Medicaid Alternative Payment Model Reduces Imaging, Costs

A Medicaid alternative payment model in Oregon reduced utilization of imaging and other traditional primary care services among community health centers by about 42 percent, according to an Oregon Health & Science University (OHSU) study.

Published in Health Affairs last week, the study examined Medicaid claims and enrollment data covering 150,000 Oregonians between January of 2010 and June of 2017. Researchers compared community health centers that participated in a new alternative payment model that reimburses providers with a fixed monthly fee per patient versus those using traditional per-visit reimbursements.

Service volume declined significantly in participating community health centers relative to non-participating community health centers during both years of the post-intervention period, compared to the last pre-intervention quarter, the study found.

The average differential change was -$14.9 during the second post-intervention year versus the last pre-intervention quarter, a decline of 42.4 percent. The decline was driven fully by decreased use of imaging, such as radiographs and ultrasounds, researchers stated.

Meanwhile, other service categories not included in the alternative payment model, such as behavioral health, dental, and obstetrical services, did not change after implementation of the new reimbursement structure.

“That’s a really strong signal,” Stephan Lindner, PhD, lead author and research assistant professor in the OHSU Center for Health Systems Effectiveness, said in a press release.

“The point of the reform is to reduce services that aren’t super valuable so that clinics can free up resources to get people the services they need,” Lindner continued. “It frees up clinics toward services that can engage these patients in a different way, such as telephone consultations and basic health screenings.”

In fact, Lindner and colleagues found in a companion study that community health centers participating in the Medicaid alternative payment model had higher utilization rates for traditionally non-billable care, such as e-visits and telephone consultations.

These value-adding services tend to be underutilized in fee-for-service payment systems, researchers pointed out. The Medicaid alternative payment model, however, gave community health centers the incentive to perform the services, which might actually be preferred by patients and providers.

The Medicaid alternative payment model was implemented in Oregon in 2013 to complement an existing patient-centered medical home (PCMH) program.

Community health centers were early adopters of the PCMH program, researchers explained. However, their payments for patients with Medicaid remained tied to the prospective payment system, which reimbursed Medicaid providers based on number of encounters.

Research has demonstrated that fee-for-service and other similar reimbursement models are a major barrier to transformational change. This may be contributing to mixed results for the PCMH model, which requires extensive care transformations, such as robust care coordination and increased access to care.

To overcome barriers in the fee-for-service payment system, Oregon implemented the Alternative Payment and Advanced Care Model (APCM), which shifted community health centers to a fixed per member per month payment independent of the number of visits for Medicaid patients.

The alternative payment included traditional primary care services provided by community health centers – such as office visits, imaging, procedures, and tests – and excluded behavioral health, dental, and obstetrical services, as well as services rendered by other facilities. The payment also did not account for quality outcomes.

Additionally, the Medicaid alternative payment model did not include downside financial risk. Instead, if participating community health centers increased traditional primary care services above the per member per month amount, they received the prospective payment system payment.

Researchers suggested that the alternative payment structure may be an effective way to eliminate financial disincentives inherent in fee-for-service systems and support changes in physician behavior that align with the PCMH.

Insufficient financial incentives are a top challenge of PCMH implementation, according to a 2018 study in The Journal of the American Board of Family Medicine. But aligning financial incentives may create even more challenges for PCMH participants.

New research published in the American Journal of Managed Care found that PCMH models combined with accountable care organization (ACO) contracts do not save as much as the PCMH or the ACO on its own.

Challenges associated with both models – such as organizational structure, culture change, employee and leadership buy-in, operational changes, and administrative resource mobilization – may be impeding the success of the hybrid alternative payment and care delivery model.

OHSU researchers stated that payment reforms that support PCMH transformation should ensure that quality of care remains unchanged by either incorporating quality metrics in the payment reform or embedding such a reform within a comprehensive effort to improve quality and the patient experience of care.”