7 Challenges Business Leaders and Chief Financial Officers Face in Risk-Based Contracting

Value-based care (VBC) has the potential to improve healthcare delivery and patient outcomes, but the transition from fee-for-service to risk-based contracts brings significant complexities. While these contracts offer the chance to share in the financial rewards of successful patient care, they also pose risks to profitability and long-term success.

Chief Financial Officers (CFOs) and business leaders at VBC organizations and digital health providers overseeing Medicare Advantage, Commercial, ACO Reach, and MSSP populations are in a pivotal position to monitor and manage these financial agreements closely. Payers often provide data and reports from their point of view to assess current performance, whether it's in a surplus (money to be paid) or deficit (money owed). However, these reports are often inaccurate, delayed, and may not offer the most reliable projection of the final financial outcome.

To manage these contracts effectively, VBC organizations need a technology platform capable of analyzing data files against specific contract terms, assessing current financial performance, identifying cost drivers, and providing actionable insights to improve patient care and reduce financial risk. As patient populations grow and the stakes get higher, the right technology can help solve these key challenges.

1. Insufficient, incomplete, inaccurate data Data is the fuel that drives the engine when it comes to VBC contracts. Incomplete or inaccurate data can distort financial projections, mislead decision-making, and result in ineffective contract management. It’s essential for CFOs, business leaders, and actuaries to ensure that data integrity is at the core of their contract management processes. On top of financial reports, having access to full claims and revenue data is crucial for creating your own early projections and spotting areas for improvement. Without clean, reliable data, achieving accurate financial forecasts and optimizing contracts is nearly impossible.

2. Complex adjudication and attribution headaches Risk-based contracts are inherently complex. Missteps in managing intricate adjudication and attribution processes can lead to costly disputes, inefficiencies, and delayed reimbursements. As a CFO, it’s critical to streamline these processes, allowing you to avoid the heavy lifting that comes with resource-heavy manual intervention, which can threaten overall financial performance. Business leaders play a crucial role in ensuring precision in these areas, avoiding the financial fallout of errors.

3. Unexpected VBC contract deficits CFOs must mitigate, both internally and externally, the risk of financial shortfalls when actual outcomes diverge from projections. These deficits can severely affect your organization’s profitability and sustainability. Misaligned projections can create disputes with payers, accountants, and Boards, eroding trust and damaging relationships. To avoid surprises that could compromise your fiscal health, proactive strategies are essential in the financial planning of your risk-based contracts.

4. No central source to meet contract adjudication needs Without a unified system for managing risk contracts, your organization may face increased administrative overhead and a lack of visibility into contract performance. The struggle to manage multiple systems and data sources across various contracts can be overwhelming, hindering your ability to streamline adjudication processes and monitor key metrics effectively. A centralized platform is critical to avoid silos and create a cohesive view of your organization’s financial health across contracts.

5. Lack of value-based care actuarial expertise  Almost half (44%) of providers and payers in a recent survey said the lack of contracting expertise negatively affects their VBC program1. Navigating risk-based contracts requires specialized actuarial VBC knowledge to accurately assess risk, forecast financial outcomes, and structure contracts for success. Many organizations rely on limited internal resources, but without the deep actuarial expertise specifically tailored to VBC, they risk poorly designed contracts, inadequate contractual protections, miscalculated financial liabilities, and missed actionable insights.

6. One-sided negotiations and lack of a neutral, trustworthy partner Providers often find themselves at a disadvantage when entering negotiations where payers hold all the data and expertise, leading to one-sided contract terms. Without a neutral third party to oversee the process, contracts can become imbalanced, eroding trust between stakeholders and making it difficult to ensure fairness. This lack of neutrality increases the risk of disputes and can hinder long-term success by creating a contract environment where collaboration is stifled.

7. Inability to scale for business growth As your organization takes on more risk contracts and patient populations, the complexity of managing these contracts grows exponentially. Without scalable systems, expanding your VBC program can feel like building on an unstable foundation. For business leaders, failing to scale efficiently can impact financial forecasting and limit your organization’s ability to take on additional risk, hampering growth opportunities.

The Arbital Health Platform Solution: Let Us Do the Heavy Lifting

We recognize that these challenges are real barriers to success in managing financial risk in VBC contracting—and we’ve got them covered. Working in tandem with our team of VBC actuarial experts, the Arbital Health Platform provides the technology and connectivity between providers, payers, point solution vendors, and accountable care organizations. By letting us handle the complexities of your contracts, you can focus on what truly matters: improving patient outcomes and delivering high-quality care.

• Data Integrity Assurance: Our team ensures an all-encompassing assessment of your data's accuracy and reliability, giving you peace of mind that your contract decisions are based on the best available information.
• Streamlined Adjudication and Attribution: Our secure, cloud-based SaaS platform automates the complexities of adjudicating risk-based contracts, providing consistent metrics to prevent disputes and ensure accurate outcomes.
• Real-Time Performance Monitoring: We continuously track contract performance, helping you to avoid unexpected financial deficits and align expectations before final adjudication.
• Centralized Solution: Manage all contracts in one place with a unified platform, giving you the visibility and control needed to improve performance efficiently without expending significant internal resources.
• Expert Actuarial Support: Built on VBC actuarial science, Arbital Health’s platform integrates expert data analyses and advanced calculations, helping you measure and optimize contracts with precision.
• Neutral Third-Party Partner: As a trusted adjudicator, we ensure fairness, build trust among stakeholders, and help level the playing field in contract negotiations. Arbital’s team has been involved in hundreds of risk-based contracts and can ensure that you are negotiating the best possible deal for your organization.
• Scalable Technology: Our platform scales seamlessly with your business growth, easily managing multiple contracts and delivering actionable insights to support your evolving needs. 

Focus on Improvement, Not Administrative Headaches

Let Arbital Health relieve the burden of risk-based contracting off your shoulders. With our expert solutions, you can focus on delivering the best possible care to your patients while maximizing the benefits of value-based contracts. Click here to explore how our platform simplifies contracts and drives value for your organization. 

¹ 2023 Perspective on Value-Based Care, Healthcare Financial Management Association for Terry Health survey. Click Here.