Alternative Payment Model Overview: Do You Have the Data to Succeed?

The introduction of the dual track Quality Payment Program within the MACRA proposed rule has many healthcare systems considering their options. My most recent blog focused on the MIPS track of QPP, so today I will focus on an overview of Advanced Alternative Payment Models. 

APMs represent a medium through which providers can purvey high-quality patient care at a lower cost to payers while receiving adequate remuneration for the care provided. That medium takes the form of a legal/business entity that holds contractual relationships with the pertinent stakeholders involved in a given care collaborative. A successful APM will allow providers the operational flexibility to target clinical improvements that enhance patient care and outcomes, while offering a payment structure that sufficiently recognizes the value created.

While CMS wants to allow flexibility in how APMs approach care delivery, there are certain criteria that all APMs must meet including:

These criteria lay waste to most models that seek to compensate providers based on quality and cost outcomes. In fact, within the MACRA proposed rule, only six models currently qualify as APMs:

The MACRA proposed rule provides that CMS intends to update the list of approved APMs annually as new payment models are identified and determined to meet the criteria. While understanding the statutory requirements is a crucial first step in assessing the viability of APMs for a given population, there are also practical issues that must be addressed to determine whether pursuing an APM is wise.

A fundamental issue that must be addressed for a successful transition from the fee-for-service (“FFS”) paradigm to value-based reimbursement via APMs is the divergent data and information needs that various stakeholders have when taking a larger systemic view. FFS payment is based on paying for services with discernable billing codes which inherently incentivizes the provision of additional existing and identifiable services, while simultaneously serving as a barrier to new types or ways of delivering services. The FFS environment implicitly condones that there is little to no expectation that providers will coordinate patient care and accept responsibility for patient outcomes, because payment is rendered for services provided regardless of the clinical efficacy of the underlying service provided.

For APMs to succeed, providers must have a 360-degree view of the population attributed to their specific APM that will only be achieved by implementing new data-sharing arrangement between payers and providers. To actually achieve higher quality care for individual patients and lower cost care for the overall population, providers’ clinical decisions need to be informed and influenced by underlying data and analytics that remove as much guess work as possible.

This requires patient-level as well as population-level data so that meaningful comparisons can be made based on the specifics of the situation. Patient-level data will show patients’ clinical histories illustrated with information such as providers seen, care settings utilized, and actual procedures received. On the other hand, population-level data will facilitate comparison among providers, population, health system, or other metrics.

Patient-level data will be critical in allowing providers to identify high-cost patients and make informed resource allocation decisions. To actually achieve higher-quality care at a lower cost, providers must be able to provide effective preventative care to reduce the initial need for acute care services, as well as effective follow-up care to reduce readmissions or subsequent need for additional acute care services.

Entities considering establishing APMs must be fully prepared to share data among stakeholders to operationalize an APM entity. Developing an understanding of stakeholders differing data needs is a critical step in preparing for an APM. APMs will spark fresh relationships among providers, payers, and patients based on mutual interests surrounding quality and costs. The key to these relationships will be trust generated via transparency, as the stakeholders will only be able to assess the delivery of promises by other stakeholders by analyzing the underlying data. APMs will help redefine the health care industry as we know it today, as shared incentives amongst the stakeholders will accelerate the rate of improvement within the industry to the benefit of all.

For more information on the Effect of MACRA on Physician Practice FMV, click here.

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