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Designing APMs to Avoid Harm in Vulnerable Populations

Laura Joszt
In a commentary for New England Journal of Medicine, Karen E. Joynt Maddox, MD, MPH, of Washington University School of Medicine, outlines key principles for designing alternative payment models (APMs) to avoid harming vulnerable populations and penalizing the providers who care for them.
Alternative payment models (APMs) have the potential to improve care and control costs, but if they aren’t crafted carefully, they could cause harm for the most vulnerable populations, wrote Karen E. Joynt Maddox, MD, MPH, of Washington University School of Medicine, in a Perspective piece in New England Journal of Medicine.

The health industry is increasingly turning toward APMs for a way to include quality and cost targets in reimbursement, but the incentives of APMs may cause harm to patients in need by putting clinicians at risk for factors outside of their control.

“In the best-case scenario, clinicians will respond to APMs’ incentives by improving care coordination and integration,” Joynt Maddox wrote, but she also acknowledged that APMs provide incentives for clinicians to avoid caring for populations with higher-than-average medical and social needs. “Understanding APMs’ potential consequences for vulnerable populations is critical if we wish to maximize benefits and reduce harms.”

While the fee-for-service system provides little incentive to improve care for people with disabilities or people living in poverty, APMs can be used to focus attention on these groups, because “the highest-cost beneficiaries present the greatest opportunities for achieving savings,” Joynt Maddox explained.

However, results for APMs have been mixed, so far. The problem is that risk-adjustment methods still have trouble distinguishing poor-quality care from medical and social risk, such as poverty. In a graph, she showed that providers caring for more low-income patients were more likely to be penalized in the Hospital Readmission Reduction Program, the Hospital Value-Based Purchasing Program, the Hospital-Acquired Conditions Reduction Program, and the Physician Value-Based Payment Modifier. Only in the End-Stage Renal Disease Quality Incentive Program were the penalties similar.

Joynt Maddox outlined some key principles that policy makers can use to create payment models that avoid unnecessary harm to vulnerable populations and don’t penalize the providers who care for these populations:
  1. Include factors like poverty and functional status in risk adjustment.
  2. Evaluate providers on improvement rather than solely on achievement in cases where risk adjustment remains inadequate.
  3. Instead of an all-or-nothing approach, reward quality improvements proportionally.
  4. Design APMs to focus on vulnerable patients, such as by linking payments to reductions in disparities or outcomes among high-risk populations.
“While some organizations may be driven by a moral imperative to address social determinants of health, financial incentives could persuade organizations that might not otherwise do so to focus on their neediest clients,” Joynt Maddox concluded. “However, if we introduce such incentives without close attention to how APMs affect providers who serve vulnerable populations, we risk causing more harm than good."

References

Joynt Maddox KE. Financial incentives and vulnerable populations—will alternative payment models help or hurt? N Engl J Med. 2018;378(11):977-979. doi: 10.1056/NEJMp1715455.

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