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VBP Toolkit: Section I. Understand VBP terms and models

Overview

As the market shifts toward increasing VBP use, including population-based payment (PBP) models, providers must be ready to implement more complex, transformative models. Moving toward new VBP arrangements requires operational and cultural changes while also offering provider entities the opportunity to restructure how care is delivered.

To be successful, you will need staff with new skills, tools to support new VBP models and strong leadership to support change management.

Section I. steps

Under VBP models, providers are not paid solely on a fee-for-service (FFS) basis. Depending on the model, you may be paid:

  • for reporting performance metrics to a payer 
  • based on your ​performance on specific metrics
  • ​a fixed amount for a set of services to an attributed set of patients

You may also be eligible to share in savings related to identified patients and/or be accountable for sharing in downside risk for those same patients.

Staff and clinicians need to understand VBP models and terms and agree on a level of financial opportunity and risk in VBP arrangements that is appropriate to your size and attributed or assigned population with respective payers.

The Glossary and the VBP Basics page offer definitions of key terms such as Assignment, Attribution and Member Month. The LAN Framework​ is also helpful.

Increasing provider reward and risk

As the LAN Category increases from Category 2 to 3 and 4, the level of financial reward and risk to participating provider entities also increases. Advanced VBP models (Categories 3 and 4) more significantly restructure payment for provider entities to better enable and support delivery system transformation.

For example, prospectively paid VBP models require stronger provider financial management and administrative functionality within the provider entity to accept and, in some cases, distribute payments to clinicians, for an array of services and to manage within the prospective payment amount. Prospectively paid models may also create challenges for accurate data collection for providers and payers since payment is no longer linked to individual FFS codes or visits.

Get clear on the model

If the VBP model(s) that a payer is asking you to participate in is not clear, or if you are uncertain of any aspects of how your payment will differ – ask for more clarity. For example, ask the payer to simulate your payments as if you participated in this VBP model in the past year. This “shadow payment data” should indicate what your practice would have earned or lost if you participated in this type of VBP model in the prior year, and it should clearly indicate your performance on related quality and financial metrics.

As you review different types of VBP models offered by payers in the VBP Compact, consider:

  • The populations and services that may present the greatest opportunity for you and your payers to achieve your defined value objectives;
  • How each VBP model might work to improve care and costs of care for different populations or subpopulations;
  • Your provider entity structure, financial arrangements, and the size and distribution of payer membership; and
  • Partners that might be important to contract with under a VBP model based on your current financial arrangements with them, their VBP experience, capacity and readiness.

​​Impact of VBP on clinic operations

When your VBP team, or a sub​set of the team, meets with payers, it is important that they ask how the VBP methodology might impact clinical and administrative operations. Ask for assistance in reviewing data from the payer to better predict future payouts and liabilities under a new VBP model and to identify “low-hanging fruit” in terms of opportunities for additional payments. For example, a family practice may be more quickly able to improve its rate on a HEDIS measure with a lower denominator because it applies to few attributed patients compared to other measures in the VBP model. The practice needs to have successful outreach to fewer patients to address gaps in care and improve your numerator and overall HEDIS rate.​​

Resources

Consult with clinicians and your staff involved in financial management, data management and quality improvement to determine if they understand VBP generally, Oregon’s rationale for moving away from a traditional fee-for-service (FFS) payment system, and the models being promoted by the VBP Compact. Strategies to address VBP readiness are discussed in Section I Step 3 Assess your readiness for a new or modified VBP model(s)​. Make the case for why healthcare payers are moving away from FFS arrangements in order to align incentives at the provider level to produce quality over quantity. If you need help making that case internally, seek support from payers, provider associations, management service organizations or health care consultants.

Talk to your staff with operational, financial, quality, and clinical responsibilities about various VBP arrangements to identify opportunities for the clinic and possible concerns. Clarify how payment arrangements might vary across payers and across different VBP models. Share why leadership prioritizes VBP for the organization and where it falls among organizational priorities. Areas to investigate include the following queries:

  • Do your clinicians and key staff understand why the FFS status quo is not sustainable or desirable?
  • Do your primary care clinicians understand which payer members are attributed or assigned to them for VBP and performance measurement approaches?
  • Do they understand the use of performance measures, financial incentives, opportunities, and risks in different types of VBP arrangements?
  • Have they participated in any VBP arrangements to date? How do they view that experience?
  • Do they understand how your participation in VBP aligns with payer goals and broader environment?
  • Do they understand how VBP success is based on an active partnership between providers and payers that requires cultural and operational changes to advance shared goals?

