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25% of Healthcare Spending Made Through APMs

News  |  By HealthLeaders Media News  
   October 27, 2016

Medicare Advantage health plans are leading the charge in adoption of alternative payment models in the healthcare industry, a report prepared for HHS says.

One of the most ambitious attempts so far to gauge adoption of alternative payment models in the healthcare industry shows significant uptake among commercial payers, Medicare Advantage health plans and Medicaid programs.

A MITRE report released this week indicates that 25% of healthcare spending this year at commercial payers, Medicare Advantage health plans and Medicaid programs will be made through APMs.

MITRE, a not-for-profit organization that operates federally funded research and development centers prepared the report as part of a Department of Health & Human Services contract.

The report shows a modest increase in APM adoption from 2015 to this year. Last year, 23% of healthcare spending was made through APMs at commercial payers, Medicare Advantage health plans and Medicaid programs.


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This year, Medicare Advantage health plans have the highest rate of APM adoption, with 41% of healthcare spending made through APMs.

APM adoption at commercial payers and Medicaid programs this year as reflected in healthcare spending is pegged at about half the rate observed at Medicare Advantage health plans: 22% at commercial payers and 18% at Medicaid programs, the report says.

MITRE collected data from 70 health plans and two Medicaid fee-for-service states. Health plans including Medicaid programs were determined as "the optimal source of data for tracking the implementation of APMs,"

"Health plans pay providers for delivering healthcare services to patients, and the contracts between plans and providers establish whether plans pay providers through traditional FFS or alternative payment models," the report says.

It focuses on two value-based categories of APMs:

  • Shared-savings APM models that are based on a "FFS architecture while providing mechanisms for effective management" of healthcare-service delivery such as bundled payments.
  • APM models with per-member-per-month payments that healthcare providers receive "to manage all of a patient's care and/or conditions."

Last year, HHS set a goal of linking 30% of traditional Medicare FFS payments to value-based APMs by this year, with the bar raised to 50% of Medicare FFS payments in 2018. In March, HHS announced that the 30% goal had been reached.

"These goals are expected to accelerate the adoption and dissemination of meaningful financial incentives to reward providers delivering higher quality and higher value care," the MITRE report says.


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