Whether you like it or not, the era of value-based contracts is upon us.
While the majority of health care is still fee-for-service based, there is an emergence of value-based care touching every cornerstone of the industry. Major private payers, such as Anthem Blue Cross, reportedly paid out nearly 60 percent of reimbursements in 2017 through value-based contracts. Other major payers are moving in the same direction, including the one that sets the tone for the rest: the Centers for Medicare and Medicaid Services (CMS).
CMS not only has an ambitious goal of 50 percent of payments through value-based contracts by 2018, but it's administering the Quality Payment Program (better known through the acronym that passed it into existence — MACRA). QPP incentivizes reimbursement based on outcomes through either its Merit-based Incentive Payment System (MIPS) or the Advanced Alternative Payment Method (APM) pathways. By early next decade, a practice's Medicare payment will either get boosted or dinged, up to 9 percent in MACRA, partly based on outcomes and other value-based metrics.
Experts say the program also gives practices a good indication of how value-based programs will be set up, as CMS typically influences other payers. "I think MACRA has done a good job establishing a framework for these [value-based] contracts. Many of the ACOs and payers are modeling the fundamental level of the value-based contracts on the MACRA structure," says Winsor, Conn.-based David Williams, consultant at Milliman, an independent actuarial and consulting firm.
Practices seeking to avoid value altogether will be left disappointed. Experts say it's time to shift their thinking and start tackling value-based contracts head on, by negotiating more favorable terms for their practice.
"As practices think about this transformation, it's critical they a) understand the population they serve; and b) the relationships with they have with payers. They need to start having new conversations about if they are going to take on more care for wellness and prevention and things that keep people away from the health care delivery system," says Austin, N.M-based Tamm Kritzer, principal at CliftonLarsonAllen LLP, a consulting firm.
Experts say there are three specific strategies practices can employ in the transition to value-based contract negotiation as a good starting point.
Strategy 1: Data is Your Friend
Among experts there is a universal agreement: The shift to value is predicated on showing payers that practices are collecting and analyzing data. As Williams says, it's hard to measure success without data. In fact, Milliman's three pillars of a successful value-based contracting strategy (transparency, stability, and control) involve substantial data gathering. Because payers have their own information to gauge and negotiate a value-based contract, practices need to ensure they are tracking the right metrics.