Saturday, January 23, 2016

Will Federal Policies Accelerate or Impede Progress in Payment Reform?

Despite widespread agreement on the need for major improvements in healthcare payment systems, progress in implementing truly meaningful payment reforms has been frustratingly slow.  Last spring, as part of the Medicare and CHIP Reauthorization Act (MACRA), Congress created significant new incentives and processes designed to dramatically accelerate progress in payment reform, with a focus on creating better ways to pay physicians.

The success of MACRA will depend heavily on how the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) implement the provisions of the law relating to Alternative Payment Models (APMs) and Physician-Focused Payment Models.  The decisions they make and the processes they establish could either encourage rapid development and implementation of innovative and successful payment models, or deter innovation and impede the progress in payment reform that Congress wanted to support.

A new report from the Center for Healthcare Quality and Payment Reform, Implementing Alternative Payment Models Under MACRA: How the Federal Government Can Accelerate Successful Health Care Payment Reform, explains the provisions of MACRA relating to APMs and describes the actions HHS and CMS should take in three key areas:

  • The regulations defining Alternative Payment Models and alternative payment entities;
  • The processes for soliciting, reviewing, and approving Physician-Focused Payment Models; and
  • The systems and resources to implement Physician-Focused Alternative Payment Models

A copy of the report can be downloaded at:

The important issues discussed in the report include:

  • The level of financial risk that physicians should be required to accept under Alternative Payment Models;
  • The steps the new Congressionally-created Physician-Focused Payment Model Technical Advisory Committee and HHS should take to encourage the development of innovative APMs for physicians;
  • The dramatic changes that CMS will need to make in its approach to implementing payment reforms in order for every physician to have the ability to participate in one or more desirable APMs by the Congressionally-mandated deadline of 2019.

Implementing Alternative Payment Models Under MACRA explains why the Alternative Payment Models that are being designed and implemented by CMS and the Center for Medicare and Medicaid Innovation (CMMI) not only fail to solve the problems with current payment systems but can actually make it harder for physicians who want to improve care and reduce spending.  The report details the serious problems with the approaches CMS and CMMI are using in most of their payment models, and it explains the types of payment changes that should be used instead, including seven different types of Physician-Focused Alternative Payment Models that could improve patient care and reduce spending for Medicare while preserving the financial viability of high-quality physician practices and other healthcare providers.  The report also describes how the development of new patient condition groups, care episode groups, and patient relationship groups required by MACRA can facilitate the development of better Alternative Payment Models.

Additional information on how to develop successful Alternative Payment Models can be obtained in these earlier reports from the Center for Healthcare Quality and Payment Reform, all of which can be downloaded free of charge at

  • A Guide to Physician-Focused Alternative Payment Models (produced in collaboration with the American Medical Association), which describes seven different types of Alternative Payment Models in detail, with examples of their application in a wide range of medical specialties;
  • The Building Blocks of Successful Payment Reform, which describes the four essential components of any successful APM and explains the different ways in which they can be designed to match the structure and capabilities of different physician practices and other providers;
  • Making the Business Case for Payment and Delivery Reform, which provides a step-by-step process for designing a payment model and setting the payment amounts and accountability targets in ways that can improve care for patients and reduce spending for payers in ways that are financially feasible for providers; and
  • Measuring and Assigning Accountability for Healthcare Spending, which describes the problems with most current “value-based purchasing” and shared savings programs and explains how to design payment models that only hold physicians and other providers accountable for the aspects of costs that they can control or influence.

 Comments (0)

©2008-2011 Center for Healthcare Quality and Payment Reform. All rights reserved.
320 Ft. Duquesne Blvd., Suite 20-J - Pittsburgh, PA 15222 - (412) 803-3650 -