What does risk-sharing in healthcare payments entail?

Risk-sharing in healthcare payments involves distributing financial risks and rewards between providers and payers. This approach is designed to align the incentives of both parties, encouraging providers to deliver high-quality care while controlling costs. By sharing the financial risks, providers are motivated to improve patient outcomes and reduce unnecessary services, which can lead to overall healthcare cost savings.

This model contrasts sharply with fixed payment structures, which do not allow for adjustments based on performance or health outcomes. Risk-sharing arrangements might include various payment options, such as capitation, shared savings programs, or pay-for-performance incentives, all aimed at creating a more collaborative environment focused on patient care and efficiency.

Other options, such as eliminating costs entirely or providing free healthcare services, do not accurately reflect the concept of risk-sharing, as they fail to address the financial dynamics between providers and payers.