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How to select the right risk as your organization takes on value-based payments

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The transition to value-based payments introduces a new world of financial risk for care delivery. As healthcare providers move away from the fee-for-service model, they need to understand the different varieties of risk built in to pay-for-performance models. Organizations armed with their options can select the kind of risk that is best suited for their operational models and pick the right supporting health IT tools.

4 types of risk

The Medicare Access and CHIP Reauthorization Act (MACRA) instructs the Centers for Medicare & Medicaid Services (CMS) to create a Quality Payment Program that includes several forms of risk, including pay-for-performance and shared savings.

  1. Merit-Based Incentive Payment System (MIPS) rewards or penalizes clinicians based on an earned quality score. For example, if a physician or group received an above-average MIPS score on quality, improvement activities and promoting interoperability, and cost in 2017, it will receive a bonus payment in 2020.
  2. Comprehensive Primary Care Plus (CPC+) launched in January 2017. CMS and private health plans pay participating practices a care management fee for each patient enrolled in the program. Incentives are included for progress on patient experience, clinical quality and utilization. Failure to meet performance goals can result in forfeiture of some or all incentives.
  3. Medicare Shared Saving Program (MSSP) involves varying amounts of risk. However, track 1 is the choice of most participating accountable care organizations (ACOs). The program requires organizations to invest in their infrastructure, staff and care design. Different tracks of the program offer rewards for meeting quality measures or demonstrating budget controls. Providers receive a portion of shared savings from CMS.
  4. Bundled payments and capitation – Medicare and private payers offer bundled payments that entail two-sided risk. Healthcare providers must demonstrate care management and coordination and reductions in post-acute care costs to succeed. Organizations that accept full professional risk, global capitation or a percentage of premium from health plans take the greatest amount of risk.

Selecting the right technology to manage risk

The kind of risk arrangement an organization chooses greatly impacts what technology infrastructure best meets ongoing needs to manage risk contracts. Organizations may want to consider two courses of action:

  1. Invest in technology that supports the requirements of the risk contract
  2. Select a risk contract based on, among other things, the kind of technology already in place

For example, MIPS requires a solution that analyzes data to measure provider quality and cost. The patient-care requirements of CPC+ necessitate electronic health records (EHR) so, the practice can identify and care gaps, automate transition management after hospital discharges, evaluate provider performance and support care management.

In general, for all types of risk, the health IT solution should include risk stratification or predictive modeling solutions that classify patients by health risk to better measure and monitor financial risk based on population management, provider performance and contract requirements.

If you’d like to learn more about which risk is right for your organization, read “Taking financial risk: A primer on IT infrastructure, Part 2: Which risk is right for you?”.



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