Five mistakes payers make in risk-sharing arrangements
The U.S. healthcare industry is shifting to value-based care models, and payers are adopting performance-based risk-sharing arrangements. To succeed, they need to build a partnership and align their long-term goals with providers. Failing to do so—and focusing on financial gains alone—can adversely affect negotiations. Payers must develop an arrangement that is fair to all stakeholders and that reduces care costs while improving care quality, patient experiences, and health outcomes.
In traditional fee-for-service models, payers and providers have competing goals. Today, payers are learning to transition to performance-based risk-sharing arrangements and collaborate with providers. However, there’s room for error in the process. Here we explore five common mistakes payers make in risk-sharing arrangements.
1. Putting too much risk on the providers
Shifting risk to providers may seem lucrative to payers, but it can adversely affect outcomes. If providers are not ready to assume the increased responsibility, they may ultimately need to be bailed out. If the provider is obligated to accept the loss, they are more likely to discontinue the arrangement.
As providers take on more financial responsibilities, payers need to deliver support, share insights, and set reasonable targets. This might include setting a limit for potential losses up front to help providers ease into the arrangement.
2. Ignoring provider technology infrastructure
Fee-for-service technology isn’t sufficient for value-based care models. Payers need to ensure that the providers in their network have adequate technology to perform data analytics, engage patients, and manage population health. Payers should incentivize providers to build better infrastructure—or offer to do it for them—to improve clinical and financial outcomes.
3. Not having a long-term vision
Including providers in the network without a long-term vision can decrease profitability. Payers should consider what kind of care delivery models providers are using and how they impact care quality. For example, providers operating on team-based care delivery models rely on different team members to improve care quality and reduce costs. While a physician focuses on critical health episodes, nurses and social workers look after a patient throughout their healthcare journey. Together, they improve outcomes and patient experiences. Payers should consider the long-term impacts that certain providers can have on performance.
4. Performing incomplete evaluations of provider networks
Payers are inclined to only include providers who effectively manage costs and provide high-quality care. However, payers also need to consider other factors that make care accessible, such as geographical location or access to specialized services. It’s important for members to be able to choose from a variety of providers based on the factors most relevant to them.
5. Not supporting providers with data
Payers hold most of the industry’s patient data, so they need to give providers a comprehensive view of at-risk patient populations as well as claims, lab, and pharmacy data to drive interventions. Adjudication data can also help providers track utilization patterns and identify areas where improvement is needed.
The key to success
In the transition to value-based care models, payers have taken on more financial responsibilities than in traditional fee-for-service models. Providers are expected to upgrade their capabilities and performance to earn the same reimbursements they earned under the traditional model. The support of payers will be key to provider success in risk-sharing arrangements.