Navigating the Shift: Mastering VBC Contract Management for Payers

Updated on March 15, 2024

Empowering healthcare payers with analytics- and infrastructure-enabled strategies and solutions to excel in value-based care contract management

Value-based care (VBC) models aspire to enhance patient health outcomes and lower healthcare expenses by prioritizing preventive care and wellness. This approach demands a joint effort among patients, healthcare providers, payers, and other stakeholders, including community-based organizations (CBOs) that provide wellness services.

These models (e.g., bundled payments, accountable care organizations [ACOs], patient-centered medical homes [PCMHs] are advantageous for payers as they lead to a healthier population and improved management of chronic diseases, thereby reducing the need for extensive and costly treatments.

Collectively, chronic conditions such as heart disease, diabetes, cancer, and Alzheimer’s disease are responsible for 90% of U.S. healthcare expenses, as reported by the Centers for Disease Control and Prevention (CDC). 

However, to fully leverage VBC models, payers must implement effective contract management and payment systems that differ from traditional fee-for-service (FFS) models, which focus on the quantity of care provided. Unlike FFS models, VBC arrangements determine reimbursements based on the quality of care and superior patient outcomes.

Successful VBC networks require clear and transparent payment processes. Conventional administrative systems built for FFS cannot manage the complexity, scale, and intricate “network of networks” relationships typically found within a VBC framework. Payment transparency is critical to ensure all parties understand the performance metrics, measurement methods, and contract terms that govern their compensation.

Analytics for Insight

To derive meaningful insights, payers require a comprehensive analytics platform capable of aggregating and analyzing diverse data sources (internal and external), including both structured and un-structured data, to perform risk assessments of patient groups under specific contract models. This analysis should address critical questions about the payer’s patient population, referral trends, key cohorts, and high-risk/rising risk individuals within those groups and their care gaps that must be addressed.

An effective interactive platform must facilitate the integration and digital processing of varied data sets, support user-friendly contract modeling with intuitive workflows, and enable outcome-based sensitivity analyses. Essential steps for payers in managing VBC contracts include collecting, digitizing, organizing, and storing pertinent data such as electronic health records (EHR), pharmacy and demographic information, and social determinants of health (SDoH) data.

This organized data feeds into a contract modeling tool equipped with a rules-engine and querying functions, allowing for the comparison of various VBC frameworks and the creation of adaptable contracts. These contracts are stored digitally for easy access and adjustment, supporting the scalability of VBC initiatives through a repository of performance data and “what if” scenario simulations. These smart libraries of digital contracts are essential to payers’ abilities to scale their VBC programs.

The process extends to distributing digital contracts for stakeholder review and agreement, ensuring all parties understand and accept the VBC terms, including performance metrics and payment structures. This approval workflow mirrors digital signature workflows seen in applications like DocuSign, promoting transparency, traceability, and compliance across the healthcare ecosystem.

By leveraging advanced analytics and structured data, payers can conduct provider risk stratification, benchmarking, and scenario analyses. Such accurate provider-vs.-provider comparisons are crucial for understanding market impacts and demonstrating the value of their VBC strategies relative to their peers and national benchmarks in a cohesive format. Payers also can use analytics for opportunity analysis and ad-hoc reporting. Data can be used to verify the value of solutions they are putting into their respective markets. 

New Models Require Updated Infrastructure

Optimizing the care network is crucial for payers managing VBC contracts, particularly in balancing narrower networks to manage costs while ensuring care access. A more focused network can lead to more controlled spending and better care coordination, though there is a risk it could spur care avoidance by being perceived as limiting care access. Applying analytics for network optimization can mitigate these concerns.

Legacy systems suitable for traditional FFS contracts usually fall short in supporting complex VBC networks involving multiple stakeholders. Adapting to various reimbursement models like FFS, pay-for-performance (P4P), VBC, and others necessitates a cloud-based infrastructure. This infrastructure must effectively manage the intricacies of different contracts and report on outcomes and financial performance efficiently. Of course, any new infrastructure built to accommodate the technological and operational needs of a VBC network brings a new set of considerations related to interoperability, data security, and the integration of digital health tools.

Ultimately, the success of payer VBC efforts hinges on a robust digital infrastructure capable of supporting diverse reimbursement strategies and facilitating transactions among a broad network of stakeholders, including healthcare providers, social service organizations, and CBOs. Integrating advanced and actionable analytics with this solid operational foundation forms a comprehensive data and network ecosystem that underpins effective VBC contract management and network optimization.

Lynn Carroll Headshot.jpeg copy
Lynn Carroll

Lynn Carroll is the chief operating officer of HSBlox, which assists healthcare stakeholders at the intersection of value-based care and precision health with a secure, information-rich approach to event-based, patient-centric digital healthcare processes – empowering whole health in traditional care settings, the home and in the community.

David Wolf
David Wolf
Vice President at MedeAnalytics

David Wolf is vice president of product management at MedeAnalytics.