1. Intro to Risk Based Contracts/Value Based Agreements
Torrey D. Sundall
Senior Director, Payor Contracting and Analytics
Sanford Health

2. Primary Footprint for Sanford Health

3. South Dakota, North Dakota, Minnesota Environment
Blue Cross Blue Shield of North Dakota
United HealthCare
Traditional Medicaid and Medicaid Expansion
Sanford Health Plan
Health Partners
Preferred One / Ucare
Medicare Cost and Advantage Products
PMAP
Medica
Wellmark
Avera / Dakota Care
Blue Cross Blue Shield of Minnesota

4. Triple Aim

5. Why Risk: Bend the trend curve overtime for sustainable long term savings (not a 1 year or short term approach to cost containment)
PMPM
Time

6. Key Components of Risk Models
Attribution of patients to care system
Support/report to providers to help achieve success
Risk Model
Financial Model that aligns incentives i.e. reduces costs, shared savings
Quality component

7. Some Key Terms to Understand
Medical Loss Ratio (MLR) Risk Score
Profit and Loss (P&L) Per Member Per Month (PMPM)
Capitation Shared Savings/Shared Loss
Total Cost of Care (TCOC) Attribution
Bundle/Episodic Payments Pay for Performance (P4P)
Stop Loss Risk Adjusted PMPM
Care Management Fees Accountable Care Organization (ACO)

8. Essentials of Risk-Based Contracting
Attribution of Patients – not a perfect science
•Attribution may be based on patient choice of product/PCP
•Attribution may be prospective assignment based on # of patients visits
Attribution at PCP level only or additionally to specialty level
Structure of Incentive Payments
•Understand how contracts impact overall revenue goals
•Cost incentive payments may be contingent upon quality performance
Pass/go, pro rata based upon achievement points
•Determine model: MLR, P & L, P4P, Bundle Payments, CMFs, TCOC
•Prospectively agree upon cost and quality targets
•Pre-payment of quality incentives – care management fees

9. Essentials of Risk-Based Contracting cont.
Quality Terms
•Standardize quality measures, targets across contracts – avoid chasing circles
•Ensure quality measures are achievable, applicable and actionable
•Collaborate with clinical leadership to ensure alignment of cost and quality initiatives
Core Team and Responsibilities
•Create core team infrastructure, collaboration among departments
•Optimize existing data sources, it’s all about the data!
•Requires data support from payors
•Involve care management programs
Provider Network Buy In
•Do you structure physician compensation models to incent focus on quality and cost of care?

10. Alternative Payment Models (APM) Framework$
Category 2
Fee for Service –
Link to Quality & Value
Category 3
APMs Built on
Fee-for-Service Architecture
Category 4
Population-Based
Payment
Category 1
Fee for Service –
No Link to Quality & Value
Fee-for-Service A
Foundational
Payments for
Infrastructure & Operations B
Pay for
Reporting C
Rewards for
Performance D
Rewards and Penalties for Performance
APMs with
Upside Gainsharing
APMs with Upside Gainsharing/ Downside Risk
Condition-Specific Population-Based Payment
Comprehensive Population-Based Payment
Majority of base CMS payments
Care Management Fees
Medicare Pay for Reporting programs: outpatient, home health, nursing facility, inpatient rehab, and inpatient psych
Quality Incentive Program
Medicare Pay for Performance programs: hospital value based purchasing, hospital readmissions reduction program, hospital acquired conditions program, dialysis, HHA pilot in Iowa, Physician MIPS
ACO/TCOC risk agreement with upside only, or MLR with upside only
Medicare Comprehensive Care for Joint Replacement program
Diabetes “bundle”
ACO/TCOC risk agreement with up and downside risk
State Medicaid programs
SD Medicaid Health Homes
Bundled Payments
Majority of commercial payments

11. Total Cost of Care
Definition
Sum of all costs generated by all providers across all places of service for an attributed insurance plan member population

12. Cardiac bypass surgery
Total Cost of Care
Definition: Example care episode for ischemic heart DZ
Emergency Room:
Possible heart attack
Cardiac bypass surgery

13. Cardiac bypass surgery
Total Cost of Care – “Hold the Mayo”
Definition: Example care episode for ischemic heart DZ
$+$+$ +
Emergency Room:
Possible heart attack
$+$+$ +
Cardiac bypass surgery

14. Rational Standards and Basic Risk Model Principles
Principle 1: Collaboration with Health Plan and Payors.
Principle 2: Patient Involvement.
Principle 3: Quality Incentives.
Principle 4: Scope of Contract.
Principle 5: Shared Savings.
Principle 6: Readiness.

15. Risk Tolerance Options
Allow providers to choose option that reflects risk tolerance
Less downside (less risk) may mean less upside (opportunity)
More downside may mean more upside
Example of 3 options:
Option 1 2 3
Upside
40%
50%
70%
downside 0%
20%
35%
Could also put a $ cap or corridor on both upside & downside as a transition to full unlimited model.

16. Quality should be a factor in model
Set simple metrics that are supportive of long term cost control, limited number, consistent with other quality programs.
Sample Measures:
Optimal diabetes care
Optimal vascular care
Transition of Care
Colorectal screening
Well Child Visits 0-15 months, 3-6 years
Mammography screening
Depression Screening
Asthma care
Patient Experience
HEDIS Measures
Potentially Preventable Admissions
Potentially Preventable ER Visits
MN Community Measures

17. Performance and Reporting
Settlement payouts
Shared savings paid out (shared losses collected) in lump sum to (from) providers after appropriate run out period (generally 3-4 months)
Reporting & Provider Support
Financial reconciliation reporting should be done on regular basis over the year. Due diligence to ensure data integrity.
Provider utilization & TCOC reporting is integral to success of program & must be deployed at the outset & on quarterly basis thereafter.
Care management needs to pivot to supporting role to providers.
You need buy in!