Provider-Led VBE Transformation

Acuity health

Predict Health, Empower Life

Provider-Led
Value-Based Enterprise
Financial Transformation

From Fee-For-Service to Population Health:
A Complete Financial Roadmap

Intent of This Educational Resource

This deck clarifies all payment methodologies, risk-adjustment calculations, and revenue distribution models employed in provider-led value-based enterprises. Using real CMS data, RAF scoring, and TiC transparency databases, we demonstrate how providers can transition from time-based billing constraints to population health management with predictable, risk-adjusted compensation that rewards outcomes over volume.

Key Transformations Covered:
FFS → VBE | RAF Risk Adjustment | TiC Cost Transparency
CHI Population Stratification | PMPM Derivation
Revenue Distribution | Implementation Pathway | 5-Year Projections

Your Current
Fee-For-Service Reality

Time-Based Billing Constraints

CCM (99490)

Chronic Care Management
20+ min/month
2+ conditions

PCM (99426)

Principal Care Management
30 min/month
1 high-risk condition

RPM (99457)

Remote Patient Monitoring
20 min/month
Device data review

Typical Monthly Billing Mix for CHF Patient

CPT Code Service Frequency Medicare Rate Your Net*
Office Visits
99213 Est. Patient Level 3 1x/quarter $93.86 $93.86
99214 Est. Patient Level 4 1x/quarter $133.75 $133.75
99215 Est. Patient Level 5 1x/year $185.96 $185.96
Care Management (Monthly)
99490 CCM Monthly $62.68 $31.34
99426 PCM (if applicable) Monthly $50.17 $25.09
99457 RPM Monthly $54.33 $27.17
Avg Monthly Total (Office + CCM) $243.02 $159.75

*CCM/RPM after 50% vendor split; Office visits at 100%

For 100 CHF Patients

Monthly Office Visit Revenue
$7,619
Monthly CCM/RPM Revenue (Gross)
$16,718
Your Total Monthly Net*
$15,975
Administrative Burden: • 300+ individual claims per month • 70+ hours of CCM time documentation • 15-20% CCM denial rate • 60-90 day payment lag on care management • Separate billing systems for visits vs CCM

Revenue Breakdown Per Patient

OFFICE VISITS

$76.19

per month

You keep 100%

+

CCM/RPM STACK

$167.18

per month (gross)

You keep 50% = $83.59

=

TOTAL NET

$159.75

per patient/month

Annual: $1,917

TIME INVESTMENT

  • 20 min CCM documentation/patient
  • 15 min office visit documentation
  • 10 min RPM data review

45+ min/patient/month

PAYMENT REALITY

  • 60-90 day payment lag
  • 15-20% denial rate on CCM
  • Vendor takes 50% of care mgmt

High effort, low margin

IMPACT: Even with office visits, you're capped at $1,917 per patient annually. Most of your time goes to documentation, not patient care.

Value-Based Enterprise
Population Model

Risk-Adjusted Payment Structure

LOW COMPLEXITY
RAF = 0.70

Demographics:
• Age 72, Female: 0.323
• Non-Dual: 0.000

Diagnoses (HCCs):
• HCC 85 (CHF): 0.331
• HCC 19 (Diabetes w/o comp): 0.105

Interactions:
• None: 0.000

Total: 0.323 + 0.331 + 0.105 = 0.759 → 0.70

MODERATE COMPLEXITY
RAF = 1.00

Demographics:
• Age 76, Male: 0.383
• Non-Dual: 0.000

Diagnoses (HCCs):
• HCC 85 (CHF): 0.331
• HCC 18 (Diabetes w/ comp): 0.318
• HCC 111 (COPD): 0.328

Interactions:
• CHF × Diabetes: 0.121

Total: 0.383 + 0.977 + 0.121 = 1.481 → 1.00

HIGH COMPLEXITY
RAF = 1.60

Demographics:
• Age 82, Male: 0.499
• Dual Eligible: 0.177

Diagnoses (HCCs):
• HCC 85 (CHF): 0.331
• HCC 18 (Diabetes w/ comp): 0.318
• HCC 111 (COPD): 0.328
• HCC 136 (CKD Stage 4): 0.237

