CASP Module 13, Section 4: Contract Implementation and Reconciliation
MODULE 13: THE BUSINESS OF VALUE: CONTRACTS & REIMBURSEMENT

Section 13.4: Contract Implementation and Reconciliation

From Contract Signature to Final Payment: The VBC Operational Playbook

SECTION 13.4

Contract Implementation and Reconciliation

From Contract Signature to Final Payment: The VBC Operational Playbook.

13.4.1 The “Why”: The Gulf Between Contract and Cashflow

In your pharmacy practice, you are accustomed to a direct, predictable, and rapid cash flow cycle. In the Fee-for-Service (FFS) world, the economic loop is tight and simple:

The FFS Loop (Time = 24 Hours to 14 Days):
Step 1: You dispense a medication.
Step 2: You adjudicate a claim to the PBM in real-time.
Step 3: The PBM approves the claim and tells you the copay.
Step 4: You collect the copay.
Step 5: The PBM pays you the remaining amount 14-30 days later.

This entire process is transactional. The work and the payment are directly and immediately linked. Signing a VBC contract, particularly a Shared Savings or OBA model, shatters this reality. You have just entered a world of dramatically delayed gratification and significant cash flow risk. The VBC economic loop is long, complex, and fraught with peril:

The VBC Loop (Time = 15 to 18+ Months):
Step 1 (Day 1): You sign the contract. You begin performing clinical services (CMM, adherence calls, med recs) for no immediate payment.
Step 2 (Day 1 – 365): You do this unpaid work for the entire 12-month performance year.
Step 3 (Day 366 – 455): The performance year ends. You now wait 90+ days for claims “run-out” (for all the claims from the period to be submitted and processed by the payer).
Step 4 (Day 456 – 515): The payer begins the 60-day reconciliation process, analyzing the “locked” data.
Step 5 (Day 516): The payer sends you an initial report, which you will almost certainly dispute.
Step 6 (Day 517 – 570): You and the payer engage in a 1-2 month dispute and validation process.
Step 7 (Day ~571): You finally agree on the numbers.
Step 8 (Day ~600): A success payment (if earned) is wired to your bank, nearly two years after you started the work.

This section is about surviving that 600-day gulf. Signing the contract is not the end of the negotiation; it is the beginning of the operational marathon. The previous sections were about the “what” (the models, the metrics, the data). This section is the “how.” It is the practical, step-by-step Standard Operating Procedure (SOP) for building the “factory” that will track patients, perform interventions, and manufacture the data-driven proof you need to survive the final reconciliation and get paid.

Pharmacist Analogy: Launching a Compounding Lab vs. Selling a Bottle

Think of your current FFS practice as being a simple retailer. A patient needs lisinopril. You buy a pre-made bottle from McKesson (the “drug”), sell it to the patient (the “transaction”), and get paid. It’s simple, fast, and low-risk.

Signing a Value-Based Contract is like deciding to build and launch your own sterile compounding lab from scratch.

The signed contract is just your “permission to build.” It’s the blueprint. It guarantees nothing. Now, the real work begins.

  • Phase 1: Implementation (The “Build-Out”): You don’t just start mixing. You have to build the cleanroom (your IT infrastructure), install the hoods (your CMM platform), write the SOPs for every single process (your clinical workflows), and get your data feeds (your air quality/pressure monitors).
  • Phase 2: Execution (The “Production”): Your lab is “live.” You are now actively tracking your “batch” (the patient cohort) and performing your “compounding” (the clinical interventions). You must meticulously document every step, every ingredient, and every interaction in your “compounding log” (your intervention data).
  • Phase 3: Monitoring (The “Internal QA”): You don’t wait for the final inspection. You perform your own internal checks. You run “bubble tests” (your leading indicators, like PDC) and send samples out for potency testing (your lagging indicators, like A1c) to make sure your SOPs are working.
  • Phase 4: Reconciliation (The “State Board Inspection”): The year is over. The state inspector (the payer) arrives with their own checklist (the contract terms). They will audit your logs, test your final product, and compare it to your blueprint. Your payment is not for “trying hard”; it’s for proving you followed the SOPs and that your final product (the outcome) is sterile, stable, and effective (the metric was met).

This section is the SOP for building your VBC “compounding lab.” A single missed step, a single uncalibrated “monitor” (data feed), or a single sloppy “log” (documentation) can cause the entire batch to fail inspection, resulting in zero payment for a year’s worth of work.

13.4.2 Phase 1: Pre-Launch (Days -90 to 0) – Building the “Factory Floor”

The work you do in the 90 days before the contract “go-live” date is the single greatest predictor of its success or failure. This is the implementation phase. Rushing this step is a fatal error. This is where you build your systems, train your people, and establish your “source of truth.” You must have a dedicated project manager (even if that’s you) and a formal checklist.

