Origins in Oregon: The Alternative Payment Methodology project

Origins in Oregon: The Alternative Payment Methodology project

Authors: Craig Hostetler; Laura Sisulak; Erika Cottrell; Jill Arkind; Sonja Likumahuwa

(Note: This article originally appeared on the Health Affairs Blog on April 14, 2014. An edited version is being reposted here as part of the research effort investigating the impact of Alternative Payment Methodology (APM) on the delivery of primary care in safety-net populations. Through this website, Frontiers of Health Care, we are sharing lessons learned and perspectives from key stakeholders on the frontlines of reform.)

How the country pays for health care is currently at odds with its vision of how health care should be delivered. Traditional fee-for-service health care payments are linked to the volume of visits, rather than the quality of patient-centered care. To unlink payment from merely the volume of services provided, Oregon recently launched the Alternative Payment Methodology (APM) demonstration project, where participating community health centers (CHCs)—also called federally qualified health centers—no longer earn revenue based on the number of individual patient seen. Instead, CHCs will receive a monthly payment based on the size and composition of their patient population. With this change, the paradigm starts to shift from the number of doctor visits to the provision of high-quality, team-based, patient-centered care.

APM is being piloted at three Oregon Community Health Centers: Virginia Garcia Memorial Health Center, Mosaic Medical, and OHSU Family Medicine at Richmond. The clinics are receiving technical assistance from the Oregon Primary Care Association (OPCA) and other community, regional and national partners.

With funding from the Robert Wood Johnson Foundation, a team of researchers from Oregon Health and Science University and OCHIN, one of the nation’s largest health information networks, is investigating the impact of APM on the delivery of primary care in safety-net populations. The research team will share lessons learned and perspectives from key stakeholders on the frontlines of reform in regular posts on the Health Affairs Blog and on this website.

How did we get here?

The Safety-Net Medical Home Initiative, a national demonstration to help safety-net primary care sites become high-performing patient-centered primary care homes (PCPCH), catalyzed discussions between community health centers, the Oregon Primary Care Association, and state leaders about alternative payment models in Oregon. This generated the momentum for implementing APM in Oregon.

In the PCPCH model, the primary care team plays a critical role in providing comprehensive patient-centered care, focusing on population health to reduce the prevalence of chronic conditions, managing chronic conditions when they occur, and helping to coordinate different types of care over time and in multiple settings.Despite the enormous promise and support for this approach in community health centers, clinicians on the front lines identified a real barrier to fully realizing this vision: the traditional payment structure, which was linked to volume of visits.

As community health centers started to implement PCPCH, it became more and more clear that linking revenue to face-to-face visits with a billable provider didn’t make sense within a team-based model. Imagine if you only paid professional soccer players when they scored goals and expected teamwork to develop. Defense and passing would probably decline. It’s the same when you only pay primary care clinics when they produce a short visit with a billable provider (e.g., a physician or nurse practitioner). Workflow in the clinic focuses on producing billable visits and becomes a barrier to utilizing the team effectively to produce better health outcomes for all patients.

The clinicians were the ones to drive this point home. Although provider satisfaction was going up under the primary care home model, the work required to implement it was being stacked on top of all of the visits that they had to crank out every day to keep the lights on. Providers still had to produce the same number of visits to bring revenue in the door, but they also had to complete additional work, such as pre-visit planning and panel management, under the PCPCH model. It was becoming clear that this increased workload wasn’t sustainable, and it would be very difficult to go further until we removed the visit-based payment model as a barrier.

To tackle this problem, OPCA brought together a small group of CHCs that had advanced experience implementing the primary care home and asked, “How do we fix this? Could we pay the clinics a set amount regardless of the number of visits—no more, no less? What if CHCs just received payment for the number of people served and didn’t have to produce billable visits?” These discussions led to the implementation of the APM demonstration in Oregon.

APM models had been on the radar for several years. OPCA had even kicked the idea around with leadership from the Oregon Health Authority and Department of Medical Assistance Programs several years ago, but the time wasn’t right to push it forward. That changed when the focus on PCPCH implementation increased and providers and policy makers encountered barriers created by the prevailing payment models. It was now the right time to resurrect the APM discussions. The Centers for Medicare and Medicaid Services approved an amendment for APM in 2012 under the Budget Improvement and Protection Act, and the APM pilot was officially launched in March 2013—the first step in freeing the participating clinics from the constraints of fee-for-service.

The APM works as follows: Medicaid pays participating community health centers a set monthly payment for each enrollee, whether or not the person seeks care. This payment structure shifts the incentive from simply churning out more office visits toward achieving quality and access by reimbursing CHCs for the range of things they do to improve patient health (for example, email or phone consultations, medication management, group visits, or patient education).

In our next post, we will talk about how this payment reform is only a first step towards really changing the focus to patient health. To implement this policy, policymakers and the CHCs needed to tackle some important tasks, such as determining how to calculate the monthly payment that would be the basis of clinic reimbursement in the new model.

Continue reading part two of this post here.

Crater Lake National Park by Dennis Behm Licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.  Accessed 4/17/2014.