Factors Associated With Contracting Between Area Agencies on Aging and Health Care Entities

Abstract

Contracting with health care entities offers an avenue for Area Agencies on Aging (AAAs) to be reimbursed for providing services that improve health and avoid the need for expensive health care among older adults. However, we have little systematic evidence about the organizational characteristics and policy environments that facilitate these contractual relationships. Using survey data on AAAs from 2017–18, we found that contracting with health insurers was significantly more likely if AAAs had strong business capabilities and access to a state CBO contracting network. AAA contracting with health care delivery organizations trended with different factors, becoming more likely if states had implemented more integrated health care delivery programs, and becoming less likely if states had managed long-term services and supports. Contracting could be facilitated by supports for AAA business capabilities, as well as state policies that increase demand for their services among health insurers and health care delivery organizations.

Keywords

care coordination case management health health services policy area agencies on aging

What this paper adds

Capabilities of Area Agencies on Aging (AAAs) and state health policy environments that shape incentives for health care organizations are both important in the process of establishing contracts between AAAs and health care entities.

Contracting with health insurers was associated with AAAs having strong business capabilities and access to a state CBO contracting network.

Contracting with health care delivery organizations was associated with health care policies and programs implemented in the AAA’s state.

Applications of study findings

Policies to help health care funding support social services for older adults should consider both demand and supply.

Different strategies are likely needed to foster contractual partnerships between AAAs and health care provider organizations versus health insurers.

Introduction

Partnerships between the health care sector and community-based organizations such as Area Agencies on Aging (AAAs) have been identified as a strategy to improve population health, reduce health disparities, and use resources efficiently (Brewster et al., 2018; Landers et al., 2020; National Academies of Sciences, Engineering, and Medicine, 2019). Efforts to link patients identified in health care settings to social services in the community have grown in recent years, including federal innovations like the Accountable Health Communities demonstration (Alley et al., 2016), a variety of state-based Medicaid initiatives (Alderwick et al., 2019; Byhoff & Taylor, 2018; Chuang et al., 2020), and programs launched within hospitals and health systems (Finkelstein et al., 2020; Kangovi et al., 2017; Schickedanz et al., 2019). Most of these initiatives aim to widen the pipeline of referrals flowing from health care settings to Community-Based Organizations (CBOs), supporting care integration goals and allowing CBOs to expand their reach. However, CBOs also require new funding flows if they are to provide more services for more clients (Kreuter et al., 2020). Contracting with health care organizations offers an avenue for CBOs to be reimbursed for health-related social services, but little is known about the prevalence or determinants of CBO contracting with health care organizations at a national scale. Emerging evidence suggests that these contracting relationships can be challenging, and that further study is needed to understand how to make them work better (Durfey et al., 2021; Scala-Foley et al., 2021; Snell-Rood et al., 2020; Taylor & Byhoff, 2021).

Area Agencies on Aging (AAAs)—CBOs established by the Older Americans Act in 1973 that provide and coordinate social services for older adults and caregivers—have increased their partnerships and service contracts with health care organizations in recent years (Brewster et al., 2019, 2020; Valluru et al., 2019) in order to meet the needs of the rising population of older adults (Koumoutzis et al., 2021; Schonfeld et al., 2021). When contracting with health care entities, AAAs most commonly provide case management services or care transition planning, but they also contract to provide a range of other services including assessment for long-term services and supports (LTSS) eligibility, nutrition programs, personal care, transportation, adult day care, and more (Kunkel et al., 2018). AAAs represent over 600 agencies in 43 states; the number and diversity of these organizations across a range of settings offers a valuable context to understand what factors facilitate CBO contracting with health care entities across the country.

