A report showed that 29 percent of total U.S. healthcare payments were tied to alternative payment models (APMs) in 2016 compared to 23 percent in 2015, an increase of six percentage points. The report was issued by the Health Care Payment Learning & Action Network (LAN), a public-private partnership launched in March 2015 to drive adoption and alignment of APMs.
Payment reform plays a critical role in building a healthcare system that results in better accessibility, quality, affordability, empowerment, and innovation. Results were in line with the goals of the LAN to tie 30 percent of total U.S. healthcare payments to APMs by 2016 and 50 percent by 2018. Detailed findings can be accessed via the LAN website.
The report marks the second year of the LAN APM Measurement Effort, the largest and most comprehensive of its kind at the national level. The findings capture actual 2016 healthcare spending from four data sources: The LAN, America’s Health Insurance Plans (AHIP), the Blue Cross Blue Shield Association (BCBSA), and the Centers for Medicare and Medicaid Services (CMS) across commercial, Medicaid, Medicare Advantage, and fee-for-service (FFS) Medicare market segments, and categorize them according to the four categories of the original LAN APM Framework.
The survey collected data from over 80 participants, accounting for nearly 245.4 million people, or 84 percent, of the covered U.S. population. The LAN APM Measurement Effort determined the following results:
- 43 percent of healthcare dollars in Category 1 (e.g., traditional FFS or other legacy payments not linked to quality)
- 28 percent of healthcare dollars in Category 2 (e.g., pay-for-performance or care coordination fees)
- 29 percent of healthcare dollars in a composite of Categories 3 and 4 (e.g., shared savings, shared risk, bundled payments, or population-based payments)
With over 800 attendees, results were announced at the LAN Summit on October 30 in Arlington, VA by Mark McClellan, Co-Chair of LAN Guiding Committee and Director of Robert J. Margolis Center for Health Policy.
“As healthcare expenditures and capabilities have continued to rise, it’s vital that we find ways to significantly reduce the cost burden for both consumers and the healthcare system,” said McClellan. “This measurement effort represents the kind of collaboration between the public and private sectors to make real progress on improving care.”
Report findings show some interesting trends. First, there was a shift away from legacy FFS payments and a marked growth in Category 2, where payments are tied to value. Second, there was a six percentage point increase in alternative payment model payments (Category 3 and 4), bringing total APM spending to approximately $354.5 billion dollars nationally.
Health plans have shifted away from the traditional FFS approach to value-based reimbursements because they recognize that APMs show promising results in terms of improved quality and cost outcomes.
The LAN has adopted the goal of tying 50 percent of U.S. healthcare payments to APMs by the end of 2018. The report is available here: https://www.census.gov/content/dam/Census/library/publications/2017/demo/p60-260.pdf.
