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VBP Toolkit: Section II. Get Ready for VBP

Overview

There are many steps a practice can take to get ready to implement VBP or change a VBP model.

Section II. steps

Green ribbon icon representsBest practice

Grants Pass Clinic has developed and implemented a variety of strategies internally and with external partners to achieve quality and cost VBP objectives.

  • A partnership with the local behavioral health provider has increased behavioral health visits through warm hand-offs. It has been very successful, but recent staffing challenges have limited the ability of the partner organization to have staff onsite.
  • A pharmacist group partnership for medication reviews, especially on patients who take over a certain threshold of medications, has reduced medication costs.
  • Through their ACO, the clinic is reaching out to patients at the end of their life for comprehensive advanced care planning, including engaging family members.
  • Clinic staff and clinicians are increasing the number of Advance Directives by asking patients about them at appointments.
  • The clinic community health and behavioral health coordinator partners with many local agencies as well as pharmaceutical companies to help patients get their needs met.

Seek a common understanding of how payers define value in their VBP models and how these definitions align with your VBP team’s expectations. VBP arrangements are more successful if there is alignment. A VBP arrangement is a partnership between you and your payer partners to mutually and collectively target and improve defined measures of value

The business case for VBP

Prior to embarking on a VBP initiative, consider the business case for participating in a VBP model. Objectives might include:

  • Improving care coordination, including transitions of care;
  • Increasing clinic flexibility to provide team-based care, including integrating primary care with mental health care and care for persons with substance use disorders;
  • Reducing overutilization, underutilization, and misuse of service by measuring and reducing unwarranted practice variation;
  • Improving care for certain high-cost, high-need populations;
  • Improving quality by closing care gaps (difference between best practice and actual practice);
  • Improving patient experience and patient outcomes;
  • Advancing health equity and addressing patients’ health-related social needs;
  • Empowering patients;
  • Reducing health care cost growth;
  • Complying with OHA and other requirements;
  • Remaining competitive – or getting ahead - in the local health care market;
  • Increasing capacity to demonstrate quality improvement and ultimately take on more financial risk; and/or
  • Improving negotiation leverage with other payers with increasing experience and a track record of successfully implementing VBP.

Yellow caution triangle icon representsCautionary note for implementation of a new VBP model

​Without an intentional focus on equity, transformation and payment reforms may perpetuate or increase health inequities. Consider:

  • To what extent are your payers focused on equity as part of their value objectives, and the potential for inadvertently exacerbating health inequities?
  • How will you incorporate reducing disparities and advancing health equity as part of your VBP value objectives?

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Leadership with a clear vision, commitment to VBP and the ability to manage change is critical for the successful shift to VBP. VBP requires adjustments in internal processes and systems, such as data management, as well as cultural change. Strong leadership and organizational communication are key factors in the culture change required for VBP advancement.

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Green ribbon icon representsBest practice

The decision to transition to VBP is multidimensional, sensitive to context and driven by a few key executives, especially the chief financial officer in hospitals and health systems. Factors that play an important role in provider entities successfully navigating from volume-to-value include:

  • Strong leadership vision;
  • Long-term organizational commitment (as opposed to short-term shifting commitments);
  • Upfront resource investment; and
  • Ability to carefully design stakeholder incentives aligned with VBP objectives.(2)
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"Leadership had to believe that VBP is the right thing to do and that they could make it work financially for the organization. At some point, providers will also recognize that VBP is the right thing to do and it will make their lives better."
Gregg Meyer, MD, MSc, chief clinical officer, Mass General Brigham Healthcare System and professor of medicine, Harvard Medical School.​(3)

Supporting VBP implementation

Senior leadership needs to ensure that its VBP strategy is deployed in a supportive manner across all internal business functions. Carefully consider who will participate in the VBP model rollout and how and when they will participate, including: staff (clinical quality, data, provider contracting, finance, project management), payer representatives, provider champions, and members.

Ask payers about resources that they may contribute, for example leadership training programs on topics that range from developing internal capacity for organizational learning and behavior change to practice variation analysis.

While smaller and/or safety-net provider entities may not have a comparable executive suite or VBP team, it is still critical that key internal staff be charged with leading VBP implementation efforts. Staff may be more likely to have multiple operational, clinical, and/or financial roles. In addition, smaller entities may lack capacity to hire staff specifically for VBP roles and expertise. Consequently, clear internal accountability for VBP implementation, combined with external resources and best practices will be key to VBP success.


Black medical suitcase icon representsConsideration for smaller, rural and/or Safety Net Providers

CMS' Medicare Quality Payment Program​ offers support for small, underserved and rural practices.


