{"id":11820,"date":"2020-09-09T17:49:45","date_gmt":"2020-09-09T12:19:45","guid":{"rendered":"https:\/\/www.medicalbillersandcoders.com\/blog\/?p=11820"},"modified":"2026-05-11T11:14:11","modified_gmt":"2026-05-11T11:14:11","slug":"impact-of-pandemic-on-value-based-contracts","status":"publish","type":"post","link":"https:\/\/www.medicalbillersandcoders.com\/blog\/impact-of-pandemic-on-value-based-contracts\/","title":{"rendered":"Impact of Pandemic on Value-Based Contracts"},"content":{"rendered":"

The Healthcare industry is facing implications from the pandemic situations that can impact their ability to improve contract performance and potentially expose them to new risks. Value-based contracts are usually relying on historical data for starting claim targets, trend rates, and\/or quality measures.<\/p>\n

Impact on claims<\/h2>\n

The timing and severity of this pandemic situation is vary materially based on geography and market segment. At the same time, delays in care, negligence in care, and drops in non-COVID emergent care may decrease costs during the 2020 performance period and create claim surges in subsequent performance periods due to unexpressed requests during the quarantine period. Value-based care contracts are adding a layer of complexity for provider organizations impacted by the COVID-19 pandemic<\/a>.<\/p>\n

Capability to manage population health<\/h3>\n

ACOs are usually are expected to meet certain preventive care, chronic care, and other quality targets in addition to effectively managing overall usage. Non-emergent patient management becomes problematic during quarantine periods.<\/p>\n

Impact on upcoming contracts<\/h2>\n

Value-based contracts are usually relying on historical data for starting claim targets, trend rates, and\/or quality measures. Current alterations from COVID-19 can disturbing upcoming contract periods for the next one to three years. Additionally, existing risk adjustment models may not appropriately account for COVID-19 pandemic impacts.<\/p>\n

Current Scenario<\/h3>\n

Value-based care and risk-based contracts have augmented significantly over the past 10 years in market segments. The Healthcare system is continuing to rely mainly on fee-for-service revenue<\/a>, the majority have some share of their revenue tied to contract performance. COVID-19 pandemic has generated significant uncertainty with respect to costs, utilization, quality, and the ability to deploy typical population health strategies to manage these outcomes.<\/p>\n

There is also uncertainty about the appropriateness of risk scores given the emergence of this novel condition combined with the disruption in traditional utilization patterns. In addition, the impact of COVID-19 itself varies considerably by geography, market segment, and socioeconomic variables. While most parts of the country will experience a temporary reduction and deferral of patient care, particularly for elective and routine services, COVID-19 treatment costs will vary based on areas with higher infection and morbidity rates.<\/p>\n

In addition, certain contracts will face greater exposure to COVID-19 risk based on the type of population covered. Medicare contracts likely will have higher COVID-19 treatment costs due to older and disabled individuals who have a greater likelihood of hospital and ICU admissions. Similarly, Medicaid contracts likely face greater exposure due to socioeconomic disparities observed with infection, hospitalization, and death rates.<\/p>\n

Accordingly, ACOs that participate in Medicare Shared Savings Programs (MSSP) have expressed significant concerns about COVID-19 and its impact on 2020 performance. 1<\/p>\n