Value Based Contracting: 5 Insights  from an Industry Insider

Copyright 12.9.2014: Scientific Cowboys – Nancy C Everitt, PMP


Value Based Contracting: The Road to Reality

Value Based Contracting is all the rage along with ACO’s and unicorns.

Are organizations truly engaging in value based contracting? Yes and no. The concept is not new, however true alignment on a larger scale is new and is a defining characteristic of effective value based contracts.

So what is “value based contracting”? It’s simply the alignment of risk and reward between the payor and the provider to improve patient outcomes.

I had the opportunity to catch up with Debra C. Collins, VP Strategy & Innovation for UnitedHealthcare Networks to get a behind the scenes look at successes, challenges and lessons learned in the evolution of their value based contracting approach.

One Look at a Value Based Continuum

Below is the continuum that UnitedHealthcare uses to illustrate value based contracting. The movement is from Fee for Service (FFS) to aligned risk and reward, eventually ending in Full Risk. You may be scratching your head and thinking that this sounds familiar to the failed capitation deals of the past.  At first blush it seems similar; however there is a more enlightened and responsible view on who should and can be capped based upon capability. You can also view UHC’s ACO philosophy online at UnitedHealthcare has been very forthcoming and much of their strategy is online at a high level, just search “UHC Value Based Contracting”.









Q& A: Insights from an Industry Insider

Below is the Q&A from my discussion with Debra Collins.

1: Are providers ready for value based contracting?

D. Collins shared that a surprising number of physicians are ready and are seeking to contract under a value based methodology. UHC uses a vetting process to identify the level of infrastructure and potential capability to perform in a value based contract. She stated that they will often start with a lower intensity model, evaluate success and then move forward with greater risk and reward based upon the practice’s success and ability.


2: Why are providers more prepared now for value based contracts?

Many practices have invested in infrastructure including EHRs and other tools.  The level of sophistication has increased through other performance based initiatives. This is about improving outcomes, not just about shifting financial risk.

The big difference Collins said was that the plans are sharing data “real time data”  with the practices. The push of live data is an X factor to allow the practices to know what is occurring with their members and take immediate action. Reporting that is 90 to 180 days is useless for care management.


3: For plans seeking to ramp up value based contracting, what are the key resources needed?

Analytical resources such as Medical Economics, Finance, Project Management, Clinical Support, and Quality are the top five listed by Collins. She also noted that the pivotal discussions with the practices needed to occur at a clinical level between the Chief Medical Officer and the physicians. Reporting and coaching around metrics, models and data supplement the clinical discussions.


4: If you were starting in a market, which providers would be the best targets for value based contracts?

Collins stated that the best first value based contracts would be dependent upon product type.  She used Medicaid as an example and explained that Federally Qualified Health Centers (FQHC), Rural Health Clinics (RHC) and Community Mental Health Centers (CMHC) are great first contracts since they all play a vital role, have access to many enrollees and have a broad array of services. Generally the relationships with FQHC/RHC/CMHC are focused on upside reward only.


5: What is a key Lesson Learned in the evolution of your value based contracting process?

Collins reflected on their lessons learned and identified training and support for the practices as a key challenge. Early on they underestimated how much time they needed to allocate to support a relationship. They now know that 1 FTE can generally support 5 practices.

Collins further said they learned that they needed to spend a significant amount of time in the early stages of the relationship working with the practice to review and interpret reports and data to help drive practice transformation. As the practice developed competency, processes and familiarity with the data feeds and resources, the time commitment from the plan decreased. Collins stated that for the practice to be successful, the plan must be prepared to invest time and energy in the relationship.


Value based contracting is alive and well. Best practices involve identifying the right relationship continuum the plan can support, dedicating enough and the right resources and then using good judgment and analytics to identify and assist physician partners in practice transformation.

Go slow to go fast and ensure that the practices can handle the risk/reward and positively impact patient outcomes. Value based contracting that is used solely for risk shifting is doomed to fail.

The goal of the risk and reward are better outcomes and more efficient/effective  uses of the premium dollar.


About the Author:

Nancy C. Everitt, MBA is the President and CEO of HEOPS, Inc. and Editor in Chief of Scientific Cowboys. Ms. Everitt is lead strategist to Clients’ on the design and fulfillment of patient access solutions such as network development and provider engagement, quality analytics, Medicare Advantage STARS strategy, disruption analysis and mapping. Ms. Everitt has been involved in the strategy of each engagement and provides significant perspective on industry best practice.

In addition to serving as Editor in Chief on Scientific Cowboys, Ms. Everitt is a frequent contributing writer to the publication sharing real world advice and operational insights on process and performance improvement. Questions on this article may be addressed directly to




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