The Present and Future of Risk-Based Businesses in Healthcare
this is high quality. thank you!
Well written and thought out but sadly the same thing could have been and WAS written in the 1990s and yet we are now where we were then.....
"As a playbook emerges for setting up these contracts, private payers continue to get more comfortable with risk arrangements. The typical arrangements involve payers giving 85-90% of their patient revenue to a risk-bearing provider. This allows the payer to lock in 10-15% profit margins."
If you think about that for a bit I imagine you'll figure out why that can't possibly be true - the payer still has to pay for marketing, claims administration, call center staff, network management, and all the other pieces that any other health has to pay for. An MA plan's MLR is usually around 85% anyways, so handing that over to a payer partner just hands that portion off and the plan maintains the usual 3-4% margins on the MA business.
The reason it's valuable to the payer and the provider partner is that it provides an incentive the the provider to boost risk scores in MA, which increases the bottom-line PMPM margins (not percentage margins) for providers and plans.