Alternative Payment Models

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Alternative Payment Models


There are varied payment methodologies being developed by payers for health care services. Payers are moving away from fee-for-service (FFS) volume-driven health care services to value-based payment models that incentivize providers on quality, outcomes, and cost containment.

It is likely that your practice will feel the impact as payment models move away from FFS to other payment formulas. The intent is to promote patient value and efficiency, but one consequence is to shift some risk to you, the physician provider. Practice viability will be dependent on how well quality, cost, and efficiency are managed. Below are answers to common questions regarding these risk-based alternative payment models:

The AAP commented ​to the Center for Medicare & Medicaid Innovation (CMMI) on its Request for Information on Pediatric Alternative Payment Model Concepts.

The Quadruple Aim and how pediatricians should be working on practice transformation from the primary care and specialist perspectives. AAP News articles on

  1. Transforming practice: Improving the patient experience of care (Patient Satisfaction)

  2. To improve population health, be proactive rather than reactive (Improve Quality)

  3. Managing costs of care integral to practice improvement (Decreasing Costs)

  4. Find joy in your job by acknowledging you can't do it all (Physician Satisfaction)

AAP News Article: Practice Transformation: Quest for 'triple aim' fuels changes in payment methodology
​To achieve high quality, enhanced access, and redu​ced costs (aka, the Triple Aim) payers have adopted mixed payment models by linking higher provider payments (e.g., through enhanced fee schedules, PMPM case management fees or pay-for-performance programs) to health outcomes as quantified by specific quality metrics.​

AAP News article What You Should Know About the Transition to Value-Based Payments
Provides guidance to pediatricians on evolving payment models and their implications for pediatrics.

State Health Care System Transformation​
Practice transformation increasingly takes place in the context of larger state payment and delivery system transformations. Learn more at the AAP State Health Care System Transformation page.

​Interactive map developed by NASHP  to track state efforts to lead or participate in accountable care models that include Medicaid and Children’s Health Insurance Program populations.​

Frequently Asked Questions on Alternative Payment Models
Answers to common questions regarding these risk-based alternative payment models.​

Gainsharing and Shared Savings
Among the various forms of payment reform are gainsharing and shared savings. Both offer the potential of enhanced payment for meeting established clinical, quality and/or financial targets. However there are potential risks as well. The following offers clarification and guidance on these two topics as well as resources for those considering participating in these types of payments.

​AAP Webinar Series on Alternative Payment Models         

Alternative Payment Models Webinar Series 

Current CPT Category II Codes: Pay for Performance Measures Brochure   
Category II Current Procedural Terminology (CPT®) codes were developed to simplify reporting of performance measures and eliminate the need for chart abstraction.

AAP Policy Statement: High Deductible Health Plans and the R​​isks of Consumer-Driven Health Insurance Products ​
Consumer-driven health care is the most noteworthy development in health insurance since the widespread adoption of health maintenance organizations and preferred provider organizations in the 1980s. 

AMA Guide to Physician Focused Alternative Payment Models
All too often, when physicians try to redesign the ways they deliver services in order to provide higher quality patient care at a lower cost, they find that barriers in current payment systems prevent them from doing so. The two most common barriers are:

  • Lack of payment or inadequate payment for high value services. Medicare and most health plans do not pay physicians for many services that would benefit patients and help reduce avoidable spending. 
  • Financial penalties for delivering a different mix of services. Under fee for service (FFS), practices lose revenue if physicians perform fewer or lower-cost services, but their practice costs do not decrease proportionately (if at all), which can cause operating losses.

AMA Evaluating and Negotiating Payment Options
As complex as it is to manage fee-for-service payments, budget based payments —that is, a prediction of how much it will cost to treat a particular patient population or a particular condition—raise a host of issues that physicians must understand to successfully negotiate the evolving payment environment.

Health Care Payment Learning & Action Ne​​twork (HCPLAN) Alternative Payment Model (APM) Framework
This white paper puts forward an alternative payme​nt model (APM) framework that can be used to track progress on payment reform along a path that supports person-centered care.​

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