Masterclass Table: The VBC Implementation Checklist (Pre-Launch)
Timeframe Domain Critical Task Why It’s a “Go-Live” Killer If You Fail
T-90 to T-60 Days
(Contract Signed)		 Legal & Finance Finalize contract language, especially “Exhibit B” (The Metrics) and “Exhibit C” (The Data File Spec). If the metric definitions are vague (e.g., “improve A1c”), you will lose the reconciliation. It must be precise (e.g., “A1c < 8.0%").
IT & Data Begin Data Feed Setup. Send data file specs to the payer. Establish secure FTPs. Plan for data mapping. This is the longest lead-time item. Data feeds can take 6 months to get right. If you start this on Day 1, you won’t have data until Day 180.
Leadership Appoint Project Manager & form the “VBC Operations Committee” (Clinical, IT, Admin). Without a single owner, everyone assumes someone else is handling it. No one does. The program fails.
T-60 to T-30 Days
(Technical Build)		 IT & Data Receive & Test Payer Data Files. Ingest the first “Payer Eligibility File” (the master patient list). If you can’t ingest and read this file, you have no patients. You cannot even begin.
Platform Config Build the Cohort Registry. Configure your CMM platform (e.g., Epic, internal tool) to “flag” all patients on the payer’s list. Your pharmacists must be able to see “This is a VBC patient” in their workflow, or they won’t know to perform the special interventions.
Reporting Build the Metric Dashboards. Create the reports and dashboards that will track the “Leading” and “Lagging” indicators. If you can’t measure it, you can’t manage it. You will be flying blind for 12 months.
T-30 to T-1 Day
(Operational Build)		 Clinical Finalize & Train on Clinical Workflows. All SOPs are written. All staff are trained on the “what” (the intervention) and the “how” (the documentation). If your pharmacists aren’t trained on how to document their SDOH screening, that data won’t exist, and you will lose your exclusions at reconciliation.
IT & Data Finalize Baseline Data. Receive the final “Payer Eligibility File” and the “Baseline Claims Data” file. This is your “Day 0” snapshot. You must mutually agree on the starting line. If you think the baseline readmit rate is 20% and they think it’s 18%, you are already in a dispute.
All Teams Final Go/No-Go Meeting. Check all boxes. Are data feeds live? Is the cohort loaded? Is the team trained? An “un-Go” is painful, but it’s better to delay Go-Live by 30 days than to start an unprepared program destined to fail.
DAY 0 All Teams PROGRAM GO-LIVE. The marathon begins.

13.4.3 Phase 2: Execution (Day 1 – 365) – Tracking Cohorts & Performance

The factory is built. The “Go-Live” button has been pressed. Now, you must run the production line every single day for a year. This phase is defined by two key activities: managing the patient cohort (the “leaky bucket”) and monitoring performance (the “QA dashboard”).

Managing the “Leaky Bucket”: The Patient Attribution & Eligibility File

You cannot just get a list of patients on Day 1 and assume it’s the same list on Day 365. Patients are not static. They move, they change insurance, they enter hospice, they pass away. This is the “leaky bucket” of patient attribution, and if you don’t manage it, you will be held accountable for patients you have no ability to impact.

The Single Most Important File: The Monthly Eligibility File

Your VBC contract must include a clause that the payer will provide you with a monthly “Patient Eligibility & Attribution File.” This is non-negotiable.

This file (usually a simple CSV or TXT file sent via secure FTP) contains a line for every single patient you are responsible for that month. It must contain, at minimum:

  • Patient_ID: The Payer’s unique member ID.
  • Patient_First_Name: John
  • Patient_Last_Name: Doe
  • Patient_DOB: 01/15/1955
  • Attribution_Status: ‘Active’ or ‘Inactive’
  • Eligibility_Month: ‘2025-10’
  • Exclusion_Flag: ‘Hospice’ or ‘ESRD’ or ‘Null’ (This is critical!)

Your IT team must have an automated process that runs this file every month to update your CMM platform’s cohort registry. This is the only way you know who to work on.

The Monthly Attribution Workflow (A Visual Guide)
STEP 1: Payer Sends Monthly File

Payer SFTP server drops “Oct_2025_Eligibility.csv”. File contains 5,000 active members.

STEP 2: Your System Ingests & Compares

Your CMM platform’s automation script runs. It compares the new file (5,000 members) to last month’s file (4,950 members).

STEP 3: The “Delta” Report is Generated

The script creates three “action lists” for the pharmacy team:

New Members (75): “Patient X is newly attributed. Flag for Initial CMM.”
Disenrolled Members (25): “Patient Y is no longer eligible. Remove from dashboard.” (You stop work).
Newly Excluded Members (5): “Patient Z is now in Hospice. Per contract, flag as ‘Excluded’ from metric.” (You stop work).

