What differentiates one-sided risk from two-sided risk in Alternative Payment Models?

• A. Two-sided risk shares in both savings and losses relative to a benchmark.
• B. One-sided risk shares in savings only (no losses).
• C. Two-sided risk means only cost savings.
• D. One-sided risk means no risk at all.

Answer: (B)

One-sided risk means the provider can share in cost savings relative to a benchmark, but there is no obligation to repay losses if costs exceed the benchmark. In this setup, the financial exposure is only to upside. Two-sided risk, by contrast, involves sharing both savings and losses, so the provider can gain from being cheaper than expected and must also cover costs that exceed the benchmark. The correct description captures this upside-only exposure: savings without losses. The other statements either imply that two-sided risk covers only savings, or that one-sided risk has no risk at all, which aren’t accurate.