Alternative Payment Models

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Alternative Payment Models

Business of Medicine
Author Credentials 

Craig Derkay, MD
Professor and Vice-Chairman
601 Childrens Ln
2nd Floor ENT
Norfolk, VA 23507

Robert Lorenz, MD
Cleveland Clinic
Department of OTO A71
9500 Euclid Ave
Cleveland, OH 44195

 

Module Summary

Medical care in the 21st century is expensive and prone to waste both through overuse of services and underuse of evidence-based approaches. The fee-for-service model currently in place has been blamed as a major driving factor for medical inflation due to the creation of perverse incentives to provide high-cost, low value care without sufficiently monitoring quality. Alternative payment models have been proposed as a means to both control costs and improve quality. These have included the development of accountable care organizations, bundled episode-based payment models and patient-centered homes.

Module Learning Objectives 
  1. Review the basic principles behind APMs—why do they exist and their basic structures.
  2. Describe the evolution of APMs and the anticipated timelines for implementation.
  3. Cite the applicability of APM’s to Otolaryngology.
Accountable Care Organizations

(ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high-quality care to their Medicare patients. The goal of coordinated care is to ensure that patients get the right care at the right time, while avoiding services which do not add value to the patient’s health and preventing medical errors. When an ACO succeeds both in delivering high-quality care and spending health care dollars more wisely, it will be expected to share in the savings it achieves. For more information, visit https://www.cms.gov/aco

Medicare offers several ACO programs:

  • Advanced payment ACO model: a supplementary incentive program for selected participants in the Shared Savings.

  • Medicare shared savings program:  a program that helps a Medicare fee-for-service program provider participate in an ACO.

 

Bundled Episode-based Payment

Bundled episode-based payment models reimburse health care providers on the basis of expected costs for clinically defined episodes of care in which risk is shared between payer and provider. For more information, visit https://innovation.cms.gov/initiatives/epm

  1. A middle-ground between fee-for-service and capitation
  2. Unlike with capitation, bundled payments do not penalize providers for taking care of sicker patients.
  3. Dimensions of bundled care program to consider include:
    • Risk adjustment to reflect the severity of the patient’s condition
    • Prospective vs. retrospective payments
    • Level of risk sharing
    • Safeguards such as stop-loss, exclusions and tail risk.
    • Bundles can be created around procedural episodes of care, or else a medical diagnosis usually defined over a period of time
    • Quality metrics should be included in any bundled-payment paradigm to ensure rationalization of services lead to either improved or else maintained patient outcomes
The Patient-Centered Medical Home

(PCMH) is a model of care that aims to transform the delivery of comprehensive primary care to children, adolescents, and adults.  The medical home is best described as a model or philosophy of primary care that is patient-centered, comprehensive, team-based, coordinated, accessible, and focused on quality and safety. Through the medical home model, practices seek to improve the quality, effectiveness, and efficiency of the care they deliver while responding to each patient’s unique needs and preferences. Patient centered homes are not a place but a way of organizing and delivering primary health care encompassing five attributes and functions:

  1. Comprehensive care: A team of care providers is wholly accountable for a patient’s physical and mental health care needs, including prevention and wellness, acute care, and chronic care.
  2. Patient centered: A partnership among practitioners, patients, and their families ensures that decisions respect patients’ wants, needs, and preferences, and that patients have the education and support they need to make decisions and participate in their own care.
  3. Coordinated care: Care is organized across all elements of the broader health care system, including specialty care, hospitals, home health care, community services and supports.
  4. Accessible services:  Patients are able to access services with shorter waiting times, "after hours" care, 24/7 electronic or telephone access, and strong communication through health IT innovations.
  5. Quality and safety: Clinicians and staff enhance quality improvement to ensure that patients and families make informed decisions about their health.

For additional information on PCMH visit https://www.pcpcc.org/about/medical-home and/or https://pcmh.ahrq.gov.
 

Medicare Access and CHIP Reauthorization Act of 2015

MACRA (Medicare Access and CHIP Reauthorization Act of 2015)

  • Created as part of the repeal of the SGR formula (Sustainable growth rate).
  • Created the QPP (Quality Payment Program) containing two pathways for participation.
    • The Merit based Incentive Payment System (MIPS)
    • The Advanced Alternative Payment Model program (APM)
  •  Legislated the payment update schedule, adjustment factor and additional incentive payments available to eligible clinicians.
    •  Payment Periods follow Performance periods by two years
    •  For the first 6 years, MIPS eligible clinicians who are considered exceptional performers (as judged by CMS according to the CPS received for that performance period) may be eligible for an additional positive adjustment of up to 10%.
    •  Cost will not count towards the final MIPS CPS in 2017 performance period and will not affect 2019 payments (this will begin in 2018 reporting period)   
    •  MACRA final rule dropped computerized physician order entry (CPOE) and clinical decision support (CDS) from Medicare’s payment program. Although CPOE and CDS are gone from QPP, the functionality will remain in certified EHRs.  Reporting requirements remain in state Medicaid EHR incentive programs. Physicians also may find they are required to use CPOE and CDS at Meaningful Use levels in hospital settings.

For additional information on how MACRA affects surgeons visit https://www.facs.org/advocacy/qpp.