This Is Not Your Mother’s Payment Model: Reflections On The APM Pilot

This Is Not Your Mother’s Payment Model: Reflections On The APM Pilot

Part 1

By: Elizabeth Steiner Hayward, MD

(Note: This article originally appeared on the Health Affairs Blog on June 18, 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.)

In early 1994, as I went about finding a practice to join after residency, every physician with whom I spoke discussed managed care at length. As a young family physician dedicated to prevention and early intervention, I was convinced that managed care answered many of the historical challenges faced by primary care physicians. At last we’d be able to pay for the social workers who could facilitate important mental health care and human services for our patients and for the group nutrition classes we wanted to run in our practices.

Yet just four years later, as I left private practice to return to academic medicine, managed care was virtually dead. All its promise had been undermined by a range of structural and environmental challenges.

The 1990s Managed Care Structure

From a structural perspective, managed care was inherently flawed. Instead of health care professionals deciding what was best for our patients, lay people without adequate training were making these decisions. Primary care physicians, who should have been seen as the center of health care transformation, were instead labeled ‘gatekeepers.’

While we could have been educating patients about the value of primary care in terms of health outcomes and cost savings, the 1990s managed care structure made primary care physicians seem like road blocks to excellent care. Additionally, managed care was almost exclusively the province of commercial insurance, rather than government-funded insurance, so competition between plans and provider groups developed in unhealthy ways. Health care became dominated by for-profit models, where there will always be tension between patient focus and profit.

Environmental challenges also prevented managed care from achieving its potential. Insurance rates skyrocketed well beyond inflation during the early to mid-1990s, which led employers to change plans (and thereby provider pools) almost annually. Since some other provider would reap future benefits if a member switched plans, primary care physicians were discouraged from investing in preventive interventions.

Beyond that, we did not have the tools to talk with patients about which tests, medications, or procedures really made a difference in outcomes. The medical community did not yet have easy access to evidence-based reviews. (At a conference in early 1995, I remember being delighted to learn of the Cochrane Collaboration, which works to make research-based evidence available to help inform health care decisions.) Those reviews have changed the nature of patient-provider conversations.

Alternative Payment Methodologies in Oregon

Given this rather unpleasant introduction to managed care so early in my career, why am I optimistic about current efforts to implement alternative payment methodologies in Oregon?

First and foremost, this time around the term encompasses multiple methods of financing care. The APM pilot described in the first post in this series is one example of several experiments currently underway in Oregon. Other alternative payment methodologies under consideration include bundled payment for episodes of care, shared savings (physicians and/or practices receive some share of savings, assuming quality remains high), pay for performance, and supplemental payments for patient-centered primary care homes (PCPCH). No longer do we face a one-size-fits-all strategy. We are no longer in the world of straight capitation regardless of quality, risk stratification of one’s patient panel, or practice location. Instead, practices can work with payers to develop the structure that fits their circumstances best.

In the next post, Sen. Steiner continues to discuss what is different this time around, including the critical roles of Coordinated Care Organizations (CCOs) in the current payment reform efforts.

Continue reading part two of this post here.