than their health care partners, and their funding usually is driven by grants, not service-related payments. They typically do not have systems in place for health care financing mechanisms. Historically, there has been little contracting or collaborating between the health care sector and social service providers. In a medical model of health care, the workflow consists of generalists assessing needs, treating the patient if possible, and referring the patient to specialists for diagnosis, consultation, and possibly treatment. In an integrated social care model, social services providers represent another set of specialists and consultants with which the health care practice is collaborating. It is unlikely that the social service provider and the health care practice have established expectations for referral, consultation, feed- back loops, reporting, and billing. Depending on the extent of the service integration desired and indicated, the integration of operational and man- agement systems may be required. The potential for “medicalization” of social conditions (i.e., subsuming social services and public health under the health care delivery system) is of concern. This medicalization, if based on an overly formalized social care integration effort based on a medical model of diagnosis, assessment, referral, and treatment, may result in needless cost and complication and may decrease the efficacy of the social care delivery (Lantz, 2018). This is a new dialogue, without the national standards provided by common definitions of condition and services, fee schedules, and reporting or contracting measures (CHCS, 2019). Coordination and communication between social service providers and health care providers in an integrated fashion may represent new ad- ministrative burdens and costs. It may create in social services providers a deeper cadre of skilled management professionals, or it may simply add administrative costs in the manner that has attracted concern and critique in health care (Papanicolas et al., 2018). The committee did not research the costs involved to integrate social care into the delivery of health care as this exploration falls outside of the scope of this report. FINDINGS The challenges and opportunities in financing the integration of so- cial care into health care fall into five categories: (1) definitions of health care, (2) payment reforms, (3) quality and accountability, (4) fragmented PREPUBLICATION COPY—Uncorrected Proofs

128 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE financing for dually eligible beneficiaries, and (5) a lack of administrative capacity for social care providers. What follows are the committee’s find- ings based on the evidence. • Current health and social care spending o Countries and states with a higher ratio of social to health care spending have better population health outcomes. Most of these countries have some form of global budgeting for health care expenses to limit the health care sector’s growth. o A small portion of social spending is needed for the activi- ties of social care integration in a health care setting: raising awareness, providing adjustments, assisting populations, and aligning activities. • Definition of health care and how it affects the inclusion of social care as part of health care o The definitions in statute and in contracts of what constitutes health care have been driven in large part by the cultural history of medicine and have made it less likely that the activities of social care would be included in the health care setting. For example, social workers have been defined as mental health providers rather than more generally as health care providers. o Within existing statutory definitions of health care, state Med- icaid programs and their contracted managed care plans and accountable providers are innovating with awareness, adjust- ment, assistance, and alignment activities to pay for social care in health care settings using state plan amendment au- thority and the waiver process. This activity is only beginning to scale in some states. o There remains great variation among states in the level of so- cial care activity; the guidance from the Centers for Medicare & Medicaid Services to states and from states to plans about permissible social care activities and benefits is limited. o Rate-setting processes for health plans and providers can be influential in obtaining financing for the integration of social care in the health care setting; the key factors are the rates calculated, risk adjustment elements to those rates, perfor- mance incentives, and the definition of medical services and quality improvement activities in the calculation of medical loss ratios. o Among the states with approved waivers there is much ex- perimentation, with informal mechanisms for learning the results of the experimentation. Formal evaluations of these PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 129 waiver activities typically are not timely and do not influence policy and practice. o The Medicare Advantage plan bidding process insufficiently promotes competition on the basis of care coordination and high-quality care in the service of enrollees. o Medicare’s new supplemental benefits guidance to Medi- care Advantage plans, made possible by the Creating High- Quality Results and Outcomes Necessary to Improve Chronic Care Act (CHRONIC Care Act), has created new opportuni- ties to integrate social care into the health care of Medicare beneficiaries. • Incentives to integrate health care and social care o The prevailing model of health care provider payment—fee- for-service—does not encourage the integration of social care. The current shift to alternate payment models led by the Center for Medicare & Medicaid Innovation activities—par- ticularly the shift to accountable care organizations—aligns incentives for the provision of social care. o Just as state Medicaid programs are experimenting with dif- ferent covered services definitions, they are innovating with new methods to pay providers, such as through account- able care organizations, in part to encourage more social care integration work. There is less such work taking place for commercial and Medicare populations. Furthermore, great variation among states exists in the types of population-based payment models (i.e., models in which a provider agrees to accept responsibility for the health of a group of patients in exchange for a set amount of money) that are being deployed, and, as with covered service definitions, states and, in some cases, their contracted health plans are not performing formal evaluation of these activities. • Quality and accountability o Definitions of health care services and conditions have his- torically provided insufficient clarity and guidance for the work of social care. o Population outcome measures for accountable entities, or ac- countable care organizations, are numerous and highly vari- able among the states. o The conclusions included in a previous National Academies of Sciences, Engineering, and Medicine report on adjusting Medicare payments for social risk factors (NASEM, 2017) have not been applied in Medicaid settings to payments or outcome measures. PREPUBLICATION COPY—Uncorrected Proofs

