American Association for Physician Leadership

Finance

A Sampling of Alternative Payment Models

Richard Self, MD, MBA | Janis Coffin, DO, FAAFP, FACMPE

October 8, 2016


Abstract:

Understanding the current selection of CMS-approved alternative payment models is critical for providers in the current healthcare policy climate who wish to pursue alternatives to traditional reimbursement schemes. This has become a topic of increasing interest with the recent passage of the Medicare Access and CHIP Reauthorization Act of 2015, as traditional fee-for-service payments will be altered—either positively or negatively—by criteria defined under the Merit-Based Incentive Payment System (MIPS). This article offers a framework for current and proposed models being implemented or investigated by the CMS. Further exploration of the topic can be carried out through supplementary or primary sources to determine best fits for specific practice environments.




Passage of the Medicare and CHIP Reauthorization Act (MACRA) of 2015 has set the ground work for CMS to begin reimbursing providers in 2019 based on their alignment with either the Merit-Based Incentive Payment System (MIPS) or alternative payment models (APMs).(1) Thus a basic understanding of the current selection of APM models is crucial for providers beginning their search for a non-MIPS reimbursement structure. This is an important consideration for all providers lest they be automatically defaulted to the MIPS structure that prescribes competitive alterations to the fee-for-service system. These models may seem amorphous in comparison with traditional models, and it can be difficult to understand the currently available models in light of ongoing refinement and debate obscuring the clear identification of APMs, especially for those providers or stakeholders who do not regularly follow the trends of model development and deployment due to other time constraints. With this in mind, we have prepared a brief overview of currently approved APMs that, although subject to change based on ongoing developments and not all-inclusive, may serve as a quick reference.

Currently Approved Alternative Payment Models

Three major categories of APMs currently are in widespread use in the healthcare industry that are readily accessible in a deployable format that meets the requisite definitions and guiding principles. These are Accountable Care Organizations (ACOs),(2) Patient-Centered Medical Homes (PCMHs),(3) and bundled payment models (BPMs) (Table 1).(4) Each has a specific primary focus for reducing spending through either providing high-value care or reducing overall expenditures through a structured bundling of payments to coordinated providers for a single patient event or provision of care. Secondary focuses of quality improvement are flexibly defined and are adoptable on a case-by-case basis. What works for one practice or specialty may, however, be fiscally unfeasible for another. This is particularly true for physicians who are independently practicing specialists or who are not members of a network that would readily allow for bundling of payments.

Specialty-specific APMs may be coming into existence in the foreseeable.

Only a handful of specific models have been wholly adopted by CMS as consistently acceptable APMs. Specifically, these “advanced APMs” are the ACO structures of the second and third tracks of the Medicare Shared Savings Program, the Next Generation ACO Model, the ACO structure of the Comprehensive EARD Care Model, the PCMH structure of the Comprehensive Primary Care Plus Initiative, and the BPM structure for the specialty-specific Oncology Care Model. The above selection, however, may not readily meet the demands of all types of organizations, specifically specialty-intensive organizations, which may benefit from receiving payments based on otherwise nonbillable high-value-based services. These limits create a strong and insurmountable barrier for many stock APMs to be readily deployable for practical use in all of the highly variable provider organization structures that make up the U.S. healthcare system. However, many other specialty-specific APMs may be coming into existence in the foreseeable future with cooperation and input from key professional organizations and advisory entities.

The Physician-Focused Payment Model

Not long ago, the American Medical Association (AMA) and Center for Healthcare and Quality Payment Reform (CHQPR) released seven Physician Focused Payment Models (PFPMs), which they promoted as a potential means to expand provider access to APMs that may be used by specialists who are not considered exclusively primary care providers or who participate in practices of varying sizes, clinical locations, and multiple provider specialties.(5) The report provides further detailed information about elements of each model’s potential strengths and weaknesses as a unique group of APMs. These models are likely to be the most effective for widespread adoption, at least from a standardized viewpoint across widely variable specialties.

