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Since the passing of the Patient Protection and Affordable Care Act (ACA) in 2010, the Center for Medicare and Medicaid Innovation (CMMI) has piloted more than 50 alternative payment models (APMs) designed to improve care across a spectrum of conditions and populations while transitioning away from fee-for-service reimbursement schemes. To date, however, only four of these APMs have been expanded for reducing net spending or improving the quality of patient care. These results ought to catalyze policymakers to seek out innovative approaches to payment reform that can overcome existing challenges.
CMMI’s current approach to developing APMs are challenged by three primary failure modes: (1) insufficient data on population-level health and risks that lead to erroneous assumptions about cost-saving strategies; (2) misaligned or insufficient incentives that discourage providers from making favorable cost-saving clinical decisions; and (3) infrastructural inertia whereby delivery systems cannot alter behaviors or internal dynamics, leading to persistent low-value care.
In both bundled and total cost-of-care models, these failure modes are compounded by static episode lengths that lack flexibility to accommodate the unique care pathways that high-risk, high-need patients invariably experience; providers being reimbursed on metrics that may not be representative of clinical or social outcomes; and best practices remaining siloed among experienced participants. Furthermore, evaluation periods for APMs are quite long — typically three to five years — such that necessary improvements to their financing mechanisms occur in piecemeal fashion.
In this Forefront article, we consider a novel approach to building value-based payment models that emphasizes continuous revision during their implementation. Inspired by quality improvement models that have improved delivery system performance, we propose that iterative model development in payment may allow for a more flexible understanding of population-level risk, financial incentives that in turn promote better care delivery processes, and rapid iteration of delivery system activities to overcome inertia. How this approach might alter our construction of value-based payment is described in the text below and in exhibit 1 at the end of the article, which focuses on how the existing ACO Reach model might be revised under our approach.