Steady embrace of value-based contracts from medical groups

While the transition from volume to value in healthcare has been slow, a new MGMA Stat poll finds medical group practice leaders uncertain as to how quickly they will change their approach to contracting.

According to a May 14, 2024, poll, about one in four (25%) of medical group leaders expect to increase their organization’s value-based contracts in 2024, while most (41%) report they expect their current value-based participation to stay about the same and another 8% expect a decrease this year. Another quarter of the poll’s respondents (27%) noted they were unsure how their value-based contracts would shift this year. The poll had 224 applicable responses.

According to respondents’ comments to MGMA, practice leaders  embracing more value-based programs are driven by the need to find additional revenue opportunities amid rising expenses. Further:

• Groups that historically only embraced value in their Medicaid contracts are seeing more of them in their commercial agreements.
• The growth in Medicare Advantage plans and their value-based components was also a factor.

For the significant share of practice leaders expressing uncertainty, a key factor is the transition to risk-based contracts and other formula changes that complicate estimating the impact on profitability.

Group leaders expecting a decrease in value-based participation point to certain specialties in which value-based arrangements are no longer being offered by some carriers, or because they struggle to retain appropriate staff to manage programs tied to their agreements.

A slow and steady adoption of value-based elements into payer contracts aligns with MGMA polling from earlier this year that found about half (50%) of medical groups include quality performance metrics in their physician compensation methodologies — up from 47% in polling done in May 2023.

Learn more: Payer Contracting Seminar

Join us June 19, 2024, for a 3.5-hour Payer Contracting Seminar to give you the skills to analyze your contracts, strategically develop contract proposals and create a monitoring and analysis process. The seminar features industry-leading education from payer contracting experts such as MGMA Consultant Doral Jacobsen, MBA, FACMPE; and Moore Solutions Inc. President Nate Moore, CPA, MBA, FACMPE.

Insights from MGMA Consulting

During her recent appearance on the MGMA Women in Healthcare podcast, Jacobsen offered tips for managing contract negotiations with payers:

• Go from “no” to innovative: “Every negotiation starts with ‘no’ — that's how they trained us on the payer side,” Jacobsen said. “We want to partner with payers so we all want the same things.”  In one negotiation, she worked with the group’s vice president to help HEDIS scores and add those quality measures to a new contract, all of which was appealing to the payer and provided reimbursement that helped keep the practice independent.
• Exercise “tactical empathy”: Many negotiators embrace a hardline, “never split the difference” thought process, but tactical empathy — “really listening to what is happening on the other side and aligning with it,” as Jacobsen defined it — creates connectivity that helps discussions about innovative payment models become reality in a new contract.
• Do your homework on innovative models: Talking to payers about launching a potential pilot model with value components should not occur unless the practice has set its own financial goals. “I find that practices [that] start down this path, if they don't have a steering process of thinking about the long-term and short-term goals, we can get off track,” Jacobsen said. New initiatives should be viewed through the lens of those goals.

Learn more: MGMA advocacy

MGMA supports policies that ensure group practices have the choice to move away from fee-for-service and into value-based payment arrangements, such as alternative payment models (APMs). Learn more in our 2024 position paper on APMs.

Additional resources

• “Picking up the threads: Simplifying clinical administration of multiple value-based contracts” (Article)
• “Business Solutions: Strategies and opportunities for advancing value-based care” (Podcast)
• “Shifting to Value amid Pandemic and Staffing Challenges” (Whitepaper)
• “Executive Session: Managing the transition from volume to value” (Podcast)
• “Summit Spotlight | Don’t Leave Payer Money on the Table” (On-demand webinar)
• Payer Negotiation Checklist (MGMA tool)
• Navigating to Value-Based Outcomes (Book)