Adopting various elements of the three APM categories with focus along a single dimension, namely the addition of currently “nonbillable” services in all seven proposed models, the joint AMA/CHQPR proposed PFPMs theoretically should benefit all key stakeholders in terms of both patient outcomes and cost reduction, regardless of the differences in each one’s “value-based” aspects, and enable them to meet the CMS Quality Strategy. Suggested novel CPT codes based on previously nonbillable services (e.g., phone calls and patient education initiatives) should work primarily to allow physicians and other providers to receive reimbursement for patient-focused interventions that would otherwise be financially prohibitive, or at least obstructive, for a private practice or other fiscally mindful entity. The authors of this article highly recommend reviewing this and other resources published by Dr. Harold Miller for readers interested being further informed on the current APM debate.(6)

The Direct Primary Care Model

Some professional organizations, such as the American Academy of Family Physicians, have begun to openly advocate the adoption of a new APM referred to as the direct primary care (DPC) model.(7) Somewhat similar in spirit to the BPM and the PCMH, the provider essentially bills for a monthly, quarterly, or yearly retainer that acts as the sole source of APM reimbursement with other charges being billed only due to extraordinary circumstances. This is not synonymous with a concierge medical model: the retainer acts as the solitary source of reimbursement with no further payer billing routinely occurring. This model, if adopted, may allow for a more financially neutral approach to reimbursement. However, minor adjustments to this general principle may be necessary to prevent inequities in practices with minimally active providers receiving financial incentive for finding “less intensive” patients versus practices in geographically or socially disparate areas being paid less for providing appropriate care. Nevertheless, it is a model that may become popular as APMs become more variable in their approach under the loose definitions we have established in this article.

Alternative Payment Model-Certifying Organizations

The only APMs that have variable requirements for third-party certification by certain payers to receive incentives and certain reimbursements—the PCMH and ACO—have become major APMs for PCPs and multispecialty groups. These independent certifying organizations are central to CMS and third-party payers’ plans of having practices conform to the quality standards set by both CMS regulations and legislative mandates. A handful of national organizations have the authority to specifically evaluate meaningful compliance with the spirit of the PCMH (Table 2).(8)

Further details about the process of applying for PCMH and ACO accreditation can be found at the websites provided in Table 2 and are beyond the scope of this article. Depending on payer agreements, providers may or may not be required to be certified to qualify for incentives or be considered APM compliant. We suggest that the reader review any payer agreements that have been previously or are currently being made to determine whether certification is mandatory for their specific organization or practice.

Regardless of ongoing and changing reporting requirements, attempts to anticipate necessary and likely changes in reporting and compliance standards for appropriate reimbursements will remain paramount. As the risk of losing favorable APM status under the changes brought about by MACRA set to begin in 2019 (based on measures from 2017) becomes a substantial risk for practices not fully compliant, erring on the side of caution may be necessary to hedge against any risk of unintentional noncompliance with CMS regulatory standards. As further details of the specifics of a combined overarching CMS “quality program” become apparent up through 2017, providers are urged to expand their knowledge regarding the currently available models and regulations through continued exploration of specialty-specific updates and publications such as this.

References

  1. Medicare & CHIP Reauthorization Act (MACRA), Pub. L. No. 114-10, 129 Stat. 87 (codified at 42 U.S.C. 1305 (2015))

  2. Berwick DM. Launching accountable care organizations—the proposed rule for the Medicare Shared Savings Program. N Engl J Med. 2011;364(16):e32.

  3. Joint principles of the patient-centered medical home. AAFP.org . March 2007; www.aafp.org/dam/AAFP/documents/practice_management/pcmh/initiatives/PCMHJoint.pdf . Accessed March 2, 2016.

  4. Finding the best MACRA rout to provider reimbursement. ModernMedicine.com . http://medicaleconomics.modernmedicine.com/medical-economics/news/finding-best-macra-rout-provider-reimbursement?page=0,0 . Accessed March 2, 2016.

  5. A guide to physician-focused alternative payment models. CHQPR.org . www.chqpr.org/downloads/Physician-FocusedAlternativePaymentModels.pdf . Accessed March 2, 2016.

  6. Creating a physician-led healthcare future: designing alternative payment models for better care, lower cost, and financially viable physician practices. CHQPR.org . www.chqpr.org/downloads/Miller-Marks_AACE_01-09-16.pdf . Accessed March 2, 2016.

  7. Direct primary care. AAFP.org . www.aafp.org/practice-management/payment/dpc.html . Accessed March 2, 2016.

  8. PCMH incentive, recognition, and accreditation programs. AAFP.org . www.aafp.org/practice-management/transformation/pcmh/recognition.html . Accessed March 2, 2016.

Richard Self, MD, MBA

Family Medicine Resident, Augusta University, Augusta, Georgia.


Janis Coffin, DO, FAAFP, FACMPE

Janis Coffin, DO, FAAFP, FACMPE, Chief Transformation Officer, Augusta University, Augusta, Georgia; email: jcoffin@augusta.edu.



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