The Institute of Medicine report Crossing the Quality Chasm: A New Health System for the 21st Century recommended a redesign of the American health care system by providing six Aims for Improvement: Safety, Effectiveness, Patient-Centeredness, Timeliness, Efficiency, and Equity. These ‘aims’ established a specific direction for policymakers, health care leaders, clinicians, regulators, purchasers, and others to follow in improving the US health care system.

With the passage of the Affordable Care Act (ACA), we are experiencing a significant redesign of the health care system. This redesign and the emerging models are focused on what you may often hear referred to as the "Triple Aim". Triple Aim is a framework developed by the Institute for Healthcare Improvement that describes an approach to optimizing health system performance by 1. improve the health of the population; 2. enhance the patient experience of care (including quality, access, and reliability); and 3. reduce, or at least control, the per capita cost of care. Source: Institute for Health Improvement

The following are some of these emerging health system delivery and payment models. Click on the model below to get more information including a description and examples of how it connects to 1305 Domain 3 cardiovascular and diabetes strategies and performance measures.

Understanding Health Systems Reform

Reform Initiatives
Accountable Care Organization (ACO) 

An ACO is a local health care organization and a related set of providers (at a minimum, primary care physicians, specialists, and hospitals) that can be held accountable for the cost and quality of care delivered to a defined population.


The goal of the ACO is to deliver coordinated and efficient care. ACOs that achieve quality and cost targets will receive some sort of financial bonus, and under some approaches, those that fail will be subject to a financial penalty. In order to meet the requirements of this type of incentive system, an ACO needs to be able to:

  1. Care for patients across the continuum of care, in different institutional settings
  2. Plan, prospectively, for its budgets and resource needs
  3. Support comprehensive, valid and reliable measurement of its performance (Note this includes reporting on cardiovascular and diabetes measures in line with 1305 Domain 3)
    Source: Robert Wood Johnson Foundation

The federal government is promoting ACOs to pave the way for the shift from our current volume-based reimbursement model to a model based on quality and efficiency.


You can learn more about these ACO programs under the National Initiatives Button. You can also explore what States are participating by going to the Center for Medicare & Medicaid Services Innovation Center . There you can search by state for "Where Innovation is Happening".

Public Health Departments and Accountable Care Organizations (CDC) focuses on the interface of public health departments and ACOs and highlights opportunities for enhanced collaboration between the two entities.

Accountable Health Communities Model

The CMS Accountable Health Communities Model is based on emerging evidence that addressing health-related social needs through enhanced clinical-community linkages can improve health outcomes and reduce costs. Unmet health-related social needs, such as food insecurity and inadequate or unstable housing, may increase the risk of developing chronic conditions, reduce an individual’s ability to manage these conditions, increase health care costs, and lead to avoidable health care utilization.

This model will promote clinical-community collaboration through:

  • Screening of community-dwelling beneficiaries to identify certain unmet health-related social needs;
  • Referral of community-dwelling beneficiaries to increase awareness of community services;
  • Provision of navigation services to assist high-risk community-dwelling beneficiaries with accessing community services; and
  • Encouragement of alignment between clinical and community services to ensure that community services are available and responsive to the needs of community-dwelling beneficiaries.

For more information, visit: Accountable Health Communities Model

Bundled Payment Models

A payment is described as "bundled" when it covers multiple healthcare services, particularly if those services had previously been paid for separately. Bundling is a very generic term and it can apply to many different combinations of services. A bundled payment can involve just one provider or many providers and it can involve two services or dozens of services.


