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Beneficiary Engagement in Medicare's Alternative Payment Models: From Serendipity to Active Choice
Jackson Williams, JD, MPA
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Beneficiary Engagement in Medicare's Alternative Payment Models: From Serendipity to Active Choice

Jackson Williams, JD, MPA
This article explores elements of patient and consumer engagement implicated by Medicare’s alternative payment models, emphasizing the potential for shopping and use of cost information.
As CMS accelerates payment and delivery system reform, it is time to reassess the degree to which alternative payment models (APMs) engage beneficiaries. Fee-for-service (FFS) Medicare was created in an era when patient engagement rarely included informing a patient with cancer of his or her diagnosis, nor allowing pharmacists to discuss with patients the medicines they dispensed. Over the past decades, commercial and public insurance offerings have increasingly featured transparency tools, shared decision making, wellness incentive programs, and other innovations. All these techniques are predicated on consumers, patients, and caregivers making informed choices about their coverage and care. 

CMS continues to roll out new alternative payment methods, both voluntary and mandatory. Yet, beneficiary choice is neither being marshaled nor promoted through any national awareness campaign to drive volume to APM-participating providers. 

Dimensions of Patient Engagement

Patient and consumer engagement in healthcare encompass many dimensions. Langston et al1 offer a continuum in which patient satisfaction, informed choice, shared decision making, partnering with patients, and ownership of one’s health are prominent. Carman et al2 propose a matrix with 3 “levels of engagement”—direct care, organizational design and governance, and policy making—and 3 degrees of engagement, ranging from consultation to partnership. Carman et al3 further refine the matrix to include such discrete elements as patient education, shared decision making, support for self-management, organizational partnership, and transparency and public reporting. Fronstin and Elmlinger4 add cost-conscious behavior to the mix—a concept encompassing plan choice decisions, use of cost information, and participation in wellness programs. Drawing on Judith Hibbard’s patient activation work, Mittler et al5 developed 4 categories of engaged behaviors: self-management, healthcare encounter, shopping, and healthy behaviors. 

In synthesizing the literature to develop a taxonomy relevant to Medicare APMs, dimensions are categorized here as: clinical, collective communication, transparency, and enrollment. Each dimension is implicated in unique ways by Medicare APMs. On the first 2 of these dimensions, appropriate means of engaging patients are well developed; but on the latter 2, inadequate attention has been given to informing and promoting consumer choice.


The most important dimension of patient engagement is the clinical dimension: enlisting the patient as a care partner to optimize outcomes, sharing in decision making when clinically practical and prudent, and, where possible, undertaking some degree of self-management. APMs that are premised on saving money through minimizing or avoiding complications of illness, such as the accountable care organization (ACO) and patient-centered medical home, depend on patients to adhere to both treatment plans and, ideally, a subset of designated, ACO-affiliated providers.   

The host organization can add case managers, health coaches, and others to its care team, and adopt a program, such as OpenNotes, to help enhance patient communication and engagement; however, if the beneficiary is not motivated to stay healthy, additional infrastructure investments be for naught. APMs that save money by limiting low-value care6 are vulnerable to marketing influences that might lead a beneficiary to visit providers outside the ACO, or otherwise demand more intensive treatment. Because FFS Medicare permits beneficiaries to use any provider, an ACO clinician must engender trust and confidence among patients to help keep them in the (ACO) fold. Research has already shown this to be a problem, with nearly one-tenth of Medicare’s earliest ACO beneficiaries seeking primary care, and two-thirds seeking specialty care, outside their ACO.7 More recently, nearly 90% of beneficiaries in a Medicare Shared Savings ACO had expenditures outside of the ACO; and about one-third of total expenditures were paid to non-ACO providers.8 

At least 1 clinical aspect is incentivized by a provider’s participation in an APM: shared decision making. In a purely FFS environment, a financial incentive may be lacking for a physician to employ shared decision-making tools or take time to discuss alternative treatment options.9 Providers facing a target budget may be disincentivized to suggest expensive treatments for some patients.

Collective Communication

Collective communication between Medicare patients and providers, mediated by CMS, substitutes for the type of market relationships that bind these 2 parties in the commercial insurance sphere. In the traditional market setting, consumers register their satisfaction through annual enrollment choices. With APMs, consumer representatives provide “system-level engagement”10 or “organizational partnership” 3 on behalf of the patient population. Medicare Shared Savings Program ACOs must include a beneficiary representative on their governing body.11 Further, patient experience surveys from a sample of the population served by APM clinicians permit collective feedback. 

