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Healthcare: Value Payment Models Cheat Sheet by

What are Value Payment Models
models     value     payment     healthcare     considerations     based


One of the most promising develo­pments of the post-A­ffo­rdable Care Act era has been the shift to value-­based payment models from tradit­ional fee-fo­r-s­ervice payment. This is driven by the Department of Health and Human Services' (HHS) that has set an ambitious goal of tying 90% of its Medicare reimbu­rsement to some type of value-­based reimbu­rsement by 2018.

Valu­e-based Payment Models can vary but they each share a common goal: to re-align provider incentives away from simply providing more services to effect­ively managing the cost and quality of care for a defined population or for a defined episode of care. Some common types are shared savings, shared risk, and bundled payment models.

Here are four critical consid­era­tions, integral to successful implem­ent­ation of a value-­based payment model:

1. Provider risk assumption

Certain value-­based payment models require providers to accept downside risk. This raises a number of potential legal issues, including which benefit product types can be used to transfer insurance risk without the need for additional licensure on the part of providers.

The effect of provider risk assumption largely depends on state insurance department requir­ements, which vary. Some states, such as Califo­rnia, place signif­icant limita­tions on provider risk assumption while other states have less restri­ctive requir­ements.

2. Network adequacy

Narrow networks have become increa­singly common and they complement value-­based payment by ensuring that there will be a sufficient volume of patients for providers that are willing to accept value-­based payment.

Creating a narrow network comes with its own set of risks and legal consid­era­tions. Network access and adequacy standards are rapidly evolving at both the state and federal level, and the standards vary depending on the product market and provider type. In addition, evolving state standards regulate not only provider access, but also the process used to select narrow network or preferred tier providers.

What is Value Based Paymnet Model

3. Data sharing

Providers’ success in value-­based payment models depends on succes­sfully managing health across a population or across an episode of care. This requires access to timely and relevant data about their attributed enrollees, including inform­ation about the services provided by other providers. This raises a host of issues under data privacy laws, including HIPAA and state privacy laws, and also could implicate confid­ent­iality restri­ctions in health plans’ agreements with other providers.

4. Government payment models

The HHS’s efforts to encourage value-­based payment in the tradit­ional Medicare program include the Medicare Shared Savings Program, the Pioneer ACO Program, and the bundled payment pilot programs. Managed care organi­zations should be familiar with these payment method­olo­gies, and the provider financial relati­onships permitted and encouraged by HHS through fraud and abuse waivers and other legal guidance.

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