The great payer pivot is the slow but steady move by health plans from paying for each service to paying for outcomes and total cost of care. Medicare set the direction, and Medicare Advantage, Medicaid and commercial plans are following with shared savings, risk-sharing and capitated contracts of their own.
This guide is for health plan executives, network and value-based contracting teams, and payer IT leaders. It explains why payers are pivoting, what accountable care looks like from the payer side, why core administration systems built for fee-for-service struggle with it, and which capabilities a plan needs to attribute members, share data with providers and settle contracts accurately.
What is the great payer pivot?
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Agnotic builds payer core systems and the attribution, data sharing and settlement components that value-based contracts depend on.
The great payer pivot is the shift by health plans from fee-for-service payment toward value-based arrangements, where providers share responsibility for the quality and total cost of care for a defined group of members. It requires payers to attribute members to providers, share data, measure quality and settle financial results.
Fee-for-service remains the base layer for most contracts. Claims are still paid per service, and value-based terms sit on top, reconciling those payments against targets after the year ends. That layered design is why the pivot is as much a systems challenge as a contracting one.
Why are payers moving to value-based care?
Payers are moving to value-based care because fee-for-service rewards volume rather than results, and because Medicare has set a clear direction. In its 2021 strategy, the CMS Innovation Center set a goal of having every Traditional Medicare beneficiary in an accountable care relationship with responsibility for quality and total cost of care by 2030.
CMS reports steady progress toward that goal, with 53.4% of Traditional Medicare beneficiaries in an accountable care relationship as of January 2025. Providers that build care management and data capabilities for Medicare ACOs want similar terms from their other payers, and plans that cannot offer them risk losing network partners.
- Cost pressure: Medical cost trends push plans to find arrangements that reward lower total cost of care.
- Quality ratings: Star ratings and quality measures reward plans whose providers close care gaps.
- Provider demand: Groups with care management teams want contracts that pay for that work.
- Employer interest: Self-funded employers ask plans for networks that show results, not just discounts.
What does accountable care look like from the payer side?
From the payer side, accountable care is a set of contracts with different levels of risk, each needing the same building blocks: an attributed member population, a financial target, quality measures and a settlement method. The differences lie in how much of the gain or loss the provider takes on.
- Pay for performance: Bonuses for meeting quality targets, on top of fee-for-service.
- Upside-only shared savings: Providers share savings below a target but carry no loss.
- Two-sided risk: Providers share both savings and losses against the target.
- Capitation: A fixed payment per member per month for a defined set of services.
- Bundled payments: A single price for an episode, such as a joint replacement and its recovery.
Most plans run several of these at once, with different terms for different provider groups. A system that handles one model in spreadsheets often breaks when the plan signs its tenth contract with its own rules.
Capitation adds its own operational work. The plan must calculate monthly payments per member, adjust them for risk, handle retroactive enrollment changes and track which claims fall inside the capitated scope so they are not paid twice. Those tasks touch enrollment, claims and finance systems at the same time.
What can payers learn from Medicare ACO rules?
Medicare ACO rules show which details payers must get right. Under 42 CFR 425.110, an ACO in the Medicare Shared Savings Program must have at least 5,000 assigned beneficiaries, because smaller populations produce results driven more by chance than by care.
Commercial and Medicare Advantage contracts face the same statistical problem. A small attributed population can show large swings in cost from a few expensive cases, so payers use minimum population sizes, risk corridors, stop-loss for high-cost members and multi-year averages to keep settlements fair.
Medicare's published methods for assignment, benchmarks and risk adjustment are also a useful reference for payers designing their own. Many providers already understand them, which makes contracts based on similar rules easier to negotiate.
Why do fee-for-service core systems struggle with value-based contracts?
Fee-for-service core systems struggle because they are built to price and pay individual claims quickly, not to group members into populations, track spending against targets over a year, or calculate shared savings after the fact. The data exists in the claims system, but the logic does not.
- No attribution model: The system knows which provider billed a claim, not which provider is accountable for a member.
- Contract terms outside the system: Value-based terms live in documents and spreadsheets, not in configurable rules.
- Claims lag: Paid claims arrive months after service, so mid-year performance needs estimation for claims not yet received.
