Tag Archives: provider risk sharing

MACRA considerations for health plans

In the article “MACRA: Key considerations for health plans,” Milliman consultants Colleen Norris and Mar van der Heijde answer four questions health insurers need to consider about how the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) will affect their business:

• How does MACRA affect providers?
• Why is [Qualifying Participant status] so desirable, yet so challenging to achieve?
• What opportunities might MACRA provide for a health plan?
• For a health plan, what are the challenges associated with MACRA?

The article is part of a series examining the impacts of MACRA on providers, alternative payment models, and health plans. To read other articles in the series, click here.

Value-based reimbursement makes actuarial expertise a must

Value-based reimbursement presents healthcare providers with risks they have limited experience and expertise addressing. These risks call for actuarial, analytic, and data mining capabilities that can help providers improve their quality of care and succeed in this new environment. Milliman’s article “Are you ready for the new world of value-based reimbursement?” explains how providers can benefit from hiring experts with contracting and data management knowledge.

Here’s an excerpt:

Contracting
There are many contracting choices offered to clinicians and facilities by both CMS and private payers. Knowing which option at which negotiated rate will work best for them is essential to the survival and prosperity of providers. In addition, ensuring that the contract includes certain types of protection to control risk is critically important and requires forethought and planning. It would be prudent for providers to engage actuaries who possess a deep understanding of actuarial risk to assist in structuring and negotiating these risks. In addition, the reconciliation of payments from these contracts will also require analytic and actuarial resources to ensure all aspects of the contract have been properly applied.

Analytics
Advanced analytics and data management is another area that requires additional focus in order to be successful. Providers need to have a data analytic strategy with tools and resources to develop a quantitative-based plan of action that focuses clinical resources on the areas of highest importance.

A first step in this process is to complete a review of current capabilities and a gap analysis. This expertise should include capabilities in medical cost and trend analytics, population health, quality analytics, and risk score analytics (see Figure 1). In addition, development of a data warehouse and the necessary analytic tools and reporting functions will set the organization on a path to success.

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Mistakes to avoid in risk sharing

Managed Healthcare Executive digs into the kinds of nuanced mistakes that can complicate risk-sharing efforts. Here is an excerpt:

Experts agree that the 1990s’ capitation agreements were not adjusted for the risk of the population, leaving some winners and some losers in risk sharing without any correlation to how well providers did their job. Typically, payers counted on controlling costs by contracting with provider organizations in capitation models.

Today, they need better ways to identify variance in the underlying morbidity of the populations they serve or they might not be getting an accurate picture of the capitated population and its risk proposition.

Robert M. Damler, principal and consulting actuary for Milliman, says failing to adjust for age and intensity in the capitation model, and simply using an average of the total population and calculating a value at the beginning of the year, could have a significant impact on risk sharing. While most experts agree that no risk-adjustment methodology is perfect, the process could become a key to driving the payer’s bottom line.

“Some groups look profitable, but when you adjust for the underlying morbidity, they may actually be creating an issue,” Damler says.

 For more perspective on how this time it may be different, check out this paper.

Controlling healthcare costs the old, new way

We’ve talked about cost control before (here and here in particular). A new healthcare reform briefing paper continues the discussion, focusing on the topic of provider risk sharing.

In the past, provider risk sharing has attracted substantial attention as a means of controlling healthcare costs. But efforts to implement provider risk-sharing strategies have often not lived up to their promise.

With healthcare costs reaching unprecedented level—and with certain reform provisions encouraging providers to shoulder more risk—the concept is again attracting attention. Given the far more precise tools now available to both payors and providers—not to mention the possibility for better coordination among all stakeholders—the healthcare system may now be primed for a successful move toward provider risk-sharing strategies.

Read the paper.