What Nephrologists and Practice Admins Need to Know About Full Risk

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May 10, 2022

In our last blog, we shared lessons learned over the last decade from the shift to full risk in primary care. The success in primary care provides a guide for nephrology as we witness the same evolution in value-based kidney care models

New payment models show that payors recognize nephrologists are key to improving quality and controlling costs for their complex patient population. As a result, practices will have the opportunity to participate in new, nephrologist-driven payment models — including full risk models. 

In these full risk contracts, nephrologists will become responsible for total cost of care for their chronic kidney disease (CKD) and end-stage kidney disease (ESKD) patients and share meaningfully in financial rewards. Most importantly, these models will enable nephrologists to practice in a way that’s more aligned with delivering the right patient care. 

But what do these full risk contracts look like, and how will participation impact your practice’s revenue and operations? Let’s take a closer look at the ins and outs of these models.

Medicare Advantage 101

In Medicare Advantage plans, the Centers for Medicare and Medicaid Services (CMS) contracts with private payors to administer these plans with providers and members. 

These plans are inherently well-suited for delegating full-risk contracts for CKD and ESKD patients. That’s because Medicare Advantage serves an older population, which aligns to the majority of CKD and ESKD patients. These plans also often offer supplemental benefits, like transportation, which help CKD and ESKD patients access care. 

In addition, Medicare Advantage plan premiums from CMS are risk-adjusted to reflect the acuity of their member population. This payment structure allows these plans to better serve more complex and costly patients.

Within Medicare Advantage, there are a few different types of plan structures, including:

  • Health Maintenance Organizations (HMOs) — Plans that assign beneficiaries to network-specific providers but have generally lower out-of-pocket premiums.
  • Preferred Provider Organizations (PPOs) — Plans that give beneficiaries more options on which providers they see but have generally higher out-of-pocket premiums. 
  • Special Needs Plans (SNPs) — Plans limited to members with specific conditions (e.g., C-SNPs are offered to patients with certain chronic conditions, including ESKD). 

Understanding the mechanics of these Medicare Advantage plans will help your practice successfully participate and achieve savings. 

How Can Members Participate in Medicare Advantage Plans?

To be eligible to join a Medicare Advantage plan, a patient must be enrolled in Medicare Parts A and B and live in the plan’s service area. Until plan year 2021, people with ESKD were ineligible for Medicare Advantage plans (unless they joined the plan prior to their ESKD diagnosis). The 21st Century Cures Act opened the ability for this patient population to newly enroll in Medicare Advantage plans

Enrollees in an HMO Medicare Advantage plan must choose a physician to serve as their primary care provider (PCP). Those who don’t choose will have a PCP assigned at the time of enrollment — even if they have no prior relationship with that provider. 

In PPO Medicare Advantage plans, enrollees have the option to select a PCP but aren’t required to do so. 

When provider groups enter into a full risk agreement with a Medicare Advantage plan, they are assigned risk patients in two ways: either through members selecting specific PCPs or through claims-based attribution. Attribution assigns members to PCPs based on set criteria, such as number of visits or coded conditions. The goal of both methodologies is to assign risk to providers that are truly accountable for a particular patient’s care. 

How Does Your Practice Earn Revenue in MA Full Risk Models?

In most arrangements, revenue from full risk Medicare Advantage contracts is incremental to your existing fee-for-service revenue. Here’s how these contracts work:

  • CMS pays private health insurers a monthly amount tied to the expected cost to take care of a patient. This is called a premium. Premium payments are risk-adjusted to reflect the acuity of enrolled members, which is reliant on accurate hierarchical condition category (HCC) coding. 
  • Payors will pass risk on relevant members to value-based entities through pre-negotiated contracts. These contracts will define the percent-of-premium (PoP) amount awarded to participating entities, with payors retaining a small portion to cover administrative expenses. This provides plans with predictable revenue without the risk of a highly variable patient population. 
  • In most arrangements, full risk contracts are incremental to your fee-for-service contracts with Medicare Advantage plans. The practice continues to bill and be reimbursed for services, which is a cost applied to overall medical expenditures for the patient.
  • If medical expenditures are lower than the capitated amount, providers typically receive savings distributions based on the amount of the surplus.
  • Savings are driven by optimizing three key levers:
  • Quality: Generating additional bonuses through Star ratings and Healthcare Effectiveness Data and Information Set (HEDIS) measures.
  • Medical expense reduction: Reducing avoidable spend by managing total cost of care below the PoP. A good example is identifying lower cost, higher quality sub-specialists to refer services to or identifying generic alternatives to medications to impact Medicare Part D spend.
  • Revenue: Impacting revenue through PoP increases and membership growth. In many cases, appropriate HCC coding is used to more accurately reflect the needs of the population, and ensure the premium paid by CMS reflects the needs of the patient.

MA full risk models provide an exciting opportunity for nephrologists to lead patient care and improve patient care delivery. These models also present new revenue for nephrology practices. Using primary care as a guide, providers in full-risk contracts can realize financial upside that is significantly greater than their FFS counterparts.

Strive Can Help You Prepare 

Full risk is complex. We’re here to make it easier for your practice to participate in these new, exciting models. In our next blog, we’ll walk through how your practice can get ready to participate in full risk contracts. If you’re ready to talk now, email info@strivehealth.com or complete our contact form

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