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 2

By: Elizabeth Steiner Hayward, MD

In Part 1 of this post, Sen. Elizabeth Steiner Hayward discussed the range of structural and environmental challenges that undermined the managed care payment structure that arose in the 1990s. She concludes that this time around is different, encompassing multiple methods of financing care.

(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.)

Alternative Payment Methodologies in Oregon

Why am I optimistic about current efforts to implement alternative payment methodologies in Oregon? First, 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.

Second, current payment reform efforts in Oregon are driven not by commercial insurers, but by the state’s expansion of comprehensive care delivered through Coordinated Care Organizations (CCOs). The Federally Qualified Health Centers (FQHCs) taking part in the APM pilot are all part of a larger CCO. CCOs are locally controlled health entities—including hospitals, primary care and sub-specialty providers, mental health, and dental care—that deliver health care and coverage to people eligible for Medicaid (Oregon Health Plan), with an emphasis on expansion of patient-centered primary care homes, integration of physical and mental health, prevention, and reducing costs through fixed global budgets and quality improvement initiatives.

We have, in essence, placed a $1.9 billion bet with the federal government that by implementing this new CCO structure, we can dramatically diminish the inflation in medical costs while preserving, and preferably improving, the quality of care for Oregonians served by the Oregon Health Plan.

CCOs can structure payment in ways that fit their providers best because they are regional and run by independent boards in collaboration with Citizen Advisory Boards. Moreover, the quality indicators for CCOs come from thoughtful discussion of evidence-based practice, leading to patient-centered care focused on outcomes first, with cost savings expected to follow. Oregon has also developed its own metrics for PCPCH, which are written from the patient’s perspective, and an entire website offering resources for patients and practices.

Third, when commercial managed care began in the 1990s, practices did not receive any training or resources; physicians were thrown into the deep end and told to swim. Not surprisingly, practices, and ultimately the model, sank under the weight of unreasonable expectations. Now, health care providers in Oregon have many opportunities for learning collaboratives (which provide a forum sharing best practices and lessons learned) and experienced physicians commonly serve as facilitators and mentors to practices implementing PCPCH.

All this is not to say that every practice taking part in the APM pilot will have smooth sailing in the transition periods. Barriers such as geographic isolation (much of Oregon is quite rural), small practice size, and resistance to change all could potentially interfere with effective transition to APM. Some communities lack critical resources; the most common is an inadequate number of mental health providers. Those of us in positions to help must do so vigorously for some time to come, and those in transition must keep open minds and commit to the process. I have been heartened by both the number of physicians stepping up to help, and the participation in training opportunities and learning collaboratives.

Ultimately, I believe that a range of alternative payment options, tailored to individual practice characteristics and combined with effective support, will transform delivery of primary care, and eventually all of medical care. Only with this transformation will we actually develop a health care system, rather than the illness treatment system in which we have practiced for so many years. The APM pilot in Oregon FQHCs is a critical step on this path.