A new paper from the Society of Actuaries examines considerations for providers looking at alternative payment models, including elements of attribution methodology and the challenges and opportunities providers should consider when it comes to risk.
SOA pointed to "trade-offs between attribution methodologies that rely on retrospective reviews of fee-for-service claims history to determine attribution versus methodologies that prospectively identify and attribute patients to providers in advance of performance periods."
The methodology should "support the distribution of gains and losses" and providers must factor in complex members, patient turnover and unassignable members since costs vary greatly across the patient population, according to the paper.
Providers are already transitioning to value-based payments and alternative payment models. That is only expected to intensify in the coming years. Payers view value-based contracting positively, as it offers them stability and allows them to impose provider quality and cost standards.
The SOA paper noted that payment models have traditionally based reimbursement on quantitative measures. "However, as the industry increasingly expands care provision within the home and through virtual communication, attribution or appropriate care points will set the stage for how care can shift under the right incentives," the group noted.
The group noted that attribution methodology is the core of APMs. As "the process of assigning patients to the provider entity, who will ultimately be responsible for the cost and quality of their care," it is the most critical part of value-based contracting. Attribution also affects a provider's risk pool, medical loss ratio and finances, according to the paper.
The exact payment model is a critical component to risk. Value-based contracting is an umbrella of payments, and there are multiple types, including bundled payments, episode-based, pay for performance and diagnosis-related. Utilization affects each payment model differently. Physicians will need to understand how each lever works and make sure incentives are aligned appropriately.
The American Hospital Association gave similar advice in a TrendWatch report in 2017.
"There is no single model that will work for every organization. Hospital and health system leaders should assess the personnel, infrastructure and other capabilities required for success in each model when considering the most appropriate path for their organization," according to AHA.
CMS has been a leader in this arena with multiple value-based models. An AMGA survey at the end of 2017 found that medical groups and health systems expect nearly 60% of revenues from Medicare will be risk-based by 2019. They believe Medicare Advantage revenues from risk-based payments will equal Medicare fee-for-service payments next year.