Footnotes

2. Lessons learned from the transition from volume to value​

3. Understanding Provider Participation in Value-Based Payment​

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​Implementing VBP involves different facets of payer and provider entity operations. For example, you need a robust quality program associated with the payment model, and technical details of administering the payment model must be clearly understood and addressed.​​

Establish a multidisciplinary team appropriate to your provider entity’s size and scope with responsibility for managing VBP implementation and ongoing operations, and for engaging staff and clinicians in the work. Consider outside resources for support and technical assistance, including payer partners, provider associations and consultants.

For large providers

For larger providers, the VBP team might include:

  • Senior leaders who have decision-making responsibilities
  • Contracting staff who will negotiate the final details of a contract
  • Clinical staff
  • Quality management staff who help develop a quality strategy and discuss measurement with provider
  • Analytical and/or financial staff who can interpret data the plan might share with providers
  • Business, finance, and project management staff who can manage the internal operations of VBP implementation, including monitoring the fiscal impact; and
  • Provider and payer staff who may serve as VBP champions to address questions regarding the payment model being proposed.

Green ribbon icon representsBest practice

To support success in VBP arrangements West Hills Healthcare engaged leadership and staff to build a nimble team that leverages data to deliver the best care for patients. The clinic president tapped systems-level thinkers she knew were going to be excited about the new model and recognizes their hard work with a stipend for participation.

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"You have to know your staff. Know who’s going to be excited and get them on board. We appreciate the time they’re spending and do as much as we can over email. When we need to meet, we give a stipend of $150 per meeting to recognize the value of their participation."
Ashley Hyder, MD
Chief Operating Officer
West Hills Healthcare Clinic PC


Black medical suitcase icon representsConsideration for smaller, rural and/or Safety Net Providers

​Small practices often rely on shared resources such as through an IPA, but also working with outside TA supports such as consultants. Many small practices need outside help with their EHRs for quality reporting and VBP success. Some successful providers have added a panel manager who reviews rosters, helps onboard new patients (when assigned), and coordinates with other staff responsible for outreach and recalls. These clinics also have a population health or quality committee that meets monthly.​

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Green ribbon icon representsBest practice

​Like many clinics in VBP arrangements, to track and address care gaps the Corvallis Clinic must view claims data on a different provider portal for each payer with which it contracts. To reduce this administrative burden and maximize the benefit of the data, a data analyst at the Corvallis Clinic built a program in Tableau that automatically aggregates data across provider portals into a combined list. A quality specialist then uses that list to connect with patients and schedule for services if needed.

Start by collecting and using data to which you already have access and which is relevant to the VBP model(s). For larger provider entities, internal data analytics staff will manage complex data sets, interpret and analyze clinical data, and develop and interpret quality and cost performance measurements at the provider and clinician level.

To the extent possible, know your baseline performance prior to entering into a VBP arrangement to understand what performance (clinical and financial if applicable) is achievable in the proposed measurement period. To obtain common baselines, provider entities and payers will need to work together, sharing data and methodologies to ensure a consistent and accurate understanding.

Data from payers

Ask payers for support in identifying best practices for bi-directional data sharing given your entity’s size, resources and data capabilities, and ask again as you advance to new VBP models.

VBP and data sharing (June 2024)


Green ribbon icon representsBest practice

​Moda helps providers manage commercial and Medicaid members by aggregating data for all Moda and EOCCO members into a single report. Providers can filter and sort for specific lines of business if desired. They also provide simple, user-friendly reports designed to help point out opportunities for providers to improve cost and quality. A team of quality improvement specialists reach out to and engage with primary care practices to help them interpret and use the data provided.

Model first

Before you actively engage in a VBP arrangement, model it to ensure that your organization can be financially and operationally viable under the arrangement. Modeling usually requires data and potentially sophisticated data analysis in collaboration with payers and/or by external resources and consultants. Know your attributed or assigned members and understand your baseline clinical and financial data for these members, and how they compare to the payer’s benchmarks.

Use dashboards

Obtain, develop and use VBP performance dashboards to investigate where performance differs from established VBP targets or contract expectations. You can start with simple VBP performance dashboard(s), including those provided by payers, and add to and refine your VBP dashboards over time.

Phase in

Payers might work with you to phase in new VBP models or performance measures by first rewarding providers for accurate, complete, and timely reporting on specific performance measure(s). This allows them to create a common baseline, or shadow-pricing approaches, before actually paying provider entities differently for performance.

