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Using Analytics to Master Payment Reconciliation in Every VBC Model

BLOG | May 26, 2023


As value-based care models expand and evolve, understanding the where and how of your funds flow, and managing financial risk, are more important than ever. VBC ecosystems are increasingly complex – especially for organizations participating in advanced alternative payment models (AAPMs) like capitation and bundled payments.

Navigating these complexities requires a comprehensive, real-time view of dollars received and the cost of care delivery. Finance teams need insights from analytics software, enabling funds flow optimization, and the ability to adapt to whatever VBC payment models your organization is participating in. Let’s take a deeper look.



Capitation and prospective bundles are a significant change from the fee-for-service (FFS) world we’ve lived for more than 50 years. These AAPMs shift the focus from payment just for performing a service to payment for helping patients achieve optimal outcomes and maintain better health.

ACO REACH, the latest and most advanced VBC model from the Centers for Medicare and Medicaid Services (CMS), leverages a capitation reimbursement model with fixed per-member-per-month (PMPM) payments for managing an attributed patient population. REACH ACOs must then pay network providers using agreed-upon payment terms. For many ACOs transitioning out of the FFS world, that will include a mix of capitation, bundles, or fee-for-service claims.

In these complex arrangements, keeping track of funds flow can be a challenge. Everyone in the ACO provider network needs to understand how much money is coming in as part of the capitated payment agreement to measure against the costs of delivering care. And you need this information in real time, or as close to it as possible. That’s where Cedar Gate’s Value-Based Care Analytics (VBCA) comes in.



Cedar Gate has developed a powerful platform that leverages our proprietary “data lake” integration to generate the analytics necessary for streamlined payment reconciliation. Our capabilities extend to any settlement variation in the VBC space, including:

  • Target-based shared savings arrangements
  • Actual costs versus claims-based and percentage-of-premium capitation
  • Target medical loss ratio arrangements
  • Prospective bundles (episodic arrangements)
  • Retrospective bundles (episodic arrangements)

Cedar Gate VBCA allows users to construct target prices and claims based on specific definitions, outlier thresholds, and claim inclusion or exclusion modelers – for example, if your VBC contracts are structured with specific service line inclusions. Reports for each performance period use the same basis and rules as your initial contract inputs (which can be modified if your VBC program changes), ensuring accurate and consistent settlements.


Flexibility and Transparency in Settlement Calculations

Another key challenge in administering capitated payments is coordinating among all the providers and partners involved in the patient’s care. Payers provide only a single PMPM payment, so it’s up to ACO network to ensure fair distribution based on contract specifications. This requires a high level of transparency and trust.

Our VBCA solution includes user-friendly entry points for each subtotal and factor in a settlement calculation. Users can adjust interim and final settlement calculations and the software will keep permanent documentation of those changes. Additionally, users can prepare settlements and send them through review workflows before publishing to provider partners, minimizing the risk of errors in reconciliation.


An Illustrative Example: The ACO REACH Experience

Let’s take the case of a REACH ACO managing a population of 10,000 patients. Each patient is attributed a PMPM payment of $100, for a total capitation payment of $1 million per month. The costs of delivering services to your attributed population will vary, so you need real-time insights into how and where to allocate those monthly funds.

Cedar Gate’s VBCA:

  • Accurately identifies costs associated with each patient
  • Measures care delivery and costs based on the parameters specified in a VBC contract
  • Identifies how funds should be distributed among providers involved in the patient’s care
  • Tracks actual distributions among the network of ACO providers
  • Offers insights to optimize future resource allocation

This level of insight empowers you to better manage costs, improve the quality of care, and reduce risks associated with population health management.



In a rapidly changing healthcare environment, providers and payers need cutting-edge tools to stay ahead of the curve. Cedar Gate’s Value-Based Care Analytics platform is a revolutionary solution that equips you with the real-time insights and flexibility needed to optimize payment reconciliation in AAPMs. Learn more about how it can help move you forward in a VBC journey.

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