Three questions with Dr. Sandeep Wadhwa: Flavors of risk and why payviders are trending

May 8, 2023 / By Sandeep Wadhwa, MD, MBA, Angela Haile-Selassie

I sat down with Dr. Sandeep Wadhwa, 3M Health Information Systems global chief medical officer, to talk about the growing buzz around the payvider model and how providers can determine if it’s the right model for them.  

The term “payvider” seems to be getting a lot of attention these days. What does the term mean, and why is it such a hot topic right now? 

I think of “payviders” as a very broad term that speaks to a relationship between the payer and the provider that isn’t predominantly fee for service. The core elements of the payvider relationship are risk plus a prepayment or monthly payment piece. The risk aspect comes in two flavors – upside and downside – which are worth unpacking. Upside is when the provider group shares in savings when an established target is met. In downside risk arrangements, if the total costs of care are less than the target, the provider keeps the savings as profit; however, if costs of care turn out to be higher than the target expenditures, the provider is responsible for paying the difference. Therefore, downside risk arrangements have higher risks and rewards than upside arrangements, which generally only involve sharing of savings.

This concept isn’t new. But the uptake is through the roof – and I think one of the reasons why has to do with COVID-19. During the pandemic, a lot of providers saw their volumes disappear when we were all back in our homes and there was a massive decline in the economy. Without patient volumes, providers’ businesses suffered. But insurers were still getting paid. It was incredibly eye opening to see who was bearing the risk for the population.  

Practices that had taken some monthly payment or had some risk had a very different experience during COVID-19. I think many providers started to think, “I want to control my fate more. I want to be accountable for our population and not just accountable for who’s in my waiting room.”  

As with any structure, the payvider model comes with benefits and risks. As someone who’s managed a health plan and worked as a practicing physician, I’d love to get your thoughts on what providers may want to consider when deciding if it’s a transition they want to make. What foundational steps can set them up for success?  

There are several things providers will want to have a good handle on if they’re transitioning to a payvider model. 

  1. Comprehensive data management. Most providers are very sophisticated when it comes to serving the patients who come through the door. But the payvider model also requires looking at a population and the total cost of care across multiple types of providers, including home health, hospitals, therapists and different types of physicians. 
  2. Risk adjustment methodology. The coin of the realm for payment is understanding and being fully accurate in capturing the risk and how that risk is being measured for a population. 
  3. Contracting. There’s a different kind of contracting expertise that goes into how providers are going to be measured versus agreeing on a unit price. It entails questions like, “Do I agree with risk adjustment?” and “Do I agree with the data and how it will be measured?”  
  4. Quality opportunities. It’s important to look at things like quality defects, excessive use of the ER and post-acute care, readmissions and low value services to understand where you have quality opportunities. I have a particular passion for addressing procedural quality defects because it’s a double win – you’re removing excess costs and improving the patient experience and safety. 

There’s a lot to consider around population health and access to care. But for providers that are thinking about becoming payviders, these are good areas to be deliberately focused on.

In a recent 3M webinar, you dug into topics like contracting and data management in value-based care with Dr. Munish Khaneja, chief strategy officer at CareAbout, a health care managed services organization based in New York. What stood out to you about that conversation?  

When it comes to payvider relationships, there’s a real asymmetry on both sides. The providers are closer to the patient, and the payers are closer to insurance risk. So talking to organizations like CareAbout around their experience – how they evaluate risk, how they set up contracts, what they’ve learned – is so helpful.

One part of the discussion I felt was particularly interesting – and meaningful – is how CareAbout approaches the payvider model with a lens toward a low-income population. Much of the industry focus has been on Medicare and Medicare Advantage, which represents 20 percent of the market. But CareAbout has worked with Medicaid on value-based care. It takes a deep understanding of the population – Munish talked about how they can’t take risk on lives they don’t understand. But with a few years of claims data, coordinating with primary care providers on care management and looking at the contract with an open lens and creativity, CareAbout has been making it happen. Ultimately, improving patients’ health outcomes is what we’re looking to achieve, and it made me hopeful as we continue toward the future of value-based care. 

To hear the full conversation, view the webinar “How payviders can level the playing field as risk-bearing entities.” 

Dr. Sandeep Wadhwa is the global chief medical officer at 3M Health Information Systems.  

Angela Haile-Selassie is a marketing communications specialist at 3M Health Information Systems.