Full speed ahead with risk: The inevitable future of our reimbursement
By now, the concept of value based care is well known. Less understood is its connection with taking on risk, and the benefits associated with it.
Valley Preferred is collaborating with several payers and maintains different types of contracts with each. Specific to our topic here, a risk-based contract takes a standard transactional payer agreement a step further. In these types of contracts, a physician and/or the practice is responsible for care quality and cost containment for his or her patient panel. When the tenets of the agreement are met or exceeded (essentially, when we reduce waste, increase efficiency, and emphasize proactive care), we receive correlating dollars. Not meeting qualitative goals can reduce our intended incentive pool.
More specifically, the American Hospital Association explains it this way: “In the value contracting context, risk is incurred through acceptance of a fixed dollar amount in exchange for the partial or total care of an identified patient population at a specified quality level, as defined through a contract. Risk represents the uncertainty about whether, after incurring the care-provision costs, the organization will have a net gain or net loss from this arrangement. Providers will assume downside financial risk for not meeting targeted population health measures, for costs above expenditure benchmarks, and for not meeting quality thresholds. Conversely, upside financial incentives will accrue when providers exceed the population health measures, achieve a lower cost of care than target levels, and exceed quality thresholds.”
Why Valley Preferred is at an advantage
Health care organizations today need to rapidly determine their own “tolerance” for these kinds of arrangements as they become the norm. Tolerance reflects an organization’s ability to handle the risk without it adversely affecting operational or financial performance, or strategic goals. Not all organizations have the capacity for this, which is unfortunate for them, as the industry is not turning back. “It’s absolutely about sustainability,” says Mark Wendling, MD, Executive Director of Valley Preferred. “As we move forward into the future, more of the revenue in health care will be variable.”
Fortunately, Valley Preferred has, as a result of great forethought and planning, an exceptionally high tolerance for risk, evidenced by our stellar performance in these contracts over the last few years. It’s because, long ago, our leaders thought ahead and prepared for this eventuality. Readying for value based contracting required new skills and a new approach to health care delivery, which we worked on over time. We were also able to remain ahead through relationships we have built over the years, such as with Lehigh Valley Health Network, Valley Preferred member physicians and providers, Populytics, and the payers with whom we work. As a result, we are in an excellent positon today.
The best payback is a healthier community
The other distinct advantage we have had in this evolutionary process has been the invaluable insight provided by Populytics’ health care data analytics and population management expertise. This has been crucial in our preparation for taking on risk. Reduction of waste, increased efficiency, and proactive care contribute to our opportunities for success. Populytics’ data has been key in identifying and assessing those at risk of developing disease, preemptively managing those with chronic disease, and implementing broad-based interventions in early stages of disease to potentially avoid or reduce cost and improve health.
Valley Preferred physicians and Advanced Practice Providers are more or less the “soldiers” in the trenches, as they are the ones that act on the data-based information supplied by Populytics. Through data, shared on Populytics’ proprietary Secure Provider Portal, our physicians know which patients are high- and rising-risk, which ones need to be seen for screenings or follow-ups, and how patients are faring after hospital discharge. Having this information at hand gives Valley Preferred physicians the edge, and consequently, the organization the advantage, in coming out on the upside of a risk-based contract.
“Besides the positive results and reimbursement from our collective commitment to increasing quality and value, we are experiencing even higher rewards for managing our risk contracts well,” says Dr. Wendling. “Our community is better off, because our patients are the recipients of improved administration and care-delivery efficiencies, better quality, better outcomes, and better access to care.”
For more information or questions about what you can do to succeed, please contact one of your Physician Advocacy Liaisons (PALs) listed on the Clinical Leaders and Liaisons tab.
Skills Required for Risk Contracting*
• Actuarial expertise/insurance risk management
• Networking and contracting strategies (thanks to Valley Preferred leaders)
• Predictive modeling
• Aggregation and analysis of claims and EHR data for population-level intelligence (thanks to Populytics)
• Advanced data management capabilities
• Physician-level reward systems (thanks to Achieving Clinical Excellence®)
• Operation of analytic software for performance measurement
• Analysis of disease registries for practice variation reduction opportunities (thanks to Populytics Care Coordination)