Roughly a third of providers say their organization does not participate in risk, a third say they participate in upside risk only, and another third say they participate in both upside and downside risk.

In contrast, when we asked physicians about their personal participation in risk, over half said they don’t participate in risk and only 18% said they participate in downside risk. The discrepancy between physician participation and organization participation reflects a gap in understanding and awareness—likely driven by physicians whose payment structures did not change after their organization adopted risk-based payment contracts.

Overall, the story is that participation in risk, especially downside risk, is low even after years of investing in providers to take on risk.

From the plan side, the news is good when looking at upside risk adoption and goals. Plans are relatively close to their upside risk goals. On average, 63% of their provider networks are in upside risk compared to an average plan goal of 78%.

On the flip side, plans are a ways off from their downside risk goals. Plans report only 21% of their provider networks are in downside risk even though they would like 63% of their provider networks in downside risk models.

Also, providers in downside risk only have a small portion of their patient panel in risk. Room exists to push further by increasing the potential financial risk or bringing more of their patient panel into risk.

Thankfully, providers in downside risk are optimistic about their ability to move further into risk when compared to other providers. 67% of providers in downside risk say they feel prepared to take on more risk, compared to only 49% of providers in upside risk and 40% of providers not already in risk.

How prepared do you anticipate you will be to take on more risk in 2 years from now?
Percent of providers selecting one of the following preparedness options

Providers in downside risk appreciate the supports that plans offer. They are more likely than other providers to say that they are receiving these supports and to say that they are effective. Further, once they start receiving these resources, they find them more effective than expected.

How effective is each support resource in helping you improve your performance?
Percent of providers who have these resources and answered somewhat or very effective

But ability does not equate to desire. 43% of providers in downside risk want to keep their involvement in downside risk the same and 34% of providers in downside risk want to decrease their involvement.

Momentum alone is not going to spur further downside risk adoption among providers. In fact, left alone, many providers would choose to revert into upside risk only models, reaping the benefits without the potential losses. Plans must, therefore, provide the necessary supports to push providers further into downside risk if they don’t want providers to backslide.

Start with providers in downside risk first. This group can increase their risk, are more willing than other groups, and could backslide if not prioritized for financial success.

The main reason providers in downside risk models don’t want to continue is because they don’t see a meaningful financial benefit for participating in downside risk models. Only 45% of providers in downside risk said that they achieved a bonus payout in the last year and of those providers, 48% achieved a bonus of 1% to 5%.

Providers face a catch-22. Help stop the cycle. Providers won’t take on more risk if they don’t think they will be successful financially. Then again, they also won’t make the investments to be successful if they are not on the hook for a larger potential loss or bonus.

Plans can help this catch-22 by partnering closely with providers new to downside risk so that success in the first year is not only realistic, but likely and financially meaningful. The goal is to encourage providers to make further investments that will lead to success under downside risk in subsequent years.

Differences exist in what providers in downside risk find effective versus providers not yet in downside risk. For example, while the average provider wants embedded staff support for coding guidance, providers in downside risk want embedded staff support for care management guidance as shown on the next page.

This aligns with a provider’s traditional path to risk. In the beginning, when providers are taking on upside risk, they may struggle with functional questions—such as HCC coding—but by the time they are progressive enough to take on downside risk, they are focused on care delivery transformation.

Additionally, providers in downside risk are more likely than the average provider to want educational and informational resources. Specifically, they like the idea of having peer-led summits to learn from other provider organizations trying to adapt to downside risk.

Offer embedded care managers and peer-led summits. Providers in downside risk appreciate (relative to other providers) embedded staff support for care management and peer-led summits for education.

Providers want to be in upside risk with 44% of providers already in upside risk saying they want to increase their upside risk and another 37% want to maintain their current level of upside risk.

This desire is distributed across providers regardless of age. Providers who graduated medical school in 1990 or later are all equally willing to participate in upside risk (~45%)—it is not just the newest generation of doctors thinking about payment differently. The only subgroup that may not be willing to take on upside risk are those who graduated medical school before 1980 and may be up for retirement soon.

Let momentum take over. Don’t over-focus on moving providers in upside risk further into upside risk. This will happen naturally, and on average, plans are already close to meeting their goals in upside risk.

Instead, plans should focus on moving providers in upside risk into downside risk. Although plans report only 21% of their provider networks are in downside risk, they say that 35% of their provider networks are capable to take on downside risk. This is a gap that plans can and must close.

Providers in upside risk are more willing to take on downside risk than those not in risk. In fact, most providers in upside risk models say that they would need less than 40% of their patient panel in risk before they are motivated to take on downside risk. This indicates an earlier threshold for when plans should start conversations on downside risk.

The interest is there. Some providers in upside risk are willing to move to downside risk, but they need support. This is made most evident by this survey finding: when plans negotiate a new risk-based contract, their top priority is looking for providers who have made investments in TCOC infrastructure (as shown on the graph on the next page).

In contrast, providers in upside risk believe the most important attribute to demonstrate is experience managing risk with other payers—yet, only 27% of plans indicated that as a priority. Providers in upside risk don’t even know what is most important in risk-based contracts to plans.

What plans look for vs. what providers highlight when negotiating a new risk-based contract

Make providers in upside risk confident about entering downside risk. Focus on bringing providers in upside risk to downside risk and make those efforts early. Said differently, don’t discount providers who only have a limited portion of their patient panel in risk and don’t sell short providers in upside risk who may not appear ready for downside risk. Rather, engage them in lessons learned from other practices and help them prioritize investments in what’s necessary for success.

