Key Considerations to Implementing Alternative Payment Models in
Maternity Care

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Episode DefinitionEpisode TimingPatient PopulationServicesEpisode PriceType and Level of RiskQuality MetricsPayment FlowAccountable EntityStakeholder PerspectivesData InfrastructurePatient EngagementRegulatory EnvironmentInteraction Between Multiple APMs

Episode Definition


The episode is defined to include the large majority of births, including the newborn care, that are lower-risk. While not necessarily lower risk, episode payment may also be considered appropriate for women who may be at elevated risk due to conditions that have defined and predictable care trajectories, such as gestational diabetes. As the CEP model matures, some groups with significant high-risk pregnancy experience and capacity may seek to manage the entire continuum of risk.


Defining the Episode - Defining the episode includes three specific questions:

When does the episode start and how long does it last?

By definition, a perinatal care patient has a specific start and end point to their maternity condition. However, there are different ways in which a maternity episode can be defined. Decisions must be made regarding when the episode starts and ends, in order to determine services and budget.

  • Options for the starting point include 1) when a payer is notified via claims of a prenatal care visit, or 2) when a live birth is identified through retrospective review of claims
  • Options for determining the episode length can include
    • Using a “look back” period. The look back could be 270 days prior to delivery, or the first visit at which a pregnancy is confirmed.
    • Using a “look forward” methodology, e.g. 60 days post-partum for the mother/30 days postpartum for the baby, based on the date of live birth.

 

Are there specific patients for whom a provider will or will not receive reimbursement through the episode model?

Payers and providers need to know which patients are being cared for under and episode payment model; thus decisions must be made about whether the model will cover all patients, or whether certain patients will continue to be paid through a Fee-for-Service reimbursement, and what criteria determines this categorization. Options include:

  • Include all patients
  • Establish exclusions:
    • High-risk pregnancies (which can be defined in many ways and negotiable, and identified after-the-fact for retrospective episodes).
    • Women who did not receive care from delivering provider during the prenatal time period.
    • Women whose pregnancy was not confirmed until a pre-negotiated week of pregnancy (this includes women who did not seek services at the start of their pregnancy).

Setting the Patient Population E-book  |   Setting the Patient Population Resource Slides

 

What services are included in the episode budget?

The goal of an episode payment model is to deliver all necessary services to the patient with the goal of achieving a successful outcome at an appropriate cost (i.e within the episode budget). Questions to be considered include:

  • Will the episode budget be set to reasonably include all services inclusive of pregnancy, or will the budget reflect a subset of services?
  • If the episode population includes the baby, will the services include all NICU costs?

Episode Budget and Price E-book  |   Episode Budget and Price Resource Slides

Episode Timing


The episode should begin 40 weeks before the birth and end 60 days postpartum for the woman, and 30 days post-birth for the baby.


Defining the Episode

When does the episode start and how long does it last?

By definition, a perinatal care patient has a specific start and end point to their maternity condition. However, there are different ways in which a maternity episode can be defined. Decisions must be made regarding when the episode starts and ends, in order to determine services and budget.

  • Options for the starting point include 1) when a payer is notified via claims of a prenatal care visit, or 2) when a live birth is identified through retrospective review of claims
  • Options for determining the episode length can include
    • Using a “look back” period. The look back could be 270 days prior to delivery, or the first visit at which a pregnancy is confirmed.
    • Using a “look forward” methodology, e.g. 60 days post-partum for the mother/30 days postpartum for the baby, based on the date of live birth.

 

Patient Population


The episode should primarily include the large majority of births, including newborn care, that are lower-risk. The Work Group also supports CEP for women who may be at elevated risk because of predictable risk factors that have defined care trajectories, such as gestational diabetes.


Defining the Episode

Are there specific patients for whom a provider will or will not receive reimbursement through the episode model?

Payers and providers need to know which patients are being cared for under and episode payment model; thus decisions must be made about whether the model will cover all patients, or whether certain patients will continue to be paid through a Fee-for-Service reimbursement, and what criteria determines this categorization. Options include:

  • Include all patients
  • Establish exclusions:
    • High-risk pregnancies (which can be defined in many ways and negotiable, and identified after-the-fact for retrospective episodes).
    • Women who did not receive care from delivering provider during the prenatal time period.
    • Women whose pregnancy was not confirmed until a pre-negotiated week of pregnancy (this includes women who did not seek services at the start of their pregnancy).

Setting the Patient Population E-book  |   Setting the Patient Population Resource Slides

Services


Covered services include all services provided during pregnancy, labor and birth, and the postpartum period (for the women) and newborn care for the baby. Exclusions should be limited. Initiatives should also consider including high-value support services, such as doula care and prenatal and parenting education.


Defining the Episode

What services are included in the episode budget?

