FAQs: Alternative Payment Models 101

Medicare, Medicaid and commercial payers are increasingly moving toward alternative payment models (APMs), shifting from fee-for-service payment to payment more closely related to outcomes of care. APMs give added incentive payments to participants providing high-quality and cost-efficient care as determined by quality and cost measures. APMs can apply to a specific clinical condition, a care episode or a population. Achieving high quality, patient-centered care, while also controlling costs, is key for success in these models. Cardiovascular professionals must also ensure collaboration among all stakeholders impacted by the APM, including primary care, hospitalists, post-acute care and payers.

The following Frequently Asked Questions are intended to provide a broad overview of APMs:

  1. What is an Alternative Payment Model (APM)?
    • APMs are payment arrangements that incentivize lower cost and higher quality patient care. Depending on the payer, APMs may be mandatory or voluntary.
    • They usually involve some type of bundled, global or capitated payments with quality adjustment or incentives.
    • Regardless of APM type and payment arrangement, physician payment can be structured in any number of ways including fee-for-service.
  2. What are the most popular types of APMs?
    • Accountable Care Organizations where clinicians coordinate the care of a large population of patients. These utilize global or capitated payments to health care organizations.
    • Bundled payments for procedures including Coronary Artery Bypass Grafts (CABGs) and Percutaneous Coronary Interventions (PCIs) and medical conditions such as heart failure.* *Most popular cardiovascular models
    • Patient Centered Medical Homes in which patients are engaged in a direct relationship with a chosen provider who coordinates team-based care, primarily driven by primary care clinicians.
  3. Who participates in these APM arrangements?
    • APM arrangements can include clinicians and health systems, as well as payers and/or employers. In some cases, arrangements are made to include select post-acute providers.
  4. Which payers are currently using or planning to implement cardiovascular APMs?
    • Medicare, Medicaid, various Medicare Advantage plans and third-party private payers including CIGNA, United HealthCare, Anthem BCBS and Humana.
  5. What role do patients play in APMs?
    • As beneficiaries of care, patient engagement with APMs is crucial, however incentives are not provided to patients if there are savings within the APM. Some APMs may allow spending on beneficiary engagement activities.
    • Medicare and Medicaid APMs require patients be notified of their care being provided through an APM.
  6. How does a cardiovascular APM arrangement begin?
    • Typically, a payer approaches your health system or cardiovascular practice to begin the discussion to implement a new payment model. Cardiovascular practices have also introduced the opportunity to collaborate with their local payers.
    • For public payers (e.g., Medicare), the medical group may decide to participate through completing the application process for Center for Medicare and Medicaid Innovation (CMMI) models.
    • Health system management may decide to explore APM participation as a cost management strategy.
  7. What is the Center for Medicare and Medicaid Innovation (CMMI)?
    • CMMI tests APMs in Medicare and Medicaid whose goals are to improve care, lower costs and better align payment systems to support patient centered care.
    • Examples of APMs currently being tested include Bundled Payments for Care Improvement Advanced, Next Generation ACO and Comprehensive Care for Joint Replacement.
  8. What cardiovascular conditions and procedures are commonly covered in APMs?
    • Non-acute and Acute PCI, Congestive Heart Failure, CABG, Coronary Artery Disease (CAD), AMI, Atrial Fibrillation
  9. What are the benefits of participating in APMs?
    • The opportunity to share savings with the payer while providing high quality care. Savings are typically calculated as the difference between the current costs and a previous benchmark.
    • Patient steerage to your clinical practice within the bounds of applicable rules and laws.
    • The opportunity to be paid for services or providers that have high value but are not currently reimbursed (e.g., telehealth, non-typical patient interactions, nurse case managers). 
    • Ability to negotiate the reduction of payer administrative requirements, such as prior authorization.
  10. What are the risks of participating in an APM?
    • Most APMs do not guarantee financial outcomes for providers. Some APMs place the providers at financial risk for cost overages. If the costs exceed a certain percentage, the provider will be required to pay back the overage.
    • Most providers are not accustomed to taking on financial risk. This will require education and possibly revamping the way care is delivered to minimize the amount of financial risk undertaken.
  11. How do I determine readiness to participate in an APM?
    • ACC developed the Alternative Payment Model Framework to help gauge practice readiness for initiating APM participation. The Framework is intended to facilitate conversations between members of the cardiovascular care team and other health care stakeholders to explore readiness and next steps for successful APM participation.

CMS References