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Thought Leadership

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What Manufacturers Need to Know About Alternative Payment Models

By Carolyn Zele

Much has been said about healthcare’s shift from a fee-for-service model to a value-based care (VBC) model—and for good reason. With 50% of clinical interventions resulting in unknown effectiveness, and 20-40% of health expenditure wasted on unproven or unnecessary treatments, VBC models can help reduce costs and inefficiencies for patients, providers and manufacturers.

Yet while many industry stakeholders are quick to support the idea of tying compensation to a model that delivers more value and better outcomes for patients, the conversation stalls when discussing the particulars of reimbursement. After all, how do you measure value?

Enter the alternative payment model (APM), a payment approach that helps define value and gives added incentive payments for providing high-quality and cost-efficient care. While the idea behind these models is the same, there are many types of APMs—each of which gives providers a different kind of financial risk or opportunity based on performance. Plus, they can apply to a specific clinical condition, care episode or population.

One example is the Oncology Care Model (OCM), developed by the Center for Medicare and Medicaid Innovation (CMMI). The OCM is a payment and care delivery model that consists of a two-part payment system: a per-beneficiary payment and a performance-based payment for providers. Another is the Comprehensive Care for Joint Replacement Model, a CMS-developed model that allows providers to share in savings if they keep costs below the target price while maintaining quality standards.

While there are many variations, APMs help healthcare stakeholders (payers, manufacturers and providers) put a measurable framework around the value of care. As a result, they’re likely to hasten the shift toward value-based care—if the metrics are measurable.

Read the full article on Drug Channels. And to see how MMIT can help you understand APMs and how they measure value, learn more about our PULSE Analytics solution.

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Carolyn Zele

Carolyn Zele

Carolyn Zele has been a solution consultant with MMIT for the last five years helping pharmaceutical manufacturers simplify market access and prepare for launch success. Prior to MMIT, Carolyn spent numerous years in the payer/PBM space managing formulary teams and technology across both regulated and non-regulated lines of business.

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