Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

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Examining the Value-Based Alternative Payment Model Basics

Alternative payment methods will only thrive if support systems that both accompany a new payment model and align with incentives are put into place.

By Jacqueline DiChiara

- Alternative payment models like the accountable care organization (ACO) and the bundled payment model have been gaining popularity under the Affordable Care Act’s (ACA) mandates.

alternative payment models healthcare reform

Figuring out how alternative payment models will evolve under a waning fee-for-service payment system is not easy.

The transition away from traditional fee-for-service payment models towards value-based reimbursement continues; the clock is ticking.

The general perception of value-based care is that a greater focus on account access, price, and incentive alignment strengthens healthcare reform.

Value-based care could lead to a drop in healthcare expenditures and streamline the medical billing process.

READ MORE: Engaging Providers Key to Value-Based Reimbursement Adoption

And a data-driven approach can keep costs down across the industry and improve care quality.

But the price bar can only dip so low before subsequent problems arise.

Additionally, a lack of standards adoption, particularly among the most recent cohort of Pioneer ACOs, makes it difficult to manage an at-risk population across the care continnum.

The bigger picture is more about diminishing the need for need for higher-acuity service and less about service volume, said David Muhlestein, PhD, Senior Director of Research of Development at Leavitt Partners LLC.

Being able to analyze care quality across clinics, hospitals, and post-acute care setting will allow healthcare providers to better understand how value-based payments relate to costs, stated Shauna Overgaard, MHI, Adjunct Professor at the College of Saint Scholastica.

READ MORE: 46% of Providers Unsure About Value-Based Purchasing Impact

“[Claim-based] analytics can better leverage clinical data in the identification of potentially avoidable complications or variations in care through pattern analysis,” she added.

But bad or unusable data only leads to claims denial. It is not always easy to aggregate data between hospitals and physicians to truly create actionable and meaningful analytics.

“We can’t manage and be efficient if we don’t have the data to allow us to direct our efforts and be able to work efficiently and as streamlined as possible,” Jose Rivera, CMPE, Orlando Health’s Corporate Director of Physician and Professional Services, explained.

Looking at population health needs in terms of evolving quality and outcome improvements is imperative as both reimbursements and care delivery models continue to evolve away from fee-for-service payment.

“What providers absolutely must have are really powerful analytics that are able to take clinical and outcomes data, a lot of which resides in clinical systems, and combine it with financial data to accurately measure where we improve quality based on outcomes results,” asserted Deanne Kasim, Research Director of Payer Health IT at IDC Health Insights.

READ MORE: NAACOS: Mandatory Bundled Payments Impede ACO Financial Success

Physician practices in particular are reportedly struggling to adapt to a new payment model environment and manage data as it comes their way.

According to research from the RAND Corporation and the American Medical Association (AMA), performance measures tied to various alternative payment models – including ACOs, bundled payments, shared savings, pay-for-performance, capitation models, and retainer-based practices – are too varied to be effective.

“For alternative payment methods to work best, medical practices also need support and guidance. It’s the support that accompanies a new payment model, plus how well the model aligns with all of a practice’s other incentives, that could determine whether it succeeds,” stated the study’s lead author, Mark Friedberg, MD, Senior Natural Scientist.

Parallel findings from the Center for Healthcare Quality and Payment Reform (CHQPR) asserted that physicians find it difficult to deliver cost-effective, high quality care.

"Many of the alternative payment models currently being implemented in Medicare not only fail to solve the problems in the current payment system, they can actually make things worse for physicians who want to improve care and reduce spending,” stated Harold D. Miller, CHQPR’s President and CEO.

“Properly designed APMs can give physicians the ability to achieve far greater improvements in the quality and affordability of care for their patients than MIPS, because APMs can overcome the barriers to better care that exist in the current payment system in ways that MIPS cannot,” he explained.

The future success of payment models is yet to be determined, he said. What happens next is dependent on what types of law provision implementations unfold.

Miller looks to Congress, the Centers for Medicare & Medicaid Services (CMS), and the Department of Health and Human Services (HHS) as a gauge to predict next steps.

“The decisions [CMS/HHS] make and the processes they establish could either encourage rapid development and implementation of innovative and successful payment models, or deter innovation and impede the progress in payment reform that Congress wanted to support,” he said.

Earlier this month, CMS confirmed that alternative payment models still have room for

“We’re not there yet,” said Patrick Conway, MD, MSc, CMS Chief Medical Officer. 

Communication issues need to be addressed, he said. The average healthcare consumer does not quite understand what true system reform is about.

“The last five years have seen the most positive delivery system improvements in our nation’s history, and we are committed to accelerating that progress,” Conway wrote on CMS’s blog last November.

There has reportedly been a notable surge in alternative payment model interest within recent years. This interest will likely only grow in time.

As the healthcare payment system realigns itself, providers will continue to learn more about what types of alternative payment models best suit their general risk needs, especially as new Medicare initiatives fall into place.

Image Credit: [AMA / CHQPR] (Image 1)

Image Credit: [AMA / CHQPR] (Image 2)


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