**4. Payments**

Payments are an important part of the Value-based Contract. They represent the result of an intervention, and being part of the operation of the contract, are not a component of the five analytical steps discussed above. Their importance to a contractor and a payer, however, make it important to discuss payments.

A successful contract will result in a payment from the payer to the provider/ HCM. Some models such as capitation and bundled payments result in prospective payments: the provider/HCM receives a fixed amount and there is usually no reconciliation or further exchange of funds. For performance-based contracts such as shared-savings or pay-for-performance, a reconciliation will be necessary to calculate amounts owed or owing. Administration of claims for these contracts can be complicated because providers will submit claims in the normal way to the payer, who must then turn off payment (because the provider will be reimbursed from a pool of funds at reconciliation). It is clearly not satisfactory to the provider/ HCM to wait 18 months for reimbursement. The challenge of administering partial payments (or payments after the fact) from a typical claims system, particularly in a payer with multiple different contracts, can be challenging to the payer. In many cases these contracts are administered manually. Solutions such as the application of Stochastic Control processes, in which the ultimate settlement payment is continually estimated and payments are made on account of the ultimate payments offer some promise as a way to satisfy provider/HCM need for near real-time payments. That, however, is a topic for a different chapter.
