At Social Finance, we work with local and state governments to realign systems for greater impact. Many of our government partners ask the same questions: which programs will best advance policy goals? How can governments carefully measure what matters in social service delivery? And how can agencies and providers reap the benefits of their work?
The outcomes rate card offers a solution to these challenges. This tool enables governments to pay providers varied amounts based on the achievement of predefined metrics.
An outcomes rate card is a partnership between a government (or similar agency) and a service provider (or network of providers), as seen in Figure 1. Rate cards can exist alongside fee-for-service funding—for instance, if a health provider has an annual $100,000 contract with the state, a small portion of total funding could be allotted to make payments defined by the rate card. Or the rate card may offer bonus funding on top of the contract amount. Importantly, the rate card includes metrics relevant to the government’s policy goals and to the provider delivering services, such as early prenatal care or smoking cessation in home visiting programs. This allows payment to be tied to a metric of achievement: for example, for each mother served in home visiting who initiates early prenatal care or stops smoking, the service provider will receive a financial reward. By offering financial incentives to providers for achieving outcomes, governments can identify and reward high-quality providers and strengthen service delivery for families.
Figure 1: How the Rate Card Works
With our partners, we design rate cards (or similar initiatives called score cards) focused on family stability, employment, children’s behavioral health, reentry, and maternal and child health. Over the past four years, we have launched rate cards for home visiting services in Connecticut; Kent County, Michigan; Missouri; and Riverside County, California. We began working with the Connecticut Office of Early Childhood (OEC) in 2017 to implement a rate card focused on early childhood services given OEC’s goal of shifting from paying for services to paying for results—a change in the status quo. Since then, OEC and Social Finance have released six rate cards for providers, updating and iterating our approach year after year and gathering lessons on what works. The rate card development process includes several steps:
1. Identify services: Social Finance identified OEC’s home visiting portfolio as a promising fit for rate cards due to its flexible funding (i.e., state dollars and the federal Maternal, Infant, and Early Childhood Home Visiting (MIECHV) Program), evidence-based program models (e.g., Child First, Early Head Start Home-Based Option, Nurse-Family Partnership, Parents as Teachers), upcoming procurement opportunities, and policy goals. OEC’s home visiting portfolio deploys nearly $20 million to home visiting programs to serve nearly 3,000 caregivers each year.
2. Work with contracting authority: OEC involved its contracting and procurement teams early in the design, which facilitated inclusion of rate cards into contracts.
3. Pinpoint the funding source(s): Using flexible, multi-year state and federal funds, OEC could feasibly direct how funding is spent. Across jurisdictions, sources of rate card payments can be (i) remitted funds from prior years’ contracts, (ii) existing contract dollars (i.e., by making contracts partially dependent on metric performance), and/or (iii) secured outside funds, such as philanthropic dollars.
4. Engage service providers: Perspectives from service providers can inform how to define rate card metrics. Over OEC’s six rate cards, OEC has solicited feedback from service providers to understand what has worked (and what has not) in rate card implementation.
5. Select key metrics: When designing rate cards, Social Finance helps governments to prioritize metrics that achieve goals for families, service providers, and government. Ideal outcomes link to program evidence, align with beneficiaries’ goals, can be measured using data, create social and financial benefits to the jurisdiction, and align with policy priorities. Metrics included in OEC’s first home visiting rate card included full-term birth and reduction in child maltreatment.
6. Set up data systems and payment terms: OEC used historical data to understand the system’s baseline performance. And based on total available funding for the rate card and the number of expected achievements, OEC could price each metric. Prices in previous rate cards varied based on total funding, variation in payment timing, and number of metrics included.
While rate cards are not a silver bullet for outcome improvement, they can align a system on key outcomes. Social Finance is dedicated to continuously improving rate card design to maximize family-level impact, as seen in our four-year partnership with OEC. Our next blog post highlights lessons from this partnership, including a review of OEC’s most recent rate card—launched in July 2021—and overall takeaways from four years of implementing outcomes rate cards in Connecticut.