Tag Archives: provider risk sharing

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.