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Healthcare providers face a looming deadline in the long-anticipated shift to value-based care from the current fee-for-service payment model. The Health Care Payment Learning & Action Network (HCPLAN or LAN) which was established and funded by Centers for Medicare and Medicaid Services (CMS) in 2015, has established a goal to have 100% of providers participating in upside and downside value-based contracts by 2025.¹ Providers are still coping with the impact of COVID-19, but they need to look ahead and continue taking steps now to prepare for the transformation. Providers that delay will discover themselves at a competitive disadvantage.

In 2021, the participation rate of providers in value-based contracts is less than 20%. That means an enormous amount of risk will shift to provider organizations and others in the healthcare industry in the next four years.

COVID-19 forced providers to turn their attention to delivering care through the public health emergency and coping with unprecedented constraints. On one hand, the pandemic effectively slowed the shift to value-based care, at least during 2020, but on the other, it also is expected to accelerate pressure to reduce healthcare costs in the future. Even though the healthcare sector is not yet out of the woods on the pandemic, providers must keep looking forward and prepare to take on more risk.

What providers can do

Health care providers can take several steps now to position themselves for success in value-based care. These include:

• Determine the value-based contracts in which they can participate.
• Understand the pros and cons of those contracts for their organization
• Utilize data to estimate how the organization would perform.

Ultimately, value-based contracts will exist in all segments — the commercial healthcare market, Medicaid, traditional Medicare and Medicare Advantage. Unless a provider organization specializes in delivering care that is not subject to Medicare reimbursement, such as pediatrics or obstetrics, Medicare is often the best place to begin the journey. There are several reasons for this. One is Medicare patients typically are the largest population for any given provider, and a second is no other payer makes as much data available to providers as CMS. Data is hard to come by in the commercial market, though information on care quality is improving. Private payers are not obligated to disclose their contracts. By contrast, CMS contracts are public and so are all their rules and arrangements. A third reason is Medicare is often the best starting point for organizations transitioning to value-based care is participation has a sequenced decision-making process. Providers can take time to determine whether and how they want to participate in Medicare.

The pros and cons of value-based contracts vary for each provider organization. Many will equate the reimbursement model to loss of revenue, but that will not be the case for organizations that are forward-thinking and quality-focused. The intent of value-based care is to reduce the total cost of care by improving the quality of care. There will be winners and losers in this shift. The promise of value-based care is better care for patients and a higher quality of life for health care practitioners.

In value-based contracts, upside and downside risk will be embedded in the healthcare landscape. The winners will be provider organizations that outperform their peers. One way they can do that is to utilize data to assess their financial risks and calculate how they would perform in the value-based environment.

Value-based contracts are complex, but resources and products are available to assist organizations with maximizing their upside potential while managing downside risks.

Data and analytics can provide insights into rules, regulations, quality and cost in value-based contracts. These tools can enable provider organizations to navigate value-based programs, analyze their performance and identify practice areas needing transformation.

Insurance solutions can also be crafted to match the underlying payment program, ensure there are no gaps in coverage, and retentions can be scaled to match an organization's risk tolerance. Modeling expected financial loss under a value-based program allows provider organizations to manage their downside risk while focusing on improving performance.

For more information on tools and strategies to assist with the risk-shifting in value-based care, please visit www.coverys.com.

  

Brian York is Vice President, Value-Based Care, at Coverys, an innovative provider of medical malpractice insurance dedicated to helping policyholders anticipate, identify and manage risks to reduce errors and improve outcomes. David Terry is CEO of Archway Health Advisors, a subsidiary of Coverys that works with healthcare providers to design, execute and finance care and risk management programs.

¹ The Health Care Payment Learning & Action Network (HCPLAN or LAN) https://hcp-lan.org/.