Green ribbon icon representsBest practice

For Providence Medical Group, team-based care and the medical home model have been core to their operations for many years, positioning them well to enter VBP arrangements. To facilitate the speed and ease of implementation across Providence’s over 35 clinic sites, leadership established a practice coach team to develop an implementation guide and round with clinical teams every day in the early stages of transformation. The practice coach team worked one-on-one with clinics to build teams of medical assistants, providers, behavioral health providers, pharmacists and care management staff. With clinical teams in place the practice coach team then worked with clinics to build the financial and quality infrastructure to be successful in VBP arrangements. Clinics with the most success in transformation had physician champions.​

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By conducting a readiness assessment, you can gauge whether you are ready to take on a new or modified VBP approach with payers, and where you might need payer or other resources to support your VBP readiness. Identifying a staff member or team to work collaboratively on VBP assessment prompts important dialog about practice goals and priorities for improvement.

Look for self-assessment tools or resources to help you assess readiness

Primary care entities, including staff and primary care clinicians, should become familiar with the Patient-Centered Primary Care Home (PCPCH) certification requirements and the clinical model in preparation for participation in any primary care VBP model: PCPCH Recognition Criteria, Technical Specifications & Reporting Guide. The functionality of a PCPCH is well aligned with best practice in VBP population health.

If you are a primary care entity, download and complete the PCPCH 2020 Standards Self-Assessment Tool. This is an Excel file designed to help primary care entities understand the PCPCH clinical model and anticipate what level their practice meets under the current PCPCH standards.

Additional PCPCH information can be found at the PCPCH webpage​.

Free readiness tools

A list of free readiness tools is in the resources section​ of the toolkit. Readiness tools typically address the following topics:

  • General and basic operations
  • Systems orientation
  • Cultural sensitivity
  • Interpersonal communications and teamwork
  • Clinical management
  • Finance and reimbursement
  • Quality management
  • Health information technology
  • Legal and ethical Issues
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Your VBP team needs to think strategically about their access to data and analytical capabilities to support successful engagement in VBP models.

Being able to access and analyze administrative, clinical, and financial data is important for provider entities participating in value-based payments. While a payer can provide you with data, it is important for you to be able to make use of the data once provided. VBP success requires skilled analytical and data support infrastructure staff that can assist clinicians in understanding what data can be leveraged, when and how. It is also important for you to understand what data are essential to share with the payer(s) in order to meet quality and other VBP performance benchmarks.

Understand the data required

When first starting VBP models, you and your payer(s) may not have all the required data to measure quality performance. Some payers include quality measures in the first year of a new VBP program that are for reporting purposes only. This allows provider entities and payers time to gather data to set benchmarks and the opportunity to identify efficient ways to collect and submit the data before financial incentives are linked to performance.

When taking on episode, shared savings, shared risk, or capitation​ VBP arrangements, consider the following data capabilities:

  • A formal data and health informatics plan that includes a strategy for collecting and analyzing attribution, administrative, clinical and financial data relevant to the VBP model and population
  • Appropriate software to receive and analyze administrative, clinical, and financial data
  • The ability to access key clinical data elements including medical records, medications, test results, prescriptions, demographics, vital signs and care plans to facilitate care management and other clinically related activity

Invest in data analytics and obtain access to analytical platforms

Performance measurement is an integral part of VBP arrangements, both in determining the payments themselves and evaluating the success of the program. Data sharing, analysis, and transparency in measurement methods are essential for both providers and payers operating under these arrangements. Data analysis also allows you to make informed decisions when considering and implementing new strategies for new VBP arrangements.

