For years, the standard method of payment to physicians has been “fee-for-service” (FFS). This method was introduced in the 1930s and refers to paying physicians based on the number of services they provide to patients. Under this model, physicians who provide more services, such as procedures and office visits, would earn more money than physicians who coordinate cost-efficient treatment plans. The FFS payment model has faced criticism for incentivizing physicians to prioritize volume over value.  

In recent years, the Center for Medicare and Medicaid Services (CMS) has implemented several Alternative Payment Models (APMs) to steer practices away from FFS payments. The models established by CMS incentivize physicians to prioritize quality of the care rendered and focus on long-term health outcomes, especially in a primary care setting.   

Alternative Payment Models 

Accountable Care Organizations (ACOs):  

ACOs are groups of physicians who aim to create a streamlined approach to care and share responsibility for patient care. These organizations are especially useful for patients with chronic health conditions, as providers from various specialties can efficiently coordinate treatment plans. Examples of notable ACOs include Privia Quality Network, Aledade, Caravan Health.  

Medicare Shared Savings Program:  

The Medicare Shared Savings Program is a type of ACO that allows providers to share the savings they accomplish through providing coordinated, quality care. This model incentivizes provider groups to reduce unnecessary health procedures and ensure cost-efficient treatment plans. Since this model may be difficult for providers with limited sources, Medicare created the ACO investment model (AIM) to provide financial resources to ACOs in rural areas.  

Bundled Payments for Care Improvement (BPCI): 

With BPCI’s providers are paid a lump sum based on the condition or episode of care treated. Certain providers, known as episode initiators, can begin an episode of care that will be paid for using bundled payments. Entities that can initiate an episode include acute care hospitals, skilled nursing facilities, group practices, home health agencies, inpatient rehabilitation centers, and long-term care hospitals.  

Merit Based Incentive Payment System (MIPS): 

Practices can choose to take part in MIPS as a way of incentivizing quality care. This system involves tracking and reporting annual data regarding a practice’s quality, improvement activities, interoperability, and cost. Aggregated data is then used to calculate a MIPS score, which informs a payment adjustment for the participating practice.  

Medicare Advantage Value-Based Insurance Design: 

This model takes into consideration the social determinants of health that impact Medicare Advantage beneficiaries. Access to healthy food, transportation, and prescription drugs are significant factors that impact patients’ day to day life. This model aims to address barriers to care for beneficiaries by providing transportation, meals, air conditioning, and housing assistance.  

Comprehensive Primary Care: 

Comprehensive Primary Care was a four-year initiative meant to improve primary care functions throughout communities. The initiative was founded with 5 main functions in mind: 

• Risk Stratified Care Management: Participating primary practices risk stratify their patient populations to ensure high-needs patients receive the proper medical care. 

• Access and Continuity: Participating practices utilize medical records to create continuity of care based on patients’ previous medical conditions, emergencies, and medications.  

• Planned Care for Chronic Conditions and Preventive Care: Practices will utilize a team-based approach to patient conditions to integrate all necessary aspects of medical care, especially for high-risk or chronic care patients.  

• Patient and Caregiver Engagement: Practices have open communication with all decision-makers, including caregivers, and implement culturally competent care. 

• Coordination of Care Across the Medical Neighborhood: Primary care providers work with other healthcare providers to coordinate patient care and create an efficient communication system. 

The initiative was launched in October 2012 and by October 2016, there were 442 practice sites distributed across 7 regions. Throughout its early implementation, practices participating in CPC reported improvements in care delivery for high-risk patients, access, and care coordination transitions.  

Comprehensive Primary Care Plus (CPC+): is an extended version of the original initiative and includes various payment elements including: 

• Care Management Fee: These fees are typically paid on a quarterly basis and is risk-adjusted based on the care management services used by a practice’s population.  

• Performance-Based Incentive Payment: This method pays practices based on patient experience measures, clinical quality measures, and utilization measures.  

• Payment under the Medicare Physician Fee Schedule: This refers to a typical FFS Medicare payment to practices.  

APMs are especially useful for patients with chronic conditions or pregnant patients who need a consistent continuum of care. As CMS continues to release APM programs, providers and practices will likely continue to transition to quality-based payment models. The goal is to create a system that rewards efficient and quality care practices, ultimately decreasing expenditures on unnecessary procedures and visits. Healthcare providers and practices should consider their payment options and focus on overall savings and efficiency when making financial plans. CMS aims to use APMs for most payments by 2030.   

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