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Preparing for value-based payer contracting

By Shannon Geis
December 8, 2016
Body of Knowledge Domain(s): Financial Management

If you are considering a move toward value-based payment, there are some questions you should be thinking about before your practice starts negotiating new contracts with payers, says Doral Jacobsen, MBA, FACMPE, MGMA member, chief executive officer, Prosper Beyond, Inc., Ashville, N.C.

“Ask yourself, ‘How do we build on our framework and position for the future?’” says Jacobsen. 

Jacobsen organizes the current available frameworks into four categories: Category 1 (fee-for-service), Category 2 (Fee-for-service with a link to quality and value), Category 3 (APMs built on fee-for-service architecture) and Category 4 (true population-based payment). And she says contracts are shifting away from straight fee-for-service and toward the other three categories, with bundled payments fast becoming the most common framework to adopt.

So what should you be thinking about when trying to figure out what model to choose? Jacobsen says even the best strategic plans can fail if you don’t think about your practice’s individual needs. “Culture eats strategy for lunch,” she says, which is why she emphasizes the importance of considering your practice’s culture in order to choose a payment models that is right for you. 

In order to set yourself up for success, Jacobsen has a few guidelines. First, she suggests establishing a value proposition for your practice. She recommends asking yourself the following questions: 

•    Who are you?
•    What value does your practice add to the network?
•    How can you quantify how you add value?
•    Why are you better than the competition?
•    Where do you see yourself on the managed care contracting continuum?

Knowing the answers to these questions, Jacobsen says, will improve your approach to the negotiation. She also recommends completing a market assessment because “understanding how you are perceived [by payers] is a foundational step.”

Once you understand where you stand within the market, Jacobsen suggests evaluating your current performance in order to understand where you can improve and what you would be willing to offer in a negotiation. “The devil is in the details,” she explains.

Jacobsen also outlines some of what she considers best practices:

  • Define practice roles and responsibilities for contracting activities with clarity
  • Analyze contract performance thoroughly and establish baseline performance
  • Establish timelines for negotiations based on historical performance
  • Secure a provider champion to support the process
  • Understand that a well-thought-out approach pays off
  • Take emotion out of the equation
  • Focus on creating a collaborative relationship with payer partners – and understand that it will not be perfect for anyone
  • Establish both short- and long-term goals
  • Consider new approaches/measures to assist the practice in growing into value-based arrangements

But most importantly, according to Jacobsen: if you are considering moving to a value-based contract, “start having conversations with payers as soon as possible and find out how that would look and feel,” she says. “You can carve out your own path rather than follow someone else’s rules.”

Shannon Geis, Staff writer/editor, MGMA

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