Why Alternative Payment Models are a Key Component of Healthcare Transformation

Alternative Payment Models (APMs) incentivize clinicians who provide high-quality and cost-effective care. Integrating APMs into your community health clinic can transform how you deliver healthcare to patients and make a real difference in their lives. It will also help your clinic shift its focus from volume-based to value-based care.

Alternative Payments Explained

An APM is a new way for health centers, clinics, and other practices to get paid for providing patient services. Traditionally, under the fee-for-service model, Medicare and Medicaid reimbursed practices for the services they provided based on a set fee specified by the Physician Fee Schedule (PFS). Now, with APMs, practices are compensated for their services based on a variety of factors, including performance, population-based payments, and flat visit rates, rather than through the PFS. There are several APM models available through Medicare and Medicaid. Clinicians can apply for APM eligibility through Medicare and Medicaid three times each year.

By offering Advanced Alternative Payment Models, practices can receive APM Incentive Payments. These payments are designed to financially reward and incentivize practices for providing high-quality, value-based care through utilizing APMs. The Centers for Medicare and Medicaid Services (CMS) disburses these payments to clinicians, which occur three times each year. The first available incentive payment occurs two years after the initial APM qualifying period. For example, if a practice starts offering an APM in 2023, it will receive the APM Incentive Payment for that period in 2025.

How Can an APMs Transform Healthcare?

APM Incentive Payments reward healthcare centers for the quality of care they provide to patients. This approach differs from conventional fee-for-service models that reward practices for the number of services or procedures provided. The transition from volume-based care to value-based care prioritizes quality over quantity, allowing practices and clinicians to earn additional income by delivering high-quality care to their patients.

Value-based care is gaining momentum in the United States. Experts say many problems in the current healthcare system are due to the fee-for-service model, where clinicians receive more money if they provide more services — even if those services aren’t of high quality. Value-based care focuses on delivering quality care while keeping service fees low for patients.

How to Maximize APM Success in Your Clinic

Here are some tips to ensure APM success in your practice:

Ensure eligibility for an APM Incentive Payment

While many states are engaging in their own programs to move toward APMs, to become a Qualifying Participant (QP) via the CMS APM program, you must meet certain guidelines related to your Medicare patients and Medicare Part B payments. See this webpage for the specifics. Eligibility for specific reimbursement percentages depends on the type of APM you integrate into your clinic, and the state where you are located, so check the latest information on the CMS website.

Invest in the right technologies for reporting your APM

You need reliable IT systems that collect information about APM performance in your clinic. These systems include patient management platforms that gather data about the patients receiving your services. By learning about the quality of care you provide, you can improve patient outcomes and maximize the value of your APM Incentive Payments.

Use data analytics

Data analytics tools will help you determine whether your APM provides value for your clinic. Use these tools to track key performance indicators (KPIs), such as service costs and patient satisfaction scores. The right software will provide valuable insights into APM performance and identify ways to maximize your APM Incentive Payments.

Final Thoughts

APMs reward clinicians for providing high-quality care to patients. Alternative Payment Models are causing a transformation in healthcare by keeping costs low for patients and shifting the focus from the fee-for-service model, which experts agree has resulted in long-standing problems in the industry. By moving toward APMs, clinicians and practices nationwide can benefit from implementing value-based care, and patients can benefit from improved health outcomes — a win-win for everyone involved.

Want to learn more about APMs? Check out our APM-readiness podcast and our APMs and Healthcare Finance podcast.