Quality up, costs down when providers share financial risk, analysis says

Commercially insured members who were cared for by providers that shared financial risk with payers saw higher clinical quality and lower costs on average in 2017, according to benchmarking tool Atlas.

The analysis is based on data from seven health plans that represent 7.2 million lives in California. That's about 55 percent of the state's entire commercial enrollment, excluding Oakland, Calif.-based Kaiser Permanente, as researchers said its 6 million commercial lives would dominate results.

According to the analysis, members under risk-based contracts saw average quality performance rates of 65.6 percent for professional risk and 67.1 percent for full-risk providers. That's compared to 57.9 percent for providers with no risk-sharing agreements.

In addition, researchers found the total cost of care decreased under risk sharing arrangements. Commercially insured members whose providers didn't share risk had an average total cost of care of $4,589. That's compared to $4,501 for providers with shared risk for professional services only and $4,428 for providers under full-risk contracts, for a difference of $161 or about 3.5 percent.

"At the national level, there is strong policy interest in financial risk sharing as an important component of alternative payment models, such as Medicare accountable care organizations (ACOs), which are designed to shift incentives away from charging for each patient service or transaction and toward producing health," according to Atlas.

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