Solving Value-Based Contract Modeling Riddles

By SpectraMedix Team

Value-based care (VBC) changes the way payers and providers (ACOs, IPAs, etc.) contract with each other. The complexity of the healthcare system and the variability and risk of performance-based contracts should set off alarms for both parties. Payers have revenue and want to keep as much as they can. Providers are delivering the services and expect to be paid fairly for their efforts. Both groups want to ensure that patients are healthy and get the care they need. The patient aspiration is admirable (and on target) but payer revenue and provider payment for services are at odds. Value-based contracts introduce tons of variables and ways to manipulate the algorithm to one or the other parties’ advantage. Yet, we have to find a way to work through this.

So here’s a riddle for you:

What has at least two parties, where at least one usually ends up in disappointment?

The answer, a bad VBC contract.

Fee-for-service contracts are easy. You may still be disappointed in your results but the variables are known and easily tracked—the more I do, the more I get. VBC contracts are different—they measure providers on what they do, how they do it, and when they do it. They set out the terms in advance, many times without adequately considering payer or provider readiness or bandwidth. The payer gets dinged when performance is poor, the ACOs, IPA’s, and provider groups take a financial hit as well, and the patient isn’t better off.

Here’s another riddle for you:

What lets you see the future but relies on the past?

The answer is a good Value-based contract modeler.

The complexities of contracting mean it’s time to do things differently. You need to be able to create models and evaluate scenarios in new ways. Value-based contract modeling is too complex for spreadsheets if you are doing it right. You need data, lots of data to map the likely performance outcomes of the future. Your models need to consider core components like market construct, business lines, attribution, performance measures, improvement indicators and more. Done right, the model will give you the ability to:

  • Scale the modeling of complex contracts in as little as 30 minutes.
  • Reduce my reliance on other departments or experts to create accurate VBP contract models.
  • Create a collaborative, transparent contract model for use in partnership with your ACOs, IPAs, and provider groups.
  • Extend the model beyond the here and now to examine and make operational the value levers that improve performance and outcomes.

In a nutshell, you need a methodology that provides structure, simplicity, consistency and transparency. It’s not easy to do. However, it’s imperative that you do it if you are going to expand and grow in your VBP contracting efforts.

Your final riddle is this:

What destroys riddle one and makes riddle two a reality?

The Answer is The SpectraMedix Contract Modeler

No shock here. As a payer in the VBC world, you’re an enabler for your providers. Their success is your success. The tools you have probably won’t cut it. That’s why we created the SpectraMedix VBP Contract Modeler. It’s been specifically designed to make contract modeling much easier and way more efficient. It helps you quickly model contracts with real data, has you implemented and live in as little as 30 days, and is designed for transparency, collaboration, and practical use in achieving your VBP aspirations.

Value-based arrangements are the future. No matter where you are in your VBC journey, things are only going to get more complex. I recommend you take a look at SpectraMedix Contract Modeler. It might be the thing for your health plan. It will surely give you some ideas on where to focus your efforts. In either case, you’ll be better off for having investigated.

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If you’d like to see a brief demonstration of VBP Contract Modeler, email

Tags: Value Based Payments, Health Plans

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