Health Care Payment Learning & Action Network Final APM Framework Released

January 15, 2016
Policy Snapshot

This week, the Health Care Payment Learning and Action Network (LAN) released their Alternative Payment Model (APM) Framework White Paper. The paper defines payment model categories and establishes a common framework and a set of conventions for measuring progress in the adoption of APMs, which are methods of rewarding health care providers based on the quality and coordination of the care they provide.

APMs are important mechanisms for delivering high-quality, cost-effective, person-centered health care. In the APM Framework, all payments to health care providers fall within one of four categories. Providers are encouraged to move to categories that offer greater quality and value. As they do so, they will experience increased accountability for both quality of care and total cost of care, with a greater focus on population health management (as opposed to payment for specific services).

The APM Framework from the White Paper rests on seven principles, which can be summarized as follows:

  1. Changing providers’ financial incentives is not sufficient to achieve person centered care, so it will be essential to empower patients to be partners in health care transformation.
  2. The goal for payment reform is to shift U.S. health care spending significantly towards population based (and more person focused) payments.
  3. Value based incentives should ideally reach the providers that deliver care.
  4. Payment models that do not take quality into account are not considered APMs in the APM Framework, and do not count as progress toward payment reform.
  5. Value based incentives should be intense enough to motivate providers to invest in and adopt new approaches to care delivery.
  6. APMs will be classified according to the dominant form of payment when more than one type of payment is used.
  7. Centers of excellence, accountable care organizations, and patient centered medical homes are examples, rather than Categories, in the APM Framework because they are delivery systems that can be applied to and supported by a variety of payment models.

With these principles in place, the Work Group that drafted the White Paper began with the payment model classification scheme originally put forward by the Centers for Medicare & Medicaid Services (CMS), and subsequently reached a consensus on a variety of modifications and refinements. The resulting Framework is subdivided into four Categories and eight subcategories, as illustrated below:

Figure 1. APM Framework (At-A-Glance)

To read the full White Paper click here.