Value-Based Contracting 2017-06-27T15:22:55+00:00

Value-Based Contracting

What is Value-Based Contracting?

Value-based contracting is a negotiated agreement between a provider and a payor that obligates the providers to accomplish certain agreed upon quality initiatives, in return for “value added” payments to be paid to the provider under the Clinical Integration Network.

Unlike an HMO down-side risk sharing arrangement, the CIN will be negotiating up-side risk contracts similar to accountable care concepts that require achieving low costs and higher quality. Gain sharing will only occur when there is both a financial gain and successful achievement of the quality measures.

These risk sharing type of contracts with hospitals and physicians have been in existence for many years. These were often the basis of Health Maintenance Organization (HMO) agreements. Again, Statera Health is not an HMO. However, in the case of the HMOs, the contract establishes a financial budget or global budget for the services used by the population of patients who are affiliated with primary care physicians in the provider network. Basically, the hospitals and physicians agree to provide and coordinate services for the contract period for a fixed dollar amount, regardless of who provided the services. At the end of the year, the actual costs are compared with the budget to determine if there was a gain or loss. The providers either share in the gains or are obligated to cover their share of the loss.

The current reimbursement of fee for service with no accountability for quality and outcome is no longer sustainable. Purchasers and consumers expect to get value for their money (value = quality/cost) on every product and service they receive. Medicare and some commercial insurers are introducing reimbursement programs that pay based on appropriateness of services provided and the quality/outcomes of those services. They are expecting to lower their costs by making sure they are paying for what is necessary, and not paying more because of poor quality of care.

Physicians will be expected to successfully reduce or eliminate costs for unwarranted services, and also demonstrate positive patient outcomes for the healthcare services performed. The savings from these efforts will initially accrue to the insurer and to the patient.

However, the Physicians have the opportunity to share in the savings they help create, as long as there are quality outcomes. Physicians will be accountable for the value of the care provided to the population of patients who are affiliated with the contracted network of insured patients. The CIN gives physicians control for the direction and facilitation of the care that is provided to their patients rather than conceding that to an insurer or other payer.

For Physicians, this will be a new way of managing their patients’ care. Physicians will need new resources, which the CIN can help provide. For example, physicians will need to look at their patient population in groups such as diabetic patients. (These are referred to as “patient disease registries”). Statera Health researches and explores what percentage of those diabetic patients are at high risk based on key clinical indicators. When were they seen in the office? What care or education can be given outside of the office? What can be done to improve their patients’ health and keep the costs of care down? How can the physicians be made accountable to colleagues who are reviewing their performance in the CIN?

The CIN will provide resources to physicians to help them successfully quality for incentive payments from their value-based contracting. For example, advisors are provided for the member Physician offices, as well as information management, analysis support, and Statera care managers to work with high risk patients and other assets.