Alternative Payment Models and Value-Based Care

Alternative Payment Models are health care payments that are tied to quality, outcomes, and cost. They are also commonly referred to as Accountable Payment Models, and can be called “Value-Based Payments” when good outcomes are achieved at a reasonable price.

For years, health care providers have been paid using a fee-for-service (FFS) model to pay for most health care services and procedures. Financial incentives inherent in the FFS model include providing care that maximizes health care payments, not necessarily the most affordable care associated with good outcomes. In many instances, important services were not reimbursed.

Under the FFS model, per capita health care costs have continued to increase, largely without improvements in health. APMs are one strategy being used by health care stakeholders to help drive both improvements in care and outcomes, and decrease per capita costs. The US Department of Health and Human Services has set specific goals that at least 50-percent of CMS FFS payments be in APMs by the end of 2018. The new Quality Payment Program under Medicare is one strategy intended to achieve that goal.