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Report: 29 Percent of Healthcare Payments in 2016 Tied to APMs

November 1, 2017
by Heather Landi
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Nearly one-third (29 percent) of total U.S. health care payments were tied to alternative payment models (APMs), such as as shared savings/risk arrangements, bundled payments, or population-based reimbursements, in 2016, a six percentage point increase from 2015, according to a report from the Health Care Payment Learning and Action Network (LAN).

The share of payments being reimbursed through an alternative payment model is up six percentage points from 2015, when 23 percent of healthcare payments were tied to APMs, according to LAN’s analysis of data sourced from LAN, America’s Health Insurance Plan (AHIP), the Blue Cross Blue Shield Association (BCBSA) and the Centers for Medicare and Medicaid Services (CMS). The data was collected across commercial, Medicaid, Medicare Advantage and fee-for-service (FFS) Medicare market segments The data also was categorized according to the four categories of the original LAN APM Framework—category 1 is traditional FFS or other legacy payments not linked to quality; category 2 is pay-for-performance or care coordination fees; category 3 is APMs build on FFS architecture and include shared savings, shared risk and bundled payments; category 4 is population-based payments.

The survey collected data from over 80 participants, accounting for nearly 245.4 million people, or 84 percent, of the covered U.S. population.

LAN is a public-private partnership launched in March 2015 to drive adoption and alignment of APMs. The results outlined in the new report are in line with the goals of the LAN to tie 30 percent of total U.S. health care payments to APMs by 2016 and 50 percent by 2018, according to a press release about the report.

The report marks the second year of the LAN APM Measurement Effort and this year’s report determined that 43 percent of health care dollars fall into Category 1 (e.g., traditional FFS or other legacy payments not linked to quality); 28 percent of health care dollars fall into Category 2 (e.g., pay-for-performance or care coordination fees)  and 29 percent of health care dollars fall into a composite of Categories 3 and 4 (e.g., shared savings, shared risk, bundled payments, or population-based payments).

“As healthcare expenditures and capabilities have continued to rise, it's vital that we find ways to significantly reduce the cost burden for both consumers and the health care system,” Mark McClellan, co-chair, LAN guiding committee, and director of the Robert J. Margolis Center for Health Policy. “This measurement effort represents the kind of collaboration between the public and private sectors to make real progress on improving care.”

According to LAN, the report findings show some interesting trends. “First, there was a shift away from legacy FFS payments and a marked growth in Category 2, where payments are tied to value. Second, there was a six percentage point increase in alternative payment model payments (Category 3 and 4), bringing total APM spending to approximately $354.5 billion dollars nationally,” LAN stated. According to LAN, the 2015 payment year breaks down as following: 62 percent of health care dollars were categorized as Category 1; 15 percent of payments were Category 2 and 23 percent of payments fell into Category 3 and 4. The 2015 data accounts for nearly 198.9 million lives covered, or 67 percent of the covered U.S. population. An analysis of the results can be accessed on the LAN website here.

“We are encouraged by these results and the great progress being made towards APM adoption,” Trent Haywood, chief medical officer at the Blue Cross and Blue Shield Association, said in a statement. “These findings underscore the importance of the public and private sectors working in concert supporting providers towards APM adoption. We know that providers need information and support from health plans to take on risk. This Measurement Effort helps develop the rationale for continued payment reform, and we as health plans must continue to share information, clinical support and data on spending and quality to determine to encourage further progress.”

The LAN, launched in March 2015 by the U.S. Department of Health and Human Services, convenes the public, private, and non-profit sectors to drive adoption and alignment of APMs. These payment models drive reform in the health care system's payment structure that incentivize improved health outcomes and quality of care over the quantity of services provided. Through the LAN's collaborative structure, more than 7,100 participants are taking action towards APM adoption and implementation.

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