Dr. Abhishek Jacob

Posted on January 10, 2023 | 3 min read

Flexibility is Key to Oversight of Alternative Payment Models 


Financial Optimization

Operational Excellence

Value Based Care

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Flexibility is Key to Oversight of Alternative Payment Models Blog

As healthcare reform progresses, the adoption of alternative payment models (APMs) is accelerating. Payers and providers must prepare themselves today to take on a new generation of value-based contracts in the years ahead.

The key industry trends itemized below underscore the need for comprehensive, flexible value-based care technology solutions that will support all alternative payment models now and for future agreements.

Industry Trends

  1. Working to meet national goals – The U.S. Department of Health and Human Services, through its Health Care Payment Learning and Action Network (HCP-LAN), has set national goals to increase the percentage of U.S. health care payments covered under APMs with two-sided risk. By 2025, the Centers for Medicare and Medicaid Services (CMS) is looking for 100% adoption of APMs for traditional Medicare and Medicare Advantage plans, and 50% adoption for Medicaid and commercial plans. The LAN’s annual measurement of progress towards this goal, compiled from a survey representing 80% of the national market, shows that in CY 2021, close to 40% of healthcare payments were still based on fee-for-service with no link to quality and value.
  2. Addressing health equity and social risk factors – The LAN’s Health Equity Advisory Team (HEAT) promotes design components for APMs that support whole-person-centered care in partnership with community organizations and social services. Payment incentives would focus on addressing disparities in the quality of care, patient experience, and health outcomes. To operationalize APMs that address health disparities, data collection has to include quality metrics over and above HEDIS measures using different methodologies and advanced analytics.
  3. Reducing administrative burden and cost of APMs Transitioning away from fee-for-service is administratively challenging and costly. Many providers don’t have the technological capacity or resources to implement APMs, particularly the advanced APMs that require providers to accept some financial risks. One way payers are helping support the transition to value-based care is by offering financial and technical assistance to providers who want to upgrade their electronic health records with modern systems that automate many administrative tasks and facilitate interoperability for APMs.

The importance of flexibility in a solution to support you now and in the future

The decision to invest in a value-based care solution rather than using in-house resources to operationalize APMs is a decision that must consider the cost/benefit equation of time and resources against speed to market. Once a solution is deemed necessary, there are a few core requirements that need to be present to ensure success:

  1. Model Comprehensiveness – the ability to support all APM contract arrangements—the ones you have now and the value-based contracts and APMs you take on in the future—is non-negotiable. To meet this standard, the system must be able to keep up with the latest government regulations, reform targets and compliance requirements, to seamlessly incorporate new mandates, and health equity or risk models.
  2. Scalable Design – an automated, standardized approach to value-based program design with the ability to reuse successful program templates allows you to accelerate speed-to-market. Go from launching a few or tens of contracts each year to hundreds or even thousands of contracts, no matter the line of business or how complex the arrangements are.
  3. Data Assimilation – the data streams, interchange, and analytics requirements for value-based initiatives necessitates a modern IT infrastructure capable of turning on new data feeds for processing and analysis. The latest value-based initiatives typically look for 3-5 years of historical data about claims, enrollment, provider info, quality, benefits, rates, risk data, attribution data, social determinants of health, and more.
  4. AI-driven Analytics – the latest in artificial intelligence to drill down into the data for better modeling accuracy, forecasting, and real-time, actionable insights into financial, quality, and outcome performance is essential given the volume of information. The use of actionable, data-driven insights is a key factor in improving the health of your populations while reducing the cost of care. For example, predict ROI and future costs of financial arrangements, risk adjustment methodology, and member attribution using predictive modeling and Machine Learning.

It’s hard to predict what parameters and complexities will be included in future value-based contracts and APMs as the journey to accountable care continues. What we can be certain of is that federal and state policymakers and government healthcare purchasers are going to continue to pressure stakeholders to adopt more APMs with increasing amounts of financial risk.

Two-sided risk contracts need powerful data gathering and analytics capabilities, robust cost management measures, and secure, reliable interoperability. The Edifecs value-based payment platform supports the entire workflow cycle, relieving the administrative burden of participating in value-based arrangements and instead, enabling the adoption and expansion of value-based programs with faster time to market, scale, and performance optimization. Contact us today to learn more.



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