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Clear Understanding and Aligned Expectations: Keys to successful Value-Based Care Contracts

Updated: Mar 18


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Have you ever tried to read any contract or agreement?


Most of us try to get a quick understanding of the big picture and what parts apply to me, unless it's a software agreement then I’m pretty sure we’ve all just scrolled down and hit, ‘I Agree’. More than a decade ago I explained how to achieve meaningful use to providers who were adopting EHRs. While the requirements were well documented, it wasn’t clear what providers needed to do, they were dealing with a changing landscape and needed assistance to be successful.


Today, many are trying to adopt value-based care with a goal to improve patient outcomes while reducing costs, but these agreements are difficult to navigate and negotiate. Critical to the success of value-based care contracts are financial agreements between healthcare providers and payers based on both the quality and efficiency of care delivered to a particular group of members. However, due to confusing contract language and unclear expectations between payers and providers, success is a struggle.


A clear understanding of the terms and goals of a value-based care contract is essential for all parties involved.

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A clear understanding of the terms and goals of a value-based care contract is essential for all parties involved. Providers and payers must have a comprehensive grasp of the contract's metrics, such as quality measures, performance benchmarks, and financial incentives or penalties. This clarity enables providers to align their care delivery processes accordingly and fosters accountability for both parties. Ambiguity or miscommunication regarding contract terms can lead to confusion, disputes, and ultimately, hinder the achievement of desired outcomes. It’s important to break the “black box” status quo of contracts, and show the impact of rules and terms negotiated in the arrangements.


Payers must appreciate the challenges and constraints faced by providers in meeting these goals.

Aligned expectations between providers and payers are crucial in ensuring the success of value-based care contracts. Both parties must have a shared vision of the objectives and projected results of the contract. Providers need to understand the payer's goals, such as cost savings, improved patient experience, or reduced hospital readmissions, to tailor their care delivery appropriately. Conversely, payers must appreciate the challenges and constraints faced by providers in meeting these goals. Negotiating value based contracts the same way as fee for service misses a key point of shifting payment methodologies, specifically that of shared risk and accountability for high quality appropriate cost care. Establishing a collaborative relationship built on trust and open communication is crucial for a mutually successful result.


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In addition to understanding the terms and aligning on expectations, ongoing monitoring and evaluation are critical throughout the duration of the contract. Regular data sharing and performance reviews enable providers and payers to track progress, identify areas for improvement, and make necessary adjustments. This iterative measurement process ensures that the providers can be responsive and aligned towards their expected outcomes as well as providing patients with quality care. A willingness to show even incomplete information may be uncomfortable, but for interim performance and early interventions, it’s a must.


Regular data sharing and performance reviews enable providers and payers to track progress, identify areas for improvement, and make necessary adjustments.

A shared understanding of the contract's terms and goals provides a solid foundation for providers and payers to work collaboratively towards improving patient outcomes and reducing costs. Regular monitoring and evaluation sustain this alignment by facilitating ongoing communication and course corrections as needed. As value-based care continues to grow, healthcare stakeholders must prioritize these key factors to unlock the full potential of this model and achieve positive outcomes for all. Otherwise, we should expect results of value based care and contracts to continue to be ambiguous and unclear.


Rami ElGawly headshot

Rami ElGawly is a seasoned technology leader with a passion for driving product innovation in the healthcare industry. With over 20 years of experience Rami is dedicated to leveraging technology to transform healthcare delivery.

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