New Payment Model Encourages Providers to Take on Risk to Treat Addiction

Contributor : Addie Blanchard - Senior Analyst and Nicole Witowski - Associate Analyst

Publish date: 24 Jan, 2019

The Centers for Disease Control and Prevention estimate opioid prescription abuse costs the United States almost $80 billion annually. As legislators and health systems alike strike back through new laws and clinical protocols, multifaceted partnerships are forming to launch payment reform for addiction treatment, and to meaningfully incentivize better care outcomes.

The Addiction Recovery Medical Home is a new alternative payment model and a product of the Alliance for Recovery-Centered Addiction Health Services. The outcomes of the experiment could set the tone for how addiction treatment is coordinated and reimbursed, and is another example of how potential solutions to complex physical, behavioral, and public health concerns rely on new healthcare partnerships. The Alliance itself is new, but the multifaceted groups that comprise it are familiar: Anthem, the American Hospital Association, HFMA, Intermountain Healthcare, Facing Addiction with the National Council on Alcoholism and Drug Dependence, and Leavitt Partners are among the core members. The ARMH-APM is centered on risk-based, capitated payments, according to the Alliance’s Addiction Recovery Medical Home – Alternative Payment Model White Paper, although healthcare providers can be reimbursed via fee for service for certain early stages of treatment, like emergency room and intensive care unit visits that may lead to a patient’s entry point into the APM.

While the ARMH-APM treats more than opioid addiction, the timing and escalation of the opioid epidemic is almost certainly a precipitating factor in the APM’s formation. Patients voluntarily enter the APM, and care is delivered through the program’s integrated treatment and recovery network. “In many ways, the integrated delivery network is the ideal ARMH-APM participant,” the Alliance states in the white paper. The National Committee for Quality Assurance, which handles patient-centered medical home distinctions across the country, will help develop the quality metrics used to gauge success and reimbursement.

Commercial payers, integrated delivery networks, addiction specialists and advocates, and hospital associations are gearing up to set this trailblazing model in motion. Here’s what it means for major healthcare players.

Payers – In the long term, seeing cost-savings is possible. To get there, payers would need to develop traditional provider networks with behavioral and mental health capabilities that can be accountable for and properly treat addiction at every stage. Determining “quality” in this service line is also murky: As the Alliance points out, quality metrics for substance use disorders are scant.

Pharma – The APM utilizes drug assisted treatment, and the APM’s focus on quality and tailored approach to behavioral health may increase drug adherence and overall care access.

Providers – The multidimensional approach to addiction treatment favors IDNs and large networks of health systems that can coordinate intensive, inpatient, outpatient, and ongoing care. It rewards integration among providers. Providers who embrace payment reform for addiction treatment may have an edge in an increasingly value-based world.

In 2019, the APM will be tested in a few markets that have yet to be announced, according to the Alliance. To forecast where this payment model could make the most impact, DRG market analysts considered population and health plan factors to make the following predictions:

Salt Lake City, Utah

With Intermountain as a core member of the Alliance that supports and developed the addiction APM, it only follows that Salt Lake City will be one of the inaugural markets. The integrated delivery network, which operates a market-dominating health plan, is already well-versed in risk-based payment models. The young population has been especially hit by the opioid epidemic. Intermountain already has initiatives underway to curb opioid prescribing, which may give it an advantage if it chooses to pioneer this route.

Worcester, Massachusetts

Overdose deaths are on the rise in Worcester amid a statewide decline. UMass Memorial Health Care, the largest integrated delivery network in central Massachusetts, is at the forefront of the crisis. The health system has implemented new strategies to improve how UMass Memorial and the city of Worcester address the opioid epidemic in the community. In 2018, UMass Memorial Medical Center launched a bridge program that connects patients with substance use disorders who are seen in the ER to drug-assisted treatment. UMass Memorial also has the capacity to deliver a full range of coordinated clinical services, including addiction services, across inpatient and outpatient settings. Plus, the system is no stranger to risk-based alternative payment models. These factors make UMass Memorial an attractive partner for the ARMH-APM.

The ARMH-APM is indicative of large health networks’ priorities. To reap the benefits of successful care coordination in a value-based model, health systems need the capacity to treat the whole individual—and increasingly, that means building partnerships outside the traditional healthcare ecosystem.

Addie Blanchard, senior analyst at DRG, and Nicole Witowski, associate analyst, both have work that appears in Health Plan Analysis and Market Overviews. Follow them on Twitter at @Addie_DRG and @NicoleWitDRG.

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