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Contract management in a value-based care environment
Lynn Carroll |
March 4, 2024 |

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For operational efficiency, value-based initiatives need a scalable digital infrastructure that can handle multiple reimbursement models, including fee for service.

Value-based care (VBC) models are designed to improve patient outcomes and reduce healthcare costs by proactively focusing on patient wellness. This preventive approach to individual and population care requires collaboration between patients, providers, payers, and other stakeholders, such as community-based organizations (CBOs) that offer wellness-related services.

Payers benefit from VBC models because their emphasis on preventive care results in a healthier overall population and better management of chronic conditions, which reduces claims for prolonged and expensive treatments. Heart disease, diabetes, cancer, Alzheimer’s disease, and other chronic illnesses combined account for 90% of healthcare costs in the U.S., according to the Centers for Disease Control and Prevention.

To get the most from their VBC models, however, payers need effective contract management, including payment capabilities, across all entities in the network. Payers must avoid replicating how they historically have managed fee-for-service (FFS) contracts – which emphasize volume – because FFS models are dramatically different than VBC ones in how reimbursements are determined and made.

For a VBC network to succeed, transparency around payments is essential. The traditional FFS claim-adjudication system is not designed to navigate the complexities, scale, and many-to-many “Network of Networks” hierarchical relationships that exist within a VBC environment. Transparency ensures a shared understanding and clarity around what is being measured, how it’s being measured, and the terms of the contract (which dictates how stakeholders are paid).

Actionable analytics

To gain these insights, payers need a scalable analytics platform that can collect and synthesize data – including unstructured data – from disparate sources to fuel a clear, risk-based analysis of patient populations and their various cohorts covered under a contract model. Payers also need to know how they are performing under a particular contract. Among the questions payers must ask themselves:

  • What does our overall population look like?
  • What are our referral patterns?
  • Which cohorts should we analyze?
  • Who are our polychronic, high-touch individuals within those cohorts?

Gaining such actionable insights requires an interactive platform that can process and digitize disparate data sets, allow users to model and build contracts using an easy navigation workflow and allow sensitivity analysis for different outcomes.A robust and scalable approach toward contract modeling and deployment is a must to gain actionable insights for payers. Thus, the first step for payers in VBC contract management is ingesting, digitizing, categorizing, and storing relevant patient data – electronic health records, pharmacy records, demographic information, and data on social determinants of health that impact risk. This structured data is analyzed and used to compile a longitudinal health record that is fed into a contract modeler powered by a rules-based engine and query-building capabilities.

The contract modeler conducts a comparative analysis of different VBC models to inform the contract building software, which can create contracts based on different use cases and scenarios. Contracts can be stored in a digital library for easy reference and modification as the payer engages in more VBC arrangements. A smart contract library is a valuable resource for past performance metrics, running “what-if” scenarios, and facilitating rapid deployment of codified business rules for multiple stakeholders. These smart libraries are critical to the ability of payers to scale their VBC contracts.

Once a payer builds out a contract through the data modeling process, the digital document can be sent to all relevant parties for review and approval. Signing off requires all stakeholders to understand and acknowledge the terms of the VBC contract, including performance metrics and reimbursement amounts. Such an approval workflow is akin to how software tools like DocuSign track signatures.Having this as a part of the process ensures complete transparency, auditability and compliance as different iterations can be versioned and tracked.Mutual clarity and understanding are essential to the success of a VBC program.

Leveraging a powerful analytics platform with structured data, payers can perform risk stratification by analyzing different types of providers, the risks they carry, and their respective clinical measures, affording payers accurate provider-versus-provider benchmarking and comparisons regarding overall cost and utilization. Payers also can use analytics for opportunity and what-if scenario analysis as well as ad-hoc reporting. Data can be analyzed to demonstrate the overall value of solutions they’re putting into their respective markets for their clients and presented in a unified manner.

Flexible network infrastructure

An important consideration for payers trying to manage a VBC contract is the size of the care network and optimization of that network. To control costs, payers will need to deploy narrower networks, while ensuring access to care. A narrower focused network allows for better control of spending patterns and efficient coordination of care. The downside of narrow networks is they potentially can be seen as an attempt to withhold care, which can act as a disincentive for individuals seeking care.Analytics-driven network optimization can preclude this problem.

While legacy infrastructures may have been adequate for payers engaged in FFS contracts, they are wholly incapable of supporting a many-to-many network with multiple stakeholders. Further, supporting the hierarchical structures of multiple reimbursement models (FFS, VBC, pay-for-performance and other alternative payment approaches) requires a cloud-based infrastructure able to segment contractual nuances while reporting outcomes and financial performance overall in a timely manner.

Digital infrastructure needed

The operational efficiency of payer VBC initiatives is dependent on a scalable digital infrastructure that can handle multiple reimbursement models, including FFS, and facilitate multiple payment streams. Such a digital infrastructure should enable a network of multiple stakeholders, which may include payers, hospitals and physician groups, social service agencies and community-based organizations.

When payers combine powerful analytics with strong operational capabilities on top of a scalable digital infrastructure, they create a data and networking framework that supports the success of VBC contracts and improves network performance.

Auhtor: Lynn Carroll

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