Alternative Payment Models

I/DD providers are gearing up for a shift to alternative payment models (APMs). In theory, value based payments provide an opportunity to refocus efforts on quality of care, rather than the number of services provided. But in practice, I/DD services are distinct from the rest of the healthcare world and their payment models will need unique consideration. There are a couple key questions to keep in mind as governments and providers work on developing APMs for I/DD services. 

What Defines Quality in Alternative Payment Models?

There is currently very little standardization or agreement on how quality in I/DD services should  be measured. Much of the precedent for value based payments are based in physical healthcare, so there are few relevant examples that the I/DD sector can learn from. In states that have begun testing value based payments for I/DD, states look at a wide range of data to determine quality. A couple examples of quality measures include rates of employment, a reduction in waiting lists, and individual experience data reporting on their level of self-determination. However, the lack of standardization and agreement across the sector makes it difficult to scale alternative payment models. 

Additionally, the I/DD services community has important long-term goals that can be harder to measure in traditional models, such as community integration, individual autonomy, and adequate compensation and support for frontline staff. These goals risk getting lost in the shuffle if Alternative Payment Models are designed to focus solely on traditionally quantifiable metrics. Also, since each individual has their own personal goals, the sector needs to take into account the fact that meaningful outcomes will look very different from one person to the next. 

Who Bears the Financial Risk? 

There are a variety of models that the I/DD sector can use, all with unique risks and benefits. In general, alternative payment models try to incentivize providers to keep their costs under a specific budget. In some models, providers who go over their budget will pay penalties. While these models are meant to incentivize efficiency, risk-bearing models can be extremely difficult for I/DD providers to actually implement. In particular, smaller providers may struggle to keep extra reserves of cash on hand to pay potential penalties. 

If they haven’t already, I/DD providers will need to invest to pay for electronic documentation, reporting, and analytics capabilities. They’ll also need staff who are trained and knowledgeable in those skills. There will need to be some training to ensure that frontline staff understand how this shift impacts their day-to-day work. All of these changes will require significant time and resource investments, which is difficult in a sector already strapped for funds. 

States are experimenting with a variety of Alternative Payment Models to determine what works best. In some states, Managed Care Organizations and I/DD providers are sharing the financial risk together, to reduce the financial pressure on I/DD agencies. Other organizations are calling on states to facilitate investments in technology and training. 

How Can We Learn From Each Other? 

While some states have begun piloting APMs for I/DD services, these models are still very much in development. Notably, some providers have reported negative effects after participating in value based payment agreements — such as struggles with implementation, reductions in needed services, and increases in waiting lists. Additionally, since most states and Managed Care Organizations have low experience with I/DD services, there is little standardization in payment rates and limited data to understand how to even set fair reimbursement rates. 

As states continue to test Alternative Payment Models, everyone will benefit from continuous sharing of experiences, learnings, and challenges. It will be important to continuously include providers and individuals in the process of building out value based structures, to ensure that these models match the reality of I/DD services and individual’s needs.