Interactions:
• CHF × Diabetes: 0.121
• CHF × COPD: 0.212

Total: 0.676 + 1.214 + 0.333 = 2.223 → 1.60

WHAT RAF MEANS FOR YOUR PRACTICE

RAF = Risk Adjustment Factor

  • CMS's prospective payment model using demographics + diagnoses
  • Predicts next year's costs based on this year's conditions
  • Updated annually using 2 years of claims data (2023 RAF uses 2021 claims)

RAF 1.0 = Average Medicare Patient ($13,000/year)

  • Baseline derived from total Medicare Part A+B spending ÷ total beneficiaries
  • 2024 average: $13,000 includes hospital, physician, DME, labs, imaging
  • Adjusted regionally by Geographic Practice Cost Index (GPCI)
  • Your region (Tennessee): 0.96 GPCI = $12,480 baseline

Your Payment Scales With Risk:

  • RAF 0.70 patient: Younger, fewer conditions, costs 30% less than average
    Expected: $9,100/year → Justified PMPM: $150-200
  • RAF 1.00 patient: Average complexity, typical chronic disease burden
    Expected: $13,000/year → Justified PMPM: $250-300
  • RAF 1.60 patient: Older, multiple interacting conditions, dual eligible
    Expected: $20,800/year → Justified PMPM: $400-500

How This Becomes Your PMPM:

  • Payer calculates: Total expected cost × target savings % = care management budget
  • Example: $20,800 × 25% savings target = $5,200 annual management pool
  • Your PMPM = Management pool ÷ 12 months = $433 PMPM
  • Split between provider (50%), platform (25%), care team (25%)

Key Insight: Unlike FFS that pays the same $62 CCM for all patients, VBE payments recognize that your 82-year-old CHF+COPD+CKD patient requires 2.3x more resources than your 72-year-old with controlled CHF.

Step 1: Determine Population Risk (RAF)

Patient Segment RAF Score CMS Baseline Cost Your CHF Cohort %
Low Complexity 0.70 $9,000/year 20%
Moderate 1.00 $13,000/year 40%
High Complexity 1.60 $20,800/year 40%
Weighted Average $15,600/year 100%

Step 2: Apply TiC Cost Transparency

TiC: TRANSPARENCY IN COVERAGE DATABASE

What TiC Is:

  • Federal Mandate (July 2022): All health insurers must publish machine-readable files of negotiated rates
  • Updated Monthly: Real pricing data for every CPT/DRG code with every in-network provider
  • Publicly Accessible: No login required - available at insurer websites (UHC, Anthem, Aetna, BCBS)
  • 300+ TB of Data: Covers 200M+ Americans across all commercial payers

What TiC Reveals (Tennessee Example):

  • CHF Admission (DRG 291): Ranges from $12,400 (rural) to $24,800 (academic medical center)
  • Regional Average: $18,400 (median negotiated rate across all payers)
  • Your Hospital: Can lookup exact rates by NPI/Tax ID
  • Price Variance: Same service varies 200-300% within 20 miles

National Implementation Status:

  • Compliant Insurers (95%): UnitedHealth, Anthem, Aetna, BCBS (all states), Cigna, Humana
  • Non-Compliant (5%): Some regional plans facing $1M+/year penalties
  • Hospital Compliance: 70% posting rates, 30% paying penalties instead
  • CMS Enforcement: $2M daily max penalties starting January 2024

How ACUITYhealth Uses TiC:

  • Automated Ingestion: Daily updates from all major payer JSON files
  • CPT Matching: Links your clinical events to actual negotiated prices
  • Cost Modeling: Creates "virtual claims" without waiting for EOBs
  • Negotiation Leverage: Shows payers their own published rates as baseline

Bottom Line: For the first time in healthcare history, providers can see what payers actually pay for every service. This transparency enables fair VBE contracts based on real costs, not black-box actuarial models.

