Legal disputes over the results of commercial value-based care (VBC) contracts are mounting.  Groups should immediately rethink their strategy to accept the “built in” stop loss from payors.  Here’s why:

Most groups in VBC programs with commercial payors believe they have no choice but to buy stop loss directly from their commercial payors.  Groups blanketly accepting the coverage do so without leverage. Though payors may insinuate otherwise, groups are often afforded legal protections against payors mandating that groups buy stop loss products directly.

2. Data Sharing
Perhaps the biggest conflict between payors and providers relates to data sharing.  Physician groups too often cede the data analytic responsibility to payors – despite the inherent conflict.  Engaging a specialized risk partner that can analyze data facilitates a more transparent relationship.

3. Advocacy
When commercial payors determine shared savings or losses, they tend to do so unilaterally.  Having a strong risk partner review the data and results for accuracy is essential.

Having a strong claims team can prevent cash flow issues if/when payors withhold future payments.

4. Regulatory Oversight
Traditional stop loss carriers adhere to strict regulations designed to protect insureds.  Regulations permitting health plans to include stop loss can be vague and lack meaningful protection for physicians.

Commercial VBC stop loss plans can also raise “risk transfer” questions.  Groups that utilize captives may face heightened regulatory scrutiny over the adequacy of the transferred risk.

5. Representation
Payor stop loss is often “sold” without representation.  When purchasing insurance in the marketplace, brokers help ensure that coverage terms are appropriate and in the best interest of their clients. Brokers also have a fiduciary duty to their clients, not the payors.

Purchasing coverage from an independent insurer provides an unbiased analysis of benchmarks relative to historical performance.  Pricing itself is a strong indication of the VBC program terms.

As demand for VBC stop loss products grows, so does supply.  With more underwriting interest in the market, pricing stop loss has become a standard part of due diligence for groups taking downside risk. 

Trust DRM as your exclusive risk partner in this highly complex space.

Brian S. Kern, Esq. CEO of Deep Risk Management LLC, a boutique VBC healthcare risk firm.