Best practice considerations for third-party provider risk-sharing contract audits

Shared-risk contracts between health plans and healthcare providers are becoming increasingly common and sophisticated. As these arrangements become more prevalent, there is an increasing amount of money at stake between health plans and providers. Transparency and verification are best practices in any relationship between parties that involves money, and this includes provider risk-sharing agreements. A settlement audit prepared by an independent third party is a recommended best practice for any organization considering entering into or already participating in one of these arrangements.

The underlying principle in these agreements is straightforward: healthcare providers are in the best position to identify and reduce unnecessary, duplicative, or inefficient care, and shared-risk arrangements provide a financial incentive for providers to do just that. While shared-risk contracts may be conceptually simple, the actual real-world financial adjudication of them is usually complex.

This paper by Milliman consultants Colleen Norris and Tom Snook explores some proposed best practices for an independent audit of provider risk-sharing settlements, and discusses the value of this review for all parties involved.

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