Your internal data analytics staff will manage complex data sets, complete analysis of clinical data and develop and interpret of provider-level quality and cost performance measurements. More specifically, you need tools, data infrastructure, and payer support to be able to routinely handle the following capabilities on behalf of practices and clinicians:

  1. Ability to pull a list of patients/members attributed or assigned to each practice/clinician as applicable, including relevant demographic and geographic data
  2. Ability to stratify this attributed or assigned population based on specific risk criteria (payers may use specific diagnosis-based tools that allocate members based on risk scores into groups such as low risk, medium risk, rising risk and/or high risk in terms of potential for costly utilization)
  3. Ability to promptly access/share data on member utilization and outcomes with the care team
  4. Ability to quickly communicate gaps in care at the point of care
  5. Ability to aggregate clinical and other data from multiple sources (such as practices integrating data from external portals, such as PreManage)
  6. Ability to submit custom reports to payers for metrics management and to meet VBP targets

Helpful data and analytical capabilities

Other data and analytical capabilities that are helpful to have but may not be essential at the beginning of your VBP journey include:

  • Ability to visualize near-to-real time data at the provider level for dashboarding and continuous quality improvement
  • Ability to obtain, share and aggregate additional demographic information including findings on health-related social needs
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Payers typically utilize analytical platforms that can produce actionable reports to assist provider entities in understanding the care needs of the population for which they are held accountable under the VBP arrangement, and the anticipated medical expenses. Some payers can offer providers access to health plan data from a web portal or direct data feeds. These portals and data can help provider entities to monitor and improve patient care. Portals and processes may also serve as a platform for provider entities to transfer VBP-related data for payer use. To understand how useful the payer portal will be, ask your payers what information is available on their portal and how timely it is updated.

Building your own analytic platform

Larger and more sophisticated provider entities may consider investing in analytical platforms when seeking to sustain and expand advanced VBP models. However, having new analytical platforms or a new electronic medical record system is not a magic wand to solve all data and analytical needs for VBP success. Where feasible, enhance internal data systems for analytic capabilities such as:

  • Provider entity and clinician-level performance on key quality indicators against benchmarks, and compared to prior performance periods; Stratification of quality performance by patient demographics (REALD and SOGI) and health-related social needs that identifies disparities​
  • Financial information on costs relevant to the payment model
  • Reports on key areas that could spur action to improve quality and reduce cost such as:
    • Predictive modeling of high-risk patients
    • Avoidable emergency department (ED) visit opportunities, by condition
    • Medication refills
    • Gaps-in-care reports

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Green ribbon icon representsBest practice

​Children’s Health Alliance (CHA), a pediatric independent practice association (IPA) in the Portland metro area, utilizes a population health tool that combines data from multiple sources (EHR, claims, hospital ER and inpatient visits from PreManage) to allow care team members to see the complete picture of the patient’s health care utilization. By ingesting health plan rosters and attributed population, it allows providers to review important utilization and quality indicators for all of their patients across payers and see the most recent health activities such as provider visits and emergency room discharges. CHA has created dashboards to summarize quality and utilization measures by payer and work lists that identify patients in need of outreach for care gap closure, onboarding, or follow-up.​

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Attribution or assignment to a provider entity, practice or clinician participating in a VBP model is fundamental to the measurement of the provider’s quality and financial performance in the model. Patient attribution designates the population for whom a provider entity accepts accountability under the VBP model and forms the basis for performance measurement, reporting and payment

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For example, patient attribution methodologies are needed in population-based payment models where one provider entity or system of providers is responsible for the care for an entire population of individuals, and in some supplemental payment models where providers are paid a per-member per month payment for certain activities, like in many patient-centered medical home programs. Attribution is also salient for specialty VBP models too, such as maternity episodes of care. Even pay-for-performance​ (P4P) bonus programs require a level of patient/member attribution in order to assess the percentage of eligible individuals who have received the appropriate preventive and primary care services that are targeted by the P4P approach.

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Lack of clarity and variation of attribution methodologies is a challenge for clinicians, provider practices and payers. The Primary Care Payment Reform Collaborative (PCPRC), in partnership with the former Oregon CPC+ Payer Group, developed principles for patient attribution​​ to ensure more effective VBP-based investment in primary care. The intent of the principles is to foster alignment and transparency on methodology, and to ensure outcome metrics associated with VBPs accurately reflect a clinic’s patient population.

