Effectively managing value-based care agreements involves two key ingredients: identifying the most effective ways to incentivize value-based care goals among physician practices—whether employed or independent—and create sufficient incentives for everyone to do the work, advised Francis Mercado, MD, interim chief medical officer (CMO) at Virginia Mason Franciscan Health and ambulatory associate CMO at Franciscan Medical Group.
It can get taxing. It can get tiring. Practices need to recognize the resource limitations and create the infrastructure to successfully navigate through these challenges, he acknowledged.
Virginia Mason Franciscan Health is part of the AMA Health System Member Program, which provides enterprise solutions to equip leadership, physicians and care teams with resources to help drive the future of medicine.
Dr. Mercado joined AMA member Karen L. Smith, MD, medical director and owner of a family medicine practice, to share insights during an AMA STEPS Forward® webinar on payment alignment.
There’s an agreement for every insurance plan, “and we try to align them as much as possible to make it less confusing for our practices,” Dr. Mercado said, noting that practices can use a combination of factors to provide financial incentives. For example, the size of a practice that you're partnering with. Performance is also a big component.
You also want to reward the health care team, including the nurses, medical assistants and back-office staff, he emphasized. These individuals “do a lot of the work also for value-based care. And you want to make sure that you share that reward.”
It's important to balance the level of financial risk against the goal of driving increased opportunity for participation in value-based care and ensure that these entities only take on risk that they can effectively manage, said Dr. Mercado.
Embrace the progressive journey
Progressing through various steps of financial risk in value-based care requires some costs and investments, but it's a journey, said Dr. Mercado.
It’s a transformation—getting paid not just for tasks, but for improving quality and reducing costs across your patient population, he said.
As you progress through value-based care, you get rewarded for the actual care improvement that you provide, and that's transformational, Dr. Mercado continued. His own health system, Virginia Mason Franciscan Health, has a mix of shared savings and cost of care, some risk-proof or just upside risk only, and revenue generation. It also has some employee value contracts and bundles of payment.
Investment is an important part of that continuum to improve care for patients. This may involve hiring staff, adopting data capabilities or partnering with vendors and care teams to analyze trends and target improvement areas.
This is about progression, Dr. Mercado emphasized. “You keep improving. You keep getting that ability, that capability to improve from one step to the other.”
Assess risk level
It’s important to start aligning incentives for the total cost of care management and quality and patient outcomes with that level of financial risk. As the practice improves, it should also start expanding its capabilities. The Franciscan Medical Group, which is a part of Virginia Mason Franciscan Health, started with patient-centered medical home projects and pilots, eventually graduating into shared savings and upside only shared savings through the Medicare Shared Savings Program. Finally, it progressed to upside downside financial risk.
Practices should look at their “readiness” to start and then to progress, Dr. Mercado advised. “Are you ready to take that next step? Are you ready to take on that additional risk? Do you have the care managers? Do you have clinical pharmacists? Do you have the analytical capability to look at all the data that your partners will start giving you to take on that risk?”
Ensure leadership, staff and provider partners are aligned and ready to take on risk, he emphasized.
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Consider multi-year arrangements
Because capability takes time to build, multi-year arrangements offer flexibility. Practices can return to upside-only risk if forecasts show high risk ahead, advised Dr. Mercado.
“We’ve done that in the past too, where you see the forecast where the risk is going to be too great in the next few years,” he said.
It’s important to also look at local market dynamics because what’s happening in Dr. Mercado’s home state of Washington is very different from California.
Additionally, offer a menu of mitigating risk and risk corridors to your partners as well, he said. The Franciscan Medical Group, for example, has independent practices that are in various stages of value-based care.
“We are able to tailor that to the practice wherever they are and meet them at their own capability,” said Dr. Mercado, noting there are practices that share on the upside downside and others that are upside only.
“It's important as an ACO that you're able to offer that flexibility,” he said.
Engage health care teams
Value-based scorecards, for example, ensure that shared savings are distributed at the proper timing. Attestation forms and quality sprints are other methods to incentivize quality work and ensure that practices are seeing the patients they have value-based arrangements for.
The Franciscan Medical Group uses education incentives to ensure everyone gets the education that's needed.
“We also provide some care management and care coordination services,” said Dr. Mercado. “That’s something you can ask for with your participating ACO because that does really move the needle.”
Ask key questions in agreements
Payment timing can make or break value-based care participation, said Dr. Smith. “It really does necessitate that each practice has awareness of the income expectations in your cashflow needs.”
To effectively participate in value-based care arrangements, know your strengths and your weaknesses, she advised. Where are the opportunities? What are the threats? That will reveal what areas practices need to address for optimal performance.
Additionally, what workflows need to change in your own individual practice to be successful? Looking at her own entity, which involves her ACO, her practice and the health plan, “we need an in-depth, submitted claims review assessing what is the cost of care and those quality metrics,” she said.
Assess different payment models
Practices also need to look at the different payment models, Dr. Smith said. Her own practice launched a prospective payment pilot that focused on hypertension, the most difficult metric in her community and patient population. The physician-led champion collaborative enlisted a health plan-employed population specialist, a practice-employed population health administrator and a registered nurse as a coordinator.
“The collaborative established core facilitators who redesigned primary care workflow, incorporating principles of health equity to optimize hypertension control,” she said.
The health plan provided upfront support and upfront payment to help put all of it together. As a result, Dr. Smith’s practice saw improvement in metrics beyond its hypertension target goals.
“That's just an example of a prospective model in terms of: is this practice ready?” she said. “Yes, we were ready. We were ready to increase our risk.”
Learn more with the AMA about value-based care, including ways to improve data sharing and best practices for payment methods.
