6 Strategies to Succeed with New Payment Models

By Duane Feger

For over 15 years, the healthcare industry has been struggling with how to transition from a fee-for-service payment model to one that rewards value. Value-based care, at its best, incentivizes clinicians to improve patient experience and outcomes by providing preventive, proactive, and appropriate care using the most cost-effective approaches possible.  While most healthcare providers agree with the potential benefits of value-based care (VBC)— especially after suffering a significant decline in service volume during the start of the Covid-19 pandemic — many are still struggling to let go of the fee-for-service payment model.

Value-based care provides some obvious challenges. It requires being open to change. The terms of VBC contracts can be hard to understand. The quality and cost metrics in most contracts can seem difficult to meet. Monitoring metrics requires accurate data and investment in new technology. And new technology requires training.

Despite the challenges, the question is not if VBC will become the standard payment model but when. Fee-for-service payment is simply not sustainable. Whether providers enter VBC contracts this year or in a few years, they should be aware of the strategies they need to implement to make alternative payment models lucrative for their practice. The following 6 strategies are critical to long-term success.

1. Negotiate realistic contracts

Negotiating a realistic contract can be challenging because the objectives of a practice and a payer are different. You want to ensure reimbursement that encourages the best quality care and outcomes for your patients. The payer wants to limit their financial liability and transfer a significant portion of financial risk to the provider. It’s critical that there is trust and good communication between both parties and that you can work collaboratively to develop a payment model that:

  1. Provides realistic capitation/reimbursement schedules that correspond with the risk/utilization profile for your patient panel.
  2. Ensures access to utilization data for the patient panel that will guide the efficient use of your limited resources and enables the identification of patients in high utilization periods that require increased care management support.
  3. Focuses on care quality metrics that you can realistically monitor and manage rather than metrics that you have little visibility into or influence over.
  4. Utilizes financial performance metrics, such as MLR targets, that are based on realistic thresholds and for which the payer shares the algorithms for both the revenue and cost metrics. Between 2017 and 2019, the average reported MLR of Medicaid health plans that met the minimum MLR (85%) was 93 percent; the average MLR of health plans that did not meet the minimum MLR was 81 percent.[i] A contract specifying a shared savings threshold of 80% MLR is probably not realistic.
  5. Aligns with your financial and patient care goals and values so you can secure buy-in from the physicians in your practices.

Before you meet with the payer’s representative, do a full analysis of your practice’s historical performance.  Know your panel’s historical statistics regarding office visits, revenues, and patient risk scores. Consider what it will take to improve care quality and outcomes and reduce the unnecessary utilization of high-cost treatments, services, and facilities. Also, consider what additional resources you’ll need to manage your contracts in terms of staff and technology. You might want to hire a consultant to assess your financial opportunities and serve as your advocate in the negotiating process.

2. Get Ahead of the Curve

Value-based contracts seemingly require practices to deliver more services with less revenue. To succeed under the terms of these contracts, you’ll need a new approach to delivering ancillary services to your patient panel. Because of current staffing constraints, care management services, such as care coordination, can no longer be continually provided to every patient. Care management services must be dynamic, focusing on the continuously evolving cohort of patients that are entering or transitioning through a period of high utilization.

You also need a way to identify those patients entering a period of high utilization (e.g.: cardiac/cerebrovascular events, oncology events, etc.) and guide them through that period with close monitoring and care management services. Traditionally, practices have attempted to identify high-needs patients by focusing on those patients who have consumed the most health care services in the previous year. In most cases, those patients have already transitioned through their health care event and are on the backside of the curve, returning to a lower level of utilization.

You need to get ahead of that curve by integrating data and analytics technology with your EHR systems, updating workflows accordingly, and exploiting insights into issues that your staff has the expertise, authority, and opportunity to resolve. When you focus attention on those specific patients who will benefit the most from care management, you maximize the efficiency and effectiveness of your limited staffing resources.

3. Coordinate care

Today’s healthcare system is fragmented. Too often clinicians only have access to the health data they collect themselves. They don’t know when other providers have seen their patients, what treatments and medications they’ve been prescribed, whether patients are complying with their prescribed treatments, how many trips they’ve taken to the ED, or even whether they’ve been hospitalized.

One way to coordinate care is to build collaborating opportunities with referral partners with similar goals and aligned incentives. This can include medical specialists as well as continuing care providers, such as SNFs, home care organizations, and palliative medicine and hospice organizations. You can automate the process by investing in technology that enables you to share patient data for timely and seamless transitions. Getting patients the right care at the right time in the right setting is key to meeting VBC quality and utilization metrics.

4. Ensure new technology integrates with your EHR system

Your practice may suffer from significant workflow inefficiencies unless your technology platforms are interoperable. Integrated technology means that the data in one system can be accessed and utilized in another. It improves your ability to inform clinical decision-making, monitor at-risk patients, provide timely and appropriate care, manage quality and utilization metrics, ensure accurate reimbursement, and increase your opportunities for shared savings and bonuses. As you update your systems — revenue cycle management, scheduling, staffing, patient engagement — make sure they integrate seamlessly with your EHR system.

5. Update practice workflows and analytics capabilities

The wrong technology can reduce your face-to-face time with patients and burden your staff with complicated processes. When investing in new technology, evaluate the workflows for efficiency and choose options that provide enhancements, such as face sheets that are easy to read at a glance and include risk analyses, automated scheduling for annual wellness visits, email alerts for recommended tests or screenings, patient referral support, HCC updates to keep your risk scores current and ensure accurate reimbursement, and notifications when a patient is ready to be transitioned to another level of care.

6. Develop actionable insights

If you’ve collected patient data through your EHR but have no way to access, analyze, and act upon it quickly and easily, you may struggle to meet the requirements of your VBC contracts. State-of-the-art analytics platforms can provide clarity about what is going on with your patient population now, what needs to be done to manage their care going forward, and how to use your existing resources efficiently. The right solution will help you monitor and manage chronically and seriously ill patients, with insights into cost and utilization risk, medication compliance, mortality risk, and psychosocial issues that are hard for humans to recognize and quantify remotely.

Find success with Value-Based Care

Since change often involves a significant investment in money and staff time, you probably won’t commit to value-based care all at once. But as you make the transition, your success depends on understanding the landscape and having the resources in place to navigate it. The strategies we’ve laid out can help you maximize your potential not only to meet the quality and cost metrics of your VBC contracts but also to achieve greater work satisfaction and financial and clinical success for your organization.

For a comprehensive view of your patients’ entire medical journey, consider the Acclivity platform, with its unique ability to integrate your patient data with Data at the Point of Care (DPC) ), a CMS program that provides access to over three years of Part A, B, and D claims data on Medicare patients. Acclivity consolidates all claims, patient info, financial data, provider data, labs, pharmacy data, membership data, and scheduling data into easy-to-read reports and actionable data notifications that integrate directly into your EHR.

To learn more about how we can help you succeed with Value-Based Care, or to schedule a Demo, please contact us at info@acclivityhealth.com or call 904 562 1368.


[i] “Medical Loss Ratios in Medicaid Managed Care” Medicaid and CHIP Payment and Access Commission, January 2022, www.macpac.gov

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