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Design Payment Transformation

What is this and why does it matter?

Payment transformation ensures that financial structures support—rather than undermine—health equity efforts. Traditional payment systems often prioritize efficiency and cost savings, which can make it hard to sustain care improvements for marginalized populations.

By intentionally designing equity-focused payment mechanisms, organizations can:

A well-designed payment model makes care delivery changes financially sustainable, scalable, and effective in reducing disparities.

How should you work through this component?

To advance equity through payment reform, design payment models that actively support care delivery changes aimed at reducing disparities—instead of reinforcing them. Engage stakeholders early, understand their needs, and plan for both upfront and ongoing costs. Select performance measures that align with equity goals, and create incentives that drive meaningful, long-term change. Above all, keep payment models flexible and responsive to data and feedback so they stay aligned with evolving equity priorities.

When does it make sense to work on this component?

Payment transformation should begin in parallel with care delivery transformation. It is especially important when:

Aligning care delivery and payment ensures that equity-driven initiatives are supported long-term rather than dependent on temporary funding or grants.

Curriculum to be completed for this component:

Design Payment Transformation (Base Deck)

This presentation introduces the fundamentals of value-based payment (VBP) and explores how Medicaid payers can intentionally design payment models to advance health equity. It walks through key concepts, including VBP payment structures, stakeholder roles, and a practical checklist for designing payment approaches that address root causes of health disparities, illustrated with real-world examples from Minnesota, Delaware, Washington State, and Connecticut.

RIC – DPT – Base Deck Presentation – 6.2025Download

Discussion Guide: Design Payment Transformation

This discussion guide provides structured reflection and team-level questions to help state and district teams apply payment transformation concepts to their own health equity work.

It prompts participants to examine current payment environments, identify implementation barriers, explore financial and non-financial incentives, and consider how community members and key organizational stakeholders can be meaningfully engaged in designing equity-focused payment approaches.

Design Payment Transformations – Discussion Guide 11.7.24Download

Self-Assessment Topics and Questions:

This self-assessment tool will help you identify, anticipate and address common challenges implementing the Roadmap.  Using it will increase your chances of successfully reducing and eliminating health and healthcare inequities. Each Roadmap component will have a set of questions and topics in their respective sections; AHE recommends utilizing the assessment questions in two ways:

It is important to routinely assess the effectiveness of the payment model in driving the behavior changes necessary to implement the care transformation model.  Contemplate the following questions every three to six months (or on a different timeline that makes sense for your team).

  1. Do the selected process and outcome measures provide the information necessary to track progress towards meeting the equity goal(s)?
    • Do any of them need to be revised or deleted?
    • Is there a need for new process or outcome measures?
    • What data was used to identify the goal?
    • What process and outcome performance measures (and the data behind them) will be utilized to track progress toward meeting the goal?
  2. Has the team assessed the existing payment and care delivery environment to proactively identify any other care or payment models that could be “competing” with the equity-focused care or payment models in terms of team member time and attention?  Are any other care or payment models asking team members to work toward conflicting or different goals?
  3. Are there up-front implementation or maintenance costs of the care model that have not been met? Can these be accounted for in the payment model or in some other way?  For example, by developing and implementing different payment types into the overall model (e.g., global budget, foundational payments for infrastructure, episode of care, P4P).
  4. Has the team considered how the payment model may change over the short-, mid-, and long-term to facilitate more positive changes and/or further reductions in disparities?**
  5. Has the team fully explored and tried to identify non-financial factors that might motivate individuals and organizations to adopt the behaviors needed to support the care delivery transformation?  How might these non-financial motivators be added to implementation of the care transformation or payment model?
  6. If the payment model involves incentives:
    • Has the team verified (post-implementation) that they motivate individual or organizational behavior changes most critical to the initiative’s success as intended?
    • Do (potential) recipients of the incentive report that they feel rewarded for improvement, achieving specific targets, or both as intended?
    • Does the frequency and timing of incentive reporting and payouts work as intended?  Are timing changes needed to maximize the potential impact of the model?
    • Is there a mechanism to consistently monitor strategies that stakeholders use to meet incentive targets?**  Is there a process to work with them to adjust the strategies and maximize progress?**
    • Are billing and reimbursement systems configured to easily link payment incentives to individuals or teams within a specific healthcare organization?
  7. Is there a process in place to ensure that disparities gaps do not lessen due to care processes or outcome measures worsening for the originally advantaged group?

Goal and Objective Setting:

About the Roadmap Goal and Objective Setting Tool

This tool is designed to facilitate goal setting and completion for your team. The tool will allow your team to:

  1. Record goals which align with the various Roadmap components
  2. Record objectives, time frames, and target completion dates, among other important items for each goal
  3. Monitor progress of goals per Roadmap component

Your team is welcome to engage with this tool as much or as little as it would like, and is helpful, in the development, implementation, and evaluation of your health equity initiative. We encourage you to use this tool to ensure clear goal setting and promote consistent communication, accountability, and progress within your team. This tool is designed to be used over time as your team progresses through the Roadmap and your initiative. This is in no way intended to be used one way by all teams. This is meant to help you progress through the Roadmap component(s) on which you are working at a given time and you may reach your goals in any order. We welcome you to consult your AHE TA lead on getting started with this tool.

Each Roadmap component is listed as a separate tab. Navigate to the desired Roadmap component via the task bar at the bottom of the webpage to add, edit, or view goals. Hide certain tabs as needed to narrow your view to specific Roadmap components or the snapshot. Changing the status of a goal will automatically shift the Snapshot view for the specific Roadmap component.