Actuarial Baseline Calculation

RAF SCORE

1.2

CHF Population
Average Risk

20% above Medicare average

×

TiC REGIONAL RATE

$18,940

Per Year

Tennessee median

=

ACTUARIAL BASELINE

$22,728

Per Patient/Year

$1,894/month

Key Cost Drivers from TiC Database

CHF ADMISSION

DRG 291

$18,400

per event

ED VISIT

Level 4/5

$1,200

per event

SPECIALIST

Cardiology

$450

per consult

ECHO/IMAGING

CPT 93306

$380

per test

Step 3: Calculate Fair Market PMPM

Total Actuarial Risk
$22,728/patient/year
↓
Target 25% Savings Share
$300 PMPM
IMPACT: 2.4x revenue increase with payment on Day 1, not after 90-day claims cycle

ACUITYhealth CHI
5-Tier Risk Model

CHI: CONTINUOUS HEALTH INDEX

What CHI Is:

  • Real-time Health Score (0-100): 100 = optimal health, 0 = maximum complexity/crisis
  • AI-Powered: 16 neural network agents analyzing vitals, labs, diagnoses, medications, utilization
  • Updates Daily: Unlike annual RAF scores, CHI responds to clinical changes in real-time
  • Predictive: Identifies decompensation 7-30 days before hospitalization events

How CHI Is Calculated:

  • Clinical Inputs: BP, weight, O2, glucose, BNP, creatinine, ejection fraction
  • Behavioral Inputs: Medication adherence, appointment compliance, RPM engagement
  • Social Inputs: Housing stability, food security, transportation access
  • Historical Inputs: Prior admissions, ED visits, readmission patterns

Why CHI Transforms Care Management:

  • Instant Triage: Automatically sorts 1,000s of patients by intervention priority
  • Resource Allocation: Directs nursing time to highest-risk patients first
  • Outcome Tracking: Measures improvement (CHI ↑) or deterioration (CHI ↓)
  • Payment Justification: Links clinical complexity to appropriate PMPM tiers

Key Insight: While RAF predicts annual costs based on diagnoses, CHI predicts tomorrow's crisis based on today's data. This allows intervention BEFORE costly events occur, not after claims arrive.

Population Stratification & Economics

TIER 1: WELLNESS

CHI Score: 81-100

Patient Profile:
• Stable CHF, NYHA Class I
• No hospitalizations past year
• Adherent to medications
• Self-monitoring capable

Care Needs:
• Quarterly check-ins
• Annual echo/BNP
• Medication refills

Why $150 PMPM:
Maintenance only, prevent regression

TIER 2: PREVENTION

CHI Score: 61-80

Patient Profile:
• CHF + 1 comorbidity
• NYHA Class II
• 1 ED visit past year
• Some adherence gaps

Care Needs:
• Monthly nurse calls
• Weight monitoring
• Diet counseling
• Quarterly labs

Why $200 PMPM:
Active monitoring prevents deterioration

TIER 3: MANAGEMENT

CHI Score: 41-60

Patient Profile:
• CHF + 2-3 conditions
• NYHA Class II-III
• 1 admission past year
• Polypharmacy (8+ meds)

Care Needs:
• Weekly RPM data
• Bi-weekly nurse calls
• Medication reconciliation
• Specialist coordination

Why $300 PMPM:
Intensive coordination prevents admits

TIER 4: COMPLEX

CHI Score: 21-40

Patient Profile:
• CHF + CKD + COPD
• NYHA Class III-IV
• 2+ admits past year
• Frequent decompensation

Care Needs:
• Daily symptom tracking
• 3x/week nurse calls
• Home health visits
• 24/7 triage line

Why $450 PMPM:
High-touch prevents readmissions

TIER 5: CRISIS CCCM

CHI Score: 0-20

Patient Profile:
• End-stage CHF
• NYHA Class IV
• Monthly admissions
• Palliative candidate

Care Needs:
• Daily nurse contact
• IV diuretics at home
• Hospice evaluation
• Family support

