Entering the world of the medical industry can be quite challenging. That’s why most medical practices hire outside consultants to deal with the paperwork and technical side, and this option gives them more time to commit to their patients.
Healthcare contracting is one of the main areas that these firms specialize in. Risk contracts are one of the structures set in place to ensure the necessary level of care by medical providers. So, what exactly are risk contracts, and how do you get one? Read on to learn all about it and discover how Peregrine Healthcare can help take your practice potential to the next level.
Value-Based Care and the Origin of Risk in Healthcare Contracting
2008 was an important year for the medical industry because congress voted to pass the Medicare Improvements for Patients and Providers Act (MIPPA). This put more focus on value-based care and introduced specific performance incentives that determine reimbursements.
The two important takeaways from this legislation are:
- Reimbursement incentives look at the quality of care instead of the volume
- The providers must assume more risk
That’s how risk contracts or risk-based contracts came to life.
What Are Risk Contracts?
A risk contract is defined as any type of contract involving one party assuming business risks. Therefore, in healthcare contracting, that usually refers to a healthcare provider, the insurance plan, or the employer taking on risk, meaning that they must cover the expenses of provided care if it goes over the projected estimates.
So, in most risk value-based care models, the insurance companies partner with medical providers who assume the financial risk of patient care. In turn, healthcare providers are in charge of covering the expenses of their patients, but they also get to keep all the profits when their patients stay healthy.
Switching to a risk-based contract can bring certain benefits like better patient care, more freedom, and better financial outcomes.
Better Patient Care through Healthcare Contracting
Patient care is the primary focus of all medical practices. Risk contracts allow clients with worse socioeconomic status to experience more stability with their healthcare providers. Healthcare contracting is essential thus to ensure this happens. This way, contracts help develop the doctor-patient relationship and enable medical professionals to provide a more personalized level of care.
More Freedom in Determining Treatment
According to surveys, physicians are happier when they can provide a high level of patient care. Unfortunately, many patients feel limited with insurance coverage, and this requires that doctors adjust necessary treatment plans or seek alternatives.
When the practice is under a risk-based contract, physicians are not worried about billable charges, which allows them to provide the right medical services at the right time. This freedom translates to better patient care and physician satisfaction.
Better Financial Outcomes
Depending on the risk contract, practices assume a certain level of risk. However, it appears that full-risk contracts give providers the best financial outcomes. That’s because these agreements have higher premiums from the insurance company. And if the provider can reduce the number of expensive interventions by focusing more on preventative care, they can pocket more money.
How Peregrine Healthcare Can Help
Peregrine Healthcare is a medical consultancy agency that helps practice owners improve efficiency and boost revenue. If you are interested in risk-based contracts, we can help you by offering advice. In addition, we can negotiate better terms on your behalf and ensure your practice is compensated adequately for your services.
Click here to learn how you can get in touch.
