In 2010, Congress created the Center for Medicare and Medicaid Innovation (CMMI) and provided it with significant funding and regulatory flexibility to develop and test Alternative Payment Models (APMs). In MACRA, Congress created incentives for physicians to participate in Medicare APMs and specifically encouraged the creation of more physician-focused APMs.
Unfortunately, a decade after creation of CMMI and five years after passage of MACRA:
The failure to implement successful APMs means that each year, millions of Medicare beneficiaries are being denied the opportunity to receive higher-quality care and the Medicare program is spending billions of dollars more than is necessary.
The Problems With the CMS Approach to Creating APMs
There are four basic reasons why there are so few successful Alternative Payment Models in Medicare:
How to Create More Successful APMs in Medicare
Clearly, a different approach to creating APMs in Medicare is urgently needed. There are three things that CMS can and should do to accelerate the implementation of more APMs that will achieve much greater savings for the Medicare program and improve the quality of care for many more Medicare beneficiaries:
#1 Design and Implement Patient-Centered Alternative Payment Models. Rather than continuing to add more “incentives” and “risk” on top of current fee-for-service payment systems, CMS needs to take a patient-centered approach to designing APMs. A four-step process should be used for designing a Patient-Centered Alternative Payment Model:
Step 1: Identify one or more specific opportunities for reducing spending and/or improving the quality of care for Medicare beneficiaries;
Step 2: Identify the changes in care delivery that will reduce spending or improve quality in those opportunity areas;
Step 3: Identify the barriers in the current payment system that prevent or impede implementing the improved approach to care delivery;
Step 4: Design the Alternative Payment Model so that it removes the barriers in the current payment system and assures the delivery of higher-value care.
A Patient-Centered Alternative Payment Model developed through this process should have four key components:
Component #1 removes the barriers in the current payment system that prevent providers from delivering higher-value care.
Component #2 requires accountability from participating providers for reducing aspects of spending that they have the ability to control.
Component #3 requires accountability from participating providers for maintaining or improving aspects of care quality and outcomes they can control.
Component #4 defines the patients who are appropriate for the services supported by the APM and ensures they are willing to participate before services begin.
There is no single Alternative Payment Model that will work for all types of patients and all types of healthcare providers, so multiple APMs will be needed to successfully reduce spending.
#2 Use a “bottom-up” instead of a “top-down” approach to creating APMs. Physicians and other healthcare providers are in the best position to identify specific opportunities to reduce spending and improve quality for patients and to know what changes are needed in current payment systems to support higher-value care. CMS should encourage a greater role for healthcare providers in the development of APMs through the following actions:
#3 Use a more efficient and effective approach for testing APMs. Similar to the approaches used to encourage innovations in other industries, CMS should select multiple APMs for “beta testing” in order to refine the APMs and determine if they are likely to work before inviting large numbers of providers to participate and committing large amounts of money to extensive evaluations. This would enable design and testing of an APM to be completed within a 4-5 year period rather than the 7-9 years required under the current approach, and it would provide a much higher return on the investment of the funding Congress has made available.
Two modifications are needed to this approach in order to support successful primary care payment reform:
More details on the problems with current CMS Alternative Payment Models and the steps needed to create more successful APMs in Medicare more quickly are available in the CHQPR report How to Create More Successful Alternative Payment Models in Medicare.
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