10 things to know about navigating alternative payment models in orthopedics


The American Academy of Orthopaedic Surgeons has released a guide to help practices identify risks and opportunities within alternative payment models designed to achieve value-based care.

Ten things to know:

1. As healthcare costs increase faster than the rest of the economy, employers and the federal government recognize the unsustainability of the current payment system and need to alter it to produce high-value health interventions, according to the October 2020 guide.

2. A proportional breakdown of insurance types in the U.S., provided by the Kaiser Family Foundation:

  • Employer-based: 48 percent
  • Medicaid: 20 percent
  • Medicare: 14 percent
  • Uninsured: 9 percent
  • Individual (covered directly by a health insurance company): 6 percent
  • Military: 1 percent

3. Increased demand for lower costs and improvements to quality continues to evolve, making it critical to define cost, quality and value, according to AAOS. Appropriate measurement is needed to achieve value-based care.

4. Understanding how alternative payment models are developed and what they mean for clinical practice is required to improve outcomes, lower costs, maintain financial stability and achieve long-term success.

5. AAOS created a value-based care continuum to help practices navigate alternative payment models. This includes identifying where existing payment arrangements fall along the value-based care continuum, understanding transition sought by purchasers/payers to value-based care and planning for changes in alternative payment model payer contracting arrangements.

6. The value-based care continuum focuses on categorizing alternative payment models by how aggressively they set cost and quality metrics to achieve value.

7. The typical assessment of an alternative payment model is the level of risk and opportunity involved for providers, according to AAOS. The greater the opportunity for financial gains and losses, the further along the continuum an alternative payment model is found.

8. To align business incentives toward reductions in cost and increases in quality, payers reward and penalize providers through financial arrangements in alternative payment models Providers put a certain amount of reimbursement "at risk" for the opportunity to receive a greater financial reward.

9. Risks associated with achieving a positive financial outcome include utilization risk, technical risk, insurance risk and performance risk.

10. AAOS encourages providers to focus on risk areas with high controllability, such as performance risk.

Click here to view the academy's guide in full.

Copyright © 2023 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Webinars

Featured Podcast

Featured Whitepapers