Attribution for success

​Transparency and consistency across attribution approaches can improve cost and quality benchmarking, increase understanding across the health system, build trust between practices and payers, enhance the ability of practices to focus their efforts and better engage patients, and maximize the benefits of data aggregation.

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To be successful in VBP, provider entities will:

  • Understand patient assignments (across all payers), and specifically, those assignments that have not led to an established treatment relationship, and the patients seen by the provider entity that are not currently attributed or assigned to the provider entity.
  • Work closely with payers to access and maintain an accurate, up-to-date list of attributed or assigned enrollees and associated providers on a monthly basis.
  • Ask for payer support to identify attributed or assigned enrollees and to regularly access performance metrics and current status for attributed enrollees.
  • Develop and implement a plan for patient, family, and caregiver education and engagement in the changes and opportunities under VBP
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Payer tips for attributing patients to provider entities in VBP models:

  • Have policies and processes to encourage patient choice of primary care clinicians.
  • Educate providers on how to access, utilize, and share data on attributed enrollees.
  • Have a process by which a provider may dispute the payer’s attribution of an individual enrollee in relation to a VBP arrangement, inform providers of its dispute process and promptly respond to and address provider complaints related to individual enrollee attribution/assignment.
  • Consider altering attribution and related primary care assignment when an enrollee is regularly seeing a different provider for primary care services than the primary care clinician to which the enrollee has been attributed and if an enrollee has not seen the attributed clinician in a defined period, such as the past twelve (12) months.
  • Have clear methods for adjusting its assignment and VBP attribution methodologies based on data analysis.
  • ​Seek to align their assignment and VBP attribution policies and methodologies to create more consistency across payers and less confusion for providers.

Resources

Patient Attribution: Why the Method Matters
McCoy RG, et al., American Journal of Managed Care. 2018 Dec; 24[12]: 596-603

  • This paper assesses the impact of five commonly used patient attribution methods for measuring health care cost, quality and utilization metrics within an integrated health care delivery system.
  • Key points: Reliable identification of the physician-patient relationship through attribution is necessary for accurate evaluation of health care processes, efficiencies and outcomes.

Whose Patient Is It? Patient Attribution​
Milliman Healthcare Reform Briefing Paper

  • A classic paper by the Milliman actuarial firm that succinctly describes several attribution methods and considerations for their use.
  • Key points: Summary of key attribution terms and methods for successful accountability models for VBP.​

Achieving health equity is essential to achieving the triple aim. VBP models offer the opportunity to focus resources on people that historically and currently have experienced the most inequities because of inconsistent access to health care, limited or no availability of culturally and linguistically appropriate models of health care, and the masking of disparities caused by a lack of comprehensive and complete demographic data about patients.

To improve equity, you first need to understand your patient population by collecting race, ethnicity, language and disability (REALD) data.

  • Review REALD guidance and resources​ developed by OHA
  • Assess, and if necessary, improve your capability to collect comprehensive and complete self-reported REALD data from all your patients.
  • Stratify quality and access data to identify disparities, and what additional resources or clinical transformation might be needed to close those gaps.
  • A provider may want to negotiate for upfront, capacity-building payments to support this data collection and stratification.

Payers can help providers identify patients who may be experiencing health disparities by sharing information they have about their members such as those who do not have a regular source of primary care and members at high risk.

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Green ribbon icon representsBest practice

CareOregon is engaged with the Alliance of Culturally Specific Behavioral Health Providers (“the Alliance”), a group of seven programs at five organizations, to codesign a new value-based payment model grounded in addressing health inequities and health disparities. The model, likely a 2C (pay-for-performance), will also have applicability to culturally specific providers outside of the Alliance.

The new model is expected to be fully implemented in January 2025 and has been intentionally developed in phases. Joint decisions on areas of focus by year have been:

  • 2020 and 2021 implementation: Support provider stability and quick repositioning of services during the pandemic and grant to Alliance for time and capacity to be co-facilitators.
  • 2022 implementation: Enhanced payment differential of 10% for culturally specific treatment services related to workforce and staffing; Health Related Services used as a financing mechanism to fund outreach and engagement which many agencies used to support Traditional Health Worker services.
  • 2023 and 2024 planning: Alliance and CareOregon developing a culturally specific care model, quality measures and ongoing payment structure(s) for January 2025 implementation.

