The Alternative Payment Model (APM) Framework white paper from the Health Care Payment Learning & Action Network (see report here) is a useful guide as we’re trying to understand the direction of Population Health initiatives. It lays out the transition from a Fee for Service payment model to a much more diverse environment with many concurrent plans – a variety of Alternative Payment Models (APMs), through both Medicare and private health plans. The appendix lists many good examples. Some of these APMs are “beginner” models – with a modest amount of upside only risk to the provider. And some models are more advanced: more risk, upside and downside, more ability for the provider or the ACO to determine its clinical and financial outcomes.
The paper has a useful image to depict this development – from current state, dominated by the large orange FFS bubble, to the next phase where there are at least 12 different bubbles, each representing an Alternative Payment Model.
I see two challenges in this picture.
One, the obvious challenge: providers need to learn the “new game”. But the “new game” is not one game – it’s many models with many sets of rules. Mason Beard, Co-founder and Chief Product Officer at Wellcentive, a Population Health firm, uses the term “Payvider” for the new breed of provider organization that takes on financial risk. Payviders need to deliver care to populations covered under these payment models – and at the same time track that they manage cost and utilization, and reimbursement, under each of these models. Instead of playing one game, payviders need to play chess at multiple boards at a time. Actually, it’s even worse: they play Chess, Go, and Mahjong, Poker, and some games we’ve never heard of. Multiple games, parallel, and simultaneous.
The second challenge is: where does this go next? If we consider the picture to the right, with the multiple APMs, as the next-but-not-final state, then what does the final state look like? Are we going back to a model of a few, consolidated APMs? Or will the number of APMs, the bubbles in the chart, continue to increase? Will we migrate to one future care-model, or will there be parallel models with gradations of risk? Each time I ask this question, the consensus seems to be: more bubbles, no consolidation. In other words, we need to get good at providing care to populations following a large number of APMs – multiple reimbursement models, multiple reporting requirements, multiple attribution strategies etc.
Provider organizations need to morph into smart “Payviders” who will be able to play these multiple games simultaneously. That means investing in organizational strategies, and Population Health Management Systems, to support the management, tracking, and reporting required for these plans. The market for Population Health Management systems is hot – and will likely heat up even more as these APMs become the reality.