What needs to happen for risk- based contracting to flourish

Healthcare providers are still largely stuck in fee-for-service contracts.

Experts cited a few changes that would need to happen in order for the industry to evolve into more risk-based contracting. In a nutshell, fee-fors-ervice medicine would need to become more untenable and risk-based contracting more financially advantageous. There are several ways that could happen.

1 Federal government pressure

Several people pointed to CMS as the only player with the power to truly move the needle on risk. The agency has already been leading the way so far with advanced payment models, with commercial insurers generally following its lead. But some argue CMS should take a harder stance in pushing providers to accept risk to keep Medicare and Medicaid patients healthy.

2 Invasion of disrupters

Innovative primary-care providers like ChenMed and Oak Street Health are accepting risk for keeping older patients healthy under Medicare Advantage contracts. Amazon, Walmart and CVS Health are branching out or expanding further into the world of outpatient care. Experts say disrupters that can reduce costs and find efficient ways to manage care will eventually force traditional providers to jump on the bandwagon or get left behind.

3 Insurers push risk

Some health systems are limited in the amount of commercial risk they can take on by the willingness of the private health insurers operating in their service areas. If insurers accepted and promoted more risk-based contracts and incentivized large providers to agree to them, that would speed up the evolution.

4 Providers step up

Much of the slow pace of risk-based contract adoption is because healthcare providers simply aren’t willing to put their revenue at risk, mostly due to fear of losing money. The transition away from fee-for-service medicine won’t happen until providers become more willing to accept risk.