Progress Continues in Developing Alternative Payment Models


The standardization of value-based models is crucial as they become widely-adopted.

The manner of reimbursement is known to affect the way that health care professionals deliver care and prioritize investments.

Currently, health care reimbursement is largely based on the fee-for-service model, in which physicians are paid for each service individually; however, this approach has been found to drive the overuse of low-value care, unnecessary services, and can result in suboptimal patient care, according to an opinion article published by JAMA.

Many health care providers, payers, manufacturers, and other industry stakeholders are seeking to expand the use of alternative payment models (APMs) as a way to encourage value.

Related coverage: Challenges for Value-Based Contracting in Specialty Pharmacy

APMs have been supported through the Medicare Access and CHIP Reauthorization Act, models from the Centers for Medicare and Medicaid Services (CMS) Innovation Center, actions of the Physician-Focused Payment Model Technical Advisory Committee, and the achievements of states, health plans, hospitals, and physicians, according to the article.

As the push continues towards value- and outcomes-based contracting, ensuring that consistent terminology and standards for outcomes related to APMs is crucial. Developing a framework for APMs will likely assist in these efforts, according to the article.

CMS first published APM classifications in 2014, which was then improved and expanded by the Health Care Payment Learning and Action Network (LAN). The LAN framework included principles for APM design and classification, as well as practical insights, according to the article.

The framework includes 4 different APM classifications:

  • traditional fee-for-service
  • pay for performance
  • APMs built on fee-for-service
  • population health payments

The framework also outlined 8 principals to help develop APMs, differentiate the models, and structure goals related to adoption. There are 3 themes present throughout the principles: patient protections against financial incentives, health care professional protection against unnecessary risks, and value-based goals for reimbursement reform, according to the article.

For patients, APMs mean a better, more coordinated health care journey. APMs must, in turn, help patients better navigate the health care system and avoid incentives that reward low-quality care.

The LAN framework supports patient protections by creating a quality threshold, which reinforces that improving care via quality accountability is a basic goal of payment reform, according to the article.

Although payment reform that holds providers accountable for financial performance and quality measures is important, these models must be flexible to improve care. It is also necessary to protect providers from models that hold them accountable for care that is outside of their expertise, as this can worsen patient care, the authors wrote.

Further, a focus of APM value should surround patient-centricity. A framework that includes quality and cost accountability is better positioned to improve care compared with APMs that only include quality accountability, according to the article.

The authors concluded that because value-based arrangements account for 30% of payments and are continuing to increase, a standardized framework will prove to be important.

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