Experience. Integrity. Advocacy.
Experience. Integrity. Advocacy.

Ready or Not, Alternative Payment Models Are Here


In early March, the Obama administration announced it had reached its goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements. That milestone for the Centers for Medicare and Medicaid Services (CMS) was eleven months ahead of schedule and a month before the April 1 launch of the Medicare Comprehensive Care for Joint Replacement Model, a bundled payment arrangement for joint surgeries.

Despite the fact that only 11 percent of physicians in the 2015 Physicians Practice Fee Schedule Survey thought a shift in payment methodology would be good for their practice, alternative payment models are here.

A little more than 50 percent of respondents said they expected none of their 2016 income to be generated through non fee-for-service contracts. While on the other end of the spectrum, only about 10 percent said they expected more than 50 percent of their income to be non fee-for-service. Interestingly, nearly 70 percent of respondents to the 2015 survey also thought the CMS goal of 30 percent value-based payments by the end of 2016 was unattainable.

Another recent study done by the Healthcare Information and Management Systems Society (HIMSS) showed as few as 3 percent of respondents believe “their organization is highly prepared to make the transition to pay for value from the current reimbursement approach of fee-for-service.” Pam Jodock, HIMSS senior director of health business solutions, told Health Data Management Magazine she thinks providers are jumping into alternative payment arrangements hoping they can figure it out as they go.

What’s true for Medicare isn’t quite yet true for the industry as a whole, however. Another study released in March in Health Affairs shows that nearly 95 percent of all provider visits used fee-for-service payment methods as late as 2013. And that was an increase of more than a percentage point since 2010. Even in the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA), the goals of tying payments to quality does not entirely eliminate fee-for-service billing. By 2018, CMS hopes that 50 percent of payments will be in alternative payments models, and the other half will be fee-for-services payments, 90 percent of which would be tied to quality initiatives such as the Hospital Value Based Purchasing or the Hospital Readmissions Reduction Programs.

For more information about various types of alternative payment models, review the Kaiser Family Foundation’s Payment and Delivery System Reform in Medicare: A Primer on Medical Homes, Accountable Care Organizations, and Bundled Payments. You also may be interested in the April 1 CMS blog post about the launch of the Medicare Comprehensive Care for Joint Replacement Model.

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Charity Singleton Craig

Charity Singleton Craig is a freelance writer and editor who provides communications and marketing services for CIPROMS. She is responsible for creating, editing, and managing all content, design, and interaction on the company website and social media channels in order to promote CIPROMS as a thought leader in healthcare billing and management.

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