As DeCamp et al note, “system-level engagement should help ACOs design care programs and set priorities (eg, about which quality or cost areas to target) in ways that help them meet quality and cost goals. It also has the potential to improve trust in the organization and create a more positive organizational culture.”10 Although there are practical barriers to identifying beneficiary representatives—especially given many patients’ fluid relationship with an ACO—the representation requirement permits an avenue of communicating to providers that would not otherwise exist. 


APMs raise unique transparency issues because they change provider incentives from the paradigm beneficiaries expect in a traditional Medicare setting; unlike the FFS paradigm, physicians may be incented to do less rather than more. With beneficiary notices about sharing ACO claims information comes the reassurance that they may see providers outside the ACO, too; however, that admonition lacks context. 

Providers can be transparent about new processes put in place to respond to altered payment incentives. For instance, when UnityPoint Health-Meriter, a participant in CMS’ Bundled Payment for Care Improvement program, developed guidelines to help determine what type of postacute care a patient would be referred to, the guidelines—in the form of a checklist—were disclosed to patients before surgery and posted in their rooms as well.12 

Information about ACOs’ and associated providers’ quality is publicly available for beneficiaries to consult in determining whether to stay with ACO-participating primary care providers, and to follow their referrals to other providers.


A fourth category of potential engagement techniques, common in the commercial context, has yet to be deployed in the APM Medicare context. Although enrollment usually connotes a contractual relationship between a consumer and a health plan, Donald Berwick uses the term to encompass “a commitment to a healing relationship” for purposes of specifying the “population” for which providers are accountable.13  

The irony of the APM in an era when person-centered care is the watchword is that a beneficiary’s primary role in a new payment model is statistical: beneficiaries are, unwittingly, either members of an intervention group or a comparison group based solely on whether their provider has voluntarily adopted or been randomly assigned to an APM. Shopping and cost-conscious behavior are integral to consumer engagement, but these elements are absent from most Medicare APMs. Although Next Generation ACOs will be permitted to have beneficiaries align voluntarily in advance of subsequent performance years, this is but one component of potential enrollment activities advocated in 2014 by the Brookings Institution. Other activities included creating “behavioral levers,” such as reduced co-pays and deductibles, to encourage seeking care within the ACO and allowing shared savings for beneficiaries.14  

Case Study Example

Imagine four 60-something patients undergoing a joint replacement at a prominent hospital in Seattle. Ann, Bob, and Carla are employed and have commercial insurance, whereas David, a retiree, is an FFS Medicare beneficiary. Why is each individual at this particular hospital? Ann is a managed care plan enrollee; all the plan’s joint replacement patients are referred to this hospital. She chose her provider when she chose her plan during open enrollment, having weighed the costs of various plan options against the array of providers in the plan network. Bob selected this hospital because his Blue Cross Blue Shield plan deemed this facility a “Blue Distinction” provider for joint replacement, guaranteeing no “surprise bills” from out-of-network physicians based at its facility. Carla is employed by Home Depot, which participates in the Pacific Business Group on Health’s Employers Center of Excellence Network. Although Carla is not a Washington resident, she travelled to Seattle because her employer has a bundled payment arrangement with the hospital and waived her associated cost-sharing for this procedure. 

David, the Medicare beneficiary, is at this hospital because the surgeon to whom he was referred practices there. Although Medicare has bundled payment arrangements with providers in the region through CMS’ Bundled Payment for Care Improvement (BPCI) program, he is both ignorant of and indifferent to Medicare’s payment methodology. Had David undergone surgery at a BPCI site it likely would have been happenstance. If his procedure was reimbursed under the Comprehensive Care for Joint Replacement model, it would have been because the hospital’s zip code had been drawn by lot.

It is still very early in APM implementation, but it is nonetheless disappointing that beneficiary participation in APMs is a matter of serendipity rather than choice, because experience tells us that elements of APMs can be either attractive or concerning to consumers. A bundled payment can be akin to a warranty—Geisinger’s “ProvenCare” bundles have been marketed as such15—which is something that consumers value. Aetna advertises its ACOs’ cost savings directly to the public. On the negative side, the managed care backlash of the late 1990s demonstrated consumers’ fears about possible stinting when providers are bound by a budget target. The remainder of this article discusses in greater depth the shopping and cost-consciousness elements of consumer engagement with APMs.

Transparency About Financial Incentives

Writing at the close of the managed care heyday of the 1990s, Miller and Sage noted that nearly 20 states had enacted laws requiring insurers to explain physician compensation methods to their enrollees. The rationale was that if physicians were incentivized to limit treatment, it would “help individuals exercise their substantive rights once enrolled in a plan” if they “underst[ood] the basic premises of managed care,” and in particular, gatekeeping and capitation.16 

Copyright AJMC 2006-2019 Clinical Care Targeted Communications Group, LLC. All Rights Reserved.
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