In a recent article, FRG introduced the importance of transparency in value-based agreements and outlined the three pillars of the transparency framework. For over 25 years, FRG’s value-based care program advisors have delivered actionable insight and extensive knowledge to health plans and providers, making fluent experts in understanding the best practices for creating mutually beneficial relationships within risk contracts. FRG champions transparency in value-based agreements because it drives results.

To be successful in building transparent value-based agreements, it’s important for health plans to note FRG’s three pillars of transparency. This article will highlight the different elements of the first pillar, full disclosure.

What is Full Disclosure?

Full disclosure means that health plans offer providers easily digestible, comprehensive data that explains any changes in reconciliation. This implies and requires regular restatement of summary and detail. Further, when necessary, health plans should share explanations of material changes to revenue and cost elements, particularly any of those that are controlled by the plan.

In the scope of being fully transparent, there are several variables, but FRG offers the following as a starting point to establish a groundwork for mutually beneficial relationships:

  • Summary and congruent detail
  • Paid amounts with no exceptions
  • Procedure and diagnosis codes with full specificity
  • Explanatory granularity for allocated costs

FRG prioritizes the key elements above because, with the proper reporting tools, they can be used to understand profitability, service quality, trend drivers, and opportunities to improve performance. They are also the foundation of AccuReports® by FRG.

The Four Key Elements of Full Disclosure

Summary and Congruent Detail

It might go without saying that any detailed statements provided to support a summary reconciliation should be consistent, but it’s not always the case. FRG believes the first rule of full disclosure is that the summary should always tie to the detail. Congruency builds confidence that the health plan providing the reconciliation has control of the information and is not hiding any material facts. This supports a foundation of trust between a health plan and a provider.

Paid Amounts with No Exceptions

Offering paid amounts with no exceptions is a key part of full disclosure because it guarantees that providers will always know what has been charged in a transparent value-based agreement. Service funds, risk contracts, shared savings, and value-based agreements are all anchored in the concept of a medical cost budget, and any remainder after a period of activity is potentially payable to the risk-bearing party. It is impossible to know if any remainder exists or deficit has been created without clarity of charges against the budget. Risk-bearing providers must be able to make informed decisions about how medical services are consumed by the patient population that they are managing to achieve their goals. They also need to see with clarity any charges against their bonus payments to properly verify any offered settlements. For these reasons, any lack of disclosure related to paid amounts for services is inconsistent with transparency in value-based agreements.

Procedure and Diagnosis Codes with Full Specificity

Including the procedure and diagnosis codes with full specificity is important because the codes themselves explain the activity associated with each patient’s visit. Managing physicians are accountable for delivering specific services during the period in which they are responsible for taking care of health plan members and health plans measure their achievement of quality goals based on key procedure codes which are documented in medical claims. In this context, whether the visit is to the emergency room or the physician’s office for an annual wellness visit, the record of that encounter must be recorded and accessible to both parties.

In circumstances where a record of the procedures performed is not available to the provider who’s responsible for the services in the value-based agreement, he or she cannot determine which patients have not been seen appropriately and schedule the necessary appointments to achieve their annual goals. Further, when only specific codes are provided the lack of clarity with regard to previously performed procedures can result in duplicative care. Finally, although some carriers may be reluctant to provide procedure codes in parallel with their total cost of care figures for network pricing confidentiality reasons, these concerns are mooted by modern price transparency mandates.

Diagnosis code disclosure, on the other hand, is vital for multiple reasons. First, managing physicians need visibility to previously diagnosed conditions to understand the drivers of previous care encounters. Understanding the history of a patient’s illness is the foundation of primary care. At the same time, in managed care where capitated revenue is based on patient complexity, the same physicians need to see what their peers and partners have observed on each case to be able to properly document diagnoses for risk adjustment.

Explanatory Granularity for Allocated Costs

In all arrangements, health plans incur costs at the network level which benefit individual patients and need to be charged against reconciliations associated with the total cost of care for physician panels. These charges, typically paid in bulk by the plan for a population in total or a subpopulation, must be allocated fairly to all value-based agreement reconciliations. However, even if allocated fairly, a risk-bearing provider should be allowed to question the contents of any such charge, and the risk-transferring health plan should be able to provide the details. This is the foundation of what it means to provide granularity for allocated costs.

Within a service fund, such costs can include shares of capitated networks like durable medical equipment, podiatry, ophthalmology, or behavioral health. Other allocated costs can include regional hospital settlements and member-level cost reallocations. Providing granularity for these allocated costs makes it easy for risk-bearing providers to understand these charges and accept any related deductions to their incentive payments.

Transparency Starts with FRG!

For the last decade, FRG’s three pillars of transparency framework have proven that fully disclosing information to health plans allows them to continue to have an honest, open dialogue with providers and creates necessary trust between the two parties to support the mutual success of full-risk contracts and value-based care payment models.

Since 1999, FRG has helped health plans and providers create transparency in risk contracting and improve financial performance. If you would like any additional information about the three pillars of transparency or our services, contact FRG by emailing info@frgsystems.com or calling 888-466-1025.