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Risk sharing: You’ve signed the contract… but what’s next?

In this third post in our series on navigating strategic risk contracting, we’ll discuss what takes place after negotiations conclude and a health system has entered into a gain sharing or other type of risk sharing contract. This is where the work to succeed on those contracts begins and effective tracking of contract performance is key. After a contract starts, a health system cannot afford to wait 18 months to assess its performance. Ongoing and effective performance tracking is important and takes time, resources, and technology investments. As the shift from fee-for-service payment models to value-based care continues, it becomes increasingly important for organizations to be able to understand financial, operational, clinical, and claims data to evaluate their contract performance. Health systems must continuously assess their performance in this type of deal so that they make changes – both to their processes of care and the contract terms — during the contract period.

Needed: An integrated technology and analytics solution

Providers need to develop consistent tracking and monitoring processes for gain sharing and risk sharing contracts to track clinical outcomes in real time. The first step in doing this is making sure the right technologies are in place. Here are a few to questions to ask:

  • Does the system’s electronic medical record (EMR) system have reporting and analytical capabilities?
  • Do physicians and care managers have access to real-time data?
  • Does the enterprise data warehouse (EDW) have the ability to store and take in data across the system, including any claims data from payers?
  • Can the system pull together the financial, clinical, and claims information into user-friendly and actionable reports?

Monitoring contracts will be very difficult without the appropriate technologies, data, and analytical capabilities.

What else do health systems need?

Technology is not the only piece, as providers also need to focus their efforts on important metrics and measures, including:

Financial performance metrics

  • Tracking actual emerging results on a per member per month (PMPM) basis against the contractual target or “benchmark”
  • Setting up a cash flow model to track monthly payments made for each population; this could include care coordination payments, bonus payments, and shared savings or losses

Clinical drivers and metrics

  • Tracking specific patient segments and chronic conditions can help care coordinators proactively manage members before high-cost episodes occur
  • Performing an analysis of episodes can be used to identify inefficiencies and gaps in care
  • Identifying specific service areas or places of service where overutilization and inefficiencies in care may be occurring
  • Developing strategies to target efficiencies and implement more effective care patterns

Quality performance measures

  • Leveraging tools to track risk-based quality metrics so providers can measure performance in real time
  • Tracking metrics across physicians and practices can help show what areas a system may need to target for care pattern changes

Don’t forget to check your work (and the health plan calculations)

Health plans and other payers will typically report health systems’ performance periodically, which should be at least quarterly. Health systems should ensure that payers follow contractual specifications of the agreements. In addition, providers should obtain detailed data files from the payer to run through their own analytics platforms. Health systems can create reports both from this payer data and internal data that regularly monitor emerging results of contract’s financial, clinical, and quality performance. Ultimately, these should be validated against any reports provided by the payer to rectify discrepancies. Emerging results should be vetted and confirmed by managed care, finance, business operations, clinical, and care coordination teams. Systems should develop a strategic plan for proactively addressing any potential shortcomings. All of these efforts are critical for actively managing the contract and tracking progress throughout the performance period.

Physicians hold the key

This new wealth of data can give health systems insights on physicians’ quality and care patterns, which they can use to improve disease and care management initiatives. Based on individualized metrics, the health system can begin to see which physicians are contributing to or taking away from contract success. For example, primary care physicians might be referring their cardiac patients to different in- and out-of-network cardiologists. The health system typically has the incentive to keep these services in -network so that patient remains in-network and so that it can track and control the services provided. Analytics can also indicate which in-network cardiologists are more efficient and higher quality, and provide physicians with the incentives to refer to these cardiologists. Furthermore, these analytics can offer insight into out-of-network physicians that are high quality and cost efficient. Executives and physician leaders can use such data to strategically modify their physician network to improve quality and efficiency, and proactively intervene if physicians are not performing adequately.

While the above recommendations will not guarantee success, over time these monitoring capabilities could help health systems better track contract performance and, more importantly, provide better care to patients.

Stay tuned for our final installment in the series where we will address managing risk-based portfolios.

Author bio

Mr. Mark J. Bethke has been a health care consultant for Deloitte Consulting LLP since June 1999. He is a Fellow of the Society of Actuaries (FSA) and a Member of the American Academy of Actuaries (MAAA). Mark is the health actuarial and financial modeling leader for Deloitte’s Value-Based Care and MACRA market offerings. Mark helps his hospital, physician, and health plan clients bridge their financial business needs through strategic collaboration in value-based accountable care models. Mark’s core competencies include value-based aligned incentive models and health information analytics by developing data models to help assess risk and model potential business scenarios. He works on issues such as provider contracting, risk/gain sharing, product development, financial analysis and management, data structure design, and health status-based risk adjustment. He has extensive experience in healthcare data analysis and modeling, benefits pricing, and healthcare provider payment systems.