Monitoring Performance: The “Leading vs. Lagging” Dashboard

You cannot wait 18 months to find out you failed. You must monitor your performance “in-flight.” The key is to understand the difference between the metrics you control today (Leading) and the metrics you get paid on tomorrow (Lagging).

Leading Indicators (Your “Process”)

What you control today.

These are metrics you and your team can directly influence this week. They are based on your own operational data (Pillar 3) and real-time feeds (ADT). You should review these daily or weekly.

  • Metric: % of Post-Discharge Med Recs completed in 48 hours.
  • Metric: % of new HF patients with documented CMM.
  • Metric: % of attributed cohort with an SDOH screening.
  • Metric: Pharmacist interventions per 100 patients.
  • Metric: Real-time PDC score (from your own dispensing data).

Your Action: If this dashboard is “red,” you swarm it. “Team, our med rec rate is 60%. Why? What are the barriers?” You fix your process.

Lagging Indicators (The “Outcome”)

What you get paid on tomorrow.

These are the big-picture outcome metrics you get paid on. They are always delayed by 60-90 day claims lag. You should review these monthly or quarterly.

  • Metric: All-Cause Readmission Rate (PMPM).
  • Metric: ER Visit Rate (PMPM).
  • Metric: Total Cost of Care (PMPM).
  • Metric: Adherence PDC (from payer’s claims data).
  • Metric: A1c / BP control % (from payer’s lab data).

Your Action: You watch this for trends. “Team, our lagging readmission rate is still flat, but our leading med rec rate has been green for 2 months. We expect to see the lagging metric improve next quarter.”

13.4.4 The Quarterly Business Review (QBR): Your Most Important Meeting

This is a formal meeting that you initiate and schedule with your payer counterparts every 90 days. This is not optional. It is your single most important tool for building trust, managing risk, and preventing a catastrophic reconciliation dispute. A payer who hasn’t heard from you in 12 months will assume you did nothing and will be hostile at the final review. A payer you’ve partnered with for 4 quarters will be an ally.

Tutorial: How to Run a VBC Quarterly Business Review (QBR)

Attendees:
From Your Team: VBC Program Lead (you), a data analyst, a clinical lead.
From Payer Team: Your primary contact (e.g., Network Manager), their clinical lead, their data/analytics lead.

The Agenda You MUST Control:

  1. (5 min) Opening & Alignment: “Welcome, everyone. The goal of this QBR is to review our shared progress on the Diabetes OBA, celebrate wins, and proactively identify barriers.”
  2. (15 min) Your Performance Dashboard (Leading Indicators): “First, I want to show you what our team is doing. This quarter, our pharmacists performed 350 CMM interventions and 1,200 adherence calls for this cohort. Our ‘Post-Discharge Med Rec in 48h’ rate is at 92%.”
    (Why? This proves your activity. You are showing them you are working hard for them.)
  3. (10 min) Shared Performance Dashboard (Lagging Indicators): “Now let’s look at the 90-day-lagged claims data. We are thrilled to see our shared goal, the A1c < 8% rate, has ticked up from 55% to 58%. This is a great trend and we believe it's a direct result of the CMM work our team is doing."
  4. (20 min) Barriers & “Red Flags” (The Real Reason for the Meeting): “Now for the most important part: the barriers. We have two ‘reds’ this quarter.”
    • Data Issue: “Our ADT feed from St. Jude’s Hospital has been down for 18 days. We are flying blind on their discharges. We need your help to get their IT team to engage, or we must contractually exclude those patients from the readmission metric.”
    • Clinical Issue: “We’ve identified 30 high-risk patients who are non-adherent. Our team has discovered they are all on a $250 Tier 3 copay for their SGLT2i. Our pharmacists can’t solve this. Can your team look at moving this to Tier 2 for our cohort, or can we auto-enroll them in your copay assistance program?”
  5. (5 min) Action Items & Close: “Great discussion. So, the action items are: [Payer Contact] will connect us with St. Jude’s IT, and [Our Team] will send over the list of 30 patients for copay review. We’ll see you in 90 days.”

This process turns a future, high-stakes dispute (“You failed!”) into a series of small, solvable, quarterly collaborations (“Let’s fix this together.”).

13.4.5 Phase 3: Reconciliation (Day 366+) – The “Final Inspection”

The performance year is over. You’ve run the marathon. Now, you must prove you crossed the finish line and submit your race time for payment. This is the financial close, a high-stakes, data-driven audit that determines your final payment or penalty. This process is not a “fire-and-forget” submission; it is an iterative, back-and-forth negotiation.

The VBC Reconciliation Timeline (A Visual Guide)
DAY 365: Performance Year Ends

All clinical interventions for the contract period stop. The “clock” for the performance year is done.

