■ Is the data that you need coming timely from the
payer or not?
■ How is population attribution going to be conducted?
■ Does the group know the value of various required
■ How is reconciliation going to occur?
■ How are the benchmarks set?
Painted in a Corner
The next critical point Matthews made in relation
to getting the right value contract is that your group
shouldn’t paint itself into a corner. Many types of value
deals either under pay the group for the good they do
and/or allow only short term success.
One such example Matthews cites is a contract
that expects a group to beat its own performance year-over-year. This can result in the organization making
money in their first year, but then finding itself unable
to make any money in the second or future years. Often
the changes in practice that generate the first year of
savings continue to cost the group money to maintain,
but the earnings quickly dissipate, resulting in a group
that has higher overheads and reduced revenues.
“There’s a maintenance cost to keeping that per-
formance that you got in year one alive in year two,”
explained Matthews. “And they’re just absorbing that.
They’ve added that to your overhead with no earnings
coming back. It’s a bad, bad, bad, bad deal.”
Other potential terms can stipulate scenarios where
the group does the work, but the health plan gets most
of the savings. Still others set a bad precedent for future
No Downside Risk
Matthews’ final piece of education pertaining to
value contracts related to a promise many insurers
make when they put a contract together: that there
won’t be any downside risk. “Insurers have nefariously
or deliberately calculated that a lot of medical groups
are very anxious, and so they put a really bad contract
together and say to the group, ‘Look there’s no down-
“Sooner or later, a lot of these contracts, where
there’s very little money at play, will claim there’s no
downside risk,” said Matthews. “I’ve not seen any
contracts with meaningful revenue opportunities for
the delivery system, the group, or whomever, that don’t
have some downside eventually.”
Ultimately, Matthews argued that as long as
health systems and groups across the country continue
to commit themselves to contract deals that are bad,
then, in addition to hurting themselves, these contracts
will mean that other providers keep getting proffered
bad contracts. It is as if the carriers are saying, ‘Why
give good contracts if providers will accept bad agree-
ments?’ so I’m trying to get the word around.” said
Matthews. “We need a more educated and more careful
constituency so that we don’t get trapped into a cycle
of bad value agreements and so that we are positioned
to make the care we provide better and less expensive.
That is what our customers—patients, employers, and
government—need from us: higher quality and less
cost. We need good contracts to do so.”
The AMGA 2018 Annual Conference will take place
March 7-10, 2018, at the Phoenix Convention Center
in Phoenix, Arizona, with a host of healthcare leaders
sharing their strategies and insights. For details, visit