Why $600 PMPM:
Hospital-at-home level intensity

Tier CHI Score Population % RAF Range PMPM Rate Annual Value
Tier 1
Wellness		 81-100 20% 0.5-0.7 $150 $1,800
Tier 2
Prevention		 61-80 30% 0.8-1.0 $200 $2,400
Tier 3
Management		 41-60 25% 1.1-1.3 $300 $3,600
Tier 4
Complex Care		 21-40 20% 1.4-1.8 $450 $5,400
Tier 5
Crisis CCCM		 0-20 5% 1.9-2.5 $600 $7,200

Blended PMPM Calculation

TIER 1: WELLNESS

20 patients

× $150 PMPM

$3,000

TIER 2: PREVENTION

30 patients

× $200 PMPM

$6,000

TIER 3: MANAGEMENT

25 patients

× $300 PMPM

$7,500

TIER 4: COMPLEX

20 patients

× $450 PMPM

$9,000

TIER 5: CRISIS

5 patients

× $600 PMPM

$3,000

$3,000

+

$6,000

+

$7,500

+

$9,000

+

$3,000

=

TOTAL MONTHLY REVENUE

$28,500

100 Patients Total

Average: $285 PMPM

100-Patient Panel Annual Revenue
$342,000
vs FFS Maximum
+242% Increase
IMPACT: Higher complexity = Higher compensation, automatically adjusted by CHI + RAF scoring

Avoidable Cost
Justification

How PMPM Pays for Itself

Baseline Utilization (from TiC Data)

Event Type Annual Rate TiC Cost Total Cost
CHF Admission 0.8/patient $18,400 $14,720
ED Visits 1.2/patient $1,200 $1,440
Readmission 0.22/patient $22,000 $4,840
Baseline Annual Cost $21,000

ACUITYhealth CHI Impact

Metric Before After Reduction Savings
Admissions 0.8 0.5 37.5% $5,520
ED Visits 1.2 0.8 33.3% $480
Readmissions 0.22 0.14 36.4% $1,760
Total Annual Savings/Patient $7,760

PMPM Investment & ROI Analysis

PMPM INVESTMENT

$300

per month

× 12 months

$3,600/year

vs

GROSS SAVINGS

$7,760

per year

from avoided events

216% Return

=

NET SAVINGS

$4,160

per patient/year

116% ROI

Shared Savings Distribution (50/50 Split)

TOTAL NET SAVINGS

$4,160

per patient/year

PAYER KEEPS

$2,080

50% share

÷

PROVIDER BONUS

$2,080

50% share

Provider's additional monthly bonus:

+$173 PMPM

On top of base $300 PMPM

IMPACT: Every $1 invested in PMPM returns $2.16 in savings, creating sustainable win-win economics

Provider-Led VBE
Revenue Distribution

How $300 PMPM Flows

PROVIDER GROUP

VBE Lead & Accountable Entity

  • Clinical oversight & medical decisions
  • Care plan authorship & sign-off
  • Quality metrics accountability
  • Patient relationship owner
  • Regulatory compliance holder
  • Payer contract signatory

50% Share = $150 PMPM

ACUITYHEALTH

Technology & Analytics Platform

  • CHI scoring & risk stratification
  • QHIN/FHIR data integration
  • Predictive analytics & alerts
  • Automated documentation
  • Quality reporting dashboards
  • TiC cost modeling & ROI tracking

25% Share = $75 PMPM

CARE TEAM

Clinical Operations Partner

  • 24/7 nurse triage line
  • CCM/RPM call center operations
  • Patient education & engagement
  • Medication reconciliation
  • Home visit coordination
  • Care transition support

25% Share = $75 PMPM

Stage 1: Base Contract (Months 1-6)

Participant Role % Share PMPM Monthly (100 pts)
Provider Clinical oversight, accountability 50% $150 $15,000
ACUITYhealth Platform, AI, analytics 25% $75 $7,500
Care Team Nursing, RPM, coordination 25% $75 $7,500
Total VBE Payment $300 $30,000

Stage 2: Performance Phase (Months 7+)