Once you understand your patient population and disparities, you can work with your payers to include strategies in the VBP model to promote health equity, such as:

  • Equity-focused quality measures in any aligned measures set(s).
  • Financial incentives for practices to stratify quality measure performance by REALD in order to identify any potential disparities and develop targeted interventions.
  • Support for services such as health-related social needs (HRSN) screening and/or traditional health worker (THW) services in the prospective payment or via fee-for-service (FFS) or supplemental payments.
  • Financial incentives to identify and engage people who are not accessing primary care.
  • Infrastructure payments to support collaboration and data sharing between practices and social services organizations to address identified HRSNs.
  • Exploration of risk adjustment methodologies that account for social risk factors.

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Green ribbon icon representsBest practice

​Virginia Garcia Memorial Health Center, a federally qualified health center with 18 locations serving the communities of Washington and Yamhill counties, places a special emphasis on caring for migrant and seasonal farmworkers and others with barriers to receiving health care. The health center has started collecting data on social complexity which they hope to eventually work with payers to use for social risk adjustment. The data collected through screening is coded in their EHR to better understand the needs of the population and align with social service providers.


Green ribbon icon representsBest practice

Since 2012, OHA has contracted with Coordinated Care Organizations (CCOs) to implement delivery system transformation and payment reform through the state’s Medicaid program, including VBP. One of the objectives of the OHA VBP Roadmap for CCOs is to "ensure consideration of health disparities and members with complex needs,” noting that "​VBP strategies should, on the whole, benefit members with complex health care needs and priority populations such as racial, ethnic and culturally based communities; lesbian, gay, bisexual, transgender and queer (LGBTQ) people; persons with disabilities; people with limited English proficiency; immigrants or refugees and members with complex health care needs, as well as populations at the intersections of these groups." The VBP Roadmap for CCOs cautions that "[i]t is essential to ensure there are no negative unintended consequences of VBPs on these and other populations."

The 2022 interim progress report noted some successes and challenges for CCOs in integrating health equity in their VBP efforts. Successes include engaging providers in reviewing community- and provider-level quality performance data, but there have been challenges in monitoring health inequities arising from VBP arrangements, with wide variation in providers’ health IT capabilities. Overall, CCOs are promoting health equity through VBPs using the following approaches:

  1. Quality performance measure selection and targets,
  2. ​Tiered or adjusted payments for providers,
  3. Identification and inclusion of eligible providers, and
  4. Process or attestation-based requirements in the VBP contract.

Patient input

Equity also requires patients, families and caregivers who are most impacted by policies and systems have some ability to provide input to changes to health care payment and delivery. One way to do this is to create a patient and family advisory council consisting of patients and family members who have received care at your practice and administrators, clinicians, and staff.


Green ribbon icon representsBest practice

​As part of CPC+ Providence Medical Group (PMG) engaged patients and families, through patient and family advisory councils (PFACs), to participate in health care transformation to achieve higher quality and a more equitable health care delivery. The work is labor intensive and with the pandemic many PFACs stopped meeting and recruiting new members is challenging. PMG’s Patient Engagement Program Manager is working with clinics to explore other ways to engage patients.​

Resources

  • Webinar: Using value-based payment to reduce health disparities (3/17/21) Slides / Recording​

In Oregon and nationally, payers and providers are increasingly engaging in risk-based payment models. Risk-based contracts are proliferating in the commercial insurance market, and Congress and CMS have created strong financial incentives and requirements for Medicare providers to move to shared risk payment arrangements.

Risk-based VBP arrangements​

Risk–based VBP arrangements offer providers the potential for greater financial rewards and more flexibility, and the opportunity to invest in clinical care transformation. Risk-based VBP models include one-sided arrangements, offering you rewards or "shared-savings" resulting from more efficient provision of quality care, or two-sided models, with a requirement that you assume some financial or "downside risk," if medical expenditures are higher than expected within the VBP model for the attributed population and identified services.