The goal of an episode payment model is to deliver all necessary services to the patient with the goal of achieving a successful outcome at an appropriate cost (i.e within the episode budget). Questions to be considered include:

  • Will the episode budget be set to reasonably include all services inclusive of pregnancy, or will the budget reflect a subset of services?
  • If the episode population includes the baby, will the services include all NICU costs?

Episode Budget and Price E-book  |   Episode Budget and Price Resource Slides

Episode Price


The episode price should strike a balance between provider-specific and multi-provider/regional utilization history. The price should: 1) acknowledge achievable efficiencies already gained by previous initiatives; 2) reflect a level that potential provider participants see as feasible to attain; and 3) include the cost of services that help achieve the goals of episode payment.


Episode Budget: There are three main factors associated with establishing the episode budget:

Determining the data that are to be used: Payers can either use:

  • Historical data (the historical “look back” period may be anywhere from one-to-three years) for individual physicians, provider groups, ACOS/IPAs, or across a geographic area or marketplace
  • Calculate the budget based on expected use of services, using payer’s current reimbursement rates.

Episode Budget and Price E-book  |   Episode Budget and Price Resource Slides

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

 

Adjusting the budget for risk factors: Payers need to determine if an episode will be risk-adjusted or if there will only be the “flat rate” budget. If there is to be risk adjustment, the following questions must be answered:

  • Will the payer offer a margin for providers (might be considered when provider efficiency is high)?
  • Will the payer implement an underuse fee, whereby if certain services aren’t offered they will be automatically added to the price (budget) to prevent underuse of care?
  • Will the payer offer stop-loss protection for outlier cases?

Episode Budget and Price E-book  |   Episode Budget and Price Resource Slides

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

Designing the savings/risk model: As an APM Framework Category 3 model, episodes may incorporate shared savings and/or shared risk. Payers need to determine the following:

  • Will the payer share any savings the provider generates? If so, what percentage?
  • Will the payer expect the provider to share in any losses that are incurred? If so, what percentage?
  • Will the provider be fully responsible for all losses and able to keep all savings it generates?/li>
  • Will the payer automatically take a percentage of the budget as its built in savings?

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

Type and Level of Risk


The goal should be to utilize both upside reward and downside risk. Transition periods and risk mitigation strategies should be used to encourage broad provider participation and support inclusion of as broad a patient population as possible.


Establishing the Episode Budget

Adjusting the budget for risk factors: Payers need to determine if an episode will be risk-adjusted or if there will only be the “flat rate” budget. If there is to be risk adjustment, the following questions must be answered:

  • Will the payer offer a margin for providers (might be considered when provider efficiency is high)?
  • Will the payer implement an underuse fee, whereby if certain services aren’t offered they will be automatically added to the price (budget) to prevent underuse of care?
  • Will the payer offer stop-loss protection for outlier cases?

Episode Budget and Price E-book  |   Episode Budget and Price Resource Slides

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

 

Designing the savings/risk model: As an APM Framework Category 3 model, episodes may incorporate shared savings and/or shared risk. Payers need to determine the following:

  • Will the payer share any savings the provider generates? If so, what percentage?
  • Will the payer expect the provider to share in any losses that are incurred? If so, what percentage?
  • Will the provider be fully responsible for all losses and able to keep all savings it generates?/li>
  • Will the payer automatically take a percentage of the budget as its built in savings?

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

Quality Metrics


Prioritize use of metrics that capture the goals of the episode, including outcome metrics, particularly patient-reported outcome and functional status measures; use quality scorecards to track performance on quality and inform decisions related to payment; and use quality information and other supports to communicate with, and engage patients and other stakeholders.


Incorporating Quality Measures to Ensure Delivery of High-Quality Care Within an Episode Model

Which measures will be utilized to measure quality?

The process of selecting the measures that most closely relate to the goals of the episode model should include examining the following questions:

  • What are the areas for improvement based on current performance?
  • How can the designing entity best engage providers and stakeholders in choosing measures?
  • What measures are already being collected, reported or publicly available, including those used by other payers, and can feasibly be integrated into this model with little burden or infrastructure cost?
  • Which measures have meaningful state, regional or national benchmarks and can serve multiple purposes through implementation in this model?

Quality Measures Part 1 E-book  |   Quality Measures Part 1 Resource Slides

Quality Measures Part 2 E-book  |   Quality Measures Part 2 Resource Slides

 

How will the payer and provider determine performance? If payment or participation in general in the model will be linked to quality performance, the designing entity must determine how performance will be assessed.
Options include:

  • Assess performance relative to benchmarks or targets
  • Assess performance relative to other providers
  • Assess performance relative to individual provider’s past performance

Quality Measures Part 1 E-book  |   Quality Measures Part 1 Resource Slides

Quality Measures Part 2 E-book  |   Quality Measures Part 2 Resource Slides

 

How will performance on measures be tied to savings or risk? There are various ways to link payment to performance, once the performance assessment is made. Two options include:

  • Integrate quality directly into the financial model and allow for performance to adjust the savings (or loss) percentages.
  • Use quality performance independently of the financial model, and reward with a separate quality bonus pool or another mechanism.

