Interoperability still a pain point for downside risk agreements

A new report from the KLAS analytics firm examined the role downside risk contracts can play when it comes to improving outcomes and saving money.  

By working with population health management vendors, KLAS explored the ways organizations can use technology and buy-in to make “significant progress” toward value-based reimbursement.  

“Success with downside risk requires a lot of effort from provider organizations and their vendor partners, and both parties must be willing to put in the necessary work,” observed researchers. “Leading organizations have collaborative relationships with their IT vendors and work in tandem with them to develop needed technology.”  

“In some cases, organizations supply data to help train models, or they may develop functionality internally that is then integrated into the technology platform. This kind of development requires heavy internal investment from the provider organization,” they added.


Downside risk models require providers to refund the payer for some losses if actual care costs exceed financial benchmarks.  

By building on shared savings contracts, KLAS explained, organizations can increase quality performance and reduce medical expenses.

For organizations that have “aggressively pursued” such contracts, said KLAS, three common principles stand out:  

Provider organizations advise peers to examine contracts closely and to make them as standardized and payer-agnostic as possible.  

At the same time, KLAS-interviewed executives repeatedly stressed the need for better interoperability between systems and for access to data from all payers.   

They want data to be timely and more easily transferred into their data warehouses, and some expressed the desire for more standardized codes and structure.   

“In addition, advanced analytics, in the form of customized reports and dashboards, are needed to create more actionable insights; this includes the predictive analytics that allow organizations to engage in risk and contract modeling,” said researchers.

They flagged claims data as a particular pain point: The availability and format can differ across payers, or even differ from month to month for the same payer.  

Executives consistently described two technology factors as being key to their downside risk progress: strong integration and timely customization. Azara Healthcare, HealthEC and Cedar Gate Technologies ranked highly for functionality, while Inovaccer earned high integration ratings.  

Meanwhile, Allscripts and Cerner customers give the vendors lower integration and functionality ratings in terms of delivering key value-based reimbursement insights.  


Population health IT vendors have played an important role in furthering value-based care, particularly when it comes to incorporating social determinants of health into organizational analysis.  

Still, hurdles exist to broad adoption. A 2020 report found that many health systems struggle to define clear return on investment from their population health management initiatives, with several (as with the KLAS report) citing data problems as a challenge.  


“Health systems that are ahead of the curve in their adoption of downside risk contracts have valuable insights that can help peers understand how to move the needle on value-based reimbursement,” said KLAS researchers.

Kat Jercich is senior editor of Healthcare IT News.
Twitter: @kjercich
Email: [email protected]
Healthcare IT News is a HIMSS Media publication.

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