Value-based payment programs link reimbursement to performance on quality and cost measures, but these programs may disadvantage providers that care for populations living in poverty or in under-resourced communities, by holding providers accountable for factors beyond their control. Some studies have suggested that risk adjustment of value-based payment outcomes should incorporate dual eligible status, while others have argued that incorporating this factor would allow for the acceptance of lower quality of care for this group. To further understand the relationship between social risk and health outcomes, this study examined how dual eligible and Medicare-only beneficiaries compared on medical comorbidities, social risk, functional/cognitive status, and annual costs of care.

Dually eligible individuals had much higher levels of medical, functional, and cognitive comorbidities, social needs, and annual costs of care compared to their non-dually eligible counterparts. For example, 41 percent of dually eligible individuals had depression, compared to 18 percent for nondual enrollees. Costs related to the areas of inpatient care, skilled nursing facilities, home health, and outpatient costs were each more than 50 percent greater for dual enrollees as compared to nondual enrollees. These results suggest that targeted interventions such as home-based primary care could be beneficial for dual eligible individuals with frailty or poor functional status. Including functional, cognitive, and social factors in cost prediction, as well as risk factors from medical claims, helped to improve risk prediction. Medicare could consider such adjustments to improve accuracy and fairness in value-based payment programs.