Depending on how they are structured, bundled payments can potentially help achieve one or more of four distinct goals:

  • Bundling multiple services delivered by the same provider into a single payment can encourage greater efficiency in the delivery of care, since the provider will no longer be paid more for delivering more of the services covered by the bundle. This type of bundle can also allow the provider more flexibility to deliver innovative services if the bundled payment no longer limits the provider to delivering services that meet the narrow definitions of the individual services that were previously paid for separately.
  • Bundling services delivered by two or more providers into a single payment can encourage greater coordination among those providers, since the providers have to agree on which services will be delivered and how the payment should be divided among them. This type of bundle can also encourage greater efficiency if one or more of the providers is delivering services that are not essential to a good outcome.
  • Bundling a treatment with any services required to address complications of the treatment can encourage higher quality of care, since the providers will not receive additional compensation for costs incurred in treating complications.
  • Bundling all services associated with a particular procedure or treatment of a particular condition into a single payment can provide greater predictability for purchasers and patients regarding their cost for delivery of that procedure or treatment of that condition and improve their ability to compare costs and value between different providers that deliver the same procedure or treat the same condition.
  • Source: The Center for Healthcare Quality and Payment Reform, The Payment Reform Glossary, First Edition

Capitation Models 

Capitated payment systems are based on a payment per person, rather than a payment per service provided. There are several different types of capitation, ranging from relatively modest per member per month (PMPM) case management payments to primary care physicians involved in patient centered medical homes, to PMPM payments covering all professional services, to PMPM payments covering the total risk for all services: professional, facility, pharmaceutical, clinical laboratory, durable medical equipments, etc. And there are innumerable variations on these basic capitation types, depending on the particular services the parties decide to "carve out" and handle on either a fee-for-service basis or by delegation to a separate benefit management company. Source: American Medical Association 2014


Types of Capitated Models include:

  • Per-member-per-month (PMPM): Capitated payments may take the form of relatively modest per-member-per-month case management payments, e.g., to primary care physicians involved in patient-centered medical homes.
  • Practice capitation: Capitation may involve PMPM payment for services that physician practice itself provides to enrollees.
  • Partial global capitation: In partial global capitation, PMPM payments not only cover services provided by the physician practices itself but also payment for all physician laboratory, diagnostic and other outpatient services that are provided to enrollees who have selected, or been assigned, to the practice. Hospital inpatient services are not, however covered by the capitation payments.
  • Global capitation: Under a global capitation arrangement, PMPM payments cover the total risk for all items and services that are furnished to the enrollees who have selected, or been assigned to, the physician practice: professional services; facility services including hospital in-patient services; pharmaceuticals; clinical laboratory services; durable medical equipment, etc.

Source: American Medical Association, Evaluating and Negotiating Emerging Payment Options, 2012


The Centers for Medicare & Medicaid Services (CMS) have a Financial Alignment Initiative which includes a capitated model with some states. Learn more CMS Capitated Model

Centers for Medicare and Medicaid Services (CMS) State Innovation Models Initiative

The State Innovation Models (SIM) Initiative is providing financial and technical support to states for the development and testing of state-led, multi-payer health care payment and service delivery models that will improve health system performance, increase quality of care, and decrease costs for Medicare, Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries—and for all residents of participating states.


For More Inforation Visit: State Innovation Models Initiative

Center for Medicare and Medicaid Services (CMS) Quality Payment Program (MACRA, MIPS & APM)

Most Medicare clinicians will initially participate in the Quality Payment Program through MIPS (Merit-based Incentive Payment System). The Affordable Care Act moved many Medicare payment systems, including that for clinicians, towards value, and Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) builds on that work. Consistent with the goals of the law, the proposed rule would improve the relevancy and depth of Medicare’s quality-based payments and increase clinician flexibility by allowing clinicians to choose measures and activities appropriate to the type of care they provide. MIPS allows Medicare clinicians to be paid for providing high value care through success in four performance categories.

  • Ending the Sustainable Growth Rate (SGR) formula for determining Medicare payments for health care providers’ services
  • Making a new framework for rewarding health care providers for giving better care not more just more care
  • Combining existing quality reporting programs into one new system

The MACRA Quality Payment Program (QPP) will help CMS to move more quickly toward their goal of paying for value and better care. The QPP has two paths:

  1. Merit-Based Incentive Payment System (MIPS)
  2. Alternative Payment Models (APMs)
  • MIPS and APMs will go into effect over a timeline from 2015 through 2021 and beyond.

