Alternative Payment Models

Alternative payment models (APMs) are payment approaches that aim to incentivize the delivery of high-quality and cost-effective care by linking financial incentives to quality measures. APMs differ from fee-for-service (FFS) models, in which payers reimburse providers for specific services rendered. Because FFS models reimburse per service rendered, providing a higher volume of services generally results in higher reimbursement, as opposed to linking reimbursement to measures of quality. APMs cover a range of possibilities from those with very modest incentives to those that include significant financial risk and opportunity. APMs also can offer more flexibility in the organization and type of services, such as care coordination, provided through bundled and global payments that are characteristic of the higher end APM types. A model for reference has been developed by the Health Care Payment Learning & Action Network (HCPLAN). It shows the range of types of APMs from very limited to encompassing. Concerns with APMs include that risk adjustment may not account for patient needs; therefore penalizing providers who care for many complex patients who may need higher intensity care.

The Centers for Medicaid and Medicare Services (CMS) is supporting the development of APMs for children enrolled in Medicaid in seven states through the Integrated Care for Kids (InCK) Model. The InCK Model grant period began in 2020 with a pre-implementation planning period, in which grantees are developing state-specific, sustainable APMs to begin piloting in 2023.

Accountable Care Organization (ACO) Models

The American Hospital Association defines an Accountable Care Organization (ACO) as a “group of clinicians, hospitals and other health care providers who come together voluntarily to give coordinated high-quality care a designated group of patients.” These groups are accountable for the health outcomes of their patients, and when they meet standards for quality and cost, ACO providers share in the health plan’s savings.

Through the Provider-led Arkansas Shared Savings Entity (PASSE) Model, Arkansas Medicaid covers individuals who are on the Developmental Disabilities Waiver, are on the Waiver waitlist and get Medicaid state plan services, live in a private Developmental Disability Intermediate Care Facility, or have a Behavioral health diagnosis and need services in addition to counseling and medication management. There are currently four provider-led and owned PASSE organizations in the state that function like insurance groups, in that providers join the groups to be in network with them. In addition to all services covered under the Medicaid State Plan, PASSE covers home and community-based services such as respite, family support, and adaptive equipment. Each member enrolled in a PASSE is assigned a care coordinator who contacts them at least monthly, and the care coordinator works to combine plans of care from each of the member’s providers into a comprehensive Person-Centered Service Plan.

First launched in 2013, Minnesota Medicaid’s Integrated Health Partnerships (IHPs) are accountable care organizations (ACOs) that aim to improve the health of the population and of individual members while controlling costs. The IHP model has two tracks, one for smaller organizations that does not include risk-bearing, and a second for larger organizations which includes both upside and downside risk. In both tracks, participating systems receive a quarterly population-based payment (PBP) that can be used to augment and enhance care coordination, innovative strategies in care delivery, and the integration of interventions that address health-related social needs. In exchange, IHPs are held accountable to specific programmatic, clinical, and utilization metrics. Participants in the risk bearing track additionally have the opportunity to receive shared savings. Participating providers enter into a risk arrangement with Minnesota Department of Human Services to be financially held accountable for the costs and quality of care their Medicaid patients receive. Over time, providers who show an overall savings across the total cost of their Medicaid patient population may receive a portion of those savings, while those who cost more may have to pay back a portion of the losses.

In Vermont, Title V was highly engaged in the development of the ACO model for CYSHCN. After examining the roles of care coordinators employed by Title V compared to those embedded in Medical Homes, Title V was able to successfully advocate for increased funding for Medical Home-based care coordination through the ACO. Now, rather than providing direct care coordination services, Title V focuses on systems-level work and provides technical assistance and subject matter expertise to Medical Home care coordinators. Prior authorizations are often waived for enrollees attributed to the ACO, which simplifies referral processes, reduces workload, and saves time for families.  

Vermont’s Title V program has invested staff resources in the development of a “Health Systems Team” that works within the systems of care framework to improve the services that support children with special health needs and their families. The team uses data to identify and remove barriers, and develop resources with input from key partners, including the CSHN team, families, Medicaid and community providers. 

Data to Inform Alternative Payment Models

Hawaii’s largest insurer, Hawaii Medical Service Association (HMSA), has transitioned to a value-based per member per month (PMPM) payment system. In adult care, they have seen cost reduction, but in pediatrics, there has not been a change. In order to calculate adjustments for pediatric PMPM rates, the health plan is collecting and analyzing claims data from CYSHCN identified with the children with special health care needs screener.