Healthcare organizations will be increasingly entering alternative payment model programs, as payers try to put more appropriate risk onto providers to better manage care for assigned populations.

The use of these alternative payment models (APMs) represent the best alternative for the nation to put the brakes on rising healthcare costs, says Francois de Brantes, vice president and director of the Center for Payment Innovation at the Altarum Institute. The center seeks to design and implement alternative payment and health plan benefits incentives programs to improve the affordability and quality of healthcare.

To flourish with these emerging contractual models, providers will need better information capabilities; improved ways to get data to front-line clinicians; and better methods for communicating with non-traditional care and service providers in their communities, he noted.

Providers generally have little experience dealing with these new models, and they represent only a small percentage of the current total revenue stream, said de Brantes. Additionally, most contracts only offer providers upside risk—for example, giving providers additional payments if they achieve certain objectives set out in the APM. In the future, providers will be offered more contracts that also have downside risks—with penalties for not achieving certain goals—or even full-risk agreements.

Francois de Brantes

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States such as New York are taking a leading role in finding innovative approaches for using APMs in treating Medicaid populations, de Brantes said during a session Wednesday at ANI, the annual conference of the Healthcare Financial Management Association in Orlando, Fla. New York is spending $50 billion annually on Medicaid, and it’s trying to find ways to ensure it is getting value for what it spends on healthcare.

“From the context from the purchaser and payer perspective, what’s increasingly driving them nuts is there’s so much waste in the production of healthcare,” de Brantes told ANI attendees. "New York State, our analysis is there’s at least 30 percent waste,” resulting from the fact that Medicaid patients’ conditions are not well managed outside of care episodes. “Super utilizers”— those covered by Medicaid who have chronic conditions or who frequent users of care—show up at emergency departments for regular care, “and we could get a 5 percent reduction in total Medicaid costs simply by doing a better job of ambulatory care management,” he added.

APMs place more pressure on healthcare organizations to reduce waste and improve care processes to provide better patient management and eliminate medical mistakes, de Brantes says.

State Medicaid programs are more likely to turn to APMs to offset risk to providers, as these programs face an uncertain funding future at the federal level, and as they deal with rising responsibilities for mental health and behavioral health responsibilities, as well as facing rising costs from the opioid crisis.

A key for providers to succeed with these new models is to get necessary data to front-line providers so they can act on it. “When you give data to physicians, they’re scientists, and they will act on that data” to improve care and reduce waste, de Brantes says. “Doctors are asking, ‘How do I get information that I can use tomorrow morning?’ In one listening session we had with some docs, they said the No. 1 thing we need is a chase list so we know who our super utilizers are. My response was, ‘How is it that you don’t know that?’ In no other industry would manufacturers not know where their biggest areas of defects are.”

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