Alternative Payment Models Accounting: Financial Reporting for Value-Based
Payment Arrangements
Introduction
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
Transitioning to value-based payment models is an important strategy for improving
healthcare outcomes and reducing costs. However, financial reporting requirements for
alternative payment models (APMs) differ from traditional fee-for-service systems. Providers
need guidance on accurately accounting for shared savings, risk arrangements and other
APM financial elements. This paper outlines best practices for financial reporting related to
APMs, focusing on transparency, compliance and informing stakeholders.
Defining Payment Models
Clear definitions clarify the payment model scope and goals. Reports should define key
characteristics like:
- Model type (e.g. shared savings, bundled payments, comprehensive primary care plus).
- Goal metrics (e.g. reducing total cost of care, readmissions, ED visits).
- Participating provider organizations, specialties and geographic service area.
- Patient population and sample size.
- Payment terms (shared savings rate, risk thresholds, payment periods).
- Administrative partners and their roles in calculating metrics/payments.
This contextual information supports assessment of progress relative to contractual
expectations and industry benchmarks.
Establishing Baselines
Baseline data establish pre-APM performance for measuring improvement. Early reports
should include:
- Historical costs and utilization metrics for baseline years.
- Analytical methodologies for attributing patients and estimating costs in baseline.
- Factors considered for risk-adjusting baselines.
- Provider performance on quality metrics in baseline years.
Baseline data are crucial for benchmarking, measuring progress and attributing
savings/losses. Thorough documentation facilitates performance evaluations over multiple
years.
Performance Measurement
Robust measurement is key to evaluating APM impact. Reports need to transparently
address:
- Data sources, frequency and lags in data availability and quality.
- Process for calculating savings/losses relative to baseline costs and utilization metrics.
- Quality metrics reported, data sources and measurement methods.
- Attribution methods linking patients and costs to specific providers.
- Statistical approaches to accounting for normal fluctuations and risk adjustment.
- Process for validating measurement data and methodologies.
Standardized, replicable performance measurement maintains analytic rigor and consistency
over time.
Revenue and Settlement Reporting
Timely and accurate settlement reporting ensures appropriate provider compensation and
oversight. Key elements include:
- Calculated total cost of care savings or losses relative to baseline.
- Performed quality score or ranking on applicable metrics.
- Calculation of shared savings or losses payment amount.
- Distribution of that amount across partner organizations as specified.
- Process for independent validation of results prior to payment.
- Timeline for payment distribution after measurement period ends.
Transparency avoids disputes and supports programmatic learning and continuous
improvement cycles.
Budgetary Reporting
Model success relies on prudent fiscal management. Reports should detail:
- Projected budget versus actual expenditures for infrastructure costs.
- Investments in care coordination, analytics, IT infrastructure and more.
- Approach to budgeting shared savings distributions and risk corridor payments.
- Reserves for surplus distributions or risk shortfalls across measurement periods.
- Administrative fees or margins built into budgets and expenditures.
Regular budgetary reporting ensures financial viability and accountability to partners and
regulators over the long-term.
Conclusion
Comprehensive financial reporting is crucial for value-based payment models still emergent
and complex. Standardized methodology from the outset promotes transparency, evaluation
of progress toward goals, compliance with reporting obligations, and continuous program
improvements. Proper accounting ultimately strengthens the transition from fee-for-service
arrangements by building understanding and trust with stakeholders across the healthcare
system.
