5 key considerations for risk-based agreements & more ASC insights from CEO Jacob Sheridan

Surgery centers’ success in risk-based agreements hinges on alignment and performance tracking, according to Jacob Sheridan, co-founder and CEO of TPA Stream, a benefit administration software provider.

Mr. Sheridan told Becker’s ASC Review about best practices and key considerations when it comes to risk-based contracts.

Note: Responses were lightly edited for style and clarity.

Question: Are risk-based partnerships a good thing for ASCs? Why or why not?

Jacob Sheridan: Risk-based partnerships can be worthwhile for ASCs, particularly if they allow for clinical and nonclinical operators to align so that payers, providers and patients each benefit. Successful risk-based partnerships can prove effective in establishing a standard payment process and reimbursement rate, forestalling the rework that is often inevitable in claims processing.

The ultimate determination of the success of risk-based partnership is in evaluating how it is formed, managed and, most importantly, improved over time to the mutual benefit of everyone. To this end, there must be a mechanism to measure consistent progress, one built on mutually developed [key performance indicators] with results that are evaluated frequently, such as on a monthly or quarterly basis, rather than per annum.

Q: How should ASCs and other outpatient practices approach risk-based agreements? What are some key considerations?

JS: There are several [factors] for outpatient practices to consider when choosing risk-based agreements. These include the ability of the partnership to deliver on [areas regarding]:

1. Are both clinical and nonclinical parties in alignment?

2. Is rapid claims processing possible?

3. Are there processes for auto adjudication of procedures that are covered by the agreement?

4. Are mechanisms in place to demonstrate ongoing improvement and the ability to adjust the agreement as needed?

5. Is there an agreement on shared reporting of progress and success metrics, and are those reviewed on a frequent basis?

Q: What’s a common misconception about risk-based agreements that needs to be cleared up? What are some common pitfalls to avoid with these partnerships?

JS: Perhaps the biggest misconception is that risk-based partnerships are a way for payers to avoid paying certain claims and for providers to limit care. This is how lobbyists and certain healthcare professionals typically characterize them, boiling the argument down to the merits of a pay-for-service versus pay-for-outcome approach. However, these concerns can be easily mitigated by providing greater transparency into agreements, rather than keeping them secret, which is often the case.

Another misconception is simply with the term “partnership” itself, as it can give a false sense of security that both parties share in equal benefit. This isn’t always the case. Another term for risk-based agreements is “value-based,” but neither of those terms mean that the agreement is well-aligned for all parties. It’s critical that all parties involved work together to develop fair and reasonable terms.

Keeping the focus on creating fair agreements is, in the end, what will allow for the most optimal care. If a risk-based partnership is one-sided, it will create unnatural behavior that will certainly not serve the patient’s best interests, and ultimately, it will not be beneficial for payers or providers, either. The overarching goal of risk-based partnerships is to create better outcomes for patients and greater accountability, but those goals cannot be reached without mutual trust and shared responsibility.

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