In shared savings or upside-only VBP models, providers may earn a portion of savings if their costs are below a defined benchmark. In downside-risk models, providers are responsible for paying a portion of the costs above the benchmark if the benchmark is exceeded. Payment models with downside risk typically provide stronger incentives and more flexibility for care delivery transformation than upside-only models.

Provider reluctance to shared risk

While provider entities and clinicians are increasingly adopting VBP, many are reluctant to participate in VBP models with downside risk (shared risk) even though these models may provide stronger incentives or flexibility for care delivery transformation.

Upside-only (shared savings) VBP models - providers may earn a bonus and/or a portion of savings if their costs are below a predetermined benchmark.

Downside-risk models - providers are responsible for paying a portion of the costs above the benchmark if the benchmark is exceeded.

  • These benchmarks are sometimes referred to as Total Cost of Care (TCOC)​ targets, even though some services and populations may be excluded from the TCOC calculations.

Most VBPs are built upon the fee-for-service (FFS) architecture​

  • Payers continue to pay claims as they always have.
  • Shared savings or shared risk arrangements then reconcile claims payments to TCOC budgets at the conclusion of a performance period.
  • Determining how close you are to the TCOC targets and waiting to receive any shared savings can be challenging. In some VBP models, you may not have access to up-front dollars (such as supplemental or foundational payments) to cover expenses for care or services not traditionally reimbursed in FFS.
  • If a payer reconciles the claims payment to the VBP target long after the conclusion of a performance period, it dilutes the motivational impact of the incentive.

Incorporating random variation

Consider natural fluctuations in health care service use and associated medical expenditures in any given population occur randomly. VBP models that do not appropriately account for random variation within and across small numbers of patients, could result in a payer not rewarding a provider entity when "true" savings occurred, and/or penalizing a provider entity when "true" losses did not occur.

Options for payers and providers to manage financial risks in VBP arrangements:

Below are some strategies to support success for providers who are advancing to models that include sharing in losses, known as downside risk. These options are not mutually exclusive and can help you assess, identify, and in some cases modify VBP models that work best for your situation and size.

    ​​​​Set a minimum number of attributed lives for shared risk models
  • Both provider entities and payers may want to set a required minimum number of attributed lives before they will enter into a risk-bearing contract. The minimum number of attributed lives will not necessarily be the same across models, but reflect the populations and services included in the VBP model.​

  • ​​Red​uce variation in data and financial risk.
    Reducing variance to address the risk of inaccurate shared savings or recoupments is important. With health care providers increasingly being rewarded based on changes in cost of care, it is critical that sufficient statistical safeguards are in place to ensure that payment arrangements fairly reflect provider performance rather than random variation in medical utilization.​(1​)​ Strategies to reduce variance include:
    • ​Truncating extreme or outlier values by setting a maximum annual aggregate claim level (such as $100,000) and excluding every claim above that level from consideration in the VBP model. This could also be done by truncating claims at a percentile (such as 9th) of all population expenditures.
    • Excluding all dollars associated with predefined exceptional circumstances and catastrophic cases (such as patients receiving organ transplants).
    • Using the same patients to measure outcomes in baseline and performance periods. In this prospective attribution approach provider entities are at-risk during the performance year for patients they had previously treated in the baseline period.
    • Covering all patients served by the provider entity in the performance year but measuring effects among higher-risk patients. Restricting performance measurement or risk-based contracting to a smaller, more costly group of patients will reduce the variance and increase the likelihood of detecting a true effect. This type of prospective attribution approach typically involves the use of a predictive risk-score algorithm such as Adjusted Clinical Groups (ACGs) or Chronic Illness and Disability Payment System (CDPS) to identify those at highest risk of future expenditures.

VBP arrangements that include a risk adjuster

Even within VBP arrangements that do not involve prospective attribution, providers and payers can utilize risk-adjustment software to understand and modify expected spending levels by age and gender to reflect the patient population served. Payments can also be adjusted for clinical risk when part of a total cost of care arrangement. By incorporating information on overall risks of attributed populations in VBP calculations, payers can reduce the likelihood of financially penalizing providers for serving patients with a higher-than-average burden of illness or reward providers for serving a healthier than average patient population.

