Lighthouses and Magnifying Glasses: How to Negotiate Value-Based Contracts

By Sanjay Seth, MD, Executive Vice President, HealthEC
Twitter: @HealthEC_LLC

Negotiating value-based reimbursement is a complex process for healthcare providers. Organizations participating in value-based agreements need to consider the specific population covered under the contract, the particular reimbursement model used, and which quality and utilization measures will be tracked. And because each contract varies, negotiators rely on every available insight to truly understand where bonuses, cost savings and better patient outcomes for each population are possible.

Data analytics and business intelligence play an important role in these pursuits. Analytics and intelligence serve as lighthouses and magnifying glasses for providers participating in value-based reimbursement and transitioning care using a population health approach. These tools help organizations see both the big picture and unique nuances of their practice. As more providers move into accountable care organizations (ACOs) or clinical integrated networks (CINs), the value of data analytics and business intelligence grows exponentially to support effective population health programs.

If success under value-based reimbursement is the end game, data analytics and business intelligence are the playbooks required to get there. According to Deloitte Consulting, LLP, “a population health approach is essential for organizations to succeed in value-based care, and physicians’ work should be redesigned accordingly.” Organizations participating in value-based contracts require a strong data-analytics engine fueled with interoperable data stored in an advanced enterprise data warehouse, and dynamic real-time reporting and analytics. But what data elements are the most crucial for provider organizations to capture and analyze?

Three Data Elements for Better Value-Based Contract Negotiations
Our experience in negotiating payor contracts for value-based for both physician and hospital-sponsored organizations confirms the critical role of data analytics and business intelligence combined with clinical knowledge. Organizations with access to these tools report far better bonus, savings and quality outcomes alongside a simpler contracting process. Using HealthEC’s ACO partners as just one example, an average of $4.7 million savings per ACO was achieved in 2019 through the Medicare Shared Savings Program (MSSP).

Specific data elements that drive success include revenue related data, expense related data and exclusion topics. These are the data elements we recommend for capture and analysis from the following perspectives.

  • Revenue related data
    • Physician office and procedure fee schedules
    • Beneficiary counts
    • Hospital utilization data
  • Expense related data
    • MLR, TCC and % age of premium
    • Facility use related for ambulatory procedures
    • Pharmacy claims
    • Diagnosis related claims
    • Disease specific claims
  • Exclusion topics
    • Beneficiary related
    • Procedure and implant related
    • Network related

Beyond data collection and analysis, a skilled business analyst with data modelling experience, including both claims and clinical data, is essential as contracts get more complicated and sophisticated. Cliff Frank, of Shore Quality Partners, is one of those experts. He identifies four important outcomes Shore Quality Partners was able to achieve by effectively analyzing data and working closely with physician practices.

  • Identify high-risk members, inpatient stays, ED visits, non-compliant patients, etc. Share these lists with providers for better care coordination and to schedule visits.
  • Rein in patient leakage by seeing where patients receive care outside of the practice and targeting these patients for marketing outreach.
  • Reduce costs and improve outcomes for diabetic population including increased use of A1-C testing, improved diabetic care coordination for high ED utilizers, and connecting diabetic patients with the care they need.

This approach of using data to prioritize and drive care also enabled SQP to achieve a 90th percentile score for quality metrics in commercial programs for the past three years and meet shared savings in MSSP for three out of the last four years.

Tips for Value-Based Contract Negotiations in 2021
With CMS’s release of the 2020/2021 Shared Savings Quality Measure Benchmarks in late 2020 amid an ongoing worldwide pandemic, now is the time for organizations to rethink their value-based contract negotiations. ACOs could be impacted on the cost benchmarking from a historical respective, the regional adjustment and the few benchmarking methods used by the commercial payers. Here are some key points to remember when facing your next payer contracting session.

  1. Exclude hospitalizations associated with COVID and the costs from the total cost of care or MLR.
  2. Add eligibility of telehealth encounters for utilization measures.
  3. Look at the quality performance to see where you are optimal and target those achievements as benchmarks.
  4. Review your previous year’s performance to decide the cap for individual costs.
  5. Make sure the contract is patient-risk factored and adjusted for market trends.

This article was originally published on HealthEC and is republished here with permission.