Merit-Based Incentive Payment System (MIPS)

MThe MIPS is a new program that combines parts of the Physician Quality Reporting System (PQRS), the Value Modifier (VM or Value-based Payment Modifier), and the Medicare Electronic Health Record (EHR) incentive program into one single program in which Eligible Professionals (EPs) will be measured on:

  • Quality
  • Resource use
  • Clinical practice improvement
  • Meaningful use of certified EHR technology

Alternative Payment Models (APMs)

APMs give CMS new ways to pay health care providers for the care they give Medicare beneficiaries. For example:

  • From 2019-2024, pay some participating health care providers a lump-sum incentive payment.
  • Increased transparency of physician-focused payment models.
  • Starting in 2026, offers some participating health care providers higher annual payments.

Accountable Care Organizations (ACOs), Patient Centered Medical Homes, and bundled payment models are some examples of APMs

 

Community Care Team 

The Community Care Team is a multidisciplinary team that partners with primary care offices (specifically Patient Centered Medical Homes), the hospital, and existing health and social service organizations. The goal is to provide patients with the support they need for well-coordinated preventive health services and coordinated linkages to available social and economic support services. States currently implementing the Community Care Team Model have found it a key element in the Patient Centered Medical Home efforts to improve care and reduce avoidable costs, especially those with complex or chronic conditions.


Community Care Teams can be a vital part of your states population health initiatives and support the 1305 cardiovascular and diabetes Domain 3 strategies.

Community Care Teams:A Promising Strategy to Address Unmet Social Needs (Center for Health Care Strategies, Inc.)


Fee-for-Service Models

Fee-for-service payment is reimbursement for specific, individual services provided to a patient. Fee for service is fairly easy to understand as a payment method, as each specific service (or procedure or intervention or piece of equipment) provided is billed and paid for. In its most common form, fee-for-service payment in health care differs from payment for goods or services in other sectors of the economy in the way it is priced. In most consumer markets, the list price is determined by what the consumer is willing to pay for an item or service. In health care, the amount paid for services is usually negotiated between insurers and other payers and providers. In the case of government payers, it is based on defined or administered rates often determined by a formula or funding levels. In addition, fee-for-service payments are somewhat constrained by coding guidelines and rules (ie, CPT and ICD-9 soon to be ICD-10) that define what can be billed and paid for.

When analyzed with respect to the 11 delivery system attributes, fee-for- service payment has several benefits. Among them is its emphasis on productivity. Fee for service encourages the delivery of care and maximizing patient visits. As a payment mechanism, it is relatively flexible in that it can be used regardless of the size or organizational structure of a physician's practice, the type of care provided (eg, clinic visit, surgery, therapy session), the place of service (eg, physician's office, nursing home, hospital, surgery center), or the geographical location of care. Fee for service does support accountability for patient care, but it is often limited to the scope of the service a particular physician provides at any point in time.

There are, of course, negative features associated with fee-for-service payment. For one, it offers little or no incentive to deliver efficient care or prevent unnecessary care. In its current form, it is generally limited to face-to-face visits and thereby thwarts activities such as care coordination and management of conditions by phone and/or email.

Because payment is limited to one provider for one interaction, fee for service does little to encourage management of care across settings and among multiple providers.

Source: Five Payment Models-The Pros, the Cons, the Potential, by Janet Silversmith on behalf of the MMA Work Group to Advance Health Care Reform, Minnesota Medical Association, February 2011

Health Homes 

The Affordable Care Act of 2010, Section 2703, created an optional Medicaid State Plan benefit for states to establish Health Homes to coordinate care for people with Medicaid who have chronic conditions by adding Section 1945 of the Social Security Act. CMS expects states health home providers to operate under a "whole-person" philosophy. Health Homes providers will integrate and coordinate all primary, acute, behavioral health, and long-term services and supports to treat the whole person.

Health Homes are for people with Medicaid who:

  • Have 2 or more chronic conditions
  • Have one chronic condition and are at risk for a second
  • Have one serious and persistent mental health condition

Chronic conditions listed in the statute include mental health, substance abuse, asthma, diabetes, heart disease and being overweight. Additional chronic conditions, such as HIV/AIDS, may be considered by CMS for approval.

