Health Care Payment Learning and Action Network

The Department of Health and Human Services launched (through CMS) the Health Care Payment Learning and Action Network (LAN) in March 2015 to align with public and private sector stakeholders in shifting away from the current FFS, volume-based payment system to one that pays for high-quality care and improved health. The LAN provides a forum for generating evidence, sharing best practices, developing common approaches to the design and monitoring of APMs, and removing barriers to health care transformation across the U.S. health care system. If you would like more information or wish to participate in the LAN, please visit the LAN website.

Background

All alternative payment models (APM) and payment reforms that seek to deliver better care at lower cost share a common pathway for success: providers, payers, and others in the health care system must make fundamental changes in their day-to-day operations that improve quality and reduce the cost of health care. Making operational changes will be viable and attractive only if new alternative payment models and payment reforms are broadly adopted by a critical mass of payers. When providers encounter new payment strategies for one payer but not others, the incentives to change are weak. When payers align their efforts, the incentives to change are stronger and the obstacles to change are reduced.

A critical first step in this alignment between public and private stakeholders is for a critical mass of payers to adopt the same goal of moving towards value-based APMs and to then track and report national progress towards that shared goal. To this end, the LAN’s first initiative was the publication of the APM Framework, which established a common nomenclature for discussing and measuring progress, to include a refined four-category payment model classification system first advanced by CMS in May of 2014.

  • Category 1 – fee-for-service with no link to payment quality;
  • Category 2 – fee-for-service with a link of payment to quality, and value;
  • Category 3 – alternative payment models built on fee-for-service architecture; and
  • Category 4 – population-based payment.

Based on this APM Framework, the LAN has initiated two nation-wide APM measurement efforts measuring use of APMs among public and private health plans who voluntarily participated in the efforts. Conducted in the summers of 2016 and 2017, these findings capture actual health care spending from CY 2015 and CY 2016 across commercial, Medicare Advantage, Medicare FFS, and Medicaid market segments. In the latest 2016 look-back results, data from over 80 participants, accounting for nearly 245.4 million people or 84% of the covered U.S. population, revealed the following:

  • 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 payments, or population-based payments)

These APM measurement findings were shared publicly at the October 2016 and 2017 LAN Summits, reports for which can found on the LAN website.

Additional Information