Staff needed for success

Recognize that your provider entity will need VBP champions and data analytics staff (internal and/or external) able to help practices and clinicians interpret and act on performance data relevant to your and their VBP performance. The amount of data, and different ways to analyze and present performance data can be overwhelming. In addition, some clinicians and staff may prefer graphs while others want access to as much data as possible. Don’t expect perfection in your data or universal acceptance. Focus on priority areas and data and what you need collectively to move the needle on key VBP performance indicators.

Understand calculations and timelines

For example, Category 2A and Category 4 VBP models include prospective per member per month (PMPM) payments to providers. In pay for reporting (Category 2B) arrangements, providers may get extra funds every time they report on performance to a payer. Some payers may offer additional payments to providers for reporting that they closed a performance gap by screening an eligible, attributed member for a HEDIS measure included in the VBP model. In this case, the reporting may be as part of the provider’s claim or encounter data submission. This type of VBP payment may show up as a monthly or quarterly lump sum payment to the provider for all applicable "gap closures" reported in the prior period. Since these types of VBP payment models do not assess provider quality or financial performance to a benchmark across a panel or group, provider payment is not delayed waiting for overall quality or financial results.

In contrast, VBP payments for provider participation in Category 2C Pay for Performance (P4P) models and Category 3 Shared Savings or Downside Risk models are largely, if not entirely, retrospective, with potentially large payments (or recoupments) occurring six months or more after the end of the performance period due to the need for complete and accurate quality and financial data to assess provider performance to the established VBP targets across all attributed patients.

Payments upfront and throughout the year​

Consider asking payers for the potential to obtain a portion of your VBP payments prospectively or throughout the year. For example, if a plan has a 2C P4P model, you could seek to obtain a partial payment amount at the start of the year to support outreach or seek partial payment during the year based on your P4P performance to date. The payer would retain the remainder to be paid out after all performance data is final, or to be reconciled with any Shared Savings/Shared Risk arrangements that might wrap around the 2C arrangement in the VBP model.​

Provider entities and clinicians are increasingly adopting VBP, but many are reluctant to participate in models with downside risk (shared risk). Moving away from the known fee-for-service (FFS) model and accepting financial risk can feel scary, despite knowing that risk-based contracts may provide stronger incentives or flexibility for care delivery transformation. To move forward it is important to assess your tolerance for financial risk in VBP models.

Ask the following questions for your organization:

  • Did you conduct a financial analysis to ensure that you understand the resources required to change clinical care operations, understand your data, and accept financial risk?
  • Do you have a means – facilitated by a payer(s) – to continuously monitor the costs to deliver services to attributed patients compared to revenue?
  • Do you have reserves or other financial means adequate to cover any potential contractual financial losses or changes to cash flow?
  • Are the right populations and/or services ‘carved out’ of the payment model?
  • Is your financial exposure limited for high-cost outliers?
  • How is risk adjustment being conducted by the payer(s)?

To be successful in any VBP model, including pay for performance and shared savings, investments in data analytics and clinical workflow changes are needed. See Section I Step 4 Identify current data analytical capabilities and gaps for details on the access to data and analytical capabilities to support successful engagement in VBP models, and Section II Step 4 Assess, interpret and leverage data​ to assess your capabilities.

Accepting financial risk

Being paid prospectively or on a shared-risk basis requires providers to accept financial risk and to have the financial and technical capability to pay clinicians and staff. If your provider entity does not have experience in being paid under a prospective or risk-based payment, pilot such payment with trusted, collaborative payers and set up feedback loops with payers to identify challenges you may have, and any data quality concerns the payer may have and adjust the process as needed.


Black medical suitcase icon representsConsideration for smaller, rural and/or Safety Net Providers

​Providers that are small, less financially secure, less experienced with VBP models, and/or more risk averse may be concerned about potential financial losses in certain VBP arrangements. While this is a legitimate concern, provider entities may explore VBP approaches with their payers that mitigate the potential for significant provider losses and offer significant opportunities for provider entities to reap financial rewards from successfully transforming care and improving value.(4​) More detail can be found in Section II Step 7 Engage and negotiate with payers​.

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A ​stop loss provision in a VBP arrangement sets a pre-determined cost threshold for a patient whereby any costs over the threshold are removed from the physician or practice’s Total Cost of Care calculations and liabilities.

Risk corridors mirror aggregate stop loss thresholds/insurance in that physicians are protected against higher-than-expected total medical spending for attributed patients. Risk corridors function by limiting provider financial losses (and gains) beyond a specified, allowable range.

In consultation with payers, determine whether and how to use stop-loss or other risk protections in your population-based payment arrangements. You might negotiate individual-level risk protection with payers for high-cost outliers and seek to self-finance and/or purchase aggregate stop loss coverage from the payer or a third party.

