LAN survey: 40% of health payments tied to alternative payment models in 2020

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More healthcare payments were tied to alternative payment models in 2019 and 2020, with Medicare Advantage plans tying the most payments into such models, a new survey found. (Getty)

Roughly 40% of U.S. healthcare payments were tied to alternative payment models (APMs) last year, with Medicare Advantage claims representing the largest amount, a new survey found.

The survey, published Wednesday by the Health Care Payment Learning & Action Network, showed that more work needs to be done as most healthcare payments were still tied to a fee-for-service model.

“The survey shows we have made limited progress in moving away from fee for service between 2019 and 2020,” said Mark McClellan, M.D., Ph.D., director of Duke University’s Margolis Center for Health Policy and co-chair of the LAN CEO forum, during the LAN Summit Wednesday. “Most payments are still in fee-for-service, especially outside of Medicare.”

The report found that 38.2% of healthcare payments in 2019 and 40.9% of payments in 2020 were tied to an APM. The percentage of payments tied to value increased from 35.8% in 2018.

However, the percentage is below the network’s goal of 50% by 2018.

The network surveyed 73 health plans, five Medicaid states and traditional Medicare, representing 80% of the national market.

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LAN also looked at the percentage of healthcare payments along payer types. Medicare Advantage had the highest amount of dollars tied to an APM, with 50% in 2019 and 58% in 2020.

Meanwhile, the commercial insurance business had 32% of its dollars in an APM for 2019 and only slightly increased to 35% the next year.

Traditional Medicare payments stayed relatively flat from 2019 to 2020, with nearly 42% in 2019 and 42.8% last year. But payers broadly support shifting toward value-based care. LAN found that 92% of respondents believe APMs can lead to better quality of care, and 85% think it can lower costs.

However, key challenges are a willingness among providers to take on financial risk and the ability to operationalize those risks.

Payers are also exploring how APMs can reduce health disparities, a major priority for the Biden administration and the Center for Medicare and Medicaid Innovation’s payment models going forward.

“Among payers surveyed, 58% collect standardized sociodemographic data, 41% measure health disparities by stratifying along sociodemographic data and 30% use these value-based arrangements to improve patient experience for targeted populations,” a release on the data said.

The survey also explored which strategies would be best at combating health inequity. Most plans (55%) pointed to referrals to community-based organizations that can address socioeconomic barriers and better care coordination.

Another 53% listed screening for socioeconomic barriers to health, and 47% cited food insecurity.

The Centers for Medicare & Medicaid Services (CMS) and LAN also announced Wednesday that the network is launching a new state-based initiative aimed at accelerating movement toward APMs.

The goal of the initiative is to bring “CMS and local stakeholders to the table to support communities,” the agency's administrator, Chiquita Brooks-LaSure, said in a statement.