Report: One in Four Medical Payments Are Linked to Alternative Payment Models

National surveys measure APM implementation in commercial, Medicare Advantage, and Medicaid markets

In March 2010, the passage of the Patient Protection and Affordable Care Act established the Center for Medicare and Medicaid Innovation to assess new models of care. The development of alternative payment models (APMs) is a central component of this reform effort. A new report from the Health Care Payment Learning and Action Network (HCP-LAN) has found that 25% of payments made by health insurers in 2016 were made through APMs that tied reimbursement to cost and quality metrics or coordinated, population-based care.

In 2015, the U.S. Department of Health and Human Services announced a goal of linking 30% of traditional fee-for-service (FFS) Medicare payments to quality or value through APMs by 2016 and 50% by 2018. In March 2016, the HHS reported the achievement of its first goal with an estimated 30% of FFS Medicare payments tied to APMs. To quantify the adoption of APMs across the country, HCP-LAN initiated a national data-collection effort aimed at measuring the implementation of APMs in the commercial, Medicare Advantage, and state Medicaid markets.

In January 2016, an HCP-LAN work group divided APMs into four types: category 1 consisted of FFS with no links to quality and value; category 2 consisted of FFS with links to quality and value; category 3 consisted of APMs built on FFS architecture; and category 4 consisted of population-based payment.

The work group determined that health plans were the optimal source of data for tracking the implementation of APMs. A total of 70 health plans participated, as well as two Medicaid FFS states, representing approximately 19.9 million of the nation’s covered lives, and 67% of the national market (excluding traditional Medicare).

The national APM measurement effort combined data from an NCP-LAN survey as well as from surveys by the Blue Cross Blue Shield Association (BCBSA) and by America’s Health Insurance Plans (AHIP). All three surveys asked health plans to report the total dollars paid to providers through APM categories 1 and 2, and through a composite of categories 3 and 4.

“Look-back” metrics were compiled for 2015, and “point-in-time” metrics were compiled for 2016.

For the 2015 metrics, the combined NCP-LAN, BCBSA, and AHIP data showed the following:

  • 62% of health care dollars in category 1
  • 15% of health care dollars in category 2
  • 23% of health care dollars in a composite of categories 3 and 4

For the 2016 metrics, the NCP-LAN data showed the following results in a composite of categories 3 and 4:

  • 25% of total health care dollars
  • 22% of commercial health care dollars
  • 41% of Medicare Advantage health care dollars
  • 18% of Medicaid health care dollars

 Sources HCP-LAN Report; October 2016.