Thanks to an AHIP Save, We Know How Addicted Providers Are to Fee-for-Service

Before I go all snarky on the latest annual report on industry adoption of alternative payment models (APMs), I want to do something I’ve never done in 43 years of healthcare business reporting. I want to thank the health insurance lobby.

Specifically, I want to thank AHIP, formerly America’s Health Insurance Plans, for saving the annual report on APM adoption put together and published by the Health Care Payment Learning & Action Network (HCPLAN). The Centers for Medicare & Medicaid Services (CMS) launched and funded HCPLAN, which is a public-private partnership, in 2015. HCPLAN’s mission was to advance and track the transition of healthcare payment models from volume-based to value-based.

Most notably, HCPLAN created the universally accepted four-part APM adoption framework, or scale. The framework measures the share of reimbursement dollars paid out by public and private health insurers to healthcare providers through various payment models. On the low end (Category 1) is traditional fee-for-service with no links to quality or value. On the high end (Category 4) is population-based payment.

As payment models have evolved, so has the original four-part framework. Fee-for-service with a link to quality and value (Category 2) now has three subcategories. APMs built on a fee-for-service architecture (Category 3) now have three. Category 4 now has four. Only lowly Category 1, traditional fee-for-service, hasn’t evolved. It has no subcategories.

Along comes the Trump regime. Last May, HCPLAN said it was replacing its now 11-part APM adoption framework and with a new four-part framework that “aligns” with the Center for Medicare and Medicaid Innovation’s plan to Make America Healthy Again. The four parts of the new framework are: healthcare choice and competition, patient empowerment, preventative care and technology-enabled healthcare.

I’m not saying the tenets of the new framework aren’t important. They are critically important to build a better healthcare system. But I’m not sure how anyone can measure the dollars flowing from payers to providers through those four categories, let alone track their progress. Maybe that’s the point. You can’t measure it. So, you could just make something up and declare victory. Much like Trump himself.

Speaking of, people like to say everything he touches dies. Through CMS, he touched HCPLAN’s original APM framework, and it was dead. That is, until AHIP revived it.

I don’t know who talked to whom, what deals were cut, what conversations were had, what data was transferred, but the annual APM Measurement Effort report is back. AHIP released it Feb. 2.

This acknowledgment in the report likely is as close as we’ll get to knowing the truth: ”With a change in federal funding, the HCPLAN concluded its leadership of the national APM Measurement Effort in early 2025. Recognizing the importance of continuing to evaluate adoption of payment arrangements tied to quality and maintaining trend lines, AHIP collaborated with BCBSA (Blue Cross Blue Shield Association) and CMS to ensure continuous APM data collection.”

If AHIP didn’t step up, we wouldn’t know what I think is the biggest news out of the report. Providers’ insistence that commercial insurers pay them on a fee-for-service basis with no link to quality or value continues to drag down the transition to value-based payment from volume-based payment.

Here’s what the numbers show, based on claims paid to providers by commercial insurers, traditional Medicare, Medicare Advantage plans and Medicaid:

• 44.9% of payments to providers from all four lines of business in 2024 flowed through Category 3 and Category 4 APMs, which the HCPLAN framework considers value-based payment models. That’s actually down slightly from 45.2% in 2023.
• 50.4% of payments to providers from commercial insurers in 2024 flowed through Category 1, fee-for-service models with no link to quality or value. That’s up slightly from 50% in 2023.

That’s the big story. Half of all payments to providers from what is arguably their biggest source of revenue is fee-for-service-based. The big story isn’t that nearly 45% of healthcare payments are tied to APMs like some in the healthcare trade press reported. It’s that providers are using their market muscle to extract volume-based payments from commercial health plans while refusing to enter into contracts that pay them based on results.

As is tradition with the annual report, AHIP surveyed payer executives on the transition to APMs. The top three barriers to APM adoption, according to the respondents?

• Provider willingness to take on financial risk
• Provider ability to operationalize
• Provider interest/readiness

That sounds about right.

Clearly, there’s self-interest in AHIP picking up the annual APM report from HCPLAN. The report points the finger at providers for lagging in value-based payment adoption. I’m OK with that as a consumer who wants more value for my healthcare dollar.

Building a better healthcare system requires measurement, and measurement requires data. If it takes a little self-interest to get it, so be it.