We anticipate that certain characteristics of AAAs influence both their inclination and ability to secure contracts with health care entities—for example, the AAAs’ capabilities to market their services and conform to data management practices expected in the health care sector, or support from a network of CBOs that contract together in their state. CBO networks have been suggested as a mechanism to share some of the administrative costs and infrastructure required to contract with health care entities across multiple CBOs (Robertson & Chernof, 2020); networks also provide a simpler process for health care entities to manage relationships with multiple organizations and cover wider territories. These supply-side factors represent opportunities for organizational development on the part of AAAs, an agenda supported by the Aging and Disability Business Institute (2021) and other CBO capacity building initiatives (Administration for Community Living, 2021; ADvancing States, n.d.).

On the other hand, we expect that demand-side factors—the extent to which health care organizations see strategic value in contracting with AAAs—also influence contract formation. Factors influencing demand on the part of health care organizations could include state health policy landscape and local market conditions. For example, state health policies supporting holistic, integrated care models could create an environment that encourages health care organizations to seek relationships with AAAs and other CBOs experienced in supplying social care. States have adopted a range of related policies to encourage care integration in recent years including the Health Homes Program, Medicaid delivery system reform waivers, Patient-Centered Medical Homes, the State Innovation Model, and Comprehensive Primary Care Plus. The accumulation of these policies could encourage health care organizations to contract with CBOs. State-managed long-term services and supports programs, which deliver Medicaid long-term care through capitated managed care plans (MLTSS), may also encourage insurers to contract with AAAs for efficient community-based services. The specific ways in which state-level context affects health care organizations’ demand for CBO contracts likely depend on whether the health care partner is an insurer or provides care directly (e.g., a health care delivery organization such as hospitals, physician practices). Prior research has not examined this distinction.

We used novel survey data on AAA contracts with health care organizations in 2017–18 to conduct a cross-sectional study exploring factors associated with AAAs having contracts with health insurers and health care delivery organizations. Findings can be used to understand the appropriate targets for programs and policies aimed at improving integrated care outcomes and enhancing funding flows from health care to AAAs.

Methods

Study Design and Sample

We conducted a cross-sectional analysis of factors associated with AAAs having contracts with health care organizations, using responses from a survey of AAA contracting behavior conducted in 2017–18. We linked AAA self-reported contracting status with survey-derived data on the AAA’s organizational characteristics, as well as data on sociodemographic characteristics and health care providers present in the AAA’s Planning and Service Areas (i.e., the counties covered by the AAA), presence of CBO networks contracting with health care entities in the AAA’s state, and data on whether the AAA’s state had implemented policies and programs intended to foster integrated care for patients with complex needs. Our sample included all AAAs who responded to the contracting survey and had data available on other variables (N = 334, 54% of the nation’s 622 AAAs).

Dependent Variables

We measured whether AAAs had contracts with health care entities using data from the 2017 and 2018 waves of the Request for Information Survey on CBOs and Health Care Contracting (RFI Survey) (Kunkel et al., 2018). The RFI Survey asked AAAs to indicate whether or not they had a contract with a health care entity, with contract defined as “a legally binding or otherwise valid agreement between two or more entities with the intent to exchange payment for services or programs.” If yes, the AAA was directed to select their contract partner(s) from a list of 14 types of health care entities. We created one binary variable recording whether the AAA had a contract with any health insurers and one binary variable recording whether the AAA had a contract with any health care delivery organizations. Insurers included commercial health insurance plans, Medicare Advantage plans, Medicare/Medicaid Duals plans, Medicaid Managed Care Organizations, Medicare Fee for Service, State Medicaid Programs, and Health Care Insurance Exchanges or Marketplaces. Delivery organizations included Accountable Care Organizations (ACO), health care centers or clinics, hospitals or hospital systems, long-term care facilities, primary care entities such as physicians or physician groups, Veterans Administration Medical Centers, and the Program for All-Inclusive Care of the Elderly (PACE).

