What are the best practices for managing risks in alternative payment models?

1 Assess your readiness

Before entering an APM contract, you need to assess your readiness to take on risk and identify your strengths and weaknesses. You can use tools such as the CMS APM Readiness Assessment or the APM Framework to evaluate your capabilities in areas such as data analytics, care coordination, population health management, quality improvement, and financial management. You also need to understand the terms and expectations of the APM contract, such as the performance measures, risk-sharing arrangements, payment mechanisms, and reporting requirements.

2 Implement risk mitigation strategies

When participating in an APM, it is important to implement risk mitigation strategies to manage potential losses and uncertainties. Establishing a risk reserve fund, purchasing stop-loss insurance or reinsurance, negotiating risk corridors or caps, diversifying your payer mix and revenue streams, and aligning your provider network and referral patterns are all strategies that can help reduce the risks associated with the contract. These strategies can help protect against unexpected costs or penalties, limit exposure to catastrophic claims, share the risk with the payer, reduce dependence on a single APM contract, and optimize performance while reducing leakage.

3 Monitor and improve your performance

To succeed in an APM, you need to monitor and improve your performance on a regular basis. You need to collect and analyze data on your cost, quality, utilization, and patient outcomes, and compare them with the benchmarks and targets of the APM contract. You also need to use data to identify gaps and opportunities for improvement, and implement interventions to address them. For example, you can use data to stratify your patient population by risk level, and provide tailored care management and preventive services to high-risk patients. You also need to engage and educate your providers and staff on the goals and expectations of the APM contract, and provide them with feedback and incentives to improve their performance.

5 Innovate and adapt to changes

APMs are constantly evolving and changing, and you need to be flexible and adaptable to respond to the changing needs and expectations of the health care system. You need to be open to innovation and experimentation, and test new ideas and approaches that can enhance your value proposition and competitive advantage. You also need to monitor the external environment and anticipate the trends and opportunities that can affect your APM participation. For example, you need to be aware of the regulatory and policy changes, market dynamics, consumer preferences, and technological advancements that can influence your APM performance and sustainability.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?