Not surprisingly, the main challenge preventing providers from moving from upside to downside risk is financial uncertainty. Making this challenge even more problematic is the disconnect between plans and providers on potential bonus increases from upside risk. Plans say that the average potential reimbursement increase is around 11% to 15%. Meanwhile, the most common range from providers is a potential bonus increase between 6% to 10%. That gap widens even further when asking about actual bonus increases, where provider reports a mere 1% to 5% boost.

Plans and providers differ on how much they think providers can earn in upside risk

The disconnect should be taken seriously. Plans are overpromising and underdelivering on their financial promises in upside risk models, which makes providers less likely to enter downside risk.

Overpromising and underdelivering. Providers are less likely to take the next step and enter downside risk because even their financials in upside risk are lower than they expected (or were promised). Plans must be more transparent about what provider revenues will look like in upside and downside risk to set expectations appropriately.

For providers in upside risk, threat of financial loss is the #1 barrier to take on more risk and accordingly, they prioritize supports related to finances. The top three resources that would make providers in upside risk participate in downside risk all relate to finances: bonus increases, advance payments, and preferred network status (as shown on the next page).

Specifically, independent physicians prefer advance payments while employed physicians prefer bonus increases. This discrepancy potentially speaks to the challenge independent physicians face in investing upfront capital to succeed in VBP.

Interestingly, preferred network status is the top choice for providers already in downside risk although it falls behind bonus increases and advance payments for providers in upside risk. Providers in downside risk realize that a successful risk relationship can not be built on bonus increases and advance payments alone. Said differently, they likely recognize that if a plan must make outsize financial investments for VBP model to succeed, it defeats the purpose. By comparison, preferred network status helps high-quality providers succeed financially while still reducing TCOC under VBP arrangements.

Convey the full financial picture. Providers in upside risk need financial support to move into downside risk and gravitate toward bonus increases and advance payments. Plans must acknowledge this reality but should also expand the view of these providers, so they value network status like those already participating in downside models.

Beyond financial supports, prior authorization (PA) removal is the next resource that providers in upside risk value, and they are looking for significant relief from PA requirements. The majority want >40% of PAs removed and nearly a fifth of providers are looking for 81%-100% removal as an incentive for taking on downside risk.

Set up processes to remove more PAs as providers hit certain milestones. As providers demonstrate success under risk-based models, they expect plans to ease administrative burdens such as PAs. Adopting a principled structure for PA removal is one of the simplest ways plans can convey trust to providers and show providers the benefits of being in risk.

Lastly, education can be one way to entice providers from upside to downside risk. Prior to receiving any form of education, provider executives are more intrigued by education (than PCPs or specialists). In fact, executives indicate education as the top, non-financial resource to encourage participation in downside risk. But the story flips when a provider organization is in downside risk and has begun receiving educational resources. In those cases, physicians find education more valuable than executives.

Showcase education to get your foot in the door. Education can entice provider executives to participate in downside risk and impress frontline physicians once they have direct experience with these sessions.

Contrary to the conventional wisdom of many, the last group to focus on is providers not yet in risk.

This is because many providers not yet in risk say they will never be ready to take on downside risk—partly as a result of being ill-prepared. Out of providers not yet in risk, 59% feel unprepared to do so. Additionally, 10% of providers not yet in risk do not say they will never be ready but anticipate it will take a significant amount of time (over five years).

Save the hardest for last. Almost half of providers not yet in risk say they will never be ready for risk. Unless most of your providers are still in this category, only move to this group once you have already made all the progress you can with providers already in risk. Once these providers are ready for risk, you will already have support resources set up from investing in providers in risk.

However, by understanding what these providers value, plans can begin to make incremental progress in this final group of providers.

Providers not participating in risk-based models envision PA removal as the most valuable support resource, but once they start receiving these supports, streamlined documents become the most valuable. And, in general, these providers find resources more effective once they receive them.

Carrots, not sticks. When plans initiate risk conversations with providers not yet in risk, they must clearly articulate the available reward(s)—starting by reducing administrative burden. In some cases, plans may have to offer select supports before providers enter risk so they can experience being in upside risk. Or in other words, taste how good the carrot can be.

Providers not yet in risk are unlikely to jump straight into downside risk. They’ll need to transition to upside risk as a way of appeasing their concerns. Unfortunately, in many instances, providers are not seriously evaluating a future transition to downside risk even as they enter upside risk.

To overcome this challenge (and ultimately ease the transition for both parties), plans must keep the transition to downside risk top of mind for providers early in the process. The next chart outlines the resources that providers not yet in risk would find effective—segmented by whether they would ultimately consider adopting risk-based payment models.

Notably, providers who are willing to enter risk in the future are more likely to find all of these supports effective except preferred network status. Even though providers in downside risk have learned that preferred network status is critical for success under downside risk.

Additionally, while providers not in risk may prefer supports such as removed PA and streamlined docs, providers in downside risk prefer supports such as benchmarks, embedded staff, and education. Plans should leverage these differences when transitioning providers (who are not currently participating in risk) into risk-based payment models.

Keep the entire timeline in mind for providers from the beginning. Providers not in risk will want reduced administrative burden and increased bonuses as incentive to enter upside risk, but they eventually need to value preferred network status, benchmarks, embedded staff, and education to be successful in downside risk. Conceptually, it would be preferable for providers to stay in FFS while building up their capabilities for upside and downside risk—as opposed to having providers jump into upside risk without the ability to take on downside risk in the future.