How to scale up value-based contracts across your provider network



On December 14th, Emily Chen, VP of Business Development at MediQuire, delivered a webinar on strategies to be successful in value-based contracts. She discussed the key questions that health plans need to be prepared for, including:

  • Why is the shift to value-based payments happening now?
  • What requirements are states imposing for value-based contracts and how do they differ?
  • What challenges do providers and payers face in the transition to value-based care?
  • What are the key components to successful value-based contracts for payers and providers?
  • Are there any tools that can help both payers and providers achieve success?

Why is the shift to value-based payments happening now?

The 2015 Medicare Access and CHIP Reauthorization Act (MACRA) was signed by President Obama on April 16, 2015 and repeals the Sustainable Growth Rate formula. MACRA will adjust provider payments based on claims data beginning with 2018 results, and it provides significant financial incentives to participate in alternative payment models (APM).

Under MACRA, 50% of Medicare payments must be in APM (Category 3 or 4) and 90% of Medicare payments must be linked to value (Category 2 to 4) by 2018. Following the lead of CMS, major payers including Aetna, Cigna, UnitedHealthcare, and the Blue Cross Blue Shield Association have all set goals for significant portions of their payments to be value-based in the coming years.

According to KaufmanHall’s 2017 State of Cost Transformation in U.S. Hospitals survey, 96% of hospital executives say “cost transformation is a significant to very significant need in their organization today.” To aid in this transformation, providers can use transitional payment models to gain comfort in taking on risk. The below APM framework from the Health Care Payment Learning & Action Network illustrates the different categories of payment models with increasing levels of risk.

What requirements are states imposing for value-based contracts and how do they differ?

A number of states have set APM targets of 50-90% of provider payments, network providers or plan members. Already, thirteen states are testing value-based payments for dual populations ranging from capitated payments to managed fee-for-service to APM. Thirteen states have mandated a specific APM target percentage in Medicaid MCO contracts for 2017, up from five states in 2016. For example, Delaware will require that 80% of all MCO members receive services from a provider under an APM by 2019. California’s upcoming Medi-Cal 2020 Waiver also includes a requirement that MCOs must have VBP arrangements for 50-60% of all managed care lives assigned to receive care through a Designated Public Hospital participating in the PRIME program. Starting in 2018, nine more states will include APM goals in their MCO contracts.

In spite of this, currently only 10% of Medicaid, 20% of commercial and 30% of Medicare FFS payments are in value-based care. Why is this the case?

What challenges do providers and payers face in the transition to value-based care?

Success in value-based care necessitates a collaborative relationship, which is difficult given the historic lack of trust between payers and providers. Most health plans and providers do not share EHR and claims data with one another, so neither side has the full clinical and financial picture of the contracted population. The two parties also come at the contract from different perspectives. Payers are focused on meeting HEDIS, RAF and utilization targets across their members. Providers are more concerned with clinical outcomes, especially for patients that come into the clinics.

In addition, each payer signs different contracts across its provider network and vice versa. Each contract has different methodologies, goals and targets for quality measures, risk adjustment and cost savings, so harmonizing these for effective population health management can prove challenging. These challenges are aggravated by the multiple provider portals that providers must log into to track ongoing performance.

To achieve mutual success, payers and providers need a platform to manage their value-based contracts in one place, incorporating both clinical and financial insights. This transparency will allow for better decision-making, which is beneficial to all parties - patients included.

What are the key components to successful value-based contracts for payers and providers?

It is essential that both payers and providers view the contract as a mutual partnership where data, information and goals are shared because they are invested in the success of one another. Cost savings and quality goals need to mutually agreed upon and reassessed to make sure that provider organizations are set up for success. Clinicians need to buy in and invest in the necessary care management and population health resources. Clinical staff need to be educated on what value-based contracts mean to them and the importance of risk adjustments and managing the total cost of care. Payers can demonstrate commitment to providers’ success with performance periods spanning several years to allow providers enough time to build and implement the necessary practice changes. 

While it may be tempting, payers cannot implement a one-size-fits-all approach to value-based contracts. Providers should only bear financial responsibility for costs they can reasonably control. An attribution model for primary care may not work for a specialty group or health system. Customizing contracts is important to ensure that the appropriate provider incentives and risk mitigants are in place. Some providers may prefer rewards based on shared savings, while others may opt for one tied to medical loss ratios. The right hurdle rate for one provider to access the bonus pool may not be the same as another, and the same is true for stop-loss deductibles. 

With patience, a trusting relationship and open communication, providers will feel more comfortable taking on additional risk as they move toward APM. 

Are there any tools that can help both payers and providers achieve success?

MediQuire’s Transpera is a smart contracting technology platform that helps payers recruit providers into value-based contracts. We enable payers to design and negotiate value-based contracts that maximize ROI and track progress of those contracts using claims and EHR data in real-time. Payers using Transpera have more accurate financial planning with weekly EHR data to track and predict HEDIS performance. With these insights, payers can stratify and contract with providers based on performance and conduct periodic reviews for midcourse corrections.

Transpera allows payers to:

  1. Recruit providers to value-based contracts: Easily design and deploy customized value-based contracts tailored to provider operational and risk appetite
  2. Reduce medical cost: Identify actionable steerage and avoidable patient utilization opportunities for high cost and emerging risk patients
  3. Improve HEDIS scores: Obtain HEDIS supplementary data from member EHR records in real-time, so you know where you stand well ahead of HEDIS season
  4. Optimize risk adjustment: Surface instances of inappropriate coding related to risk adjustment factors that you and providers can take action on
  5. Address patient churn: Understand and manage patients that are new to your population based on continuous EHR data

View MediQuire’s webinar on value-based contracts and see a demonstration of Transpera’s features here. For more information contact MediQuire here.