Under Construction: Alternative Payment Models Pose Challenges for Specialists
By Emma Freer Texas Medicine July 2022


For some physicians, alternative payment models (APMs) may be the way forward in the transition away from fee-for-service. But for specialists that road is still under construction. 

Houston radiation oncologist Andrew Farach, MD, understands this predicament.  

In April, Medicare proposed delaying indefinitely the implementation of a new, mandatory radiation-oncology payment model designed to improve care for cancer patients receiving radiotherapy and streamline the payment process. 

Once implemented, the model would use quality measures, clinical data reporting, and patient experience to determine payments. It also would test whether prospective, episode-based payments lower Medicare costs while preserving or enhancing the quality of care for Medicare patients. (See “The ABCs of VBC,” page 13.) 

Dr. Farach, past president of the Texas Radiological Society, says the model is a step in the right direction, and he’s hopeful that, once the model is implemented, it would free him and his colleagues from increasingly onerous prior authorization requirements because they would have more discretion about how to care for their own patients.  

On the one hand, “I see the benefit of episodic [or] value-based care, if we ever get there,” he said. 

On the other hand, Dr. Farach welcomed the delay, which he says buys time to address “very evident problems” with the model and for physicians to prepare for its implementation. For instance, he would like to see the model updated to address health inequities and to ensure small, rural practices can succeed despite lacking the same overhead, resources, and technology as their larger urban counterparts.  

He, like many specialists, finds himself in a conundrum: Without a model in place, there's little incentive to break away from the fee-for-service paradigm.  

“I have no clue how I would do [value-based care] outside of an established APM,” he said.

The APM conundrum 

The Texas Medical Association is working to support physicians, regardless of specialty, who find themselves in this position. The association has asked the Centers for Medicare & Medicaid Services (CMS) to reconsider updates to the Merit-Based Incentive Payment System and instead focus on the development of voluntary, physician-led APMs. In late April, the TMA Board of Trustees also approved the creation of a new task force dedicated to APMs. (See “What’s New in Value-Based Care,” page 13.)

Studies show physicians in primary care specialties – family medicine, general practice, internal medicine, obstetrics-gynecology, and pediatrics – are disproportionately overrepresented among APM participants, while their colleagues in other specialties are disproportionately underrepresented. 

Similarly, practices with at least some primary care physicians participate in APMs more often than their peers in practices without any primary care physicians, according to a 2020 American Medical Association policy research perspective.

Until CMS adopts new specialty APMs, many specialists will remain on the track’s sidelines, says Tyler anesthesiologist Asa Lockhart, MD. He chairs the AMA Council on Medical Service and is a past president of the Texas Society of Anesthesiologists.

“If there’s not a federal model, then there’s no proven model,” he said. 

Of the 10 Medicare APMs currently available in Texas, six are targeted to a specific clinical condition or are episode-based, namely: joint replacement, oncology, maternal opioid misuse, and diabetes prevention, plus two APMs the Center for Medicare & Medicaid Innovation (CMMI) is testing related to kidney care and bundled payment. 

Although the U.S. Department of Health and Human Services’ (HHS’) Physician-Focused Payment Model Technical Advisory Committee (PTAC) has proposed other specialty APMs, these models have not always been successful, often because they lack proof of any meaningful return on investment.  

Former HHS Secretary Alex Azar rejected a series of APMs, including many developed by specialty societies in partnership with PTAC, in 2018 and 2019. More recently, CMS announced a CMMI strategy refresh in October 2021, under which all future APMs must address health inequities, a priority of the Biden administration. PTAC also has signaled its belief that CMMI should offer fewer and more targeted APMs.  

AMA CEO James Madara, MD, worries these rejections could have a cooling effect, according to a June 2018 letter he sent to Secretary Azar. 

“[O]ther physician groups and specialty societies may find it difficult to justify continuing their efforts to develop APM proposals to submit to PTAC if there is little reason to believe they will actually be implemented for Medicare patients,” he wrote.  

In search of a blueprint 

Another challenge for specialists wanting to participate in an APM is determining the value of their contributions to patient outcomes and cost savings – a fuzzier equation than for their primary care colleagues.  

Dr. Lockhart says this is a double-edged sword. Specialty care is typically more expensive, which means specialists potentially can earn greater incentive payments and really thrive under a value-based care model. But they also may struggle to divvy up those payments. 

“In primary care, you’re pretty much the master of the ship, whereas in the procedural area you’ve got a lot more players and moving parts,” he said.  

One way anesthesiologists can get around these challenges is the perioperative surgical home, an APM developed by the American Society of Anesthesiologists (ASA) and espoused by Dr. Lockhart. This team-based approach measures value based on improved outcomes – e.g., reduced length of hospital stays, readmissions, and complications – and lower costs, according to ASA

Under the fee-for-service model an anesthesiologist often plays little role in patients’ presurgery care, other than to administer tests before they are admitted to the surgery facility, which “may do nothing to increase value,” Dr. Lockhart says. 

Under the perioperative surgical home model, however, primary care physicians, anesthesiologists, and other clinicians work together to assess patients for underlying conditions and other factors that could impact the surgery’s success. They then work to address any findings.  

For instance, Dr. Lockhart says, the physician-led team may diagnose a patient with diabetes, prescribe physical therapy to help him or her tone up, or offer smoking cessation guidance in advance of a scheduled surgery – all actions that “ensure [the patient is] capable of a great outcome.”  

Once the patient is optimized for surgery, the perioperative surgical home model aims to ensure the surgery is a success by selecting the right team and standardizing the appropriate processes to minimize errors, according to ASA. Postsurgery, patient care is focused on pain management and preventing complications. Long-term, such care revolves around coordinating discharge plans, educating the patient and his or her caregivers, and rehabilitation.  

The model has proven its value in at least one test: Novant Health, a hospital in Wilmington, N.C.,  formerly known as New Hanover Regional Medical Center, saved $12 million in 2018 after expanding the perioperative surgical home setup to 10 different patient and disease groups over three years.  

Dr. Lockhart acknowledges that many specialists may be wary of APMs, especially given the complex finances undergirding such models. But he encourages his peers in all specialties to reconsider, pointing to the support offered by TMA and others in organized medicine as well as to the leverage that comes with early adoption.  

“If you do all the work [to increase value], and you’re willing to do it for free, the system’s going to let you do it for free,” he said. “You really have to aggressively pursue part of that shared savings.”

Tex Med. 2022;118(6):30-32
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Last Updated On

September 12, 2022

Originally Published On

June 24, 2022

Emma Freer

Associate Editor

(512) 370-1383

Emma Freer is a reporter for Texas Medicine. She previously worked in local news, covering city politics, economic development, and public health. A native Clevelander, she graduated from Columbia Journalism School and the University of St. Andrews.

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