Independent Variables

Area Agencies on Aging Organizational Characteristics

We obtained data on AAA organizational characteristics and business capabilities from the responses to several waves of the National Survey of Area Agencies on Aging. Time-invariant characteristics such as organizational structure and area served were taken from the respondent’s most recent survey out of 2016, 2013, 2010, and 2008 (USAging, 2017). Business capabilities were measured in 2016 with a 13-item scale covering activities such as market analysis, business planning, rate setting, and marketing, with scale scores corresponding to higher levels of business capabilities (scale detailed in the Appendix). To measure whether the AAAs potentially had access to CBO networks that pursue regional or statewide contracts with health care entities together, we created a variable recording whether the AAA was in a state where any other AAAs had reported contracting as part of a CBO network in the RFI survey. Sociodemographic characteristics of the AAA’s Planning and Service Area, including percent of the population below poverty and percent of the population age 60 and above, were calculated by taking population-weighted averages of the counties that made up each AAA’s Planning and Service Area. Health care resources present in the AAA’s Planning and Service Area, including primary care physicians and hospital beds per 10,000 people, were calculated as population-weighted averages from county-level data in the Area Health Resources File (Health Resources and Services Administration (HRSA), n.d.).

State-Level Policy Context

State-level policy data obtained from Kaiser Family Foundation (Kaiser Family Foundation, 2019) were linked with AAAs according to their state. From these data, we recorded whether the state had implemented MLTSS, signaling the presence of LTSS managed care organizations that might seek to contract with AAAs. To obtain a measure of the extent to which state policy had encouraged health care organizations to adopt integrated care models, signaling pressure on health care provider organizations to potentially contract with AAAs, we created a count variable (range: 1–5) recording how many of the following programs had been implemented in the state: (1) Health Homes Program, (2) Medicaid 1115 delivery system reform waivers, (3) Medicaid Patient Centered Medical Homes, (4) State Innovation Model, and (5) Comprehensive Primary Care Plus.

Analysis

We began by calculating descriptive statistics on the prevalence of contracting with different types of health care entities. We used logistic regression models to examine associations between independent variables and the two primary dependent variables in turn: whether AAAs had any contracts with health insurers, and whether AAAs had any contracts with health care delivery organizations. We clustered standard errors by state to account for the clustering of AAAs within states, and excluded observations missing data on any of the variables included in the models. We also re-estimated the models using hierarchical (mixed) models with random intercepts for state.

Results

A total of 334 AAAs were eligible for our study by virtue of having complete data for all variables included in the model (Table 1). Of these, 37.7% of agencies were independent nonprofits, 26.3% were part of local government, and 29.6% were part of a council of governments or regional planning and development agency. Overall, 147 AAAs in the sample (44%) reported contracting with at least one type of health care entity; 30.8% were contracting with a delivery organization and 29.0% were contracting with an insurer. The AAAs included in our study were generally representative of the broader population of AAAs in terms of variables that could be observed in both samples, as illustrated in Table 1. Figure 1 shows the proportion of AAAs that reported contracts with specific types of health care entities. The type of health care delivery organization mostly commonly contracting with AAAs was a hospital or health system; the type of insurer most commonly contracting with AAAs was a Medicaid Managed Care Organization.

Table 1.

Characteristics of AAAs included in study and broader population of AAAs.

	Study Sample (N = 334 AAAs)		All AAAs^a (N = 605 AAAs)
Characteristics of AAA	N	%	N	%
AAA organizational structure
Independent nonprofit	126	37.7	242	40
Local government	88	26.3	189	31.2
Council of governments or RPDA	99	29.6	145	24
Other	21	6.3	29	4.8
AAA area served
Urban/Suburban	57	17.1	109	18
Rural	151	45.2	282	46.6
Mix	126	37.7	214	35.4
Full-time staff
0–20	158	47.9
21–40	62	18.8
41+	110	33.3
Census region
Northeast	75	22.5	166	27.4
Midwest	65	19.5	101	16.7
South	122	36.5	217	35.9
West	72	21.6	121	20
Business capabilities: Percent of activities in place
0%	37	11.1
1–24.9%	174	52.1
25–49.9%	76	22.8
50–100%	47	14.1
Any contract with health care entity	147	44
Has contract with any delivery organization	103	30.8
Has contract with any insurer	97	29
Contracts as part of a CBO network	56	16.8
AAA’s planning and service area	Mean	SD	Mean	SD
% population below poverty	14.8	4.6	14.7	4.9
% population aged 60 or over	23.1	3.9	23.2	4.0
PCPs per 10k persons	6.9	2.5	6.8	2.6
Hospital beds per 10k persons	29.3	14.6	29.5	15.7
AAA’s state	N	%	N	%
CBO Network contracting by other AAA(s) in state	179	53.6
State has any MLTSS model	213	63.8	378	62.5
Count of state delivery system reforms implemented
0–1	73	21.9	132	21.8
2–3	198	59.3	351	58
4–5	63	18.9	122	20.2

