How Do Health Plans Succeed in Alternative Payment Models (APMs)?

April 11, 2023

The way that healthcare organizations structure services and payments is evolving. The traditional fee-for-service model is being phased out, and stakeholders are increasingly adopting a new value-based care (VBC) framework. Alternative Payment Models (APMs) are a key element of this transition, developed by the Centers for Medicare & Medicaid Services Innovation Center to support and incentivize VBC practices. APMs financially reward healthcare providers who can demonstrate successful VBC according to specific quality measures.  

Value-based care aims to improve patient outcomes and cost-efficiency, while addressing healthcare access equity among different patient populations. A 2020 survey of existing APMs found that many achieved “statistically significant savings” for healthcare stakeholders while improving patient outcomes. Adopting an APM requires a considerable transformation in any practice, which does assume some financial risk. That’s why the support of APMs is more critical than ever, especially in oncology, such as the current Enhancing Oncology Model (EOM) and Medicare/Medicaid already incorporate APMs. Health plans are also pushing APMs into other areas to maximize the advantages of value-based care. Here are some aspects of how health plans can prepare to succeed using APMs.

What Key Components Do Payers Need for a Successful APM?

While there is no one-size-fits-all solution for integrating APMs into a health plan, all successful implementations require building the technological and operational capabilities necessary in VBC and demonstrating efficacy via quality measures used by APMs.

Successful APMs call for practice transformation, the sharing of clinical and claims data, and technology that works together to enable providers to improve patient outcomes and manage costs — without burdening the health care practice.  

Making use of EHR data is essential for APMs, but the most successful ones will also incorporate data from: 

The fundamentals of successful APM adoption are:

  1. Transparency, infrastructure, and services around the data  

    The foundation of value-based care starts with the technological capability to gather, display, and collate the relevant data and integrate it into the services offered. Investments in relevant hardware and software will ensure that all stakeholders (payers, providers, and patients) have the infrastructure to utilize data and streamline workflows between services.
  2. Data-driven insights into cost, quality, and improved outcomes

    This data gathering aims to drive improvements and show progress according to the APM’s quality measures. To this end, an AI-enabled software platform can analyze the relevant data to inform decisions on how to meet the APM’s desired quality measures, such as reducing ED admissions and end-of-life chemotherapy or receiving positive patient feedback.
  3. Clinical, financial, and operational practice transformation

    These transformations demand commitment to enabling providers to improve outcomes and manage costs through technology. All medical and administrative staff must be onboarded with new methods of using technology, communicating with each other, and rethinking the relationship between payer and provider. It’s essential to leverage technology to be seamlessly integrated into existing workflows and not burden the practices with re-inventing the wheel from the ground up.
  4. Partnering with an experienced technology vendor

    Getting the program right requires the right partner with disease-specific expertise, extensive experience with payer enablement, and a broad network of successful engagement among all stakeholders. The partnership should involve a technology platform and a program for practice transformation to drive the seamless integration of APMs.

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