Nearly 45% of healthcare payments tied to APMs: Survey

Health plans remain committed to value-based care, with both public and private payers funneling dollars to alternative payment models, according to a new survey from America's Health Insurance Plans.

The organization widely known as AHIP recently took over the annual analysis of healthcare payments historically performed by the Health Care Payment Learning & Action Network (HCP LAN), which launched this measurement effort in 2016. The Measurement Effort survey evaluates the adoption of alternative payment models (APMs) across lines of business, including Medicare, Medicaid and private health insurance plans.

This year, AHIP continued the partnership with CMS and Blue Cross Blue Shield Association to conduct the Measurement Effort survey. The latest results represent healthcare payment data from 58 health plans, two fee-for-service Medicaid states and Traditional Medicare, representing over 271 million people nationwide in 2024.

Across these lines of business, 44.9% of healthcare payments flowed through APMs in Categories 3 and 4 as originally defined by HCP LAN. These categories include APMs with either upside, downside or both types of financial risk, including population-based payments for specific conditions or populations.

However, the percentage of healthcare payments tied to risk-based APMs has remained stable, decreasing slightly from 45.2% in last year's Measurement Effort survey. Similarly, private and commercial payers saw similar proportions of payments -- 28.7% in 2024 and 28.5% in 2023 -- in downside risk APMs, which hold providers accountable for quality and costs of care.

Public payers continue to outpace commercial health plans in the adoption of value-based healthcare payments. The survey found that just 38.9% of healthcare dollars made by private payers in 2024 were in Categories 3 and 4 APMs, down slightly from 39.2% in 2023.

Meanwhile, 60.0% of Medicare Advantage payments, 42.7% of Medicaid payments and 44.4% of Medicare payments were in Categories 3 and 4 APMs in 2024. However, the public lines of business also experienced some decline, with Medicare Advantage notably experiencing a difference of about four percentage points.

All lines of business also saw fewer healthcare payments made through downside risk APMs. Again, Medicare Advantage had the most payments in downside APMs, accounting for 45.2% of its payments in 2024. Private payers had the lowest rate, at 19.4%.

Transitioning healthcare payments to APMs in Categories 3 and 4 has been a top priority for payers since these models hold providers accountable for outcomes. CMS, in particular, has set a goal of having all Traditional Medicare beneficiaries in a relationship with a provider accountable for quality and total cost of care by 2030.

Risk-based APMs promise to deliver on value -- improving clinical outcomes while reducing the cost of care. However, the transition to value-based care from the fragmented, fee-for-service system has proven to be a marathon, not a sprint. Not only have health plans and providers seen little gains in risk-based APM adoption, but the latest data shows 39.7% of healthcare payments were still purely fee-for-service in 2024. Another 15.4% were just linked to quality and value.

The feet-in-both-canoes conundrum seems most relevant to private health plans. In 2024, 50.4% of healthcare payments were strictly fee-for-service.

However, payers remain optimistic about the future of value-based care. AHIP also polled respondents on future trends, and 70% said they expect APM activity to increase over the next 24 months. More than half (55%) of respondents expect the most growth in risk-based APMs under Category 3, which includes bundled payment models like CMS' Transforming Episode Accountability Model (TEAM). CMS launched TEAM in certain areas on Jan. 1, requiring select hospitals to participate.

CMS also recently announced a successor to the popular ACO REACH (Accountable Care Organization Realizing Equity, Access, and Community Health) Model, which ends this year. After that, the agency plans to launch the Long-term Enhanced ACO Design, or LEAD, model.

Payers responding to the Measurement Effort survey also said they feel providers are better prepared to participate in APMs and that health plans are more engaged with the models. They also cited health plans' ability to operationalize APMs as a key facilitator of future adoption.

"This year’s survey highlights how health plans continue to work hand-in-hand with providers to advance value-based care and drive meaningful improvement for patients," Danielle Lloyd, MPH, AHIP’s senior vice president of private market innovations and quality initiatives for Clinical Affairs, said in a press release. "These innovative payment models reward outcomes, resulting in patient-centered, high-quality, coordinated care that is more affordable for Americans."

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.