Fact Sheets

Overview of Select Alternative Payment Models

Overview of Select Alternative Payment Models

The Centers for Medicare & Medicaid Services (CMS) has deployed multiple alternative payment models that increasingly tie Medicare payments to value, meaning the quality and efficiency of the care delivered.  In total, as of January 1, 2016, CMS has identified 10 alternative payment models that contribute to progress towards goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value. Those include:

  • Medicare Shared Savings Program (MSSP)
  • Pioneer ACOs
  • Next Generation ACOs
  • Comprehensive End Stage Renal Disease (ESRD) Care Model
  • Comprehensive Primary Care Model
  • Multi-Payer Advanced Primary Care Practice
  • End Stage Renal Disease Prospective Payment System
  • Maryland All-Payer Model
  • Medicare Care Choices Model
  • Bundled Payment Care Improvement

Medicare Shared Savings Program: Created by the Affordable Care Act and launched in 2012, the Medicare Shared Savings Program (MSSP) was created to help Medicare fee-for-service program providers become Accountable Care Organizations (ACOs), which are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients. Providers get to share in savings earned from providing high value, high quality care.  Specifically, the program rewards ACOs that lower their growth in health care costs while meeting performance standards on quality of care and putting patients first. Provider participation in an ACO is purely voluntary. In 2014, MSSP ACOs improve quality of care and saved nearly $300 million.

Pioneer ACOs: Started in 2012, this is a program designed for early adopters of coordinated care. Pioneer ACOs tend to be more experienced, have an established care coordination infrastructure, and assume greater performance-based financial risk. The CMS Actuary certified in 2015 that given savings in the program coupled with quality improvements it could be scaled across Medicare programs at large. Pioneer ACOs have subsequently been integrated into the Medicare Shared Savings Program. In 2014 alone, Pioneer ACOs improved quality and saved over $100 million.

Next Generation ACOs: Initiated in 2015 and begun in 2016, this model is designed for ACOs experienced in coordinating care for populations of patients.  It allows providers to assume higher levels of financial risk than under current models. It also tests new beneficiary incentives to receive care at Next Gen providers. This model builds upon experience from the Pioneer ACO Model and MSSP to offer a new opportunity in accountable care—one that sets predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality standards of care.  This model allows provider groups to assume higher levels of financial risk and reward than are available under the current Pioneer Model and MSSP.

Comprehensive ESRD Care Model: Launched in October 2015, this model is designed to improve care for patients with end stage renal disease through the creation of Accountable Care Organizations in which dialysis facilities, nephrologists and nephrology group practices, and other providers and suppliers worth together to coordinate care and are accountable for the cost and quality of care provided.

Comprehensive Primary Care Initiative: This initiative supports primary care practice transformation in select regions in partnership with local payers. This is accomplished through enhanced, non-visit-based payments, data feedback, and learning systems provided to physicians and other clinicians on the ground.

Multi-payer Advanced Primary Care Model: Launched in July 2010, this is a partnership with other commercial payers and Medicare in select states that provides monthly care management fees for primary care and other transformation support to test whether advanced primary care will improve care and lower costs.

End stage renal disease PPS: The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) required the implementation of an end stage renal disease bundled payment system effective January 1, 2011. In this new prospective payment system for ESRD care, the ESRD PPS provides a single payment (adjusted for case-mix) to ESRD facilities for renal dialysis services provided in an ESRD facility or in a beneficiary’s home.

Maryland All-Payer Model: The state of Maryland adopted a hospital global budget payment program in which all payers pay hospitals a fixed annual amount for inpatient and outpatient services, irrespective of hospital utilization (in other words, one annual budget unrelated to the number of patients admitted).  In year 1, the composite quality measure of preventable conditions improved by over 26 percent, and Maryland decreased absolute overall per capita Medicare hospital costs by 1.08 percent, saving Medicare $116 million.

Medicare Care Choices Model: Launched in July 2015, this model provides new options for hospice patients by allowing Medicare beneficiaries who qualify for hospice to receive palliative care services and curative care at the same time, and many of these services are available 24/7. Hospices receive $400 Per-Beneficiary-Per-Month for providing services.  

Bundled Payments for Care Improvement: The initiative targets 48 conditions with a single payment for an episode of care, incentivizing providers to take accountability for both cost and quality of care. Four types of bundled payments have been tested. Currently, more than 1,700 acute care hospitals, skilled nursing facilities, physician group practices, long term care hospitals, inpatient rehabilitation facilities, home health agencies, and others have assumed financial risk for episodes of care in the bundle.