Tag Archives: value-based contracts

Key COVID-19 questions for providers in value-based contract agreements

Estimates of how the COVID-19 pandemic will financially affect the healthcare sector continue to evolve. Recent attempts to quantify the impact signal the likelihood that, for 2020, the reduction in spending associated with deferred care will outweigh in aggregate the increase in spending required to care for patients with COVID-19. However, at an individual provider entity level, the change in spending will vary based on a multitude of factors such as geography, the nature of services provided, and the demographics of the population served.

What does this mean for the mutual financial responsibilities created through value-based contracts? In short, for any given provider organization, the impact of COVID-19 on its value-based contracts will depend largely on certain actuarial, legal, and strategic aspects of each agreement.

In this paper, Milliman’s Cory Gusland, Anders Larson, and Brian Sweatman discuss 10 key questions that providers should be asking as they assess each of their value-based contracts during this uncertain time.

Employer-led accountable care considerations for providers

Employers are becoming increasingly involved in the movement toward value-based reimbursement, particularly employers that self-fund the healthcare needs of their employees. Two common strategies currently used by providers to reach the employer market segment are:

• Aligning with a health plan to develop an accountable care product, which steers employees to participating providers in the accountable care network.
• Direct contracting with employers. Typically, an employer offers its employees a narrow or tiered network plan alongside a broader network product offering.

A full economic impact analysis is necessary for a provider to make an informed decision about entering a direct contract with an employer. A provider should consider the three main drivers of the contract:

• Potential revenue changes
• Opportunity to reduce cost
• Range of potential outcomes

An increasing number of employers are seeking accountable care-style solutions. This type of arrangement is still evolving, but will likely continue to proliferate, because it aligns the financial incentives of employers and providers. In this article, Milliman’s Simon Moody and Kim Hiemenz answer some key questions for providers as they consider employer-led accountable care.





Implication of coding on risk adjustment and valued-based contracting

Healthcare providers are measured on certain performance metrics that dictate their payment amounts under value-based contracts. Risk adjustment plays an integral role in determining financial performance. In order for these contracts to be equitable for insurers and providers, risk adjustment must accurately capture changes in population morbidity to effectively measure the provider’s true cost impact.

In this article, Milliman’s Rong Yi, Howard Kahn, and Jared Hirsch highlight common data issues that affect risk scores. They also discuss practices that can improve coding efforts related to risk adjustment.