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January 14, 2022

Hierarchical Payment Models—A Path for Coordinating Population- and Episode-Based Payment Models

Author Affiliations
  • 1Humana Inc, Louisville, Kentucky
  • 2Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts
  • 3Department of Medical Ethics and Health Policy, Perelman School of Medicine, University of Pennsylvania, Philadelphia
  • 4Corporal Michael J. Crescenz VA Medical Center, Philadelphia, Pennsylvania
JAMA. 2022;327(5):423-424. doi:10.1001/jama.2021.23786

In November 2021, the Centers for Medicare & Medicaid Services (CMS) announced a strategy to achieve near-universal participation in value-based payment models by 2030.1 Core to this strategy is the goal that every beneficiary should be in a clinical care relationship that has accountability for quality and total cost of care. Achieving this goal will require harmonizing the CMS foundational value-based payment models that focus on accountability across the continuum of care (ie, population-based models) with those that target specific diseases, acute events, or sites of care (ie, episode or bundled payment models).

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1 Comment for this article
Hierarchical Payment Models Should be Designed to Implement High-Quality Primary Care
Kevin Fiscella, MD, MPH | University of Rochester Medical Center
The authors propose an interesting, hierarchical alternative payment model (APM), but space limitations likely precluded their discussion of important limitations. APMs should be designed to support systems of care that meaningly address the US health care system’s poor performance with regards to two national goals: health care value (poor return on population health per health care dollar spent) and health equity (addressing population-level disparities in health).

Addressing these twin population-based goals requires population-based measures that meaningfully reflect population health and equity. Addressing these twin national goals critically requires implementing high-quality primary care and rebuilding this foundation of health
care (National Academies of Sciences, Engineering, and Medicine, 2021). Implementing high-quality primary care, in turn, requires a fresh, collaborative, and holistic-design approach involving APMs, development of health care policies, and creation of a vibrant health care ecosystem with this goal at the forefront. No doubt, the proliferation of APMs, APM fragmentation, and lack of coordination between them undermine the goal of implementing high-quality primary care.

However, significant risks posed by episode-based payment models to primary care, value, and equity must be acknowledged and addressed during design. These risks include fragmentation and erosion of primary care through carve-outs, exacerbation of health inequities from perverse, poorly conceived incentives, insufficient population-based accountability, and cost-shifting. Mitigating these risks will require meaningful collaboration with primary care stakeholders in the design of hierarchical APMs to ensure restrictions in the scope of episode-based care, transparency in value and equity outcomes related to episode-based care, and ultimately sufficient autonomy to primary care organizations and practices in contractual decisions.