90-Day “Run-Out”
DAY 366 – 455: Claims “Run-Out” Period

This is the 90-day waiting period. No analysis is done. Everyone just waits for all claims (hospital, pharmacy, MD) from Day 1-365 to be submitted, processed, and finalized by the payer.

30-Day “Lock & Query”
DAY 456: The “Data is Locked”

The payer declares the dataset “final.” This is the official “Source of Truth.” Both the Payer’s data team and your data team begin running their queries against this exact same dataset.

30-60 Day “Dispute”
DAY 480 – 540: Reconciliation & Dispute

Payer sends their “Initial Reconciliation Report.” You send your “Validation Report.” They never match. You now have a formal dispute period (defined in the contract) to argue over every patient and every claim (see next section).

30-Day “Final Settle”
DAY ~570: Final Settlement & Payment

After the dispute, a “Final Reconciliation” is signed by both parties. The final payment (or penalty) is calculated and processed. Your cash finally arrives, ~18-20 months after you started.

13.4.6 Masterclass: Winning the Reconciliation Dispute (The “Appeal”)

This is where you save your entire program from financial ruin. A 2% error in the attribution list can be the difference between a $500,000 payment and a $100,000 penalty. You must be prepared to fight for every patient and every data point. This is not adversarial; it is a standard, expected part of the process.

The “Black Box” Payer Report: Your #1 Contractual Red Line

You must have language in your contract that forbids a “black box” reconciliation.
A “black box” report is a one-page summary from the payer that just says:
“Final Cohort: 5,000 Patients. Readmission Rate: 16.2%. Target: 15.0%. Result: Failed. Penalty Owed: $150,000.“

This is unacceptable. You cannot validate it, dispute it, or learn from it.
Your Contract Must State: “Payer agrees to provide a full, patient-level data file for all members included in the final cohort and for all metrics used in the reconciliation. Provider shall have 45 days to review, validate, and dispute this patient-level data.”
Without this clause, do not sign the contract.

The reconciliation begins. The Payer sends their patient-level file. You run your own queries. You find a discrepancy. This is how you manage it.

Tutorial: The Reconciliation Dispute Log

You will create a shared Excel or database file to track every single dispute, line by line. This is your audit trail.

G
Patient ID Dispute Type Payer’s Finding Your Dispute & (Contractual Evidence) Resolution
A123-456 Attribution Included in Cohort. Dispute: Remove. “Patient disenrolled on 06/15/2025. Per Sec 4.1a, members must be enrolled for $\ge$ 9 months.” Agreed. Patient Removed.
B789-012 Attribution Included in Cohort. Dispute: Remove. “Patient entered Hospice on 10/01/2025. Per Exclusion 5.2c (Palliative/Hospice), this patient must be excluded.” Agreed. Patient Removed.
C345-678 Attribution Included in Cohort. Dispute: Remove. “Our CMM platform logged a Z59.4 (Food Insecurity) code on 03/01/2025. Per Exclusion 5.2f (Documented SDOH), this patient must be excluded.” Pending. Payer reviewing CMM log.
D901-234 Outcome Metric Readmission on 04/10/2025. (Event = FAIL) Dispute: Remove Event. “The admission on 04/10 was for a ‘Planned Elective Cholecystectomy.’ Per Metric Spec 7.1, unplanned admissions are counted. This elective procedure should be excluded.” Agreed. Event Removed.
E567-890 Clinical Data A1c OBA = FAIL. (Baseline 9.2%, No Follow-up Lab). Dispute: Change to SUCCESS. “Payer’s lab feed is missing the Quest lab from 12/15/2025. We are attaching the EMR record showing a follow-up A1c of 7.8%. Per Sec 4.4, EMR data is a valid source of truth.” Agreed. Changed to Success.

You repeat this process for hundreds or even thousands of lines of data. This is not a quick email; it is a deep, forensic audit. After weeks, you and the payer “settle” on the final, mutually-agreed-upon dataset. The final payment is calculated from this dataset, not the initial one.

13.4.7 Conclusion: Implementation is the Contract

You have now seen the full lifecycle. A Value-Based Contract is not a piece of paper; it is a 1.5 to 2-year operational marathon. The legal document you sign on Day 1 is just the blueprint for the factory you have to build.

The pharmacy organizations that fail in VBC are those that are brilliant at the clinical work but naive about the operational work. They perform heroic interventions, save lives, and then go bankrupt because they didn’t get the data feeds right, they didn’t manage the “leaky bucket,” and they accepted the payer’s “black box” report as final.

The pharmacies that succeed—and become indispensable partners to payers—are those that are just as rigorous about their implementation checklists, their data integrity, and their reconciliation audits as they are about their clinical protocols. They build the “factory” correctly from Day -90.

Now that we understand the models, the data, and the operational lifecycle, we will conclude this module by looking at real-world case studies. We will explore examples of where these principles were applied correctly… and where they failed, leading to costly lessons for all involved.