AMA, NAACOS, AHIP share how to succeed in value-based care arrangements

April 15, 2024 - The American Medical Association (AMA), the National Association of Accountable Care Organizations (NAACOS), and AHIP have released a playbook on value-based care best practices, highlighting the importance of patient attribution, financial benchmarks, risk adjustment, and more.

The organizations previously released data-sharing best practices and have collaborated again to facilitate successful member participation in value-based payment arrangements.

The partners assembled an advisory workgroup of members from each organization and interviewed subject matter experts for the playbook. Participants included a range of stakeholders such as national and regional health plans; large, small, rural, integrated, and independent physician practices; and value-based care entities.

The voluntary best practices for value-based care fell into seven different domains.

Patient attribution

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Matching patients with the right physician, practice, or value-based care entities is critical to ensure patients and participants reap the benefits of value-based arrangements. Attribution should focus on finding the populations that participants will be held accountable for, honoring patient preference, and including only patients whose practice can reasonably coordinate and improve their care.

When using voluntary patient selection, value-based care participants should validate selections with claims data and proactively provide opportunities to update selections.

Using claims data is the most common way to attribute individuals to value-based care entities. This method should use a multi-year attribution window. For prospective attribution, participants should apply appropriate exclusions at the end of the performance period to ensure accuracy. For retrospective attribution, they should deploy strategies to improve predictability, such as provisional attribution reports and adjusting financial performance reports based on the most recent attribution lists.

When using automatic new member attribution, participants should attribute patients to a value-based care entity after a voluntary patient selection has been made or claims data is available to verify the attribution. When determining clinician types eligible for attribution, including advanced practice providers (APPs) in the methodology and leveraging strategies to correctly identify clinicians mainly responsible for a patient’s care are key best practices.

Benchmarking

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The first step of benchmarking in value-based payment arrangements is calculating a baseline spending amount. Entities must decide whether to base this amount on their own historical costs or market comparisons, how many years of data to use, and whether any costs are excluded.

Next, participants have to establish a trending methodology to update the baseline with projected or observed cost changes during the performance period to estimate the expected costs of the attributed population. Entities should prioritize regional over national trends and use both prospective and administrative trends and retrospective adjustment to achieve accuracy.

Lastly, participants must learn how to apply additional adjustments to advance the goals of the value-based care arrangement. They should include benchmark adjustments to incentivize continued efficiency and test adjustments to encourage the inclusion of historically marginalized populations.

Risk adjustment

Risk adjustment in value-based payment arrangements ensures payments are adjusted to reflect the acuity of the attributed population. When selecting a risk adjustment model, participants should use standard risk categories like Hierarchical condition categories and use concurrent models or update risk scores within the performance year.

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Providing targeted physician education and support can help ensure complete documentation of the extent of illnesses during the risk adjustment process. Additionally, it is important to incorporate demographic and social determinants of health data into risk adjustment models and pilot and monitor health equity adjustments before scaling.

Quality performance impact

Most value-based care arrangements reward participants for meeting predetermined quality metrics. This helps incentivize quality improvement and sustain long-term, high-quality care.

When structuring an arrangement’s quality component, entities should establish a minimum performance threshold with a sliding scale to reward higher quality improvement. In addition, models should have achievable performance targets and adjust both savings and losses based on quality performance.

Participants should provide transparent quality measures, methodologies, and performance targets at the start of the performance period and offer regular feedback on progress throughout the period.

Financial risk

All value-based arrangements require participants to take on some level of accountability, but they do not always include downside risk. Risk level depends on an entity’s experience and capabilities. Multi-year arrangements with a path toward increasing risk and reward over time can help entities ease into downside risk. Additionally, allowing participants to return to upside-only models when population or payment changes occur may offer more flexibility.

Participants should assess capacity and local market dynamics when designing downside risk options and present options for mitigating risk to account for unexpected events, such as risk corridors, capping savings and losses, and stop-loss.

Payment timing and accuracy

How and when providers receive payments in value-based care arrangements varies. In shared savings models, savings or losses are generally calculated at the end of the performance period, while other models offer prospective payments before the performance period ends.

In cases of prospective payments, participants should structure the timing and method of payments to address the specific goals of the arrangement, adjust payments to account for complex patient populations, and assess high-value service areas that may need additional investment.

In reconciling payment arrangements, entities may want to conduct preliminary reconciliation, share complete data on reconciliation, offer technical assistance, and provide an appeals process.

Incentivizing for VBC practice participant performance

Engaging physicians and care teams is essential to the success of value-based payment arrangements. Entities should provide educational resources, develop clear criteria for incentives, and provide quarterly feedback on performance related to incentives.

Participant incentives should use a mix of factors that are determined in advance of the performance period. Incentives should be calculated at the Taxpayer Identification Number (TIN) level and allow participants to determine how to share them internally.