Measuring Progress: Adoption of Alternative Payment Models in Commercial, Medicaid, Medicare Advantage, and Fee-for-Service Medicare Programs

Report: Released October 30, 2017

The LAN was launched in March 2015 to accelerate the adoption of alternative payment models (APM) and drive alignment in payment reform approaches across the public and private sectors. These payment models have the potential to realign treatment and payment incentives to improve health care quality while containing cost. Through the LAN’s collaborative structure, more than 7,100 participants are taking action towards APM adoption and implementation. The LAN has adopted the goal of tying 50% of U.S. health care payments to APMs by the end of 2018. In 2016, the LAN embarked on its first national APM Measurement Effort to assess the adoption of APMs and the progress toward the LAN’s goals. The 2017 LAN APM Measurement Effort marks the second year of this initiative.

The report marks the second year of the LAN APM Measurement Effort, the largest and most comprehensive of its kind at the national level. The findings capture actual 2016 health care spending from four data sources: the LAN, America’s Health Insurance Plans (AHIP), the Blue Cross Blue Shield Association (BCBSA), and the Centers for Medicare and Medicaid Services (CMS) across commercial, Medicaid, Medicare Advantage, and fee-for-service (FFS) Medicare market segments, and categorize them according to the four categories of the original LAN APM Framework.

Conducted from June to August, 2017, the survey collected data from over 80 participants, accounting for nearly 245.4 million Americans, or 84%, of the covered U.S. population. The report shows progress with 29% of total U.S. health care payments tied to alternative payment models (APMs) in 2016 compared to 23% in 2015, a 6 percentage point increase.

The LAN APM Measurement Effort determined the following results for 2016 payments:

  • 43% of health care dollars in Category 1 (e.g., traditional FFS or other legacy payments not linked to quality)
  • 28% of health care dollars in Category 2 (e.g., pay-for-performance or care coordination fees)
  • 29% of health care dollars in a composite of Categories 3 and 4 (e.g., shared savings, shared risk, bundled payment, or population-based payments)

These results highlight the move away from a fee-for-service system that reimburses only on volume and the move toward more patient-centered APMs. First, there was a shift away from legacy FFS payments and a marked growth in Category 2, where payments are tied to value. Second, there was a 6% increase in alternative payment model payments (Category 3 and 4), bringing total APM spending to approximately $354.5 billion dollars nationally.

Publication Info

Publication date: October 30, 2017
17 pages

Suggested Citation: Health Care Payment Learning & Action Network. Measuring Progress: Adoption of Alternative Payment Models in Commercial, Medicaid, Medicare Advantage, and Fee-for-Service Medicare Programs. October 30, 2017.

The LAN invited health plans across market segments, as well as managed FFS Medicaid states, to quantify the amount of health plan in- and out-of-network spending that flows through APMs – including key areas of available pharmacy and behavioral health spending, if such data were available. Each of the questions in the survey tracked to the categories and subcategories of the original LAN APM Framework, using the LAN survey tool, definitions, and methodology.

In this year’s effort, 78 health plans, three FFS Medicaid states, and FFS Medicare participated, and combines data from the LAN survey, the BCBSA survey, the AHIP survey, and FFS Medicare. Health plans, states, and FFS Medicare reported the total dollars paid to providers according to the original APM Framework through different levels of detail, based on the survey in which they participated. With this data, the LAN calculated aggregate results for Category 1, Category 2, and a composite of Categories 3 and 4, to compare the number to the goals.

For more information on the methodology, please read the Methodology Report above and view the training video below.

The LAN APM Framework establishes standardized definitions and categories of APMs and a methodology for quantifying the adoption of APMs across the public and private sectors. The original LAN APM Framework was developed by the Alternative Payment Models Framework and Progress Tracking (APM FPT) Work Group, which was composed of public and private stakeholders and convened by the LAN Guiding Committee. In mid-2017, a refreshed Framework was released to reflect changes in market dynamics and legislation. For timing and trend reasons, this year’s APM measurement effort used the original Framework.


APM Measurement Cover

Measuring Progress: Adoption of Alternative Payment Models in Commercial, Medicare Advantage, and State Medicaid Programs

Report: Released October 25, 2016

After the release of the Framework, the LAN’s Payer Collaborative, comprised of a diverse mix or public and private health plans, convened to further shape and inform the LAN’s approach for measuring progress in adopting APMs. In mid-February, the Payer Collaborative launched a five-week pilot to determine the feasibility of obtaining internal data from plans and also to understand the investment of time and resources needed to complete the data collection. This pilot was an essential step in ensuring that the APM Framework – and the measurement aligned with it – was “road tested.” It allowed the LAN to refine the methodology and to develop precise definitions for measurement before launching the national measurement effort.

This first LAN APM Measurement Effort requested health plans to provide data through two different methodologies:

  • The 2015 look-back metrics, which is a retrospective view, asked health plans to report actual dollars paid to providers during 2015 or the most recent 12 months.
  • The 2016 point-in-time metrics, which was somewhat of a prospective view, asked health plans to report dollars paid to providers based on contracts in place on January 1, 2016. Health plan dollars could be reported as the number of members attributed to APMs multiplied by an average cost per member per year. Alternatively, health plans could report the most recent spend data that was available.

When the LAN combined this data with that of the Blue Cross Blue Shield Association (BCBSA), and America’s Health Insurance Plans (AHIP), the results demonstrated the following:

  • 62% of health care dollars in Category 1
  • 15% of health care dollars in Category 2
  • 23% of health care dollars in a composite of Categories 3 and 4

A total of 70 health plans and two Medicaid FFS states participated in this initial LAN effort, representing approximately 199 million of the nation’s covered lives, and 67% of the national market (excluding FFS Medicare). More information on the LAN’s first APM Measurement Effort can be found in this  APM Measurement Effort report.


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