Taking the Plunge Into Risk-Based Contracting

Medical practice leaders, whether their practice is independent or part of a health system, have different motivations for taking the plunge into risk-based contracting.

Whatever the motivation, once the ink is dry on the new contract, the question is often, “What comes next?” Practice leaders and physicians alike must adopt new processes, new tools and a new way of looking at healthcare delivery if they are to succeed in this new world.

A New Mentality for Patient Management

Under FFS payment, the most important driver of revenue is what happens inside the practice. The more services physicians deliver, the more income they generate.

Under risk-based contracts, however, the most significant revenue driver is what happens outside the practice. Even if a primary care practice provides economically efficient care, visits to the emergency department (ED), specialist consults and other outside services can easily lead to unnecessary patient spending.

Success under risk-based contracts therefore depends on ensuring every physician in the practice internalizes this shift and embraces a new care mindset: In addition to delivering efficient, high-quality care to patients, physicians also must make sure their outside utilization is appropriate.

This mindset is especially important under newer risk-based contracts that limit narrow-network protections and allow physicians much less leeway to deny authorization for services. In addition, risk-based contracts with a population health component create a special challenge, because the practice will typically be responsible for a list of attributed members its physicians have never seen. Practice leaders must attempt to engage these patients to optimize services and manage outside utilization.

Practices also should keep in mind that controlling outside utilization does not always mean reducing utilization. For example, if a patient visiting a primary care practice has borderline asthma and has never seen a pulmonologist, a referral to a specialist to fine-tune medications and assess respiratory therapy options could help reduce long-term spending for the patient.

Obtaining Claims Data for Patients Covered by the Risk-Based Contract

Physician groups with risk-based contracts require reports that list all the services patients are receiving, both inside and outside the practice. Groups also require reports identifying patients most at risk for high utilization.

To develop useful risk and utilization reports, the practice should begin by obtaining claims data for patients covered by the risk-based contract. Data should cover claims for all services, not just services provided by the practice.

Next, the practice should use the claims data to generate a risk score for each covered patient. Medicare provides hierarchical condition category scores for these beneficiaries. For non-Medicare contracts, practices can work with a risk score vendor or use commercial software to generate scores.

Finally, claims data and risk scores should be linked with patient care data in the electronic health record (EHR) to enable practice leaders to generate various standard and custom risk reports. These reports complement the limited information available in most EHRs, because they meld available data sets for a true view of population health.

Transparency Is Critical

To succeed under a risk-based contract, practice leaders must commit to full transparency by taking three steps:

1. Ensure all physicians are aware of the new contract and understand the implications of risk-based payment.
2. Align physician incentives with contractual risk by building utilization, quality and patient satisfaction metrics into the compensation formula.
3. Provide physicians with the tools they need to succeed, including data reports that encapsulate their performance against contract goals.

The key to full transparency is to create a governance structure that addresses every aspect of risk-based contracting. Key steps the governance group should take in building a risk management infrastructure include:

• Establishing guidelines for specialist referrals
• Identifying preferred referral partners
• Monitoring individual referral utilization
• Establishing principles for sharing bonuses

When the entire practice understands the contract and knows the plan, the practice can reach short-term goals and build for long-term success in risk-based contracting.

Summary

are in one of the most challenging times with contract . There are new economic pressures, changes in reimbursement structures due to shifts in site-of-care and payers wanting providers to assume more risk.

Payers want providers to assume more risk and in order for a provider to do so, they need to be able to contain and even reduce costs. If providers are going to enter into risk-based contracts, they have to reduce their cost structure internally and reduce friction costs with payers.

The Physician's Advocate in Payer Contracting

Our roots in payer contracting run deep, making CodeToolz one of the most effective payer contracting and reimbursement firms in the country.

Our Payer Contract Review and Rate Negotiation Services include:

• Comprehensive contract review
• Contract language analysis to ensure optimal terms for physicians
• Utilization and payment analysis by payer to compare reimbursements
• Working with payers to raise reimbursement rates
• Preparation of competitive fee schedule analysis to support optimal rates
• Market analysis to present comprehensive proposal to payers
• Negotiate participation in additional payer plans in any given market

Once our team has a clear understanding of what your payer contract contains, we identify strengths, weaknesses, and improvement opportunities and review them with you.

Let the experts at CodeToolz take your contracting efforts from burden to competitive advantage. The bottom line is that in negotiations, knowledge is power and planning is essential. Contact Us Today! (512) 787-1852

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