In the ongoing transition to value-based care (VBC), provider contracting poses challenges for health plans and providers. In my past role as the VP of Quality at a large health plan, I was part of the team that reviewed provider contracts that included risk around quality. Adding my role to the review process reduced the frustration of the Network and Quality teams because I could identify the reporting requirements that the health plan couldn’t meet and create alignment with measure priorities.
Value-based contracting rapidly evolves, with federal and state regulatory bodies imposing new mandates. The Centers for Medicare and Medicaid Services (CMS) intends to shift traditional Medicare and many Medicaid beneficiaries into VBC arrangements by 2030. The growing emphasis on quality further fuels the demand for VBC contracts as payers push for them and providers recognize their significance in driving volume and revenue.
This acceleration toward VBC results in complex contracts with intricate data management needs to achieve quality outcomes. Here’s how quality considerations and the associated data influence VBC contracts.
Understanding VBC contracting concepts
Most contracts fall along a spectrum, increasing complexity as risk sharing expands. The following are the most common contracting concepts, from minimal to more comprehensive risk sharing:
- Gainsharing: For providers just starting with VBC, they share in the savings and not the risk of loss, giving them an upside-only arrangement.
- Upside/Downside Risk Models: Providers share in both savings and risk. In these contracts, providers receive a per-patient allotment of funds and retain the defined portion of the surplus generated. However, if they spend more than the allotment, they are responsible for a specified portion of the deficit.
- Bundled Payments: The provider receives a fixed payment for all services within a single episode of care or for a specific period, such as joint-replacement surgery. If the provider successfully delivers care and prevents complications or errors, they keep a portion of the savings. However, they are responsible for the deficit if costs exceed the fixed amount.
- Capitation – Professional-Only Risk: The payer establishes risk pools, typically based on a monthly payment per member (PMPM). The amount payers give providers is based on the average expected healthcare utilization and risk profile of the patient pool, among other factors. Providers are only responsible for the professional side risk.
- Capitation – Global Risk: This arrangement is the same as the Professional-Only Risk above, except providers and payers fully share risk in these contracts.
As each party takes on financial risk, the need for VBC expertise and technology to support care and contract management increases. There are several contract considerations to help payers and providers build the proper foundation for VBC success.
Identify the best approach for all parties.
While achieving a perfect contract for all parties may be unlikely, better collaboration is more likely to result in win-win scenarios. Initial negotiations often begin with the health plan’s template, aligned to their goals, but healthcare is diverse. Providers and payers must ensure the right stakeholders are involved to ensure quality metrics are tailored to the provider’s specific patient population, such as children or diabetics. Payers and providers must also align on standards, like NCQA or CMS Core Set, so parties can determine the most appropriate risk-sharing levels, ensure the measures are reportable, and gather necessary data.
Consider how to match measures to members
Plans with multiple lines of business must consider the measures that best reflect the desired outcomes for each population and look for commonality where possible. Another consideration is, when negotiating with a provider practice, payers should consider the specialists. If the practice has an endocrinologist, it benefits all parties to have quality measures related to diabetes in the contract.
Focus on carrots, not sticks.
The proper contract will encourage compliance through incentives rather than penalties. Payers should tie provider incentives to defined quality measures and promote ease of reporting, such as CPT 2 codes and providing supplemental data to health plans to lower the cost of data acquisition. This approach, emphasized by Jessica Columbus of Apex Health, promotes efficiency for providers, such as using point-of-care alerts to guide actions aligning with contract goals.
One data feed to rule them all
The ongoing challenge in VBC is building the required infrastructure and technology. Complicating matters is the need for a standardized minimum data set, with health plans having differing specifications for supplemental data files. Even with standardized measures, consolidating data from multiple sources is highly challenging. Efficient use of available data is crucial for health plans to avoid frequent revisits to providers.
Consider the implications for data aggregation. Suppose a provider collaborates with seven plans, each with a distinct gap-in-care list and inconsistent header data. In that case, the payer must invest resources in consolidating this data to manage quality measures effectively.
Nick D’Ambra, former VP of Quality Improvement at AbsoluteCare, shared an essential experience at the RISE HEDIS & Quality Improvement Summit. While working on a state-mandated performance improvement project to streamline clinical practice guidelines, the central question emerged: Could a broader opportunity exist to collaborate with other managed care organizations and create a unified file format meeting all their needs?
Bridging the data management gap
Collecting and reporting data for Value-Based Care (VBC) is challenging, especially with the increasing volume of data as VBC becomes more common. However, the impact of AI technologies like machine learning, natural language processing, and optical character recognition, including generative AI like ChatGPT and Bing Chat, is significant. These technologies excel at aggregating and synthesizing patient data from various sources.
Unlike spreadsheets, which require manual input and manipulation, health plans can automate AI to operationalize data intake and tasks, identify patterns, highlight relevant information, and streamline processes. For payers and providers managing quality measures in contracts, leveraging data both prospectively and retrospectively is crucial, and AI enables this at scale.
Winning at VBC
Organizations that effectively leverage AI to precisely identify, monitor, and report quality outcomes will position themselves for success in attaining value-based contracts, thereby enhancing patient health and bolstering financial performance.
About Elissa Toder, MBA
Elissa Toder, MBA, is the Vice President of Quality Improvement Strategy & Solutions at Reveleer. Elissa holds a BS in Health Policy Administration from Penn State University and earned her MBA at Clark University.
