Expert Perspective

May 24, 2021

Keep the Wheels Rolling: When—and How—to Move Up the Value-Based Road

Kristen Daigle – Value-Based Contracting Lead

Whether to move away from fee-for-service (FFS) contracts isn’t the question being asked in most physician practices these days. The strategic vision of working toward improved outcomes and lower costs through alternative, value-based payment models resonates almost universally. So, the question at hand tends to be much more tactical:

“How do we know when we’re ready to advance to the next level along the Alternative Payment Model (APM) continuum?”

Answering this highly nuanced question requires carefully evaluating the practice’s:

  1. organizational structure
  2. financial picture
  3. quality metrics

Step from FFS to quality

There are a variety of APMs practices can leverage to help stabilize their financial view and enhance quality metrics. But at a high level, most APMs fall into one of four stages along a fairly linear continuum: from FFS to quality incentives, to shared savings, and finally to risk capitation.

The decision to go from FFS payments into the “quality incentives” stage of the APM continuum typically involves providers working with their payers to layer quality incentives on top of existing FFS agreements. Often, there is little clinical or financial risk in the transition. In fact, when structured properly, practices can gain a measure of financial stability through bonuses for meeting quality measures.

What’s important at the quality incentive phase is to set a good foundation for future moves down the value-based path. Partners steeped APM requirements can help design a value-based contracting strategy, develop a sustainable governance structure, and assist in using technology to support population health.

Once a practice has gotten used to quality incentives, though, how does it know when the time is right to jump into a shared savings arrangement?

Aggregate for shared savings

There are few reasons not to take the next step toward shared savings if providers aren’t feeling overburdened by quality incentives. Shared savings agreements typically include additional care coordination reimbursement—and that amount usually represents the only potential for downside risk.

However, smaller practices also must be ready to aggregate with other practices in an IPA, ACO or CIN to participate in a shared savings model in order to get a large enough panel that would support your necessary measures with some stability. Heavier regulation and oversight are involved, too. Therefore, strong physician engagement and leadership and a solid governance structure become essential to success.

Establishing an effective care coordination model around primary care providers is also crucial as the focus shifts from quality only, to quality and cost metrics. Utilization management efforts intensify once practices band together in a shared savings agreement.

Once again, the collaborative expertise of partners can help identify and engage key physician leaders, set governance for growth, and establish a significant primary care footprint with material membership in the appropriate service areas.

Be prepared for full risk capitation

While the length of time a practice has engaged in a shared savings model can help determine when it’s ready for full risk capitation, that’s not the only factor. The entire organization should be financially prepared to assume full upside and downside risk, have a significant membership panel, and routinely receive high marks for quality metrics (e.g., Medicare 4-Star rating or better). Deep engagement and connectivity among providers become even more critical, as all providers must understand their levers for revenue, expenses and risk.

Indeed, one of the key ways to ensure APM success at every level is to educate and incentivize all staff members to do their part to help the practice and its patients move through the APM continuum. It takes teamwork, but with collaborative partners like CareAllies guiding organizations at every stage of the APM journey, practices can start achieving value.

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