RPDA: Regional Planning and Development Agency; PCP: Primary Care Provider; MLTSS: Managed Long-term Services and Supports.

^aAll AAAs with a survey response in any year providing organizational structure and area served. A total of 622 AAAs existed in the study period, 17 of which had no survey responses.

Figure 1.

Percent of AAAs contracting with different types of health care delivery organizations and health insurers. (VA: Veterans Affairs; PACE: Program for All-Inclusive Care of the Elderly; MCO: Managed Care Organization).

Contracts With Health Insurers

Logistic regression models showed that different factors were associated with the likelihood of AAAs contracting with insurers versus contracting with delivery organizations (Table 2, full regression results in Appendix Table A3). The odds of having a contract with an insurer were higher for AAAs scoring in the top quartile of the business capabilities scale (O.R. 6.41, p < 0.001) compared with AAAs scoring in the bottom quartile. The odds of having a contract with an insurer were also higher for AAAs located in states where other AAAs reported contracting through a CBO network (O.R. 5.29, p = 0.001) compared with AAAs located in states where no other AAAs reported contracting through a CBO network (Figure 2). Both of these results remained similar in magnitude and statistical significance across alternative model specifications tested in sensitivity analyses. To test the robustness of our measure of access to CBO networks in the state, we tried an alternate model specification replacing that measure with a variable indicating whether any other AAA in the state reported any contracting (instead of contracting as part of a CBO network). Being located in a state where another AAA merely reported contracting (not necessarily as part of a CBO network) was not associated with reporting an insurer contract.

Table 2.

Characteristics of organizations and environment associated with AAAs contracting with health care delivery organizations or health insurers.

Characteristic	Value	AAA has Contract with Any Delivery Organization	AAA has Contract with Any Insurer
Characteristic	Value	Odds Ratio	Odds Ratio
Organizational structure	Ind. Nonprofit	1.00	1.00
	Local govt	0.34***	0.36*
	COG/RPDA	0.35*	0.44
	Other	0.36	0.54
Area served	Urb/Suburb	1.00	1.00
	Rural	0.29*	0.30**
	Mix	0.48	1.00
AAA Business Capabilities Scale	Quartile 1	1.00	1.00
	Quartile 2	1.09	0.75
	Quartile 3	1.10	2.18*
	Quartile 4	2.13	6.41***
Other AAAs in state contract as network	No	1.00	1.00
	Yes	1.17	5.29***
State has MLTSS	No	1.00	1.00
	Yes	0.41*	0.87
Count State Delivery System Reforms	0–1	1.00	1.00
	2–3	1.28	1.28
	4–5	3.97**	3.01
Observations		334	334

*p < 0.05 ** p < 0.01 *** p < 0.001.

Exponentiated regression coefficients (odds ratios) from two logistic regression models are presented. The first model estimated the likelihood of AAAs reporting contacts with any health care delivery organization, and the second model estimated the likelihood of AAAs reporting contracts with any health insurer. Models cluster standard errors by state to account for clustering of AAAs within states. In addition to the variables shown in the table, both models are also adjusted for quartiles of % population below poverty, % of population age 60 and older, primary care physicians per 10,000 population, and hospital beds per 10,000 population (full regression results provided in Table A3).