Health Home Services:

  • Comprehensive care management
  • Care coordination
  • Health promotion
  • Comprehensive transitional care/follow-up
  • Patient & family support
  • Referral to community & social support services

Health Home providers can be:

  • A designated provider: May be a physician, clinical/group practice, rural health clinic, community health center, community mental health center, home health agency, pediatrician, OB/GYN, or other provider.
  • A team of health professionals: May include physicians, nurse care coordinators, nutritionists, social workers, behavioral health professionals, and can be free-standing, virtual, hospital-based, or a community mental health center.
  • A health team: Must include medical specialists, nurses, pharmacists, nutritionists, dietitians, social workers, behavioral health providers, chiropractics, licensed complementary and alternative practitioners.

For more information, visit: Health Homes and Medical Homes

Source: Centers for Medicare & Medicaid Services

Medicare Shared Savings Program

The Medicare Shared Savings Program was established by section 3022 of the Affordable Care Act (ACA) and is a key component of the Medicare delivery system reform initiatives included in the ACA. Act and is a new approach to the delivery of health care. Eligible providers, hospitals, and suppliers may participate in the Shared Savings Program by creating or participating in an Accountable Care Organization.

The Medicare Shared Savings Program is designed to improve beneficiary outcomes and increase value of care by:

  • Promoting accountability for the care of Medicare FFS beneficiaries
  • Requiring coordinated care for all services provided under Medicare FFS
  • Encouraging investment in infrastructure and redesigned care processes

The Medicare Shared Savings Program will reward ACOs that lower their growth in health care costs while meeting performance standards on quality of care.

Multi-payer Models

A major component of the Affordable Care Act is the emerging new payment and care delivery models which pursue the Triple Aim of improving quality of care, improving health outcomes and reducing waste/controlling costs. To achieve these results, there must be collaboration and broad-based support from the numerous public and private health care payers. Some of the emerging models for care delivery and payment reform include medical homes, advanced primary care and accountable care organizations.

Currently many states are pursuing multi-payer medical home initiatives such as Centers for Medicare & Medicaid Services (CMS) State Innovation Models program, the Comprehensive Primary Care Initiative, and the Multi-payer Advanced Primary Care Practice demonstration.

Patient Centered Medical Home

The Agency for Healthcare Research and Quality (AHRQ) defines a medical home not simply as a place but as a model of the organization of primary care that delivers the core functions of primary health care.

The medical home encompasses five functions and attributes:

1. Comprehensive Care

The primary care medical home is accountable for meeting the large majority of each patient's physical and mental health care needs, including prevention and wellness, acute care, and chronic care. Providing comprehensive care requires a team of care providers. This team might include physicians, advanced practice nurses, physician assistants, nurses, pharmacists, nutritionists, social workers, educators, and care coordinators.

2. Patient-Centered

The primary care medical home provides primary health care that is relationship-based with an orientation toward the whole person. Partnering with patients and their families requires understanding and respecting each patient's unique needs, culture, values, and preferences. The medical home practice actively supports patients in learning to manage and organize their own care at the level the patient chooses.

3. Coordinated Care

The primary care medical home coordinates care across all elements of the broader health care system, including specialty care, hospitals, home health care, and community services and supports. Such coordination is particularly critical during transitions between sites of care, such as when patients are being discharged from the hospital. Medical home practices also excel at building clear and open communication among patients and families, the medical home, and members of the broader care team.

4. Accessible Services

The primary care medical home delivers accessible services with shorter waiting times for urgent needs, enhanced in-person hours, around-the-clock telephone or electronic access to a member of the care team, and alternative methods of communication such as email and telephone care. The medical home practice is responsive to patients' preferences regarding access.

5. Quality and Safety

The primary care medical home demonstrates a commitment to quality and quality improvement by ongoing engagement in activities such as using evidence-based medicine and clinical decision-support tools to guide shared decision making with patients and families, engaging in performance measurement and improvement, measuring and responding to patient experiences and patient satisfaction, and practicing population health management. Sharing robust quality and safety data and improvement activities publicly is also an important marker of a system-level commitment to quality.

