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Alternative Payment Models

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Tips for redesigning alternative payment model


An article in the American Journal of Accountable Care sets forth some principles for successful redesign of alternative payment models, based on past and current payment reforms. The idea, of course, is to achieve better care and lower spending and make physicians’ lives easier.

Three of the suggestions are:


Focus more resources  on higher-value care.  The fee-for-service system does not address the lack of payment for many high-value services that could address patient needs at lower costs. These would include payers supporting patient education and self-management support for patients with chronic conditions  in order to avoid hospitalizations/rehospitalizations.

Hold physicians accountable only for the cost and quality  matters they can control.

Reduce administrative cost and regulatory burdens.


To read the article, please hit this link.

2 physician group CEOs tout capitation


Two  physician-group CEOs discuss  in FierceHealthcare how to make Alternative Payment Models work well for their organizations.

“We really believe in this, and we think it’s better medicine,” said Pioneer Medical Group CEO John Kirk.

“Mr. Kirk’s organization, an employed-physician multispecialty group comprising 61 providers in Southern California, now gets 82 percent of its revenue from capitation, he said. It calls its approach a ‘coordinated care model.”’

Capitation–or an upfront, per-member, per-month payment for providing services for a set population for a set time period–is the core financial element of that model. “That payment was originally calculated just by age and gender, but now includes risk scores for individual patients, which is vital when it comes to negotiating rates with health plans, ” Fierce said.

Another capitation  route is through an independent practice association (IPA)–such as Sharp Community Medical Group, in San Diego. About 800 independent physicians contract risk through the organization, CEO Paul Durr said.

Fierce summarized:

“The size and geographic reach of the organization gives Sharp Community Medical Group a leg up when contracting with health plans.” But Mr. Durr noted that a key to the IPA’s success was requiring doctors to belong exclusively to that group. “Another key was developing a common electronic medical system — though he noted it wasn’t easy to get specialists on board.”

Additional key elements of successful Alternative Payment Models, according to Messrs. Durr and Kirk, include:

  • The power of data.  The group should handle its own claims and provider credentialing. “Community Medical Group negotiated a 20 percent rate increase in a health plan contract by leveraging data to demonstrate how many patients with complex conditions it was treating who were ‘out of the norm.”’
  • Patient-use management. Pioneer Medical Group has  after-hours clinics, which divert patients to a lower-cost alternative to the emergency department.
  • Provider engagement.  It wasn’t until  Sharp “required exclusivity from its providers, and then worked with them to design incentives, that it redefined its relationship with them.’’
  • Quality incentives. There are  many Alternative Payment Models to measure quality, such as the government’s star ratings, CAPG’s standards of excellent program and the Integrated Healthcare Association’s  (IHA) pay-for-performance program. Pioneer Medical Group has been awarded $3.15 million in bonus payments since 2005 through IHA’s program.

To read the whole article, please hit this link.

CMS widens options for APMs

CMS  offering additional opportunities for physicians and other clinicians to join advanced Alternative Payment Models beginning in 2017 and 2018.

The advanced Alternative Payment Model is the more lucrative of two options under the Medicare Access and CHIP Reauthorization Act, (MACRA) a payment system for Medicare physician fees that replaces the controversial Sustainable Growth Rate formula.

CMS will offer the Oncology Care Model with two-sided risk as a qualifying advanced APM beginning in 2017 and  will reopen applications for the Comprehensive Primary Care Plus model and the Next Generation ACO model for the 2018 performance year.

Patrick Conway, M.D., deputy CMS Administrator,  said:

“With these new opportunities, CMS expects that by the 2018 performance period, 25 percent of clinicians in the Quality Payment Program will earn incentive payments by being a part of these advanced models. Thanks to MACRA and the Innovation Center, we’re striving to see more Medicare patients benefit from better care when they visit their doctor for a knee replacement, receive cancer treatment or have a coordinated care team manage their complex conditions.”

Physicians who participate in Medicare must submit at least some performance data next year to avoid a penalty under MACRA. These data will determine payment adjustments beginning in 2019. Physicians who qualify as an advanced APM will avoid some reporting requirements and be eligible for a 5 percent lump-sum bonus.

To read a Becker’s Hospital Review article on this, please hit this link.

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