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Analysis

Alternative Payment Model Adoption Increases

By John Commins  
   October 22, 2018

The Health Care Payment Learning & Action Network study shows that the percentage of healthcare payments tied to APMs have increased at a steady pace from 23% over a two-year span.

One-third of all U.S. healthcare payments in 2017 involved alternative payment models, including shared savings, shared risk, bundled payments, and population-based payments, a new report shows.

The Health Care Payment Learning & Action Network study, which calls itself "the largest and most comprehensive measurement effort of its kind," shows that the percentage of healthcare payments tied to APMs have increased at a steady pace from 23% over a two-year span.

LAN divided healthcare dollars into four buckets, and found that:

  • 41% of healthcare dollars in Category 1 (Fee-for-Service – No Link to Quality & Value)
     
  • 25% of health care dollars in Category 2 (Fee-for-Service – Link to Quality & Value)
     
  • 34% of health care dollars in Categories 3 (APMs Built on Fee-for-Service Architecture) and 4 (Population-Based Payment)

LAN, is a public-private partnership that was created by the Department of Health and Human Services in 2015 with a mission is to accelerate the transition to APMs.

"The report’s findings reinforce our understanding that there is sustained, positive momentum in the effort to shift healthcare payments from traditional fee-for-service into value-based payments," said Mark McClellan, co-chair of the LAN Guiding Committee.

LAN's Measurement Effort this year reported findings at the payment or subcategory level. Most of the spending tied to Category 3 and 4 APMs falls within the Framework's 3A category, which focuses on shared savings.

Only 12.5% of payments were made in Categories, 3B, 4A, 4B and 4C combined, which McClellan said illustrates additional opportunities to increase payments through episode- and population-based payments that have additional risk.

"While we celebrate the increase in overall APM adoption, we also know further progress on payment reform will be important to ensure healthcare dollars flow through models that have more risk," he said.

This year also marks the first time the LAN reported payment data by line of business, rather than across lines of business only. For Categories 3 and 4, 5he report found that:

  • Medicare Advantage had 49.5% of healthcare dollars.
     
  • FFS Medicare had 38.3% of healthcare dollars.
     
  • Commercial plans had 28.3% of healthcare dollars.
     
  • Medicaid had 25% of healthcare dollars.

The APM Measurement Effort includes FFS Medicare data, in addition to data from 61 health plans and 3 FFS Medicaid States, representing a total of 77% of covered lives in the United States.

McClellan announced the results of the LAN’s measurement effort today at the LAN Summit in Tysons, Virginia.

LAN's goal is to tie 50% of U.S. healthcare payments to APMs by the end of 2018.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

APMs accounted for 34% of all healthcare dollars in 2017.

Fee-for-service models accounted for 66% of all healthcare dollars in 2017.

LAN hopes to tie 50% of all U.S. healthcare payments to APMs by the end of 2018.


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