Written by Jesica Freeman, Chief Product Officer
Reviewed by Andrew Mackenzie, Chief Science Officer and Jiaming Wang, Senior Product & Data Science.
In 2024, Medicare Advantage (MA) underwent significant changes driven by policy shifts, financial pressures, and an increased emphasis on value-based care (VBC) as payers transferred more risk to providers. Both payers and providers navigated evolving risk adjustment methodologies, shifting reimbursement models, and economic challenges. Key issues included adapting to CMS payment model updates, managing revenue volatility, and leveraging data to enhance risk contract performance. The increasing expense of healthcare strained VBC models, emphasizing the need for stronger cost controls and proactive interventions. At year-end, MA faced further disruptions from market exits of unprofitable plans, fewer plan options, CMS benchmark rate cuts, and higher utilization of supplemental benefits, adding to enrollment and profitability uncertainties.
Despite the challenges Medicare Advantage faced in 2024, one thing is clear, the shift to value-based care (VBC) is accelerating and here to stay. The Centers for Medicare & Medicaid Services (CMS) has set a goal for all Medicare fee-for-service beneficiaries to be in a VBC arrangement by 2030, and nearly half of primary care physicians already participate in these models. This shift continues to reshape our healthcare system, emphasizing quality, efficiency, and improved patient outcomes.
Success in the evolving VBC landscape requires payers and providers to refine contract methodologies, integrate fragmented data seamlessly, and build a strong operational infrastructure for contract adjudication. These components are essential for generating actionable insights, ensuring accurate settlements, and streamlining contract execution.
This report compiles market insights from our 2024 Arbital Health Webinar Series, highlighting the latest trends, challenges, and opportunities in value-based contract management.
Arbital engaged C-suite leaders from payers and providers (ie value-based care enablers, digital health providers, and Accountable Care Organizations) to explore their experiences and challenges with value-based care contracting, focusing on two key areas:
Among those surveyed, the majority (76%) have experience managing patients in value-based care arrangements, while 17% were exploring value-based care models, and 7% had no experience in VBC. Among those surveyed on their experience in value-based care arrangements, 47% identified contract design, member baseline setting, and incentive alignment between partners as the biggest challenge. The next biggest challenge to those organizations in VBC, cited by more than 39% of respondents, was data management, both retrospective and prospective financial reporting, as well as optimizing contract performance within value-based care arrangements.
From this brief survey of approximately 70 healthcare companies, it emphasizes the pressing need for contract management technology, better evaluation methods, improved data governance, and greater payer-provider alignment. Addressing these operational challenges is essential for accelerating VBC adoption and ensuring long-term success in the Medicare Advantage market.
Arbital Health helps healthcare customers navigate these complexities by providing expert actuarial consulting services, data-driven strategies, and technology solutions to manage risk contract performance.
For assistance navigating this rapidly changing market, please contact Rich Gamret, FSA, MAAA at rgamret@arbitalhealth.com or learnmore@arbitalhealth.com.