VBP Basics

Below are some helpful key VBP concepts if you are just getting started.

Per-member-per-month payments: This means your practice gets a set dollar amount every month for each health plan member assigned or attributed to your practice. For example, if your practice is in a prospective capitated payment arrangement with a health plan, you’ll receive a set amount every month for each patient covered by that health plan.

Member month: a count that records one member month for each month a specific individual member is insured/enrolled in the payer’s health plan during the specified period. Member month is calculated by taking the number of individuals in a health plan and multiplying that sum by the number of months that member is insured/enrolled in the health plan during the specified period (such as calendar year 2023). One individual who is insured/enrolled in the same health plan for one year creates twelve-member months (1 person x 12 months).

Data capabilities: In every VBP arrangement, health plans will require you to report on certain quality (and sometimes utilization) measures. To be successful you’ll need data analytical capabilities to be able to track the measures, identify gaps in care and report on progress. Go to Section I Step 4 Identify current data analytical capabilities and gaps to learn more.

Attribution: Knowing which members your health plan identifies as your primary care patients is critical to success in VBPs. Health plans have different approaches, so you need to know how each health plan you contract with does it. Go to Section I Step 5 Understand member attribution and assignment to learn more.

Getting paid: When and how your clinic will get paid differs across VBP models. The quality bonus you get in a pay for performance (P4P) VBP arrangement is typically paid after all claims for the year have been adjudicated and performance on quality metrics is calculated. Though some health plans may offer interim P4P payments, the full P4P payment is often 6 – 9 months after the end of the year. Any savings in a shared savings payment arrangement are also generally paid out in a similar timeframe, well after the performance period is complete and data is available. In a prospective capitated payment arrangement, payment is made prospectively based on the number of your patient member months covered by the health plan as determined by the payer.

Assessing financial impact of a VBP: If the VBP model(s) that a payer is asking you to participate in is not clear, or if you are uncertain of any aspects of how your payment will differ – ask for more clarity. For example, ask the payer to simulate your payments as if you participated in this VBP model in the past year.  This “shadow payment data” should indicate what your practice would have earned or lost if you participated in this type of VBP model in the prior year.