For more information visit: The PCMH Resource Center

Recommended Core Measures for Evaluating the Patient-Centered Medical Home: Cost, Utilization, and Clinical Care (The Commonwealth Fund)

The Million Hearts® Cardiovascular Disease (CVD) Risk Reduction Model

The Million Hearts® Cardiovascular Disease (CVD) Risk Reduction Model is a randomized controlled trial that seeks to bridge a gap in cardiovascular care by providing targeted incentives for health care practitioners to engage in beneficiary CVD risk calculation and population-level risk management. Instead of focusing on the individual components of risk, participating organizations will engage in risk stratification across a beneficiary panel to identify those at highest risk for atherosclerotic cardiovascular disease (ASCVD).

For more information, visit: The Million Hearts® Cardiovascular Disease (CVD) Risk Reduction Model

Pay for Performance

Under a "pay-for-performance" (P4P) model, a health insurer or other payer compensates physicians according to an evaluation of physician performance, typically as a potential bonus on top of the physician's fee-for-service compensation. The payer bases its evaluation on the data it has on that physician or physician group - most commonly, administrative or claims data which measures the quality and/or cost of care. Patient satisfaction data may also be a factor. Using these data, the payer then rates the physician or physician practice according to the payer's own criteria. Those physicians who meet the payer's targets may receive financial incentives (bonus payments) and some pay-for-performance programs also implement penalties, such as reductions in payments for services if payer's targets are not met. Source: American Medical Association

The P4P models are designed to use quality of care measures that include patient access to care, use of electronic systems within and/or across practices, and patient experience of care. In addition, process and outcome measures in priority areas of prevention, cardiovascular, diabetes are tracked using standardized national measures such as those endorsed by the National Quality Forum (NQF) including NQF 18 and NQF 59.

Value-based Reimbursement Models

Various models & terminology falls under the term value-based reimbursement, including value-based payments and value-based purchasing. Value-based payment is a generic term used to describe a payment model where the amount of payment for a service depends in some way on the quality and cost of the service that is delivered. Value-based purchasing is a generic term used to indicate that a purchaser is contracting for healthcare services in ways that are designed to improve quality, reduce costs, or both. Value-based purchasing may include the use of some form of value-based payment. Source: The Center for Healthcare Quality and Payment Reform, The Payment Reform Glossary, First Edition

  • Value-Based Payment

The goal of any value-based payment (VBP) program is to shift from volume-based/fee-for-service payments to payments that are more closely related to outcomes. An example is pay-for-performance programs that reward improvements in quality metrics and outcomes.

VBP programs have been largely prompted by public payers (Medicare) and now further driven by many private payers. The Medicare VBP program is intended to provide comparative performance information to physicians as part of Medicare's efforts to improve the quality and efficiency of medical care. This is hoped to be achieved by providing meaningful (meaningful use) and actionable information to physicians so they can improve the care they furnish, and by moving toward physician reimbursement that rewards value rather than volume. The program contains two primary components - the Quality and Resource Use Reports (QRURs, also referred to as Physician Feedback Reports) and the value based payment (VBP) modifier. The VBP program aligns with the Physician Quality Reporting System (PQRS).

For information on CMS value-based payment, visit: Value-based Payment Modifier

For information from the American College of Physicians, visit Medicare's Value-based Payment Program

  • Value-based Purchasing

Value-based purchasing is a demand side strategy to measure, report, and reward excellence in health care delivery. Value-based purchasing involves the actions of coalitions, employer purchasers, public sector purchasers, health plans, and individual consumers in making decisions that take into consideration access, price, quality, efficiency, and alignment of incentives. Effective health care services and high performing health care providers are rewarded with improved reputations through public reporting, enhanced payments through differential reimbursements, and increased market share through purchaser, payer, and/or consumer selection. Source: National Business Coalition on Health's Value-based Purchasing Council


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