Doctors Provide 5 Alternative Payment Model Improvements

March 13, 2017 - A journal article published in the American Journal of Managed Care, outlines recommendations from several doctors on significant ways alternative payment models (APMs) can be improved and better designed.

APMs are being promoted throughout the healthcare environment, including solicitations from the Centers for Medicare and Medicaid Services (CMS) for payers to join MACRA’s Advanced APM track as well as the AHA advisory committee to MedPAC to implement more APMs and other MACRA compliant programs.

The group of doctors, from the University of Colorado School of Medicine, Center for Healthcare Quality and Payment Reform in  Pittsburgh, and the Department of Emergency Medicine at Yale, were prompted by the current APM landscape to address possible improvements.

The authors took into consideration the APM designs seen today, and suggested improvements in APM resource management, accountability, procedures, flexibility, and administrative duties.

“The Medicare Access and CHIP Reauthorization Act of 2015 encourages development of physician-focused alternative payment models (APMs),” the doctors said. “This creates the most significant opportunity in  two decades to meaningfully redefine how physicians are paid for their services. Whether this results in better care and lower spending, and whether it helps or harms physician practices, will depend heavily on how the HHS implements APMs.”

Based on previous research, the authors cited that patients managed under APMs are sometimes at risk for decreased care and worse health outcomes because APMs financially incentivize lower healthcare spending. Adding penalties on care quality protects some patients, but creates gaps in care for patients with more medically complex conditions.

The doctors believe that payers who support self-care habits and provide high-value resources can improve patient outcomes under APMs.

“A major weakness in the current fee-for-service (FFS) systems is lack of payment for many high-value services that could address patient needs at lower costs,” the authors said. “For example, patient education and self-management support can help patients with chronic disease to avoid hospitalizations, but they are not adequately supported by payers.”

Fee-for-service models did not incentivize physicians based on patient outcomes, or for lowering care costs for their patients, and did not account for costs physicians are able to control.

The authors say that physicians in general demonstrate a desire to lower cost, and improve quality care. Based on physician attitudes, the authors suggest that APMs moving forward need to hold physicians accountable for performance factors they can feasibly control.

“A successful APM will hold physicians accountable for aspects of costs and quality they can control (eg, how many tests they order, which procedures they perform, how well they prevent avoidable complications), but not for the things they cannot (eg, the services ordered by other physicians for different health problems, increases in the prices of drugs they prescribe),” the authors said.

“In order to deliver higher-value care, the barriers that specialists face under the current payment system must be removed,” they added.  

The doctors referenced that a majority of healthcare spending is for a small portion of patients with multiple health conditions. To address care needs for patients that don’t require as many services, the doctors suggest that APMs should be used within specialty care, so not every patient is required to be part of an Accountable Care Organization (ACO).

“Primary care medical homes and surgical episode payments are not readily adaptable to most types of specialty care, and it is neither necessary nor desirable to force every patient to be part of a large ACO in order to receive better care,” they wrote. “Appropriately designed APMs are needed in every specialty so that all patients can benefit from higher-value care.”

The authors concluded that improved flexibility and reducing administrative burden are paramount in improving APMs. The suggestions provided include providing more delivery sources to meet the needs for rural and local community and focusing APMs on reducing administrative functions rather than adding more.

“The complexity of current payment models and the systems used to administer them have significantly increased the costs of healthcare in the United States without corresponding improvements in outcomes,” the authors said. “APMs represent an opportunity not only to improve care delivery, but to eliminate unnecessary administrative burdens. Just as care delivery should be redesigned to eliminate waste, no administrative requirements should be included in APMs unless the likely benefits will significantly exceed the costs.”