Alternative payment models require a second look James C. Capretta | Apr 6, 2021
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When the Affordable Care Act (ACA) was enacted in 2010, alternative payment models (APMs) were touted as promising tools for reining in costs. After a decade of modest results, the Biden administration should consider adjusting their design.
The premise of APMs is that the financial incentives embedded in reimbursement policies drive how care is delivered to patients. Fee-for-service (FFS) payment is said to reward volume rather than value because providers get paid more when performing more services and ordering more tests. APMs try to counter these incentives by focusing bonuses on population-based measures of spending and health status, or by combining discrete payments into bundles covering the full cost of entire episodes of care.
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