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

Quality Measures Part 1 E-book  |   Quality Measures Part 1 Resource Slides

Quality Measures Part 2 E-book  |   Quality Measures Part 2 Resource Slides

 

 

Payment Flow


The unique circumstances of the episode initiative will determine the payment flow. The two primary options are: 1) a prospectively established price that is paid as one payment to the accountable entity; or 2) upfront FFS payment to individual providers within the episode with retrospective reconciliation and a potential for shared savings/losses.


Operationalizing the Payment Model: Operationalizing the episode requires relationships between payers, providers, and patients, according to the following questions:

How will payment be operationalized?

  • Fee-for-service with retrospective reconciliation to the episode budget.
  • Prospectively paid at the start of the episode. (Note: this requires the episode to be triggered by a prenatal care visit, not a live birth)

When will reconciliation payments be made?

  • With what frequency will the payer reconcile payments?
  • Will the provider face penalties for claims not submitted in a timely manner?
  • Will the payer face penalties for late reconciliation?

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

How will the payer distribute payments to the contracting entity?

  • Depending on the contracting method, the payer needs to identify how payments will be distributed.
  • Will accountable providers have any requirements to distribute shared savings payments to subcontractors (if applicable?)

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

Accountable Entity


The accountable entity should be chosen based on readiness to re-engineer change in the way care is delivered to the patient and to accept risk. In this model, the accountable entity will likely require a degree of shared accountability, given the number of clinicians working to care for a patient.


Establishing the Episode Budget

How will performance on measures be tied to savings or risk? There are various ways to link payment to performance, once the performance assessment is made. Two options include:

  • Integrate quality directly into the financial model and allow for performance to adjust the savings (or loss) percentages.
  • Use quality performance independently of the financial model, and reward with a separate quality bonus pool or another mechanism.

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

Quality Measures Part 1 E-book  |Quality Measures Part 1 Resource Slides

Quality Measures Part 2 E-book  |   Quality Measures Part 2 Resource Slides

Stakeholder Perspectives


Ensure that the voices of all stakeholders— consumers, patients, providers, payers, states, and purchasers—are included in the design and operation of episode payments.


Contracting with Providers: To make an episode model a success, contracts between payers and providers must reflect the design and goals of the model, reflected by the following questions:

How can payers determine which providers are ready for a maternity episode-based payment? (Options are not mutually exclusive)

  • Identify providers who are both amenable and have licensure to contract for episodes
  • Share data on overall maternity care quality and outcomes, highlighting concerns and areas for improvement, to engage providers
  • Conduct readiness assessments

Making the Business Case for Maternity APMs Infographic  |   Making the Business Case for Maternity APMs Issue Brief

Determine which providers will have contractual obligations under the episode. Options include:

  • Payer contracts with one principal accountable provider
  • Payer contracts with one provider, which in turn subcontracts with other providers
  • Payer contracts with each partnering provider

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

Once a model is designed and providers identified, what details should be included in the maternity episode-based contract?

  • Episode definitions (with specificity of billing codes)
  • Appeals process
  • Provider responsibility for reporting, frequency of claims submission

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

How will the payer distribute payments to the contracting entity?

  • Depending on the contracting method, the payer needs to identify how payments will be distributed.
  • Will accountable providers have any requirements to distribute shared savings payments to subcontractors (if applicable?)

Contracting with Providers E-book  |   Contracting with Providers Resource Slides

How will data be used to assist providers in managing to an episode budget?

  • What data should providers expect to get from payers to help them track costs relative to budget for each episode?
  • How will the data be shared, (e.g., web portal) and with what frequency (e.g., monthly, near-real-time)?

Data Infrastructure E-book  |   Data Infrastructure Resource Slides

Data Infrastructure


Understand and develop the systems that are needed to successfully operationalize episode payments.


Contracting with Providers to Make an Episode Model a Success

How will data be used to assist providers in managing to an episode budget?

  • What data should providers expect to get from payers to help them track costs relative to budget for each episode?
  • How will the data be shared, (e.g., web portal) and with what frequency (e.g., monthly, near-real-time)?

Data Infrastructure E-book  |   Data Infrastructure Resource Slides

Patient Engagement


Engaging women and their families is critical in all three phases of the episode—prenatal, labor and birth, and postpartum/newborn—to contribute to the foundation for healthy women and babies.


Regulatory Environment


Understand relevant state and/or federal regulations and how they may impact the design and implementation of episode models.


Interaction Between Multiple APMs


Consider the context of the broader strategic goals when deciding whether to implement multiple payment models and address the operational issues that arise when two entities may have responsibility for the costs of care for one patient.


A Closer Look: Lessons Learned from Tennessee and Ohio

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Text about Ohio and Tennesee interviews here

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