Emerging Trend: Alternative Payment Models and Value-Based Purchasing

We’ve been tracking alternative payment models (APMs) and value-based purchasing (VBP) as an emerging trend for years — but now more than ever, we are seeing an increased interest in these models to help build resiliency and improve care quality in light of the pandemic.

APMs and VBP drive innovation and flexibility

When COVID-19 began, many care services became difficult to deliver. As service volume dropped, many fee-for-service (FFS) models struggled to sustain critical care.

Medicaid managed care is equipped to help states create meaningful APMs. During the public health emergency (PHE), this included developing models like UnitedHealthcare Community & State’s FQHC Transformation Investments Program to help providers continue seeing patients and meet new demands. As we look towards a post-pandemic future, it’s clear that new challenges await health care organizations, including an increased need for behavioral health services and catching members up on preventive care. APMs have the ability to facilitate this care delivery in a way that benefits both patients and providers.

APMs shift towards building resiliency and advancing health equity

Over the last year, expansion of VBP models and APMs has slowed as attention and resources have shifted towards COVID-19 response efforts. There has been some uncertainty on both payer and partner sides regarding how best to measure the impact of COVID-19; however, we've seen the PHE lead to more discussions on the value of capitated arrangements that pay providers a fixed amount per patient per unit of time (often monthly) depending on performance, rather than depending on volume needed in an FFS environment.  We've also seen independent practices join with accountable care organizations (ACOs) to leverage resources and secure new revenue streams through APMs that reward the ACOs for performance. We are likely to see interest in models that build capacity and promote stability continue after the PHE.

The pandemic has also highlighted the impact of health disparities on health outcomes, leading state Medicaid programs, the Centers for Medicare & Medicaid Services (CMS) and the Center for Medicare and Medicaid Innovation (CMMI) to prioritize advancing health equity as part of the shift to value-based care.1 This level of focus on health equity starts in the design phase and requires actionable data and collaboration across providers, payers, and community members and organizations.

As the health care system begins to use data more efficiently and effectively, we’re also seeing more APMs that encourage social screenings, development of community-based partnerships for referrals, and implementation of nonmedical care to address social determinants of health (SDOH). For example, in Arizona, the Health Information Exchange, in collaboration with the Arizona Health Care Cost Containment System, conducted a request for proposal and selected a statewide SDOH closed-loop referral partner in NowPow. This type of state technology adoption could be a key factor in our ability to adopt SDOH and related VBP activities.

Aligning new care models with provider objectives

APMs and VBP models are intended to facilitate changes in clinical practice that produce better outcomes and improve member experiences while reducing the total cost of care. We approach these models with a holistic mindset. That means understanding our provider partners' goals, the needs of the populations they serve, and their capacity and practice capabilities for delivering high-quality care and ensuring accountability. When done correctly, implementing these models includes tailoring them to each provider based on these understandings and having a team in place who can help ensure providers are set up for success.

APMs have to be designed with agreement, trust, and actionable, timely data from both the payer and provider. With this approach, many of our partners in value-based arrangements have built confidence in taking on higher levels of risk and improving health outcomes for all.

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