Value-based payment (VBP) arrangements with two-sided risk are significantly less common in the commercial health insurance market compared to the Medicaid, Medicare Advantage, and traditional Medicare markets. However, creating a financially sustainable commercial payment model is more important than ever due to rising health care costs and stagnant—if not declining— outcomes. Payers and providers must work together to proactively change the payment structure before these unsustainable dynamics force third-party entities, such as regulatory bodies, to act.
Many industry leaders believe making commercial VBP arrangements with downside risk more predictable and common offers a path forward for creating a financially sustainable payment model while delivering high-quality, whole-person care. But despite that perspective, information on what does and does not work in risk-based arrangements in the commercial market is not as transparently available as it is for other health insurance markets.
To help advance adoption of VBP arrangements with downside risk in the commercial market, Health Evolution’s Roundtable on Commercial Risk-Based Contracting—a multistakeholder group primarily comprised of leaders from payer and provider organizations and sponsored by two technology organizations—committed to participate in the Value-Based Payment Cohort Study to identify and share key learnings that could define win-win arrangements in risk-based contracting, as well as design guidelines to build those contracts. For this cohort study, payer and provider participants shared progress and insights on their multi-year VBP contracts with downside risk for a commercially insured population through individual interviews and virtual cohort discussions that occurred throughout fall 2021 to fall 2023.
The Roundtable’s new report, Designing Win-Win Commercial Risk-Based Contracts, outlines leaders’ findings from the effort, as well as their recommendations to make the contracting process for commercial VBP arrangements with downside risk more predictable and common and to encourage the industry to adopt contracts that incentivize providing high-quality, whole-person care at a sustainable cost.
Access the report here:
We thank all participants in and guest contributors to Health Evolution’s Roundtable on Commercial Risk-Based Contracting and the Value-Based Payment Cohort Study for providing valuable insight and guidance to create this report. We also extend special thanks to our Commercial Risk-Based Contracting Corporate Members for supporting this work:
Health Evolution’s Adrienne Knowlton led the research and analyses that served as the basis for this report with support from Elena Brandano Birnbaum and Ashley Antonelli.
