Executive Summary: The SDOH Gap in Level Funded Plan Design: What Claims Data Shows and What Plan Sponsors Ignore
LFP-11.03 — Benefits Architecture#
Social determinants of health drive healthcare utilization in ways that claims data captures indirectly but plan design ignores entirely. Members missing appointments because they lack transportation. Diabetics whose glucose control deteriorates because they cannot afford the diet their condition requires. Emergency department utilization driven by housing instability rather than acute illness. The claims patterns are visible to a TPA that knows how to look. The benefit design responses exist. The gap is not budget; it is design.
Claims data does not include a field for food insecurity, but the signals are present. Repeated emergency department visits for conditions manageable in primary care signal unmet social needs. Prescription fill gaps signal medication nonadherence driven by cost or access barriers. Research published in Population Health Management estimated that approximately 50 percent of patients do not take medications as prescribed, with cost cited as one of the most common reasons. The CMS Accountable Health Communities model screened nearly 483,000 Medicare and Medicaid beneficiaries and found that 15 percent were eligible for navigation services based on unmet social needs, with more than half reporting more than one unmet need across housing, food, transportation, utilities, and interpersonal safety. A Cigna analysis of 5.1 million commercially insured members found that 27 percent lived in zip codes where median income was at or below 200 percent of the federal poverty line, with significant overlap between social need populations and high-prevalence conditions including diabetes, behavioral health disorders, and high-risk pregnancy.
The benefit design responses are specific and cost-modest. Non-emergency medical transportation as a covered benefit costs $3 to $5 per member per month. One avoided emergency department visit per year among transportation-constrained members produces a positive return. Medication cost reduction through copay assistance programs, 90-day fill incentives, and transparent PBM arrangements addresses the cost-related nonadherence that drives downstream claims. Community resource navigation through platforms like Findhelp and Unite Us connects members to housing assistance, food banks, utility programs, and legal aid. The CMS Accountable Health Communities evaluation found that navigation referrals were feasible at scale and increased members’ connection to available resources. SDOH screening integrated into wellness visits or annual health assessments requires minimal infrastructure; the Hunger Vital Sign tool is two questions.
The evidence base is stronger for Medicaid and Medicare populations than for commercial employer plans, and where extrapolation is required, the mechanism is the same regardless of payer. The employer who designs SDOH response into a level funded plan will produce better member outcomes and lower claims costs than one who treats social needs as someone else’s problem. Closing the gap requires identifying the specific SDOH signals in claims data, building targeted benefit design responses, and integrating those responses into the level funded core.