Private Practices

How value-based care is making payor contracts even more complex

Len Strazewski , Contributing News Writer

It’s an American tradition. Physicians charge a fee for their services, do their best to achieve better outcomes for their patients, and are paid by health plans and sometimes directly by patients. 

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But value-based care models and risk-sharing arrangements are on the rise. Driven by these trends, payor contracts are becoming increasingly complicated. So it’s especially critical, say legal experts, that physicians understand the impact that contractual terms, conditions and provisions will have for their private practices and the patients they serve.

To help physicians in private practice better navigate the challenges of payor contracting, the AMA has unveiled a suite of actionable resources.

Doctors can learn more from subject-matter experts in the AMA’s free, two-hour webinar series that guides private practice physicians through the complexities of the health-plan payment landscape. “Payor Contracting 101” and “Payor Contracting 201” cover basic contract provisions, basic legal rules governing contracts, commonly negotiated provisions, common disputes, and innovative and nontraditional opportunities.

The AMA also has developed a comprehensive new private practice toolkit on payor contracting that covers these elements:

The webinar series was developed for AMA for practicing physicians by experts from the Chicago, Denver and Los Angeles offices of the Polsinelli law firm, and speakers included attorneys Jonathan Buck, Garrett Jackson, Ryan Morgan and Lori Oliver.



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While value-based care promises to support quality care, the approach poses contract-negotiation challenges, demanding detailed contract language and a high level of performance information. 

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Value-based contracts and the  terms and conditions—including use of pay-for-performance metrics, bundled payments for some procedures and episodes of care, population-health goals and capitated compensation for physicians and other health professionals—are growing more complicated as government agencies and private contractors continue to adopt new concepts, experts from the Polsinelli law firm explained in the “Payor Contracting 201” webinar.

As a result, physicians and their staff are likely to need more detailed information than ever before about their costs and their performance .

Before signing off on a value-based care contract, Buck recommended that physician practices make sure they have access to the information they need so they can make an informed decision about whether the proposed contract works for them.

As Lori Oliver noted, “Consider whether you have the tools you need to succeed,” and “retain actuarial support if needed, and  “plan for ongoing communication with clinicians and staff.”

It takes astute clinical judgement as well as a commitment to collaboration and solving challenging problems to succeed in independent practice settings that are often fluid, and the AMA offers the resources and support physicians need to both start and sustain success in private practice.

Since the onset of the COVID-19 pandemic, government programs, with  private payers following close behind, have moved to address access and equity issues, Jackson said.

Due to heightened awareness during the pandemic of the impact of longstanding health inequities, payors are seeking ways to address the disparities that affect health and health outcomes that extend beyond the traditional domains of medicine, such as housing instability, food insecurity and patients’ social isolation. Physician practices should anticipate these issues being raised during contract negotiations, specifically to determine who will be accountable for addressing those issues as they arise.

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Current approaches to value-based care, appearing in most contract language, include pay-for-performance based on metrics of care quality and patient satisfaction, added Buck.

Payment models continue to evolve. More employers are entering into direct contracts with physician practices, health systems and others, targeting annual total cost of care and shared costs with doctors and their administration. Meanwhile, pharmacy and behavioral health are becoming progressively integrated with other costs.

Buck said commercial insurers are also focusing on value models that shift more risk to physician practices and providing more product designs that offer value-based language to employers. Joint ventures are likely to expand, involving employers, insurers, health networks and clinically integrated networks.

“Commercial fee-for-service-only arrangements will be at a competitive disadvantage,” Jackson said, “and metrics and analytics are more important than ever.”

Find out more about the AMA Private Practice Physicians Section, which seeks to preserve the freedom, independence and integrity of private practice.

Also, check out the AMA guide to keeping your physician practice open during COVID-19.