Contracting for Outcomes

Care providers keep us healthy, treat us when we're ill, and guide us through life's most challenging moments. It is that sense of purpose that motivated countless doctors, nurses, specialists, physician assistants, physical therapists, and other care providers to seek out medical training in the first place. We all benefit from their professional expertise on a day-to-day basis and through the most trying times, such as the COVID-19 pandemic.

It's why Elevance Health's philosophy is deeply rooted in care provider partnership. It's also why our efforts center on empowering care providers across the country by:

Contracting for outcomes with reimbursement models and aligned incentives that give care providers autonomy and flexibility. This allows them to focus not only on traditional preventive care but also on pharmacy, behavioral health, and social needs.

Collaborating for success with tools and resources that make it easier to access the data necessary to help their patients make the right care decisions at the right time.

Connecting for health through our digital platform that curates and links services for complex care management, home-based care, palliative care, pharmacy, social needs, and other resources when needed.

Shifting to Value-Based Reimbursement

Paying differently for healthcare — shifting reimbursement from volume to value — has for many years been considered an essential building block to improve the overall healthcare system and achieve whole health. Yet, the evidence base supporting the shift to value-based reimbursement has developed more slowly than some expected and with mixed results, which has led some to doubt its viability. Two things are clear from our experience: First, value-based care, particularly shared-risk arrangements, delivers real value on affordability, health outcomes, and experience; second, payment is not enough. A truly different way of collaborating based on data, regular feedback and discussion, and patient-specific action plans is required for success. It's time to end the debate on if value-based care is important and focus instead on how to succeed in the opportunities it presents.

Types of Payment Models

Upside — Care providers keep a portion of any savings they create with the payer sharing a portion of the overall savings. If a care provider doesn't create savings and has a loss, they do not owe anything to the payer.

In all of these models, payment depends on meeting or exceeding quality, outcome, experience, and other benchmarks.

Bar chart comparing provider payment models by degree of risk-sharing against potential for improved efficiency and quality, ranging from fee for service, upside shared savings, partial downside, and full risk capitation

Value-based care is about allowing care providers the freedom to treat the unique needs of their patients and communities, while at the same time meeting evidence-based standards that help ensure all consumers benefit from high performance. It's beneficial for patients, for the healthcare system, and for society at large. We know through intuition and evidence provided in this progress report, that value-based care — and sharing in downside risk in particular — increases preventive care, reduces the need for costly invasive care, incentivizes whole health, lowers costs, and allows care providers to focus on their patients.

Elevance Health's approach is:

  • Outcomes-aligned. Our work is grounded in quality, accessibility, affordability, experience, and equity.
  • Partnership-oriented. Ours is a capital-light, flexible approach rooted in achieving mutual success. We invest in empowering practices, paying differently for outcomes, and working more deeply with the highest-performing care providers.
  • Market-agnostic. We have built a path to value for care providers regardless of whether their patients have Medicaid, Medicare, or Commercial health plans.
  • Consumer-focused. We are there for our consumers at any point of their lifetime, offering products to suit their age and lifestyle, and partnering with care providers who work in their communities.

Starting with Primary Care

Primary care is the best place to start to make value-based care a reality. With the ability to influence much of downstream care,1 primary care providers play a valuable role as the first point of contact for patients.

We have pursued deep relationships through a variety of contractual agreements and investments with multiple like-minded partners, all of whom are committed to the high performance our consumers deserve.

These partners include aggregators focused on enabling independent primary care providers, comprehensive care clinics, and those focused on certain populations or markets. All of them are highly patient-centric, enabling care providers to concentrate on delivering quality, affordable care.

Our Progress

Sixty-three percent of our medical spend is in value-based care and as the pages that follow demonstrate, these arrangements are driving positive health outcomes across all our lines of business. We are committed to meeting care providers where they are and helping them move across the risk continuum, toward more mature forms of value and, ultimately, to appropriate levels of downside risk.

VBC Spend Penetration

2018: 56%

2020: 60%

2022: 63%

Source: Internal evaluation (2022).

Forward Together

We are committed to value-based care as a critically important means for improving healthcare in America. In addition to continued investment in primary care models, we are also broadening our approach through strategies such as expanding our value-based care programs to partner with specialists in all business segments and evolving our ability to collaborate more deeply with high-performing care providers who prioritize health equity and consumer experience. Most importantly, we are committed to being active partners who go beyond the contract, delivering on the promise of value-based care and creating a real impact for patients — our consumers — while helping care providers thrive.

1 Golden, WE, Edgman-Levitan S, Callahan SR. Changing How We Pay for Primary Care. NEJM Catalyst. November 20, 2017. https://catalyst.nejm.org/changing-primary-care-payment/.