Over the last few decades, the healthcare industry has experienced a significant shift from fee-for-service (FFS) payments to value-based payments (VBP). Value-based care delivery models, which base payment on outcomes versus the number of services provided, are key when it comes to improving patient care and lowering costs.
There are several forces driving the advancement of value-based models, including:
- Significant government program influence.
- Investor interest in value-based strategy.
- Consumer expectations for access to more personalized, high-quality care.
The VBP movement, while flashy and exciting, can also be challenging for providers when it comes down to the details. The reasons for this include:
- The necessary data sets can be disparate, slow, and incomplete.
- The transparency between payers and risk-taking providers is often limited.
- Private value-based contracts are often insufficiently detailed on important matters such as pricing trend and margin assumptions, the definition of revenue components to which percentage of premium contracts are applied, etc.
Given the market forces outlined above, it’s very likely providers will soon find themselves entering shared savings and/or risk contracts. It’s critical these providers work with actuaries who are skilled at disentangling complex value-based payment models and managing financial risk so that they can focus on what they do best: caring for patients. Wakely Consulting, an MHA Endorsed Business Partner (EBP), can assist hospitals and health systems with the task of translating complex VBP contracts to enhance patient care and lower costs.
Those interested in learning more are encouraged to visit the MHA EBP webpage or contact Rob Wood at the MHA.