130 INTEGRATING SOCIAL CARE INTO THE DELIVERY OF HEALTH CARE o Even with good accountability measures, health plans and providers struggle to justify investments when returns are delayed and accrue to collaborators. The lack of continuous eligibility for Medicaid benefits exacerbates this problem, as do the long-term nature of the returns on investments in so- cial care integration and on upstream investment in pediatric populations. Geographic exclusivity, which limits the number of providers operating within a region, makes it possible for partners to make longer-term investments, but this is not pos- sible in populous settings. o The Internal Revenue Service (IRS) community benefit stan- dard is another opportunity to finance the integration of so- cial care in health care settings. Experience has shown varying levels of engagement by health systems, little enforcement by the IRS, and varying levels of aligned attention from states and communities. • Financing care for patients with complex health and social needs o Patients enrolled in both Medicaid and Medicare have the highest social needs, but the division of their health care financing between state and federal agencies creates barriers to addressing those needs in a way that integrates social care. o The Programs of All-Inclusive Care for the Elderly program enrolls a fraction of dual eligibles and has demonstrated mixed outcomes. o No systematic evaluations exist for Dual-eligible special needs programs (D-SNPs), in part because each is unique to the state in which it operates. The CHRONIC Care Act mandated the evaluation of D-SNPs, which may assist with standardization. o The financial alignment demonstration for dual eligibles shows that while care innovation increases with alignment, administrative and financial challenges remain. o Evaluations of the financial alignment demonstration have found savings in two states and improved health care use outcomes in additional states. The demonstration has been extended and expanded to accrue more of the data needed to evaluate its effectiveness. • Capacity building for social care providers o Social service agencies and health care organizations have historically not worked together. The systems of financing social services agencies and of financing health care organiza- tions are different. o Health systems may “medicalize” the integration of social care into health care. Health systems often use models of PREPUBLICATION COPY—Uncorrected Proofs

FINANCING SOCIAL CARE 131 care requiring research, diagnostic codes, and technical spe- cialization, which add cost and complexity, with the ultimate result being effects on population health that are neutral or negative. o The administrative costs of social care providers could in- crease as a result of efforts to integrate social care into a health care setting based on a medical model for consultation and referral. REFERENCES AHA (American Hospital Association). 2018. ICD-10-CM coding for social determinants of health. http://www.ahacentraloffice.org/PDFS/2018PDFS/value-initiative-icd- 10-code-sdoh-0418.pdf (accessed May 23, 2019). Allen, K. 2018. Companion Medicaid and Medicare Advantage dual-eligible special needs plans. Health Management Associates blog. https://www.healthmanagement.com/blog/ companion-medicaid-medicare-advantage-dual-eligible-special-needs-plans (accessed May 23, 2019). Alley, D. E., C. N. Asomugha, P. H. Conway, and D. M. Sanghavi. 2016. Accountable health communities—Addressing social needs through Medicare and Medicaid. New England Journal of Medicine 374(1):8–11. Arons, A., S. DeSilvey, C. Fichtenberg, and L. Gottlieb. 2018. Documenting social determi- nants of health-related clinical activities using standardized medical vocabularies. Jour- nal of the American Medical Informatics Association Open. doi: 10.1093/jamiaopen/ooy051. ASPE (U.S. Departent of Health and Human Services’ Office of the Assistant Secretary for Planning and Evaluation). 2018. Report to Congress on the Medicaid health home state plan option. https://www.medicaid.gov/state-resource-center/medicaid- state-technical-assistance/health-home-information-resource-center/downloads/ medicaidhomehealthstateplanoptionrtc.pdf (accessed May 23, 2019). Bachrach, D., J. Guyer, and A. Levin. 2016. Medicaid coverage of social interventions: A road map for states. The Milbank Quarterly, July 25. https://www.milbank.org/publications/ medicaid-coverage-social-interventions-road-map-states (accessed August 28, 2019). Bachrach, D., J. Guyer, S. Meier, J. Meerschaert, and S. Brandel. 2018. Enabling sustainable investment in social interventions: A review of Medicaid managed care rate-setting tools. The Commonwealth Fund, January 31. https://www.commonwealthfund.org/publica- tions/fund-reports/2018/jan/enabling-sustainable-investment-social-interventions- review (accessed May 23, 2019). Bodenheimer, T., R. A. Bereson, and P. Rudolf. 2007. The primary care–specialty income gap: Why it matters. Annals of Internal Medicine 146(4):301–306. Bradley, E. H., and L. A. Taylor. 2013. The American health care paradox: Why spending more is getting us less. New York: Public Affairs. Bradley, E. H., M. Canavan, E. Rogan, K. Talbert-Slagle, C. Ndumele, L. Taylor, and L. A. Curry. 2016. Variation in health outcomes: The role of spending on social services, pub- lic health, and health care, 2000–09. Health Affairs (Millwood) 35(5):760–768. California Health Care Foundation. 2018. Intended consequences: Modernizing Medi-Cal rate setting to improve health and manage costs. https://www.chcf.org/publication/intended- consequences-modernizing-medi-cal-rate-setting-to-improve-health-and-manage-costs (accessed May 23, 2019). PREPUBLICATION COPY—Uncorrected Proofs

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The consistent and compelling evidence on how social determinants shape health has led to a growing recognition throughout the health care sector that improving health and health equity is likely to depend – at least in part – on mitigating adverse social determinants. This recognition has been bolstered by a shift in the health care sector towards value-based payment, which incentivizes improved health outcomes for persons and populations rather than service delivery alone. The combined result of these changes has been a growing emphasis on health care systems addressing patients’ social risk factors and social needs with the aim of improving health outcomes. This may involve health care systems linking individual patients with government and community social services, but important questions need to be answered about when and how health care systems should integrate social care into their practices and what kinds of infrastructure are required to facilitate such activities.

Integrating Social Care into the Delivery of Health Care: Moving Upstream to Improve the Nation’s Health examines the potential for integrating services addressing social needs and the social determinants of health into the delivery of health care to achieve better health outcomes. This report assesses approaches to social care integration currently being taken by health care providers and systems, and new or emerging approaches and opportunities; current roles in such integration by different disciplines and organizations, and new or emerging roles and types of providers; and current and emerging efforts to design health care systems to improve the nation's health and reduce health inequities.

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