The Advantages of Value-Based Contract Standardization for Payers

By Raj Lakhanpal, MD, FACEP, CEO, SpectraMedix

Modeling a value-based contract is often a time-consuming process. There are so many variables to contend with—incorporating relevant quality and utilization metrics; attribution related to primary care, specialist, or behavioral health providers; selecting types of contracts ranging from quality-based incentives to shared savings, shared risk, capitation, episodes, and more; other additional financial parameters; timeliness of incentives payment—the list goes on and on. Different states with unique goals to improve healthcare also add additional complexity to these arrangements.

With the pressure on payers to develop win-win agreements while still maximizing their own ROI, it’s important to have standardized processes in place so that replicating successful contracts isn’t a heavy lift.

Based on our experience providing advanced contracting and performance improvement solutions to health plans, here are the key benefits to your health plan by establishing a standardized contracting process:

  1. Efficiency—If you’re attempting to develop, negotiate, and implement value-based contracts using an Excel spreadsheet, the process of finalizing a single contract can take weeks, if not months. Standardizing your contracting process with a value-based contract modeling solution can reduce the amount of time it takes to develop agreements down to about one hour.
  2. Accuracy—If your value-based contracting process is reliant on manual effort, it’s far more likely that inaccuracies will emerge from contract to contract. Using advanced solutions for the purpose of contract standardization serves to codify the many variables at play in each contract and helps you to generate models that are both accurate and replicable.
  3. Consistency—As your value-based arrangements expand, it’s easy to get lost with different performance metrics, different criteria, and multiple contract parameters. Standardized contracts help curb the variability inherent in manual contract modeling efforts.
  4. Simplicity—The range of contract types included under value-based care is expansive, with shared savings, shared risk, and capitation to name just a few. Attempting to manage this variety of contract types using manual processes is sure to be headache-inducing for your health plan. Implementing a solution with standardized contract modeling capabilities will reduce chaos and pay major dividends in the long run for your business.
  5. Transparency and Collaboration—One of the many benefits of value-based contracting, as opposed to fee-for-service, is that it’s built on collaboration between payers and providers as opposed to conflict. The challenge therein is getting payers and providers on the same page and conversing with one another. Standardized contracting solutions allow payers and providers to share data with each other simply and break down contract terms in a way that’s easy to digest for both parties.
  6. Compliance—One of the greatest challenges for health plans in maintaining a standard of contracting success over time is the ever-evolving internal policies and procedures associated with value-based care. Contract standardization solutions will ensure terms, policies, and procedures are kept up-to-date and are appropriately factored into each and every contract.
  7. Permanency and Replicability—With an automated contract standardization solution, your health plan can develop a historical record of all previously negotiated contracts and the results of those arrangements. This repository provides context for current contract negotiations to more easily replicate the successful ones, and helps to foster more durable and stable contracts.


A key step in developing a standardized value-based contracting process is to identify an advanced solution designed to bring the benefits outlined above to fruition. It should provide key capabilities including modeling automation across business lines, performance improvement analytics, user defined contract terms, and advanced provider enablement solutions. If you’re interested in learning more about how our contracting standardization solutions can help you to achieve success in value-based care, please take an in-depth look at our value-based care solutions

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