- Manual settlement: Year-end calculations are rebuilt by analysts for each contract, with long dispute cycles.
Which capabilities does a value-based payer need?
A value-based payer needs attribution, contract configuration, performance tracking, quality measurement, provider data sharing and settlement, all working from the same member, claims and provider data as the core system. These can be built around an existing core rather than replacing it.
- Attribution engine: Assigns members to providers using configurable rules per contract, with a record of why.
- Contract configuration: Stores benchmarks, risk-sharing rates, quality gates and stop-loss terms as data.
- Performance tracking: Shows spending and utilization against targets during the year, with completion estimates.
- Quality measurement: Calculates measures from claims and clinical data, and tracks open care gaps.
- Provider data sharing: Sends rosters, claims and gap lists to provider partners on a regular schedule.
- Settlement: Calculates final results with audit trails providers can review.
Attribution deserves the most design attention, because every other number depends on it. Common rules assign a member to the primary care provider they chose at enrollment or, failing that, to the provider who delivered the plurality of their primary care visits over a lookback period. Each contract may tweak those rules, so the engine must support variations without code changes.
Keep attribution history too. Members switch providers during the year, and settlement disputes often turn on when a member moved and which rule applied at the time. A system that only stores the current assignment cannot answer those questions.
How should payers share data with provider partners?
Payers should share attributed member rosters, claims data and care gap lists with provider partners on a regular schedule, in standard formats, so providers can manage the population they are accountable for. Providers cannot manage cost they cannot see.
Many plans still send monthly flat files that each provider group parses differently. The Provider Access API under CMS-0057-F, built on FHIR, gives affected payers a standard route for sharing claims and clinical data with in-network providers, and the same approach can serve commercial contracts.
Data sharing should run both ways. Providers hold clinical data, such as lab results and blood pressure readings, that closes quality gaps faster than waiting for claims. Accepting that data in standard formats improves measure accuracy and reduces chart review work.
How do payers settle value-based contracts?
Payers settle value-based contracts by fixing the attributed population, totaling the period's costs after a claims runout, adjusting the benchmark for risk and trend, applying quality results and risk-sharing terms, then producing a statement providers can audit. Each step should be reproducible from stored data.
- 1. Freeze attribution: Lock the member list for the performance period using the contract's rules.
- 2. Run out claims: Wait the agreed period for late claims, then total actual costs.
- 3. Adjust the benchmark: Apply risk adjustment and trend factors defined in the contract.
- 4. Apply quality: Use quality scores to set the share of savings or losses the provider receives.
- 5. Apply limits: Apply stop-loss, risk corridors and caps.
- 6. Publish: Send a settlement report with member-level detail and a window for disputes.
Run the same calculation during the year. Quarterly estimates using completion factors for claims not yet received tell both sides where the contract is heading while there is still time to act, and they remove most of the surprise from the final settlement.
Version everything. When a contract amendment changes a benchmark or a quality threshold mid-year, the settlement must apply the right terms to the right months, and both parties must be able to rerun the calculation and get the same answer.
Where the payer pivot stalls
- Spreadsheet settlements: Year-end calculations that take months and invite disputes.
- Late data: Providers receiving claims data too late to change care in the same year.
- Opaque attribution: Providers unable to see why members were assigned to them.
- One-off contracts: Every contract built by hand, so scaling to more providers multiplies effort.
A practical path is to standardize before scaling. Agree a small set of contract templates, build the attribution and settlement logic for those templates once, and move existing contracts onto them at renewal. Each new provider group then becomes a configuration task rather than an analytics project.
Trust is the other ingredient. Providers who can trace each attributed member and each settlement figure back to claims are far more willing to take on downside risk than providers asked to accept a single number at year end.
How Agnotic can help
Value-based contracting succeeds or fails on data and calculation quality. Agnotic Technologies builds payer core components for this work, including configurable attribution engines, contract term models, in-year performance tracking and settlement calculations with full audit trails.
Agnotic also builds provider data sharing, from FHIR APIs and roster feeds to gap lists and clinical data intake, so provider partners can manage the populations they are accountable for and plans can see results before the year ends. Work usually starts with one contract template and grows from there.
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