How Alternative Payment Models are Revolutionizing Healthcare

Alternative Payment Models (APMs), developed under the Patient Protection and Affordable Care Act (ACA) and Center for Medicare and Medicaid Innovation (CMMI), have been driving healthcare from the traditional fee-for-service payment system to a value-based payment approach. Value-based care models help incentivize healthcare providers to focus on patient-centered care and care coordination, taking a fragmented system and attempting to make it whole. In this piece, we concentrate on the ways APMs have impacted this systematic shift and what is in store for value-based, coordinated, patient-centered care in the future.

The Results of the APMs Compared to Fee-for-Service

With over 27.8 million beneficiaries and individuals impacted by the alternative payment model initiatives, CMMI’s 2020 Report to Congress highlighted multiple examples of program performance which resulted in “statistically significant savings.” One example with favorable financial results is the ACO Investment Model (AIM). ACOs under this APM achieved a net savings to Medicare of $382 million across the first 3 years of the program. AIM showed improved quality in rural or low ACO penetration areas, decreasing hospital readmissions by -4.4% and emergency department visits by -2.9% respectively.

Overall, the various CMMI program results reported were mixed from a financial perspective. However, many CMMI models had positive quality outcomes for patients and meaningful lessons to be learned. One valuable insight is the importance of creating incentives for healthcare providers to coordinate and deliver care more efficiently. Models that bundle payments for hospitals, physicians, post-acute care, and other healthcare services shift the focus from individually rendered services to clinically managing the patient throughout their episode. This results in a more patient-centered approach through a more integrated means of care.

Enlace Health’s own experience with bundled payments has been extremely positive, helping our clients achieve a 7:1 payback ratio on their investment, saving our partners millions of dollars. With an emphasis on quality as part of the value-based contracting process, patients have also benefited from this arrangement. In one client example, patients under the value-based care model were 3 times less likely to have a potentially avoidable complication than patients in a traditional fee-for-service payment program. Tracking the patient across different care settings and the facilitation of a clinical team approach improves outcomes and reduces the likelihood of adverse events such as readmissions and emergency department visits. These types of outcomes promote value-based care as a “win-win” scenario for all parties involved.

Payer Focus is Geared Towards Patient-Centered Care

Medicare, Medicaid, and commercial insurance payers realize the importance of coordinating healthcare services to best meet the needs of the patient in the most efficient and cost-effective manner. Clinically aligning providers and payments helps eliminate duplication and unnecessary, low-value services while fostering quality and patient satisfaction. Payers should not focus on a specific moment in time but should evaluate the whole patient and assess the most advantageous ways to treat and prevent clinical conditions. In addition to ACOs and bundled payments, this shift is evidenced by models such as Accountable Health Communities (AHC), Patient-Centered Medical Home (PCMH), Total Cost of Care (TCOC), Comprehensive Primary Care (CPC), and Primary Care First (PCF).

In summary, APMs have transformed care delivery and healthcare payment, incentivizing patient-centered care and coordination among a disparate and disjointed healthcare system. Over the past decade, we have seen many advancements, improvements, and success stories evolve from value-based care. Policymakers, payers, providers, and patients understand that these models will continue to evolve as refinement of programs and new innovative methodologies emerge. APMs encourage high-value, patient-centered care while controlling healthcare costs. While not necessarily a one-size-fits-all option, these models will serve as the framework for value-based payment initiatives across the healthcare continuum for years to come.

CMS Innovation Center: 2020 Report to Congress  

The ACO Investment Model Final Evaluation of Three AIM Performance Years

Innovation At The Centers For Medicare And Medicaid Services: A Vision For The Next 10 Years

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