An Alternative Payment Model (APM) is one way of delivering value-based care, as the shift from traditional fee-for-service to a value-based payment model continues, programs are continuously looking to serve as a catalyst in offering cost-effective, higher-quality care. APMs incentivize this goal and can apply to an episode, condition, or an entire population.
Medicaid agencies are starting to integrate APMs for patients with high level needs but in order to do that the Centers for Medicare and Medicaid Services (CMS) will have to offer a helping hand in flexibility. According to The Commonwealth Fund, states are zeroing in on three key areas to implement Medicaid APMs: behavioral health providers, safety-net providers, and long-term care providers.
The country’s largest health insurance covers over 70 million low-income and disabled individuals, it is financed by federal and state governments and costs over $570 billion annually–it is Medicaid. Because of its size and reach, it is important for the program to run efficiently and effectively; APMs offer a means to monitor and control spending, improve the care given and increase accountability. States have discretion when it comes to what goes into their Medicaid program and so each is uniquely tailored to the population it serves.
AHCCCS, Arizona’s Medicaid program, has urged CMS to leverage its unique and powerful role to continue building states’ capacity to lead the movement towards a value-based health care system. The agency supports a market-based approach that incentivizes payers and providers to establish new value-based arrangements that align incentives to improve efficiency and member outcomes. Last year, in comments in response to a request for information from CMS’ Center for Medicare and Medicaid Innovation (CMMI), AHCCCS said it recognized that contracted MCOs and providers were well-positioned to create new payment models, rather than having these methods dictated by the state. To support this private-sector innovation, AHCCCS said it has established broad value-based goals for the system and allowed its MCOs to advance APMs to best meet the needs of their own unique populations, provider mix, and geographic regions. Read the agency’s entire response to the CMMI RFI.
Behavioral health providers specifically face difficulties in coordinating patient care and when dealing with mental health and substance abuse disorders (SUD) care can often times become increasingly fragmented. States such as Rhode Island, Maine and Tennessee have adopted payment reform in this area, utilizing APMs to incentivize coordinated care and ensure that the quality of care remains high, while keeping costs low. Check out this Hertel Report article for more insight on the importance of coordinated care in regards to SUD.
According to The Commonwealth Fund, Medicaid programs would also like to implement financial incentives in the reimbursement of safety-net providers and using APMs to encourage skilled nursing facilities to provide more coordinated long-term care. Obstacles arise in areas where staffing and other limitations place a strain on reaching a sweet-spot in value-based care but states are really starting to consider the benefits of implementing APMs.
The Commonwealth Fund also outlines some support systems Medicaid programs need in order to expand the value-based model, such as:
- Flexibility from CMS to work around obstacles in federal rules, such as the requirement that safety-net providers must be reimbursed based on cost only.
- Help from CMS in understanding which federal Medicaid waivers and authorities can be used to pursue payment reforms.
- Federal investment in Medicaid leadership so that directors gain the skills to guide agencies, health plans, providers, and patients through the transition to a new health care business model centered around value-based payment.
View the full Commonwealth Fund report on their site.
Read more about APMs in Medicaid in this extensive Deloitte study.