Setting the Stage for Payment Reform: Updating New York’s Regulations on Risk Transfers Between Health Plans and Providers

This United Hospital Fund report, supported by NYHealth, examines the current regulations governing risk-transfer agreements in New York State.

Risk transfers include capitation and other agreements often known as shared savings or shared risk. Rooted in the theory that providers will have strong incentives to allocate resources most effectively if they themselves are at risk for the quality and cost of their treatment decisions, such agreements are a key component in the effort to shift reimbursement from fee-for-service to value-based payments.

These agreements between insurance plans and health care providers have become increasingly common as New York State continues to move toward value-based payment approaches. The regulations overseeing these risk-transfer agreements are complex, and the prospect of standardizing them has numerous policy and regulatory implications in terms of licensing, financial review, and consumer protection.

This timely report provides an overview of the current rules on risk transfers and their historical context, as well as a checklist of issues for policymakers, State regulators, health plans, providers, and other stakeholders to consider in updating the current regulatory system.