As published in the Journal of AHIMA, July to August 2018, Vol. 89, no. 07

Institutions entering the alternative payment model (APM) landscape for the first time need to have an appreci­ation of what this activity does and does not entail. It does not simply mean that the enterprise can package a reduced fee-for-service pricing structure into a different bag. Neither does it mean that the enterprise can expect “new money” for meeting quality benchmarks that it should already be meet­ing. And, in the words of one hospital executive, it does not mean that “everything can stay the same except I can write the doctors a check.”

A true APM offering creates the kind of clinical and finan­cial integration that can help with federal and state anti­trust compliance as well as with elimination of duplicative or redundant care. APMs can increase positive clinical out­comes and reduce cost, all without denying patients medi­cally necessary services. This paradigm shift brings with it changes in operations, often occurring in parallel with ongoing efforts to stabilize revenues under the “old” way of doing things.

Getting Started with Advanced Payment Models

The biggest initial hurdle for institutions contemplating APM relationships is whether the information technology already within the enterprise is capable of gathering even basic clini­cal outcome data and sorting it within a variety of patient populations. Claims data – if made available by payers, and especially for a care-managed population – can show a va­riety of clinical activities, such as medication compliance (with prescription refill information) and clinical activity outside of the APM enterprise.

Most hospitals and multispecialty physician groups do not include vision, dental, and other types of routine care services.

Integrating this claims data with the enterprise’s elec­tronic health record (EHR) is a critical first step, and many legacy systems (and some modern EHRs) do not have this capability. Interface engines and bridging technology are expensive as well. So, a business decision about whether the cost of new APM-assistive technology is less than the anticipated additional revenue from APM payers should be made.

Additionally, some health information management (HIM) professionals still recoil at the notion of incorporating ex­ternally generated information into the official record of care, regardless of how thoroughly this objection has been debunked, and notwithstanding how the push for interop­erability has expanded the information on which clinicians rely in developing a plan of care. Such external information is critical both to care coordination in a clinically integrated environment and to developing payment models for shared savings and case rates.

The modern HIM professional must be a participant in helping the organization integrate its record of care simulta­neously with its integration of payment for-and the delivery of-that care.

While considering the capability of the EHR to gather and sort clinical data in a helpful way, the enterprise should also analyze its business systems to make sure that, among other things, revenue from care not provided can be linked to patients whose overall care is being managed within the APM framework. Many APMs link the payment of bonuses to decreases in the overall “spend” experienced by individual patients or patient groups; linking these shared savings and other payments to providers who prevented unneeded (and therefore unbilled) patient care thus becomes important. A variety of regulatory schemes require that these savings be paid proportionally to the owners or participants in the APM venture as well, so business systems need to be able to track this and integrate this information into the back-end pay­ments of bonus or savings revenues.

Deciding What to Measure

Once the capabilities of the enterprise’s various data sys­tems have been established, the contract negotiation team, which should include providers as well as business executives, counsel, and other subject matter experts, should convene to discuss which data will be measured within the APM and what monetary value will be assigned to each of these measurable data points.

Clinicians generally do not like being measured on things that don’t matter clinically; yet, “you can’t manage what you don’t measure” is still the order of the day. The unfortunate reality of APM contracting is that once one payer requires a healthcare provider to measure some performance capability, the APM ends up measuring it for all payers on the theory that quality is payer agnostic and the enterprise doesn’t want to discriminate in the qual­ity care it delivers based on payer type. Thus, controlling the number and quality of measurable data points at the outset of an APM relationship is critical to prevent partici­pants from measuring everything and focusing on nothing of clinical significance.

APM participants can’t forget the various legal mandates not to create payment methodologies that incentivize pro­viders to deprive patients of medically necessary care. However, the definition of “medically necessary” may vary depending on which regulatory scheme you apply and what a particular payer thinks about therapeutically equivalent care.

Monitoring compliance with all of the contract’s provi­sions is a necessary step, which is made more difficult by the traditional separation of enterprise oversight and manage­ment into different silos of responsibility. To the extent that a separate business organization has not been formed to deal with APM contracting and payment issues, close collabo­ration between clinical and administrative departments needs to be created and maintained.

For example, physicians may not make critical distinctions between care pathways that have vastly different financial consequences unless they are both included in the conver­sation about developing those pathways and reminded of those pathways when atypical patients present.

Similarly, combining clinical documentation improve­ment (CDI) programs with new clinical and financial mea­surements helps make the case for both. Compliance doc­trine would indicate that there needs to be valid clinical reasons present when business office or HIM staff request additions to or changes to medical record documentation after discharge (such as hospital-acquired conditions or “present on admission” indicators). Any changes to medi­cal records after discharge typically relate only to changes in fee-for-service reimbursement, which as a motivator typ­ically does not impress physician partners and impresses regulators even less.

However, correcting clinical documentation concur­rently with an admission-or correcting entries in the re­cord after admission that relate to the continuum of care­in a clinically integrated network has more than a simple “change the document to upcode the care” impact. It af­fects how all of the participants in the APM structure ap­proach ongoing care and the financial incentives for per­sons other than the care provider whose record has been supplemented.

Providing Feedback on Benchmarks

Frequent feedback on both clinical and financial bench­marks needs to be provided to all participants. Industry information shows that this “dashboard” information is more effective when presented as a comparison with other partici­pants (on an anonymous basis, of course), as most providers do not want to be viewed as negative outliers. Additionally, the completeness and accuracy of clinical documentation can be dashboarded and compared with industry and com­petitor norms in order to show the effect on care provided ­or not needed-and the corresponding effect of medical spending and enterprise costs. Both are helpful in establish­ing the proof of clinical and financial integration desired by regulators and payers.

If a separate organization has been established to man­age the APM arrangements, then one compliance-related item of documentation should be a business associate agreement between each APM provider and the manage­ment organization. Unless the manager is a licensed entity under state insurance law, most likely it will be viewed as a “legal stranger” to the flow of “protected health infor­mation” (PHI) and will need a business associate agree­ment with each provider. Likewise, the provision of pro­tected health information (PHI) to members of the APM collaborative not involved in direct patient care creates another compliance risk and such information should be “de-identified” before sharing with APM management and membership.

Finally, audits of payments and explanation of benefit forms should be undertaken regularly to make sure that the payer pays in accordance with the APM agreement. For many providers, these payments will be all that they receive for services rendered, and it is not uncommon (un­fortunately) for payers not to pay in accordance with their agreements.

Barry S. Herrin ( is the founder of Herrin Health Law, P.C., based in Atlanta, GA.