Case-mix can vary substantially across providers. In addition, risk-adjustors help account for changes in attributed patients’ health status over time that may increase expenditure variance in an attributed panel. Primary care only payments should not be adjusted for clinical risk because a commonly accepted methodology to estimate how much primary care someone needs based on their medical condition(s) does not yet exist.

Set a minimum savings/loss percentage within VBP models

Small gains and losses are most subject to random variation in utilization and medical expenditures. The risk of a payer inappropriately rewarding or penalizing a provider entity can be minimized by setting a minimum savings/loss percentage, such as 1-2 percent of the total cost of care target, in a VBP arrangement before any savings/losses are shared with the accountable provider entity.

Discount small gains or losses within VBP models

Discounting small gains or losses, and not enabling (or requiring) that an accountable provider share in those savings (or losses) to the full extent, also helps mitigate the risk of false positives and false negatives in VBP arrangements. For example, a payer using this approach might discount savings (or losses) between 2-5 percent before calculating savings the provider has earned or the portion of losses a provider must offset.

Aggregate providers for measurement of financial performance

Grouping smaller panels/provider entities together for purpose of financial performance measurement increases the sample size available to assess provider performance. Aggregating with other providers may help reduce financial risk and uncertainty in an advanced VBP arrangement. However, your provider entity still needs to understand and agree to the methodology for sharing savings or financial penalties across involved entities.


Green ribbon icon representsBest practice

Eastern Oregon Coordinated Care Organization (EOCCO) contracts with primary care practices ranging in size from small practices with one provider to large health systems with many clinics and thousands of attributed members.

The VBP model has a joint ownership structure with local practices who have a stake in cost and quality outcomes. This includes groups of smaller providers that have joined together to reach a minimum membership threshold suitable for the custom model described below. A large board of diverse provider and community representatives guide the work, with an extensive vetting process for any proposed VBP changes.

The primary care VBP model consists of:

  • PCPCH infrastructure payments (HCP-LAN 2A) to support primary care practice infrastructure and capacity to participate in VBP; available to all PCPCH practices regardless of size
  • Optional prospective primary care capitation (HCP-LAN 4A) to providers willing to accept the risk of moving from fee-for-service (FFS) to capitation; rates are higher than what the practice would receive under FFS to encourage adoption
  • Additional behavioral health integration capitation (HCP-LAN 4A) is available to clinics who offer behavioral health services in the primary care setting
  • Quality bonus (HCP-LAN 2C) available to all primary care clinics, based on a measure set derived from the list of Oregon Medicaid incentive measures
  • Total cost of care incentive (HCP-LAN 3A/B) under a shared savings model, including all medical and pharmacy services

Quality is assessed on a portfolio of quality measures with low minimum denominator thresholds for measure inclusion (minimum 10 members), to allow the maximum number of practices to participate. All primary care practices can earn a VBP incentive for meeting quality measures.

The total cost of care incentive has two different forms depending on provider size.

  • For large practices – the provider is held accountable for risk-adjusted total cost care trend for their attributed population, with upside and downside risk
  • For all other practices – all providers share risk for pooled outcomes; also available to risk-averse large practices

These programs have been highly successful in generating provider engagement in quality improvement and cost control. In each of the last three years, EOCCO paid out more than $20 million in quality and total cost of care bonuses, not including capitation and infrastructure payments.

Resources

Risk Stratification: A Two-Step Process for Identifying Your Sickest Patients
Dera, J., Family Practice Management. 2019 May-June;26[3]:21-26

  • This paper describes how a practice applied a structured approach to determine their patients' health risk levels and used it to improve their care teams' support for their patients.
  • Key points: Risk stratification enabled the practice to provide risk-stratified care management. Article includes a risk stratification algorithm tool and considerations for workflow changes that improve care management.

Footnotes

1. McCall N., Peikes D. (2016). Tricky Problems with Small Numbers: Methodological Challenges and Possible Solutions for Measuring PCMH and ACO Performance​, State Health and Value Strategies, a program of the Robert Wood Johnson Foundation.


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