Why recent regulatory changes require a deeper focus on health equity

Expanded requirements may require executives to take a new approach to enterprise-wide health equity improvement.

In brief

• The federal government strengthened its commitment to health equity advancement in its regulatory portfolio.
• New standards will require a transformation of organizational culture and operations.
• Organizations should focus on linking health equity data to actionable strategies.

The 2023 EY Health Equity Outlook Report found that while there has been strong cross-sector momentum on health equity priorities across the health ecosystem, efforts remain nascent (Figure 1).1 Despite broad awareness of the challenges, health industry organizations have not universally developed strategies to address harmful social determinants of health, and many are not yet able to measure the impact of their interventions on vulnerable patient populations. New regulations taking effect in 2023, however, introduce expanded requirements — and incentives — that may necessitate a different approach to enterprise-wide health equity improvement.

Figure 1: Current trends in health equity impact

New health equity regulations taking effect in 2023

With new requirements taking effect in 2023, the federal government bolstered its commitment to health equity advancement as a major pillar of its regulatory portfolio. Data reporting mandates and value-based reimbursement models stand out as key focus areas. By introducing novel financial and reputational incentives for organizations to strategically evolve their health equity capabilities, these mandates and credential programs underscore health equity’s inherent link to health care quality improvement as part of the government’s broader equity agenda. 

Notable evolution in health equity-related regulations includes:

Centers for Medicare and Medicaid Services (CMS):

Beginning in calendar year 2023, CMS introduced numerous changes to enhance providers’ incentives to deliver more equitable care. These include:

• A new five-pillar health equity framework as part of the Hospital Inpatient Quality Reporting (IQR) program — with accompanying attestations participating hospitals must satisfy — outlining critical areas for improvement related to strategic planning, data collection and analysis, quality improvement, and leadership engagement (Figure 2).² Acute care hospitals that successfully meet requirements will see a 4.3% increase in reimbursement rates.

Figure 2: CMS Framework for Health Equity Strategic Priorities

Figure 3: Implications of new health equity-related CMS regulations

National Committee for Quality Assurance (NCQA):

Building on its existing Health Equity Accreditation framework, NCQA launched the Health Equity Accreditation Plus program in June 2022 to support organizations that are relatively mature in their health equity journey.⁷ This advanced program:

• Expands and accelerates efforts to improve health equity through four critical domains:
  1. Social determinants of health data collection
  2. Community-based partnership development
  3. Patient and consumer engagement
  4. Referral pathway improvement for identified social needs
• Designates and differentiates participating health plans and care delivery organizations as trusted strategic partners committed to advancing health equity.⁸

Additionally, as of calendar year 2023, NCQA is stratifying an additional eight Healthcare Effectiveness Data and Information Set (HEDIS) measures by race and ethnicity to drive increased transparency and strategic action on racial health disparities across service delivery and health outcomes.⁹

Figure 4: Implications of NCQA health equity accreditation updates

The Joint Commission on Accreditation of Healthcare:

As of January 2023, the Joint Commission has added dedicated health equity standards as part of its hospital, ambulatory and behavioral health care accreditation programs. To achieve credentialization, health provider organizations will now need to meet baseline requirements related to:

• Equitable care delivery, including patient race and ethnicity data collection
• Existence of a clearly articulated health equity strategy
• Leadership designation to drive accountability for strategic execution

Integration of equity capabilities into Joint Commission certification embeds a commitment to health equity within quality and safety improvement efforts and assures health equity is central to organizational culture and processes. Further, the Joint Commission is developing a standalone Health Care Equity Certification to distinguish health systems and hospitals that are exemplary in their efforts to reduce health care disparities in the communities they serve.10

Figure 5: Implications of Joint Commission health equity accreditation

Food and Drug Administration (FDA): 

• The 2023 omnibus spending bill requires development of clinical trial diversity action plans as part of FDA-approved drug safety and efficacy studies, and mandates that the FDA update and finalize draft guidance in the coming months.11 This move aims to advance inclusive research and prevent costly delays that occur when trials fail to engage representative patient populations by embedding a focus on patient diversity throughout clinical research processes.12,13

Figure 6: Implications of FDA health equity requirements

How health industry organizations can position themselves for success

These new requirements underscore health equity as an elevated priority across the health regulatory landscape and strengthen operationalization of the Biden administration’s commitment to health care equity.¹⁴ Given the interconnected ecosystem and the growing need for strategic collaboration, these shifts in the regulatory landscape point to direct and indirect impacts on stakeholders across the health and life science value chains. Beyond establishing baseline expectations for health equity engagement, the updated standards introduce new opportunities for provider, payer and life science organizations to accelerate data competencies, expand care capabilities, and improve care quality and safety in alignment with equitable, person-centered care goals.

Considering these significant changes in CMS, NCQA, the Joint Commission and FDA regulatory requirements, health care and life sciences organizations must position themselves for immediate success under the new standards as well as proactively develop more robust capabilities to capture value as health equity regulatory requirements continue to evolve. 

As organizations prepare for these changes, executives should be asking:

• What risks and opportunities are unlocked by these new regulations?
• Where should my organization invest to improve our health equity performance?
• What digital and analytic technologies can enable success?
• What new or expanded skillsets do employees need to deliver against new requirements?
• What data will be critical to make the business case for scaling health equity investments?

Accountability for performance under new standards will require deliberate strategy, technology investment, community engagement, and transformation of organizational culture and operations. Organizations must take responsibility for proactive development of new and/or expanded health equity measurement and reporting abilities, with explicit focus on linking health equity data to actionable strategies that improve quality, enhance safety, and address social drivers of health disparities.

How EY can help

The EY Center for Health Equity leverages knowledge in strategy, data and analytics, workforce, and community to help health and life science organizations:

• Navigate market dynamics that impact business operations
• Bolster performance against health equity-related requirements
• Leverage innovation to derive analytic insights that inform health equity strategic planning and prioritization
• Drive equitable improvement on health outcomes for vulnerable populations. 

Figure 7: EY Center for Health Equity Solutions and Capabilities

Through customized health equity strategic and operational solutions, we help organizations elevate their health equity maturity and accelerate impact for patients, employees, communities and enterprise stakeholders. With many health sector organizations in the early stages of developing or implementing a health equity strategy, EY health equity solutions enable organizations to capitalize on new social and financial value creation opportunities while progressing their health equity agenda.

To learn more about how Ernst & Young LLP can help your organization evolve its health equity journey, please contact Dr. Yele Aluko, Director of the EY Center for Health Equity.