News and Insights
Preparing for an At-Risk Era
Hospital boards and C-suite executives have a major strategic decision to make in the near future: Should they go at-risk?
Risk-based payment structures take on various forms. Some provide opportunities to share in savings when care is provided at a lower than expected cost (“upside risk”); others also demand financial penalties when costs exceed a benchmark (“downside risk”).
While many boards may believe they have already assumed risk through existing value-based payments, accountable care organizations or bundled payment scenarios, they may not realize that the majority of these agreements lack downside risk. As payers move beyond gain-sharing arrangements, providers also will need to enter into downside risk agreements.
The clearest signal for change came with recent announcements by the Centers for Medicare & Medicaid Services and leading payers and providers that set ambitious goals for increasing value-based payments. Despite indications that value-based reimbursements are what the future holds, many delivery organizations are hesitating.
One reason is concern that if they start too early and without some defined arrangement with a payer, they will forgo revenue in today’s fee-for-service model without any offset through gain-sharing or other structures.
In truth, preparing for risk can help boards to optimize their revenue in the current payment model. Start by optimizing fee-for-service today, then build out infrastructure you’ll need in the future. But first, it’s important to understand what risk looks like in the context of the current health care marketplace.Read More
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