Patient-Centered Alternative Payment Models Needed for Success

The solution to alternative payment model (APM) success is implementing patient-centered models developed by front-line physicians, according to Jack Resneck, Jr., MD, president-elect of the American Medical Association.

Payment systems often prevent patients from receiving the high-quality care they need.

“In many cases, when physicians invest in implementing new systems to help patients stay healthy and avoid visits, procedures or hospitalizations, they have two financial repercussions,” Resneck wrote in a recent AMA article.

“Not only are the innovative interventions unreimbursed, but for most interventions, the physician practice takes a second hit from the loss of revenue for avoided services. While rent, labor, equipment and other practice expenses typically don’t go down when innovating, inflexible payment systems compound the disincentive by penalizing revenue.”

Many APMs that are implemented by payers fail to recognize the payment barriers that affect patient health outcomes and hurt physicians financially. Certain outpatient and at-home care are not supported under current payment systems, even though this care could prevent the need for further inpatient care that costs more.

Most Medicare APMs use shared-savings bonuses or shared-loss penalties to decide payment adjustments, but these are based on spending targets, not quality of care, which is what they need to focus on to improve health outcomes.

Medicare APMs miss the mark when it comes to supporting physician innovations that will improve care quality for patients. They also fail to generate the expected cost savings, with some leading to higher spending. From the physician perspective, APMs generate high financial risk without the benefit of removing care barriers.

According to Resneck, a successful APM is patient-centered, yields high-quality care at a low cost, and should have the following three components.

First, physicians need APMs that allow for the flexibility to provide patients with all the services they need. This would require getting rid of payment gaps and prior authorization requirements that hinder patient care and lead to high spending.

Second, the APMs must require payments to the physicians that support the cost of the care being delivered. Episode or condition-based payment models can lead to healthier patients and fewer expensive treatments and procedures in the long run. But the payment for these services must be increased in order for physicians to maintain positive revenue and provide necessary care to sick patients.

These increased payments must be able to cover personnel and workflow necessities and be risk adjusted to cover care delivery for sicker patients and patients who face barriers to care and social determinants of health.

Lastly, a successful APM will hold physicians accountable for the spending and care quality that is in their control, but not for the things they cannot control, such as rising drug costs and flaws in patient attribution methodologies.

“Physicians are intrinsically motivated to achieve quality improvement, and desire information systems that put valid, actionable information about their performance in front of them at the point of care,” Resneck wrote. “They particularly respond to transparent measures that address areas of substantial harm or waste and were developed by peers, rather than black-box metrics delivered months or years after care has been provided.”

Value-based payment models designed by physicians—the individuals who experience firsthand the effects of APMs—are the key to achieving overall APM success, according to Resneck.

While these front-line workers have developed patient-centered models, government and commercial insurance companies have not implemented them in their plans. The Physician-Focused Payment Model Technical Advisory Committee (PTAC) was formed in 2015 to prioritize the construction of APMs designed by front-line physicians.

Resneck used telehealth as an example to show how quickly health systems can adopt new methods when barriers are removed. Physicians had no choice but to expand telehealth use once the coronavirus pandemic hit. In a time of emergency, barriers to telehealth in APMs were dropped in order to provide patients with essential services.

Moving away from a one-size-fits-all APM model and focusing on condition-based models that include a variety of inpatient and outpatient treatments and procedures will reduce barriers and improve costs and patient health outcomes.