By MARIE COPOULOS & MONICA NAKIELSKI

Following a year of growing conversation about the links between the climate and our health, a new proposed rule from the CMS Innovation Center (CMMI) links value-based payment innovation and sustainability for the first time, creating important precedent for an emerging connection in the health care sector and for system strategy.

In mid-May, CMMI proposed its first innovation model with a sustainability component, Transforming Episode-Based Accountability, or TEAM. The TEAM model is a successor to episode-based alternative payment models and notable in that it’s a mandatory payment model overall, though the sustainability component is voluntary. As proposed, acute care organizations selected to participate will have the option to opt into emissions reporting, opening the door to receive feedback and technical assistance. This is the first visible link between value-based payment and sustainability from CMMI, a test of a concept that–like all initiatives coming from CMMI–could give way to scale.

This follows on a year in which emissions reporting and the intersection of climate and health generally (which includes thinking about the health implications of factors like heat, air, and water, or simply put climate as a social determinant of health) has become more prominent. The Joint Commission began offering its Sustainable Health Care certification, a voluntary program. The Securities and Exchange Commission (SEC) passed a ruling requiring disclosure of carbon emissions and associated risks. This SEC ruling requires Scope 1 and Scope 2 emissions reporting from all publicly traded companies, which will include many of the largest health systems. And these rules follow on the heels of new reporting requirements for organizations operating in California, requiring emissions reporting for organizations larger than $1B on not only Scope 1 and Scope 2 but also Scope 3 emissions and climate-risk disclosure for organizations operating in excess of $500 million. Most hospitals and systems fall within these financial parameters. The reporting rules follow Task Force for Climate-related Financial Disclosures (TCFD) standards, which a number of organizations use today.

These proposals and programs are in their infancy. The SEC and California rulings will no doubt be contested and the CMMI proposal is voluntary in nature. However, there is a clear trend toward speaking about climate initiatives in terms of their health impacts and grappling with the health industry’s role in mitigating emissions overall. The CMMI proposed rule is important because it puts the sustainability discussion in the context of health care delivery and payment innovation broadly at CMS.

This matters because sustainability initiatives require similar core success factors to delivery reform and benefit from alignment. In fact, some of the breakthrough thinking happening in the sustainability space builds on the skill sets and experience gained in the value-based payment over the last decades, including:

• Financial modeling: Sustainability investments challenge existing financial models because of the long timelines for return on investment–a lot like population health models that incent preventative care over long timeframes.
• Workforce development: In both sustainability and climate adaptation (i.e. encouraging more resilient health systems), new skillsets are needed. In value-based payment, building competencies in care management and data analysis has been a central focus over the last decade. Both these skill sets (identifying and working closely with patients with significant health risks and using data to inform the work) and the practice of re-equipping the current workforce create important precedents.
• Data strategy: While ESG reporting is largely focused on risk and financial in nature, we expect to see new sets of best practices around data collection, monitoring, and measurement–tapping into existing data sources as the field evolves. As sustainability reporting broadens out of the financial context into strategy, there is a lot of room to take advantage of the improved data functionalities of health systems for impact.

Finally, and perhaps most critically, a natural evolution of these pilot initiatives is to think not only about reducing emissions, but to reduce the impacts of environmental factors (like heat and poor air and water quality) on population health and specifically on patients with existing complex needs. When viewed in this longer-term context, as a social determinant of health, it underscores the importance of linking new payment and delivery models to this conversation. While this new proposal from CMMI is a small step in this direction, it’s an important one that we hope will seed greater participation and conversation in the health innovation space.

Marie Copoulos is the Managing Principal of Horta Health, LLC and a subject matter expert in health delivery and payment reform in Medicare and Medicaid models. Monica Nakielski is an ESG & Sustainability Advisor at Hameda LLC and a subject matter expert in sustainability and ESG efforts.