Provider appetite for value-based care models with downside financial risk is growing, according to the Health Care Payment & Learning Action Network.
Last year, only 40.6% of payments were for fee-for-service care with no link to quality, while more than half of healthcare payments came through value-based reimbursement agreements.1 The majority of those were associated with some financial risk. Meanwhile, 18.1% of all payments had links to quality and value.
Medicare Advantage plans saw a 3.7% increase in downside risk arrangements, and traditional Medicare saw a 6.2% increase, bringing MA to 38.9% of payments in downside risk models and traditional Medicare to 30.2%. LAN aims for all Medicare payments to fall under alternative payment models with downside financial risk by 2030.
Health plans have identified provider willingness to participate in downside risk arrangements as one of the greatest barriers to adoption.2 They also point to provider interest and ability to operationalize these models as additional challenges. For example, providers in risk-based APMs with small patient populations can lose more money if one patient has a significant health expenditure.1
LAN asked health plans and states to report dollars paid in calendar year 2022 or in the most recent 12 months for which data was available. It found:
- MA had 57.2% of healthcare dollars in Categories 3 (APMs built on fee-for-service architecture) and 4 (population-based payment), and 38.9% in two-sided risk APMs (Categories 3B and 4).
- Traditional Medicare had 48.9% of healthcare dollars in Categories 3 and 4, and 30.2% in two-sided risk APMs (Categories 3B and 4).
- Commercial plans had 34.6% of healthcare dollars in Categories 3 and 4, and 16.5% in two-sided risk APMs (Categories 3B and 4).
- Medicaid had 40.2% of healthcare dollars in Categories 3 and 4, and 18.7% in two-sided risk APMs (Categories 3B and 4).
These shifts are expected to bring improvements to plans and their members. LAN found 93% of payers predict APM adoption will result in better quality of care and improved care coordination, while 79% expect it to result in more affordable care. As these models gain popularity, MA plans that work with their provider network to encourage adoption will have the opportunity to devote more resources to innovative benefit design, improve collaboration with providers and provide a higher quality of care to their members.
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- LaPointe, J. Value-based reimbursement grows as providers take on more risk. RevCycleIntelligence. Oct. 30, 2023. https://revcycleintelligence.com/features/value-based-reimbursement-grows-as-providers-take-on-more-risk
- 2023 Measurement Effort. HCPLAN. Oct. 30, 2023. https://hcp-lan.org/apm-measurement-effort/2023-apm/