Last month, we almost broke our webinar platform when we discussed the future of commercial risk. Nearly a thousand people joined, and the chat was flooded with interesting questions and perspectives.

Our main message? The future of commercial risk is uncertain—and it will decide the fate of value-based care.

Here are the top four insights we dug into.

1. The future of commercial risk is anything but certain

There’s no clear path to commercial risk. There have been mixed results to date, and, unlike Medicare, there is no single voice to galvanize stakeholders toward a single glidepath. Moreover, the savings are dispersed across many commercial plans, making scaled cost reduction harder to do.

Beyond that, achieving success in commercial risk requires a fundamentally different approach than Medicare risk. The focus for commercial is preventing conditions and overutilization of care they don’t need and then, when they do need care, connecting them to the most cost-effective treatment, provider, and site of care. While in the senior population, it’s all about increasing primary care utilization, condition management, and specialist coordination for chronic conditions.

Are the barriers to commercial risk insurmountable? Here’s why they might be.

As one executive put it, this is why predicting the future of commercial risk is like trying to predict the stock market.

2. But it’s possible

Medicare has dictated the risk-based payment story for the last decade. Commercial is a place where providers and payers have more agency. They have freedom to experiment with cost savings opportunities.

There’s also a renewed interest in removing cost from the system due to the precipitous drop in fee-for-service reimbursement during the pandemic. Even if folks have different expectations, there is common ground around this ambition. Purchasers want lower costs. Patients want less cost out of their pocket. Plans want to rein in costs. And employers want to spend less on benefits.

And, if not value-based care, then what else? Everyone wants lower-cost care and there’s currently no obvious alternative to value-based care. Until a new solution materializes, we are left acting with the best tools at our disposal.

The data on commercial risk opportunities (and where the research goes next)

3. Not every commercial cost driver is an opportunity

So, where are all the opportunities? In our recent analysis of a commercial claims data set, we identified 20 high-cost sub-service lines. With areas like pregnancy and chemotherapy emerging as opportunities, tactics for reducing spend become more clear.

But be careful not to take all these opportunities as given. In a well-managed population, we expect specific services to increase in cost, not decrease. Take for example outpatient evaluation and management. More frequent office visits mean greater potential to prevent chronic conditions and less downstream utilization of high-cost services.

4. Paths toward commercial risk come with distinct trade-offs

The industry has two main options for the future of commercial risk: There's the Medicare path, and then there's something else. It’s not clear which will create more net savings or improvement.

Following Medicare: Commercial payers often follow CMS’s lead on alternate payment models. This glidepath toward population-wide risk would create significant efficiencies for providers through standardized incentives and infrastructure. However, CMS’s models focus heavily on broad disease management, a drawback for the commercial population.

Pregnancy care: 2 value-based opportunities (and 2 red herrings)

Taking a distinct approach: Providers and payers could focus on high-spend episodic models that are uniquely tailored to the commercial populations’ clinical needs and saving opportunities. The bespoke approach would come at the cost of providers who would be required to split their focus across multiple processes and capabilities needs.

Parting thoughts

Through conversations with stakeholders in the commercial risk space, it has become clear that the journey to risk is as much of an adaptive challenge as it is a technical one. Some of the most progressive VBC leaders cite having to overcome fears and shift organizational culture as a key for making progress.

Commercial risk is an area executives can choose to lead the market and shape the future, and we will continue to track it. Catch the latest insights at advisory.com/VBC.