One health system finds ‘millions’ of reasons to audit value-based payments

• A health system used audits to discover that two health plans had severely underpaid on value-based payment (VBP) bonuses that the system was owed.
• The finding led the health system to include an auditing feature in contracts for subsequent VBP models.
• The health system also has become more cautious about moving into downside-risk models.

A health system used audits to learn that health plans with which it had value-based payment (VBP) contracts underpaid on those contracts by “millions” of dollars.

Ochsner Health System took the unusual step of auditing the bonus payments it received under the first two upside-only VBP models in which it participated with commercial health plans.

“In both cases, the audits led to multimillion-dollar adjustments” for the health system, said David Carmouche, MD, senior vice president of community care for Ochsner. “So that doesn’t give you a lot of trust when you’re trying to enter into a collaborative relationship.”

The health system undertook the audits because Carmouche, as a former health plan executive, understood the challenge that health plans face in interpreting complex new VBP models.

“I’m not sure most providers believe they can audit those funds,” Carmouche said about bonuses in VBP arrangements with commercial health plans. “We get so used to working with Medicare, where you really can’t audit Medicare.”

The discovery of the health plans’ significant underpayments, which Carmouche believes stemmed from miscalculations and not any malicious reasons, prompted changes in the health system’s approach to VBP. Those changes include:

• Slowing down its movement into downside-risk arrangements with commercial health plans
• Establishing “thoughtful” limits on how much risk it can take
• Insisting on having a year of reporting before agreeing to any VBP model expansion
• Requiring that contracts identify the information that data auditors can access
• Touting to area physician practices that they should partner with Ochsner in VBP contracts, since the system can hold health plans accountable for payment accuracy

“We use this story to say, ‘Look, you can go into these contracts on your own, but you’re going to need somebody who’s got some sophistication with you to make sure you’re being treated fairly,” Carmouche said.

The challenges in undertaking the audits

The health system debated whether to proceed with the audits, which were relatively inexpensive and were permitted — at the health system’s expense — in the VBP contracts, because of the risk they might show the health system was overpaid, Carmouche said.

The audits also were complex because one of the health plans involved was national in scope and used a proprietary risk adjustment methodology. That audit took more than a year to complete.

The varied consequences of the audits

The discovery led the health plans to change their VBP contracts to address flaws. The plans also compensated area physician practices that they similarly had underpaid.

At least one health plan also subsequently took steps to “tighten up their program to the point where it is very difficult to earn value-based dollars today,” Carmouche said.

Ochsner audited subsequent VBP contracts and found additional underpayments of owed bonuses, but those amounts were much smaller than in the first two contracts, Carmouche said.