WHAT IS A RISK SHARING ARRANGEMENT IN A MANAGED CARE CONTRACT?

When a managed care organization gets ready to share an employer’s financial risk in case of unfavorable claim experience, then this mutual contract between employer and managed care is known as a risk-sharing agreement. This agreement needs a managed care organization to either share the risk of unfavorable medical claim experience of an employer or take cost-saving measures. A risk-sharing agreement can be formed for any type of managed care organization. This post will help you to understand risk-sharing agreements in easy words. So, keep reading!

Understanding the risk-sharing agreement in detail:

For long and short-term cost savings, employers typically enroll in a managed care plan. The risk-sharing contract between an employer and a managed care organization is one way of ensuring employers’ short-term success or failures. This contract provides a financial guarantee to the employer that its program is saving costs by managing employees’ medical claims. If not, then managed care organizations will share the financial risk of claims. The use of risk-sharing agreements is currently increasing day by day as it is an attractive marketing strategy to attract payers by managing their financial risks by providing health plans sometimes at high rates. A risk-sharing agreement provides faster and guaranteed reimbursement making a long-term relationship with the payer.