How Health Plans Can Leverage Alternative Payment Models (APMs) for Provider and Patient Success

March 27, 2023

The healthcare industry is shifting from the traditional fee-for-service economic model to a value-based care (VBC) framework. The Patient Protection and Affordable Care Act (ACA) and the Center for Medicare and Medicaid Innovation (CMMI) has developed alternative payment models (APMs) as an incentive for providers willing to make this change.   

APMs test new healthcare payment and service delivery approaches, rewarding high performers who successfully translate them into value-based care. This approach boosts patient outcomes while simultaneously improving providers’ cost efficiency.    

How Health Plans Can Best Meet Provider Needs and Expectations

APMs shift the focus from a standardized payment process to a more engaging and personalized experience for patients and providers. This new VBC ecosystem is coordinated around patient satisfaction and eliminating low-value, redundant, or unnecessary overhead costs for healthcare organizations with a renewed focus on improving outcomes and standardizing care.   

Improve Patient Outcomes and Experience

APMs should encourage providers to offer patient-centric care. For example, a plan that bundles hospital stays, physician appointments, post-acute care, and other traditionally stand-alone services into one holistic treatment journey provides personalized care not found in a billable list of separate procedures.  

In this value-based approach, prevention is more valuable to the provider than prescribing another procedure. It reduces hospital readmissions and patient wait times and improves community- and home- healthcare access across patient populations. These factors are important to all stakeholders, including patients.  

Results from existing initiatives are promising. A five-year evaluation of The Innovation Center’s Independence at Home Demonstration found that it reduced total Medicare expenditures; more significantly, 93 percent of beneficiaries and caregivers reported high satisfaction with the quality of care.  

Reduced Costs for the Patient, Provider, and Payer

Integrating an APM can lead to significant cost savings. CMMI’s 2020 Report to Congress surveyed over 27.8 million beneficiaries and individuals covered by APMs in some form. Results highlighted multiple cases in which APMs contributed to “statistically significant savings,” including the ACO Investment Model (AIM), which reduced hospital readmissions and ER visits in rural areas and saved Medicare $382 million during its first three years.   

What Makes a Successful APM?

Many APMs still suffer from assumptions inherited from the fee-for-service model. Crafting a successful APM means building a structure appropriate for a VBC framework.  

This structure requires a way to organize, coordinate, and visualize all the relevant data: Electronic Health Records EHR, (re)admissions rates, treatment results, imaging, appointment scheduling, drug trials, patient population data, revenue cycle, staffing, and more. There is no one-size-fits-all APM; each should be tailored according to its goals, stakeholders, and patient population.  

An AI-powered healthcare software solution from a technology vendor specializing in the specialty provider’s field (e.g., oncology) can serve as an effective platform to generate data-driven insights essential to improving cost efficiency, quality, and overall outcomes for all involved. These insights can be used to help practices:  

  • Build transparency, infrastructure, and services based on this data  
  • Transform clinical, financial, and operational practices while getting all relevant staff on board   

A Successful APM Framework

When adopting a new APM, it’s essential to establish how it will add value to your health plan’s commercial goals while helping practices align with an efficient, precision-medicine approach to healthcare. Carefully consider the following:     

  • Goals: What measures are you trying to achieve?  
  • Design: How to design the program to fit these measures?  
  • Recruitment: How will you recruit the practices?  
  • Program Execution: Who will execute the program?  
  • Relationship Management: Who will manage the provider and payer relationship?   

Accounting for all these variables can be daunting, but consulting with an experienced vendor partner that understands the specialty at hand can help you harness the power of APMs into success for both patient and provider.

October 2022 webinar

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