On October 22, the Healthcare Payment Learning and Action Network (LAN) published the results of its 2017 survey on payer adoption of alternative payment models (APMs). The outcome of the survey showed 34% of provider payments are now made through APMs—and 90% of payers expect APM adoption to accelerate.
Survey respondents included payers providing health insurance coverage for nearly 226.3-million Americans, or 77% of the covered U.S. population. The 2015 and 2016 surveys had similar levels of participation.
For the survey, participating payers were asked to categorize provider payments according to the LAN’s APM Framework:
In 2017, more than one-third of all payments to healthcare providers— approximately $383.5 billion—were made through an APM (combined Categories 3 and 4). This represents a 17% increase over 2016. Payments made through Category 1 (fee-for-service payments with no link to quality or value) have decreased 34% since 2015.
The survey results include a detailed breakdown by lines of business: Commercial, Medicaid, Medicare Advantage (MA), and Medicare Fee-for-Service. Just under half of MA payments were made through an APM, but only one-quarter of Medicaid payments utilized any APM structure.
For the first time, the LAN survey included semi-qualitative informational questions regarding payers’ perspectives on APM adoption, including where they believe the healthcare system is headed, how APM adoption will impact the healthcare marketplace, and what they see as the top facilitators and barriers to APM adoption.
With regard to the future of APM adoption, 90% of payers expect that APM activity will increase. The remaining 10% expect APM activity will remain the same; no payers responded that APM activity will decrease.
Where is the greatest growth?
Payers anticipate the greatest growth will be in episodic payments and non-condition-specific population-based payments. Payers are in near-universal agreement that APMs will improve quality and care coordination and make healthcare more affordable.
Most payers (58%) expect APM adoption to drive greater consolidation among healthcare providers. However, payers do not anticipate higher unit prices due to such consolidation.
What are the top catalysts for APM adoption?
Payers identified “health plan readiness” and “purchaser interest and readiness” as the top facilitators for APM adoption. Other facilitators making the list included “provider interest” and “readiness and government influence.” In terms of impediments, payers identified providers’ unwillingness to accept risk and inability to operationalize.
What can we learn?
For providers, the lessons from the 2017 LAN survey are clear: payers will push harder for providers to participate in APMs. While payers acknowledge the challenges providers face, they view them as obstacles to overcome rather than barriers to progress.
While the degree of APM adoption varies by lines of business and region of the country, the overall trend is undeniable: the dominance of traditional fee-for-service reimbursement is fading fast, and providers must develop APM competencies—including risk management—in short order.
If you have questions about APMs and reimbursement or would like assistance in any matter involving compliance, valuation, or strategy and integration, contact one of our PYA executives below at (800) 270-9629.
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