Impact of Technology on the Future of Healthcare Alternative Payment Models

Srinivasan Sundararajan | April 5, 2022


(APMs) Alternative Payment Models, hold providers financially accountable for the quality and cost of care delivered to patients. These APMs include accountable care organizations (ACOs), episode-based payment models, Comprehensive Primary Care models, and other arrangements.

A brief explanation of alternative payment models is below.

Total Cost of Care

In this model, multiple provider participants like hospitals, primary care physicians, are accountable for cost and quality of care for an assigned set of patient population, typically done through an attribution process. Some of the examples being Medicare Shared Services Program (MSSP) and Accountable Care Organizations (ACO).

Episode Based Payments

A medical episode typically consists of a series of steps and activities that are part of a particular illness. Typically, medical episode consists of awareness, admission, discharge, and post-acute care. In this model, participants ensure that the patients get highest quality of care in an episode while minimizing the cost.

Primary Care Transformation

Primary care is central to a high-functioning healthcare system. There is a greater need for primary care to coordinate among themselves to improve the health outcomes and reduce cost. Shared decision making is an important aspect of this model. This model provides increased incentives to primary care providers for increasing their infrastructure and care coordination technology.

Technology Trends That are Enabling the Success of Alternate Payment Models

The following technology trends are observed by industry analysts towards the adoption of value-based healthcare focused alternate payment models.

Population Health Management Solutions: Population health Analytics is about improving the health outcomes of a group of patient population by understanding their risk profile (like those with diabetes, vascular disease, COPD, hypertension, heart failure or coronary disease), and utilizing  Advanced Analytics and Data Management techniques to proactively improve their wellness. Population Health Management provides the basis of many value-based alternate payment plans.

Wearable devices allow access to health data that providers can leverage to improve patient outcomes. Through data analytics and population health management, systems can identify populations in need, stratify risk, and track patient progress.

Key Technologies involved are – DataOps, Multi Model Databases, AI/ML

Journey Analytics in Healthcare: Healthcare customers go through a series of steps as a journey during their care episodes. Episode-based payment (or bundled payment) has been adopted by a large number of public and private payers. Episode based journey analytics are foundational for efforts to improve the quality and efficiency of healthcare, whether in the context of fee-for-service reimbursement, total-cost-of-care models, or other alternative payment approaches. This will result in efficiencies like reduction in hospital readmissions.

Usage of Machine Learning is growing in episode analytics.

Key Technologies involved are – DataOps, Multi Model Databases, AI/ML

Provider/Partner Network Management Platforms:  Success of value-based healthcare initiatives depend on how well providers, payers and other partners collaborate with each other. These platforms are meant for data sharing, coordinating long running business process workflows and contract management between the stake holders.

The promise for blockchain in healthcare relates to its ability to reconceptualize and distribute trust across networks. The likely use cases for blockchain will be focused on ACOs because of the lack of ACO specific software and lack of legacy applications.

Some of the use cases that will be solved by Blockchain in an Provider/Payer Network are below

  • Claims Clearing
  • Provider Directory
  • Patient Directories
  • Master Patient Index
  • Provider Credentialing

Payment Integrity Solutions:  Payment integrity is about using advanced analytics to detect fraud, waste, and abuse (FWA) in claims and adopt proactive approach to address payment leakage. Current estimates suggest that near $6 billion dollars are wasted on fraudulent claims. Technologies like social analytics, predictive modeling and machine learning are utilized in these solutions.

Advanced Analytics In Provider/Partner Network:  In a network, Advanced Analytics can be used to determine most efficient provider that can serve a particular member. Advanced Analytics can also help to determine the provider performance, member outreach needs, prospective shared savings or penalties etc.

Data analytics allows providers to gain insights from performance management measures and metrics that hold the clues to financial viability under risk-based and pay-for-performance contracts. By embracing advanced analytics, hospitals and health systems can accelerate their path to value.

Alternative Payment Models (APMs) have developed rapidly over the past several years. technology capabilities such as remote patient monitoring and telemedicine, as well as the increasing use of big data, blockchain and AI, are also changing the face of healthcare. These technologies in particular assist in the growth of alternative payment models also.

Gartner has recently identified the technology trends for in both provider and payment segments.

Vast majority of those trends point towards the implementation of alternative payment models which are highlighted in the above sections. It is in the best interest of healthcare stakeholders to get equipped with technology solutions in support of alternative payment models.


Gartner Hype Cycle for U.S. Healthcare Payers, 2021 report

About the Author –


Srinivasan Sundararajan

Srini is the Technology Advisor for GAVS. He is currently focused on Healthcare Data Management Solutions for the post-pandemic Healthcare era, using the combination of Multi Modal databases, Blockchain and Data Mining. The solutions aim at Patient data sharing within Hospitals as well as across Hospitals (Healthcare Interoprability), while bringing more trust and transparency into the healthcare process using patient consent management, credentialing and zero knowledge proofs.

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