What physicians need to know about alternative payment models in health care
Long gone are the days in which physicians are paid solely based on the specific services they perform, a reimbursement model known as ‘fee-for-service.’ Today, alternative payment models promoting value-based care have become increasingly common. In fact, Medicare recently announced a hefty goal: By 2030, all Medicare beneficiaries with Parts A and B will be treated by a provider in a value-based care model. And it’s not just Medicare exploring these models. Many commercial payers and Medicaid are as well.
As physicians strive to improve revenue cycle management by shifting from traditional fee-for-service to alternative payment models, it’s helpful to understand available options. This article answers common questions to help steer physicians in the right direction.
What is a concise alternative payment model definition?
Alternative payment models come in many forms, but the one commonality is that they provide financial incentives for high-quality, cost-efficient patient care. There are various types of alternative payment models. These models—sometimes referred to as APMs—may apply to specific clinical conditions, care episodes, or patient populations. They may also apply to high value services not currently billable or multi-physician bundled payments.
Why would a physician want to engage in an alternative payment model?
Here are three common reasons to engage in value-based care payment models: More flexibility in healthcare delivery, adequacy and predictability of revenue cycle management and payment to promote financial sustainability, and accountability for costs and quality that physicians can control.
What are some types of medical practice alternative payment models?
Here’s a list of alternative payment models healthcare payers use most frequently:
Fee schedule payments with a link to quality and value-based payments
Fee schedule payments with accountability for performance
Care management payment
Population-based payments
Bundled/episode payments
In terms of specific alternative payment model examples, here are a few:
Some, but not all, alternative payment models are part of CMS’ Quality Payment Program.
Can physicians get more involved in developing alternative payment models in health care?
Yes. The American Medical Association (AMA) encourages physicians in primary care and other specialties to participate in and design alternative payment models such as ACOs, bundled payers, and more. In addition, the Medicare Access and CHIP Reauthorization Act (MACRA) established a way for individual physicians, physician groups, medical specialty societies, and others to develop and propose physician-focused payment models for Medicare to consider. An independent committee called the Physician-Focused Payment Model Technical Advisory Committee reviews these proposals and recommends which types of alternative payment models Medicare should adopt.
What questions should physicians consider if they want to propose an alternative payment model?
Here are a few questions to consider when proposing value-based payment models:
What are your biggest barriers in the current healthcare payment system in terms of achieving these goals?
What are your biggest opportunities to improve care and/or reduce total spending?
What is your medical practice size and relationship with other providers? What alternative payment model might be most feasible for you? Some models are more suited for single specialty medical practices of any size while others are more doable for larger or multi-specialty practices or medical practices working collaboratively with hospitals or other providers.
What types of patients and conditions do you treat most frequently?
What are the biggest medical practice challenges with alternative payment models, and how can physicians overcome them?
Three big challenges are resource constraints, complex rules and policies, and an inability to analyze data. To overcome them, medical practices must create the right infrastructure before beginning the alternative payment model program. This includes having the right stakeholders, program champions, and staff in place. It also includes having the right electronic medical record capabilities and analytics tools to help medical practices quickly and easily measure healthcare performance.
What questions should physicians consider when evaluating pay-for-performance contracts?
There are several questions to consider when negotiating payer contracts and evaluating healthcare contracts involving an alternative payment model. Make a list of alternative payment models under consideration. Then ask these questions:
How can you quickly, efficiently, and amicably resolve differences and unforeseen issues?
How will the payer assign and attribute patients to you for the purposes of incentive payments? How will the payer reconcile healthcare costs for emergency or elective care from another provider?
How will the you and the payer communicate on an ongoing basis to ensure the agreement works for both parties?
Under what circumstances may the parties terminate the agreement, and how?
What are the pay-for-performance period start and end dates? Is there an initial ramp-up period?
What are the terms of payment and reconciliation, including remittance timeframes and processes for appeal?
What are the terms of the agreement, and is there any flexibility? For example, some payers may be flexible and offer three- or five-year terms. A five-year term gives physicians more time to engage patients in healthy behaviors that have an impact on quality outcome measures. However, others may not because the model is based on resources allocated within a certain timeframe.
What calculation will the payer use to determine performance?
What is the process for healthcare claim submission and data reporting?
Conclusion
Shifting from fee-for-service payment models to alternative payment models in health care can be a game changer for your medical practice in terms of promoting long-term financial sustainability. Exploring your revenue cycle management options is a good first step. Learn how edgeMED can help and be sure to check the Healthy Snacks blog for more expert insights, best practices and industry trends.
