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Transformation Hub

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June 19, 2019 07:00 AM

Health systems eye commercial payers for more downside risk

Maria Castellucci
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    Finance executives at hospitals and health systems see the most opportunity to work with commercial insurers to increase downside risk in payment contracts, according to a new survey.

    The survey, published Wednesday by consultancy Navigant, found 64% of finance leaders said they plan to assume additional risk in contracts with commercial payers in the next one to three years. Medicare and Medicare Advantage were behind with 57% of executives saying they plan to take on more risk in traditional Medicare contracts while only 51% of executives answered that they plan to assume more risk in the Medicare Advantage sector.

    Rich Bajner, managing director of Navigant, said providers likely see more opportunity for downside risk in the commercial space because there are more opportunities to negotiate contracts. Providers are largely stuck in the price points the CMS sets for Medicare and Medicare Advantage.

    "In commercial markets, the bands to negotiate are wider so providers and payers have more creativity in how to structure relationships," he said.

    Providers have also pointed to unpredictable changes in the Center for Medicare and Medicaid Innovation's payment models as another reason for slow adoption to risk in the Medicare space.

    The survey was also conducted shortly before the CMS released its five new primary care payment models, which could have affected the results.

    The survey also found that most executives were confident their organizations could move to more risk soon. About 72% said their organizations plan to take on additional risk in contracts in the next one to three years.

    Bajner said the results are in line with recent trends. "We are seeing more providers make investments and core competencies that are necessary under risk-based models," he said.

    For the 28% of executives surveyed who said they didn't think their organizations would take on additional risk in the next few years, lack of local market demand was listed as the biggest reason at 56%.

    Bajner said as the industry learns more about tactics to successful risk-based contracts, providers are more diligent about who they will partner with.

    "Providers aren't going to take on risk just to take on risk," he said. "They are rethinking how to contract it." In fact, increasingly a contract with a commercial payer isn't completed because they can't agree on the terms.

    Such occurrences are likely translating to providers that the payers don't share in the demand for such contracts, Bajner said.

    Tags: Payment, This Week in Healthcare, Value-based payment, Payment, Insurers, Transformation, Transformation Hub
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