Figure 2.

Percent of AAAs with selected characteristics contracting with health care entities. Percent of AAAs contracting with health care entities, shown according to quartiles of AAA business capabilities, and by whether the AAA’s state had a network for CBOs to contract together with health care entities. The graph shows the unadjusted percent of AAAs with selected characteristics (x-axis) that reported contracts with delivery organizations (yellow bars) and insurers (green bars). The prevalence of contracts with insurers increases substantially among AAAs that have higher business capabilities and a CBO network in their state. The prevalence of contracts with delivery organizations appears to be less sensitive to these AAA characteristics.

Two features of an AAA’s Planning and Service Area—percent of population age 60 and over, and hospital beds per 10,000 persons—were associated with having a health insurer contract in the main analysis, but these associations became weaker and less precise using alternative model specifications.

Contracts With Health Care Delivery Organizations

The odds of an AAA having a contract with a health care delivery organization were significantly higher for AAAs located in states that had implemented 4 or 5 integrated delivery system policies (O.R. 3.97, p < 0.01) compared with states that had implemented 0 or 1 policy. The odds of contracting with a delivery organization were significantly lower for AAAs in states that had implemented MLTSS (O.R. 0.41, p < 0.05).

Two features of AAAs were associated with lower odds of having a contract with a health care delivery organization as well as lower odds of having a contract with a health insurer. AAAs that were part of local government agencies were significantly less likely to have contracts with both types of entities relative to AAAs that were structured as independent nonprofits. AAAs serving primarily rural areas were significantly less likely to have contracts with both types of entities compared to AAAs serving urban and suburban areas.

Discussion

Our results indicate that characteristics of AAAs (supply-side factors) as well as state health policy environments (demand-side factors) are both important in the process of establishing contracts between AAAs and health care entities. These findings suggest that strategies to foster multi-sector relationships to support holistic health and social services will need to be multi-pronged to stimulate demand from health care entities and also to enhance the capacity of AAAs and other CBOs to meet this demand. Additionally, differences in the factors associated with AAAs contracting with insurers as opposed to delivery organizations indicate that CBOs developing their capabilities to secure contracts, and policymakers looking to foster such relationships, may need tailored strategies for insurers and delivery organizations.

For AAAs, having a contract with one or more insurer was highly associated with the AAA’s business capabilities, a measure of activities that strengthen the organization’s ability to define the value of its services and position itself to obtain funding streams beyond core support provided through federal Older Americans Act and other government funding. The causal relationships involved are likely multi-directional and mutually reinforcing. Health insurers—which typically have much expertise contracting with health care providers—may prioritize contract partners who can fit into existing processes designed for health care providers. At the same time, AAAs that see a realistic opportunity to obtain health insurer contracts may make special efforts to elevate their business capabilities to match insurer requirements. The presence of a CBO network in the state through which AAAs contract together—also highly associated with AAAs having an insurer contract—could enhance the likelihood of AAAs contracting with insurers by elevating business capabilities of CBOs involved in the network and simplifying the contracting process for insurers and thus reducing their transaction costs. We did not have data on how states may have seeded CBO networks, encouraged AAAs to develop business capabilities, or encouraged health insurers to contract with AAAs, but the confluence of relationships observed in our data suggests intentional state-level coordination or policies could be at work.

Having contracts with health care delivery organizations such as hospitals and health systems was not significantly associated with AAA business capabilities or the presence of a CBO contracting network in the state, suggesting that these factors could be less important to delivery organizations, which may be negotiating contracts at smaller scales for local areas. However, the accumulation of pressures and supports for holistic, integrated care models through delivery system reforms in the AAA’s state was highly associated with contracting with delivery organizations. These results depict a scenario where an accumulation of delivery system reforms may have created a state-level environment where health care delivery organizations find it in their interest to seek out service contracts with AAAs, and these delivery organizations are willing and able to work with AAAs that have a range of baseline business capabilities. Researchers examining other provider behaviors may also find it useful to consider accumulation of related policies and programs at the state level, in addition to evaluations that attempt to isolate impacts of specific programs. Notably, having managed LTSS in a state was associated with reduced likelihood of AAAs having contracts with health care delivery organizations, possibly due to the fact that in these states, managed LTSS plans themselves were performing the services that might be contracted out to AAAs. It is also possible that unmeasured features of states that have adopted MLTSS also influence contracting behavior; states that have adopted MLTSS are larger and have higher gross state incomes than states that have not adopted MLTSS.

