Quality & Practice

Alternative Payment Models and Initiatives

The Patient Protection and Affordable Care Act (PPACA) which became law in 2010, introduced many new and sometimes controversial concepts into health care.  A second law was signed into effect 3 days after PPACA was enacted.  This new Act was called the Health Care Education Reconciliation Act of 2010 and it made several changes to the recently passed PPACA.  Now the two laws together (PPACA and the Health Care Reconciliation Act of 2010) are what is known as the Affordable Care Act or ACA.

The Department of Health and Human Services has been looking for some time at ways to switch the  standard payment system (based primarily on the volume of services billed) to a new “Value Based” system of payment, in which physicians are paid based on outcomes and quality indicators rather than strictly on volume.  The ACA provided funding and a mandate to The Centers for Medicare and Medicaid Services (CMS) to determine what other sorts of models might work.  CMS formed a new group, called the Center for Medicare and Medicaid Innovation (CMMI) to develop and test various payment and delivery models.  Many of the new models remain under the fee-for-service model, but with additional requirements to ensure that value is being considered, not just volume.  Right now, CMMI is focusing on three general areas:

  • Testing new payment and service delivery models
  • Evaluating results and advancing best practices
  • Engaging a broad range of stakeholders to develop additional models for testing

The new models being tested by CMMI are separated into seven categories: 

In early 2015, Congress passed another law – the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).  Although you may be more familiar with this law as having ended the Sustainable Growth Rate (SGR) method for calculating physician payment rates, it also made some significant changes to the reforms started under the ACA.  MACRA basically limits physicians’ choices in reimbursement methods by requiring them to either participate in an approved Alternative Payment Model or to participate in a program called MIPS which is discussed elsewhere on this website.  In late 2015, CMS put out a request for information, asking providers to answer several questions related to APMs and how they should be designed, as well as publicizing the names of individuals who made up the technical advisory group formed to advise CMS on whether APMs submitted by providers should be qualified.  So now, in addition to the models being tested by CMS, providers have the opportunity to develop their own physician-focused models. 

 Articles on Innovative Payment and Practice Models:

Last Updated: May 2016