Partnering With Payers: Key Lessons Fairview Health Services Learned

Out of 85 payer arrangements, more than one-third were upside-only risk arrangements, according to new data from Premier healthcare alliance. However, of those upside arrangements, 57 percent of them were in Medicare Shared Savings Program or Medicare Advantage — meaning upside-only contracts are less likely among commercial payers.

For hospitals and health systems, partnering with payers is an important step to build a foundation for accountable care organizations. Through these partnerships, hospitals and systems can get reimbursed for work done redesigning care patterns and rewarded for lowering admissions and cost.

"ACOs invest millions of dollars in permanent infrastructure such as preventive care, chronic disease management, medical homes, technology and provider networks," Blair Childs, senior vice president of public affairs for Premier healthcare alliance, said in a news release. "Shared savings helps offset the costs of these investments, as well as losses that come from decreased utilization."

Payers in the Minneapolis market, where Fairview Health Services is based, have been willing to participate in value-based and risk-baring contracts dating back to 2009, Andy McCoy, vice president of revenue management for Fairview Health Services, said during a press call hosted by Premier June 5.

Fairview has partnered with commercial payers in risk contracts since 2009. It is also a Pioneer Medicare ACO and now has more than 300,000 risk-based members. Fairview learned the following two lessons during its experiences partnering with payers for risk-baring contracts, according to Mr. McCoy.

•    Try to build "non-performance penalties" into contracts. Payers have different levels of ability to analyze data and identify areas for improvement, and Fairview wants to ensure the data received from payers is timely and detailed enough to be actionable. Fairview is working on building non-performance penalties into future contracts for that reason, Mr. McCoy explained.

•    Consider target-setting methodology. Setting per member per month cost targets is critical for success, but providers should consider the methods of target setting carefully. A preset target offers greater predictability, but has more inherent risk. On the other hand, a market-based methodology has appeal but providers won't know in advance what the target will be, Mr. McCoy said.

In the future, according to Mr. McCoy, Fairview is seeking consistency in attribution models among payers as well as consistency in data from payers in risk contracts.

"A key is implementing the care delivery changes at the same pace as the new payer arrangements," Joe Damore, vice president of population health management at Premier, said in the release. That way, providers seeking accountable care models can remain financially sustainable and continue improving the health of their populations.

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