Provider Readiness for Operating in Alternative Payment Environments

In 2010, the Affordable Care Act (ACA) set the stage for sweeping changes across the healthcare landscape and later long-term services and supports with its “Triple Aim.” The Triple Aim intends to improve the US health care system by enhancing the experience of care, improving the health of populations and reducing the per-capita costs of health care. To achieve these goals, the ACA included several provisions targeting how health care is organized, delivered, and paid for with a focus on testing new models of delivery and focusing on the value of care versus volume.

Across the health care industry, improved outcomes and quality-of-life are key drivers of health care initiatives. As a result, health care payment systems, including Medicaid, are increasingly moving away from fee-for-service (FFS) models and shifting toward paying for value and outcomes which offer the potential for improvements in efficiency, quality, and flexibility in service provision.

In a report published by ANCOR in 2019, the National Association of Medicaid Directors’ defined Alternative Payment Models (APMs) as strategies that change the way Medicaid providers are paid – moving away from FFS payments to methods of payment that incentivize value. The report also identifies Value-Based Payment (VBP) models as those models in which a state Medicaid program holds a provider or a managed care organization accountable for the costs and quality of care that they provide or pay for.