D​etermining financial performance and payments

Know when and how the payer will determine financial performance against the budget targets. Consider what claims lag time might be, how the financial data will be analyzed, and whether the provider has an audit and/or appeal process on the budget calculation.

Understand how and when savings will be distributed and how any losses will be recouped. Payer approaches to addressing losses may vary by provider size and financial stability and experience. In the event of a loss, payers could reduce the budget or FFS payment for the following year to spread the cost of the losses out over a year. This doesn’t require the provider to actually pay the health plan dollars. Alternatively, larger providers with financial reserves may be asked to reimburse payers directly for incurred losses within population-based payment models.


Black medical suitcase icon representsConsideration for smaller, rural and/or Safety Net Providers

  • To estimate average savings per person, shared savings programs typically assess providers’ performance relative to an expected target or a comparison group’s performance, but the existence of random variation in medical expenditures leads to statistical uncertainty in measuring the savings rate. This uncertainty is greater for provider practices that have a smaller number of attributed patients.
  • The probability of an incorrect performance reward or penalty is heavily dependent on panel size. This potential for statistical uncertainty isn’t limited to situations where the provider entity is small, (i.e., has few patients), but can also occur when an individual payer or health plan has few patients attributed to the provider entity. However, aligned multi-payer VBP models, such as those envisioned by the VBP compact, can help to increase the size of attributed panels and achieve statistical confidence.
  • The more VBP measures and models align across payers, the more there can be valid approaches to measuring provider performance even when a particular payer’s membership is relatively small with a provider.

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

4. N. McCall. Tricky Problems with Small Numbers: Methodological Challenges and Possible Solutions for Measuring PCMH and ACO Performance, State Health and Value Strategies, 2016.

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Regardless of which VBP model you are implementing:​

  • Document your VBP approach including goals, timelines, measures and data sources.
  • Be realistic and clear about the resources required, and your expectations.
  • Maintain a dialogue with payers, clinicians and internal partners throughout the process.
  • Continue sharing information and seeking and responding to input and feedback from patients, families, caregivers and community partners.

Entering into more advanced VBP contracts with payers can take a significant amount of time. It is important to allow adequate time to plan and engage staff and clinicians. This is especially true if the provider entity and/or key clinicians and staff are not experienced with the particular VBP model being implemented, or if this is their first VBP arrangement. Don’t be afraid to ask payers to help identify solutions to challenges that might arise with your VBP implementation.

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When approached as a partnership, you can engage and negotiate with payers to enter into value-based contracts that support the care you provide, are flexible to allow for innovation and achieve payer and provider goals.(5)

To prepare for negotiation, start the conversation with the payer well before sitting down to sign a contract.(6​) At least 6 months in advance of the start date of the VBP arrangement, identify what you will need to do differently and how you will measure and track your progress. You will need a minimum of two years of data prior to beginning the contract to understand trends in your performance. Consider if it makes sense to look at data gathered before the COVID-19 health emergency.

Knowledge is power

To be successful you need to understand:

  • How performance will be measured (quality and cost), including data sources, calculations and algorithms to be used. Be clear that you can provide the data, manually or automated, in the formats the payer expects.
  • How the payer determines attribution, how they notify you of changes in your attributed or assigned population, and avenues you may have to question the attribution of specific patients.
  • Resources you are willing to commit for VBP success. This could be expanding access by staying open later or on weekends, creating educational resources for high-risk patients, investments to support patient outreach and care coordination, or implementing analytics.

It’s important to know what you are bringing to the table by assessing, interpreting, and leveraging your data. Data on quality of care and efficiency are key, but provider organizations may also highlight data and capabilities that show how the value-based contract will add to a payer’s portfolio.(7​)

Resources

Webinar: What do you need to know to negotiate VBP agreements? (4/21/21) Slides / Recording​​

Key questions you can ask payers:

  • What information/data can you provide to help my practice target outreach to patients attributed or assigned to my organization who have not been seen in my clinic? This could include names of high-risk patients that do not have a primary care visit and do have an emergency department visit or hospital admission.
  • What data and information can you provide to identify opportunities for my practice to improve performance?
  • What technical assistance can you provide to support success in VBP contracts?

Footnotes

5. What providers need to know when negotiating value-based payments

6. Note: ​Some payers have VBP arrangements within their base contracts – such as P4P arrangements – that providers should be aware of and work toward meeting, consider the potential ROI and alignment of measures across payers.

7. Value-Based Contracting 101: Preparing, Negotiating, and Succeeding​
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