Mastering Value-Based Contracting: A Playbook for Payer-Provider Success

As the healthcare industry advances toward value-based care (VBC), the promise of improved outcomes, reduced costs and strengthening payer-provider partnerships continues to gain momentum. Yet many organizations remain stuck at the starting line, hesitant to take on financial risk or ill-equipped to support the operational demands of new payment models. 

At the 2025 OPEN MINDS Strategy & Innovation Institute, leaders from VNS Health and Netsmart gathered to share their blueprint for navigating this shift. The message was clear: success in value-based contracting is possible, scalable and essential. But success demands the right combination of infrastructure, insight and intentional collaboration. 

 

The Technology Advantage: Infrastructure That Scales with You 

Despite widespread support for VBC in principle, execution often falters due to gaps in data, interoperability and organizational readiness.  

Netsmart Senior Vice President Scott Green underscored this point, citing a recent survey from the Health Care Payment Learning and Action Network (LAN) showing that while more than 41% of payments in 2022 were tied to value and risk-based models, many providers still lack the systems and workflows to operationalize them at scale (source). 

The Netsmart CareFabric® model is designed to address these gaps, connecting payers and providers across domains like behavioral health, post-acute care and population health. Rather than layering new systems on top of outdated workflows, the CareFabric streamlines data exchange, supports flexible contracting arrangements and empowers clinicians with real-time insights. 

This level of support is critical when payers hand providers large attribution files with tight implementation deadlines — sometimes giving only six to eight weeks to turn contracts into care delivery. 

 

VNS Health: A Case Study in Value-Based Evolution 

VNS Health offers a compelling example of how to make value-based models work in the real world. Starting as a home health agency over 130 years ago, the organization has grown into a $3.5 billion integrated care enterprise serving more than 60,000 individuals in New York. Its care ecosystem includes Medicaid plans, behavioral health programs and a proprietary suite of predictive analytics tools. 

Devin Woodley, Vice President of Managed Care Contracting at VNS Health, detailed how his team consolidated more than a dozen behavioral health programs into a single EHR — enhancing care coordination, streamlining referrals and enabling hospitalization alerts. Risk algorithms automate caseload assignments and ensure clinical resources are distributed efficiently, even accounting for acuity and staff caps. 

“When you have a number of different programs, it's nice to go into one record and see them all,” Woodley said. “Everything from health home articles, 3132 and the population health programs—we can see them all in the one system.” 

Proactive data sharing is another cornerstone. VNS provides some payers with weekly reports, showcasing performance before claims data becomes available. This transparency strengthens trust and accelerates payer responsiveness. 

 

Behavioral Health: Breaking Down Silos, Driving Results 

Behavioral health has historically been marginalized in value-based arrangements, often siloed from medical care despite its outsized impact on outcomes. VNS is changing that. They simplified their behavioral health offerings into three tiers: 

• Level 1: HEDIS-aligned follow-up visits within 7 or 30 days of discharge 
• Level 2: Wraparound care management for at-risk individuals over three to six months 
• Level 3: Enhanced support for individuals with serious mental illness (SMI) or substance use disorder (SUD), including access to prescribing NPs 

These models aren’t just functional — they’re profitable. VNS negotiated performance-based bonuses tied to HEDIS outcomes, achieving rates well above the national average. For example, while the U.S. average for 7-day follow-up hovers around 39%, VNS has sustained rates above 76%, earning up to a 25% bonus on top of their baseline rate. 

Even more striking is their willingness to share risk. In one contract, VNS put 100% of its fees on the line — agreeing to repay the payer if savings targets weren’t met. Their confidence comes from decades of working with the same populations, refining care strategies through grant-funded programs and validating performance through their own health plan. 

 

What Payers Are Looking For 

Payers are looking for more than mere vendors; they seek true partners. Member experience, HEDIS scores, CAHPS ratings and risk adjustment are all under scrutiny. Providers who can help improve these metrics — and demonstrate improvement via data — are more likely to secure delegated risk and expanded roles. 

A brief disruption during VNS Health’s EHR transition impacted payer quality scores, highlighting just how interconnected provider operations are with payer outcomes. Payers are watching closely. The quality that partners deliver becomes their reputation, too. 

 

Moving Forward: Culture, Capabilities and Collaboration 

Scaling value-based care takes more than dashboards and data feeds. It requires a cultural commitment to transparency, investment in technology and a willingness to align incentives. It also takes time. As Woodley explained, it took years of performance in grant-based pilots before VNS was confident enough to assume downside risk. 

For organizations just starting out, experts recommend beginning with upside-only agreements or pay-for-performance (P4P) contracts, then layering in more risk as experience and confidence grow. 

The Centers for Medicare & Medicaid Services (CMS) has set a goal of having all Medicare beneficiaries in accountable care relationships by 2030 (source). That means providers can’t afford to wait. The future of healthcare financing is already here — and those who can prove value will be the ones who thrive.