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Alternative Payment Models: What Do Neurosurgeons Need to Know?

kahnGuest post written on behalf of

Guest post from Elyne N. Kahn, M.D., M.P.H.
Neurosurgery Resident,

Alternative payment models (APMs) differ from traditional fee-for-service by focusing on paying for value versus paying for volume. Though such systems have existed in various forms for decades, they have garnered a great deal of attention in recent years as health policy experts and large payers seek to find ways of controlling the cost of healthcare in the U.S.

Most APMs seek cost control by introducing risk to providers or hospitals to incentivize cost containment and high quality care. Any given payment model may involve “upside risk,” “downside risk,” or both (Figure 1). Given the numerous examples, the Centers for Medicare & Medicaid Services (CMS) developed a taxonomy of payment models into which various APMs are categorized. APMs are actively being developed, tested and implemented by CMS and private payers across the country. (See CMS’ interactive map displaying “innovation sites.”)

figure 1

Figure 1

Bundled payments are one example of an APM that is likely to affect many neurosurgeons, and spine surgery has been an early target of bundled payment initiatives. In this model, a group of healthcare providers (hospitals, physicians, other healthcare providers) share one prospective payment for a specified range of services associated with an “episode of care.” The goal is to reduce unnecessary utilization and control costs by encouraging coordination of services among providers. The risk taken on by the provider is that a patient may utilize additional or higher-cost services resulting in a total cost of care that exceeds the bundled payment. Total cost may vary based on co-morbidities, complications, and post-discharge hospital readmission, so applying risk-adjustment to the payment methodology is critical. For neurosurgeons participating in such a model, there are several important considerations:

  • Whomever is awarded the bundled payment will control the mechanism for dividing the total amongst all participants, including the neurosurgeon;
  • Special attention must be paid to how risk adjustment factors will be calculated and applied to increase or decrease the bundled payment;
  • Program emphasis is on reducing costs, rather than rewarding quality; and
  • Success depends on improving processes, connectivity and communication among multiple care providers and organizations.

APMs need not be considered catastrophic for physicians and neurosurgeons; however, to date, physicians have absorbed a disproportionate financial burden. In the face of , APMs might help drive a greater impact of each dollar spent on the wellbeing of our patients. In addition, hospitals and other non-physician healthcare costs may face a more appropriate degree of burden in cost containment. Nonetheless, as these payment systems evolve, neurosurgeons remain at risk if they don’t remain actively involved in efforts to ensure that both patients and providers experience the benefits of new modes of reimbursement.

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