Our results should be interpreted in light of several limitations. First, this cross-sectional study reveals associations rather than causal connections. However, in an area of such rapid change with significant policy and practice implications, deeper understanding of cross-sectional co-variations provides valuable insight and direction for further research. Second, our contracting data reflects statuses as of 2018; this is an area of active development that calls for continued monitoring of changes and relationships, particularly in light of potential pandemic impacts on AAA partnerships (Pendergrast, 2021). Third, 134 AAAs for whom we had contracting data had to be excluded from the analysis because they were missing data from the 2016 survey on business capabilities, reducing our analytic sample from 468 to 334. As a sensitivity check, we re-estimated the models without the business capabilities scale, and confirm that our results for other variables remained consistent when analyses used the larger sample of AAAs. Finally, our data on AAA contracting was survey-reported and could be influenced by misclassification bias, though respondents were advised to consult with colleagues to represent the organization as accurately as possible.

Our study adds to existing evidence by illuminating two dimensions of variation that policymakers, researchers, and managers need to consider in designing and studying programs to deploy funding from the health care sector to pay AAAs and other CBOs. The first dimension of variation is the extent to which initiatives target supply-side factors that make AAAs attractive contract partners or demand-side factors that motivate health care entities to seek out contracts with AAAs. The second dimension of variation is how dynamics of establishing contracts with AAAs are different for health insurers and health care delivery organizations. Ignoring variation across these two dimensions could prompt stakeholders to declare failure too early as might happen, for example, if AAA capacity development programs are slow to translate to intended partnerships because demand from health care entities is insufficient. The complexity of factors influencing development of contractual relationships in which health care entities pay AAAs to provide services suggests that no single policy solution or program structure will be sufficient to enhance this activity. Rather, efforts to promote partnerships between health care and CBOs will need to address multiple axes of variation.

Supplemental Material

sj-pdf-1-jag-10.1177_07334648221096137 – Supplemental Material for Factors Associated With Contracting Between Area Agencies on Aging and Health Care Entities

Supplemental Material, sj-pdf-1-jag-10.1177_07334648221096137 for Factors Associated With Contracting Between Area Agencies on Aging and Health Care Entities by Amanda L. Brewster, Traci L. Wilson, Suzanne R. Kunkel, Leslie A. Curry and Chris Rubeo in Journal of Applied Gerontology

Supplemental Material

sj-pdf-2-jag-10.1177_07334648221096137 – Supplemental Material for Factors Associated With Contracting Between Area Agencies on Aging and Health Care Entities

Supplemental Material, sj-pdf-2-jag-10.1177_07334648221096137 for Factors Associated With Contracting Between Area Agencies on Aging and Health Care Entities by Amanda L. Brewster, Traci L. Wilson, Suzanne R. Kunkel, Leslie A. Curry and Chris Rubeo in Journal of Applied Gerontology

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This study was funded by research grants from the RRF Foundation for Aging and the Donaghue Foundation. The Request for Information Survey was funded through a grant from The John A. Hartford Foundation. The National Survey of Area Agencies on Aging was made possible, in part, by funding from the Administration for Community Living, Department of Health and Human Services. The content is solely the responsibility of the authors.

Ethical approval

Research procedures were approved by the UC Berkeley Office for Protection of Human Subjects (Protocol 2019-09-12538).

ORCID iDs

Amanda L. Brewster

Traci L. Wilson

Supplemental Material

Supplemental material for this article is available online.

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