Specialty care now drives the majority of U.S. healthcare costs. In 2023, patients in six key specialties — orthopedics, oncology, cardiology, women’s health, behavioral health and nephrology — 68% of commercial and Medicare spending and 38% of direct medical costs (McKinsey).
This concentration of risk means a single high-cost claim can destabilize financial performance for providers and payers alike. As spending climbs, employers, health plans and investors are demanding both scale and measurable value from specialty care platforms.
As spending continues to climb, employers, health plans and investors in specialty care platforms are demanding both scale and measurable value in return for their investment in these models.
Value-based care models have traditionally centered on primary care, where practices coordinate treatment, manage chronic conditions and control costs. Over the past decade, this approach has become the dominant reimbursement framework in healthcare — rewarding providers for improving outcomes rather than increasing service volume.
Yet most U.S. healthcare spending now occurs in specialty care, where costs and quality vary widely. Even small inefficiencies can translate into millions of dollars in waste. Recognizing this, Centers for Medicare and Medicaid Services (CMS) and commercial insurers are adapting value-based models to specialty care.
Early CMS models, like joint replacement bundles, kidney ACOs and oncology episodes, show that specialists can manage costs and deliver quality when incentives align. These programs revealed that success depends on:
Building on those results, CMS is expanding specialty-focused models in Medicare and Medicaid, while commercial payers are developing similar arrangements with provider groups. For specialty organizations, many of which are backed by private equity, this shift represents both opportunity and risk.
Groups that can demonstrate measurable value and control costs are positioned to:
Those without strong cost-management strategies risk financial setbacks if claims rise unexpectedly.
Aggregate stop-loss reinsurance caps total losses when claims exceed a predetermined threshold, enabling risk-bearing organizations to define their maximum financial exposure when participating in value-based contracts. It’s a safeguard against the unpredictable; high utilization and unexpected healthcare inflation won't undo your progress.
Aggregate stop-loss coverage helps specialty care organizations:
While aggregate reinsurance isn’t new, its growing use within specialty carveouts marks a significant market shift. A specialty carveout separates the financing and management of a high-cost area, such as oncology, cardiology or orthopedics, from broader health plan contracts. This model has gained traction over the past five years as payors and specialty groups look for more targeted ways to apply value-based principles where cost and quality variation are greatest.
These arrangements bring greater accountability for outcomes, with providers now responsible for both care quality and total cost. Aggregate coverage supports that shift by providing a financial backstop, protecting groups from the impact of outlier years while demonstrating control over financial risk.
With the right data and underwriting strategy, aggregate reinsurance turns risk protection into a foundation for sustainable growth.
Securing aggregate reinsurance depends on the strength and credibility of your data as much as your financial position. Underwriters rely heavily on specialty-specific claims data, actuarial modeling and performance metrics to evaluate risk and price coverage appropriately.
The more comprehensive and transparent the dataset, the stronger the case for favorable terms. That includes:
Underwriters are wary of groups without solid data or seasoned leadership. Investing early in data, governance and performance tracking enhances underwriting results, enabling leaders to quantify performance, validate assumptions and identify care pathways that drive measurable improvements.
By proactively organizing these materials, you improve your underwriting position and signal to the market that your organization is sophisticated, data-driven and prepared to manage risk over the long term.
Private equity has become a driving force in the growth of specialty care provider platforms built around value-based models. Investors are drawn to groups that can:
For these firms, aggregate coverage is a growth enabler. By limiting losses, specialty groups can take on more value-based contracts, expand patient panels and reinvest in data capabilities without jeopardizing returns.
One of the clearest advantages comes in capital raising. When groups can show that their financial downside is capped, such as limiting losses to five percent beyond a benchmark, it signals disciplined risk management and attracts investment from private equity partners and boards.
Successful value-based care initiatives require investment, infrastructure and organizational changes. These changes take time and financial returns are often viewed as a long-term investment. With aggregate protection in place, specialty platforms can scale with greater confidence, acquire practices, improve care coordination and build stronger relationships with health plans, without fearing that an unexpected claims year will derail progress.
As CMS and commercial insurers expand specialty-focused risk models, like TEAM and AHEAD, the need for aggregate stop-loss protection is increasing.
“Transforming Episode Accountability Model” is a mandatory bundled payment program that holds hospitals financially accountable for surgical costs through 30 days post-discharge. By tying payments to fixed episode rates, TEAM increases both predictability and potential downside risk when costs exceed benchmarks.
“Advancing All-Payer Health Equity Approaches and Development” is a state-based model that aligns Medicare, Medicaid and commercial payers around total cost-of-care and equity goals, expanding the financial accountability of provider groups. As states adopt AHEAD, more provider groups will share accountability for cost and outcomes, expanding exposure to value-based financial risk.
Together, these models accelerate the shift toward shared financial responsibility. Aggregate stop-loss coverage provides a critical safety net as specialty groups assume greater accountability, preventing one outlier year from erasing years of progress.
Value-based specialty care is accelerating. Secure aggregate stop-loss reinsurance now to mitigate downside risk, protect enterprise value and scale with confidence.
Health plans, private equity partners and specialty care platforms evaluating value-based specialty arrangements may benefit from reviewing how aggregate stop loss reinsurance supports financial stability, data readiness and contracting strategies. To discuss considerations specific to your organization, connect with our team through our secure online form.
Josh Gottesman of the Risk Strategies National Healthcare Practice is a stop-loss and surety broker who specializes in downside risk protection for managed care organizations. He works with a wide range of accountable care organizations (ACOs), health maintenance organizations (HMOs) and provider groups across the country.