Rethinking Alternative Payment Models (APMs) for Health Plans

June 06, 2023

As the healthcare industry continues to transition from a framework dominated by fee-for-service reimbursement to one focused on value-based care (VBC), industry stakeholders are adopting more alternative payment models (APMs). A recent survey found that 19.6% of U.S. healthcare payments flowed through two-sided risk APMs. 83% of payers surveyed believed that the adoption of APMs would continue to rise, with 96% saying that APMs resulted in better care and care coordination.  

APMs are used by the Centers for Medicare & Medicaid Services (CMS)’s Innovation Center to incentivize healthcare stakeholders to adopt VBC practices. They provide financial rewards to companies that meet specific VBC metrics called quality measures. For example, under the current Enhancing Oncology Model (EOM), cancer clinics are rewarded for demonstrating cost-efficient use of drugs, reducing end-of-life chemotherapy numbers, receiving positive patient feedback, and more.  

Value-based care is all about efficient and effective use of resources and recent studies of existing APMs have shown “statistically significant savings” for healthcare stakeholders while improving patient outcomes in health care. 

A New Paradigm for Healthcare

Getting the most from APMs begins with a company culture, focused on improving the health and well-being of members through collaboration, innovation, and innovative approaches to solving some of the most pressing issues in healthcare.  

The principles of VBC aim to address health equity, which requires data on patient populations and their healthcare journey broken down by gender, ethnicity, age, and other socio-economic factors, along with cost-effective use of drugs and other treatments. This can seem like a monumental project, especially if your practice has yet to consider these metrics. To adapt, health plans should work with partners that can provide the right tools for patients and providers alike.

How to Get Started with APMs

When establishing APMs into your precision medicine practice network, here are the top three things to keep in mind:  

  1. Infrastructure requirements – You must determine the best quality measures for an effective APM. Network practices may have set up new databases, collect information, and establish new workflows to effectively achieve the APM’s goals.
  2. Integrate the data with network participants – Once you have the infrastructure to collect the data, you need to be able to use that data to optimize efficiency and performance. An electronic platform will use analytical tools to translate real-time clinical and claims data into actionable ways to progress in VBC.
  3. Understand the requirements – What kind of insights are you looking for? Which service models are necessary to enable providers and members to advance the standard of value-based cancer care? There is no need to start from scratch—partner with a software vendor with experience in your specialty to benefit from established APM best practices.

Integrating APMs into health plans requires effort, collaboration, strategy, and tools. Still, it pays dividends in terms of improved patient outcomes, reduced bureaucracy, efficiency savings, and financial assistance via value-based quality initiatives.

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