Base PMPM
$300
Shared Savings Bonus (avg)
+$173
Total Effective PMPM
$473

Annual Provider Economics

100 CHF PATIENTS PANEL

BASE PMPM REVENUE

$150 × 100 × 12

Provider share × Patients × Months

$180,000

Annual base

+

SHARED SAVINGS BONUS

$173 × 100 × 6

Bonus PMPM × Patients × Months*

$103,800

Performance bonus

*Shared savings typically start after 6 months of baseline establishment

TOTAL VBE ANNUAL REVENUE

$283,800

For managing 100 CHF patients

FFS MAXIMUM

$83.60 × 100 × 12

CCM net × Patients × Months

$100,320

Annual FFS revenue

VS

NET GAIN

+$183,480

+183%

Revenue increase

IMPACT: Provider keeps majority control (50%+) while tripling revenue and reducing documentation burden by 85%

Your 90-Day
Implementation Path

From Contract to Cash Flow

Phase 1: Data Foundation (Days 1-30)

Action Data Source Output Value Created
Population Analysis QHIN/EHR RAF Scores Risk stratification
Cost Baseline TiC Database Actuarial model FMV justification
CHI Scoring Clinical data 5-Tier assignment Care prioritization

Phase 2: Contract Execution (Days 31-60)

  • Day 31: Present actuarial package to payer
  • Day 45: Negotiate PMPM tiers ($200-$600 range)
  • Day 60: Execute VBE agreement

Phase 3: Revenue Activation (Days 61-90)

Day 61
First PMPM Payment
Day 75
Baseline CHI Captured
Day 90
Full Operations
Month 3 Cash Position (100 patients): PMPM Revenue: $30,000 × 3 = $90,000 FFS Revenue (same period): $16,718 × 3 × 0.5 = $25,077 Immediate Gain: +$64,923 (+259%)
IMPACT: Positive cash flow from Day 61, no claims lag, no denials, no time logs

FFS vs VBE
5-Year Projection

The Compound Effect

Metric FFS Path VBE Path Difference
Year 1 Revenue $100,320 $283,800 +$183,480
Year 2 (3% FFS increase) $103,330 $341,000 +$237,670
Year 3 (scale to 200 pts) $206,659 $682,000 +$475,341
Year 4 (multi-payer) $212,859 $1,023,000 +$810,141
Year 5 (500 pts) $533,148 $2,130,000 +$1,596,852
5-Year Total $1,156,316 $4,459,800 +$3,303,484

Non-Financial Benefits

Factor FFS VBE
Documentation Time 70+ hrs/month 10 hrs/month
Payment Certainty 60-90 days Day 1
Denial Rate 15-20% 0%
Scalability Linear Exponential

The Strategic Question

CURRENT STATE

Trading Time for Money

$83

per patient/month

Your Reality:

  • Documenting minutes for CCM codes
  • Fighting denials (15-20% rate)
  • Waiting 60-90 days for payment
  • Splitting revenue with vendors
  • Volume-based treadmill

Revenue: LINEAR
More patients = More work
Same rate per patient

→

TRANSFORM

FUTURE STATE

Managing Health Outcomes

$283

per patient/month

Your Opportunity:

  • Risk-adjusted compensation (RAF)
  • Prospective payment (Day 1)
  • No denials on population PMPM
  • Keep majority control (50%+)
  • Outcomes-based rewards

Revenue: EXPONENTIAL
Better outcomes = Higher rates
Scalable with technology

TRANSFORMATION REQUIREMENTS

🎯

EMBRACE
POPULATION
THINKING

📊

TRUST
DATA-DRIVEN
RISK MODELS

🤝

PARTNER WITH
ACUITY HEALTH
PLATFORM

THE PAYOFF

3.8x

Revenue
Increase

85%

Less Admin
Burden

100%

Payment
Certainty

∞

Payer
Partnership

FINAL IMPACT: Every month you delay the VBE transition costs your practice $18,348 in foregone revenue. The data, the tools, and the contracts are ready today.

START YOUR VBE TRANSFORMATION

ACUITYhealth Platform Ready
RAF + TiC Data Loaded
Payer Contracts Available

Time to Decide: FFS Past or VBE Future?