Seven Value-Based Payment Predictions for 2023

By Raj Lakhanpal, MD, FACEP, CEO, SpectraMedix

*Contributions for this blog post were provided by Rahul Lakhanpal, Chief of Staff at SpectraMedix and a second-year student in Wharton’s Health Care Management (HCM) MBA program.

As 2023 begins, healthcare executives are planning and refining their organizations’ value-based payment (VBP) strategies for the year ahead. I wanted to take a moment to share with you some VBP predictions that could impact both payers and providers over the next twelve months.

Before getting into the predictions though, a friendly reminder that changes in healthcare can take many years. Predictions often do not change from year to year and are instead directional trends that continue to progress and evolve over time. As such, many of the predictions we discussed last year will still hold true for 2023. We have elaborated on a few of these past predictions based on new learnings in 2022 while introducing new ones as well. These predictions stem from multiple discussions with senior executives at health plans and health systems, our clients, growth investors, private equity firms, and RFPs we’ve been invited to participate in in 2022. In addition, Rahul Lakhanpal, Chief of Staff at SpectraMedix and a second-year student at Wharton’s Health Care Management (HCM) MBA program, has contributed to this post with a perspective informed by Wharton’s professors, resources, and guest speakers.

Despite the pandemic being in the rear-view mirror, COVID still magnifies the financial challenges faced by provider networks and the need for well-defined, timely payment streams. This will continue as both payers and providers have the incentive to move towards value-based care.

Some of our predictions for 2023 are the following:

1. Health systems will focus on being successful in the Medicare Shared Saving Program (MSSP) and Medicare Advantage (MA) in 2023.

Given the financial burden that many health systems face due to rising labor and supply costs, and the decrease in hospital assets and private investments with the market decline, health systems will focus on attainable goals. Health system executives feel that MA offers a good chance to succeed, given the clear value-based care playbook and payment benchmarks. The main drivers will be improving quality and reducing total cost of care. Addressing risk and ensuring that members are appropriately risk adjusted will still be important, but risk adjustment will not be a key driver to success in MA VBP.

2. Both health systems and health plans will continue to make significant efforts and investments to engage and empower their affiliate provider networks. 

Large health systems will try to take back lost ground from intermediaries by acquiring primary care provider (PCP) and specialist practices, and/or supporting their affiliate practices in meeting their VBP goals with quality and analytics platforms and care management solutions, as well as providing monthly payments (instead of payments made after 12-18 months). Payers, especially in Medicaid, will also continue their efforts in enabling their provider networks with solutions that move them from pay for quality (P4Q) arrangements to greater risk-bearing contracts and incentivizing them with timely payments. The focus in 2023 will be to ensure that PCPs stay on both payer and provider platforms.

3. Health plans will continue to advance their providers to move into Medicaid, health exchange, and commercial value-based contracts in 2023.

As mentioned above, health systems will be busy focusing on being successful in MA in 2023. That being said, payers will move forward in Medicaid, health exchanges, and commercial VBP arrangements. With millions of Americans projected to lose Medicaid with the signing of the $ 1.7 trillion government funding bill in December 2022, payers will move forward with plans to enroll those members in health exchanges and commercial business lines and build VBP programs in support of this move. Medicaid health plans will invest in technology and strategic initiatives to move their networks from the commonly adopted P4Q agreements to risk-bearing arrangements.

4. Behavioral health and social determinants of health (SDoH) will continue to see greater adoption in value-based care contracts.

We have come a long way from behavioral health being a carveout to now being included in P4Q and total cost of care arrangements. In Medicaid, we are seeing agreements being adopted that include SDoH and health equity initiatives as part of the arrangement. Community-based organization (CBO) aggregators are contracting on behalf of CBOs to deliver on SDoH management initiatives. As health plans develop VBC strategies, we believe this will be a significant focus in 2023.

5. Health plans and health systems will invest in technologies to manage population health and financial management for VBP arrangements.

Health systems are realizing that the data warehouses and analytics systems they’ve invested in can help them improve quality and partly manage population health, but also that these systems are not equipped for value-based payment arrangements where meeting financial goals is also key. Such initiatives require the ability to model VBP arrangements, perform monthly financial reconciliations, reduce network leakage and utilization, and manage total cost of care and medical loss ratio (MLR) contracts. These all require additional analytics, contracting, and data warehouse investments. This helps health systems ensure correct payments are made and that they stay within the budgeted amounts in their contracts.

6. Specialists, including private equity-backed physician practices, will focus on adopting VBP arrangements through specialist carve-outs.

We believe this prediction from 2022 will significantly accelerate in 2023. Payers are increasingly carving out medical-cost risks tied to specific conditions, either through sub-capitated or episode-based models. These specialists will use 2023 to determine which model they can advance the most financially within. Specialties moving toward VBP arrangements include nephrology, oncology, orthopedics, women’s health (maternity bundles specifically in Medicaid), and cardiology, and provide an upside case from pure FFS revenues.

7.  Telehealth VBP arrangements will gain greater momentum, either as a separate carveout, or as a part of a more comprehensive total cost of care arrangement.

We see models evolving in behavioral health or specialist referrals where telehealth will become an integral part of the care delivery paradigm.


2023 has the potential to be a transformative year in healthcare. Payment models will increasingly reward healthcare organizations that take on more risk, which is nothing new. But the ones that cannot or will not take on more risk in 2023 will be closer than ever to being left behind (or consumed) by their competition, or risk significant financial consequences. How chronic conditions, behavioral health, SDoH, specialties, and telehealth are factored into various VBP models will continue to evolve, increasingly be data and analytics-driven, and impact payers and providers clinically and financially more than ever. Both groups need to be constantly looking for new, technology-driven ways to get or stay out in front of VBP arrangement requirements and challenges. 


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