5 Keys to Successfully Adapting Healthcare Models to Alternative Payment Models

In the healthcare industry, the shift toward value-based care models has made slow but steady progress in the past several years. According to recent data from the Centers for Medicare & Medicaid Services (CMS), 40% of payments now run through healthcare's alternative payment models (APMs), with up to 90% of payments tied to value outcomes in one way or another. Commercial payers are also now leveraging shared savings, the total cost of care, and bundled payment models to drive value to their members.

How healthcare systems and patients benefit from bundled payments systems

Bundled payments represent one form of APMs, which are designed to move toward value-based healthcare delivery models by incentivizing providers to advance coordination and efficiency of care while also improving health care quality and outcomes at lower costs.

With bundled payment models, the total allowable acute and post-acute expenditures (target price) for an episode of care are predetermined. Participant providers share in any losses or savings that result from the difference between this target price and actual costs.

CMS blazed the trail in bundled payments with programs like Comprehensive Care for Joint Replacement (CJR), Oncology Care Model (OCM), and Bundled Payments for Care Improvement (BPCI). These models proved successful across markets, health systems, and clinical service areas. That same level of innovation needs to be applied to care model adaptations to drive success in bundled payments and to generate the value these models are meant to deliver.

5 keys to implementing bundled payment models in healthcare

Here's how to craft a winning healthcare payment model strategy capable of scaling future alternative payment model expansion under new payers and participants.

1. Understand the rules of the payment model game.

Think of a new payment model as having rules, players, and a field of play. In any bundled payment model, there is a definition of the clinical activity that counts toward that bundle.

There's also a definition of applicable timelines for a bundle to be active or for claims to run out. Some claims “count” toward the bundle, while others will be excluded. And there are outlier rules that will exclude some patients’ episodes from the reconciliation math.

There are several approaches in use to define episodes of care, which will require you to get into the weeds and understand how applicable programs operate. You won’t be able to play the alternative payment game successfully unless these things are well understood because they will inform your strategy. 

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2. Leverage data to determine opportunities & future outcomes.

In order to craft a vision for the future state of your care model, you need a data-driven process to define the opportunity in your patient journey. Data can effectively reveal which clinical activities in your current care model would have a positive or negative impact on the new model.

Good data analysis provides the voice of reason and a clear roadmap for improving cost, access, outcomes, and patient experience. Since bundle definitions generally extend beyond the walls of the hospital or provider for patients, the data representing clinical utilization and whole-bundle costs need to be available.

CMS provides this “full universe” claims data directly to providers. While commercial payers are likely to struggle to match that level of transparency, strong claims-based analytics must be the basis for successful payer/provider partnership in the bundles program.

This analysis can help identify a specific tactic to target to improve performance. This could include a post-acute care utilization, site of service opportunity, or a closer study into adverse outcomes or typically outlier patients who share commonalities like psychosocial components or similar treatment modalities. These are the applicable data insights that allow you to take a carefully tailored approach to reshape the care model.

Good data analysis can provide the voice of reason and a clear and visionary roadmap for improving cost, access, outcomes, and patient experience. - Dan Nissen, Propeller Alumnus

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3. Build your patient care team.

The most challenging component to implementing a sustainable clinical care model is the reorganization of the care teams involved in a patient’s care. Without effective change management that acknowledges the “people side” of this change in a proactive way, these care model innovations are likely to fail.

Your quantitative assessment should be paired up with the clinical expertise of your team. In most cases, it’s not about bringing new staff onto the team, but reconfiguring existing clinical processes and their associated stakeholders.

This may involve requesting some team members to shift their work to a lower-cost care site. Healthcare systems must first assess the outcomes of making these changes so they are data-backed, have a firm foundation, and has personnel buy-in tied directly to the future state care model. This approach builds faster trust, alignment, and adoption for all involved stakeholders. 

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4. Take an agile, iterative approach. 

You’ve assembled a talented roster of key players and now have leveraged data insights to craft a winning strategy. A “big bang” approach to implementing care model changes can backfire if the operational changes haven’t all settled in or contributors aren’t confident in their modified role on the team.

Consider testing care model strategies to make sure they enhance the patient experience and lead to better outcomes. Ensure you have the systems in place to answer those questions.

This is where an agile approach to testing and iterating the core concepts in the care model becomes essential for success. The best teams know their care models will evolve over time. Pilot programs, intervention testing, and good performance measurement are crucial to your ongoing success. 

Related Content: Propeller's Agile Transformation Services

5. Grow your competitive advantage. 

Your ultimate goal is to mature this care model innovation, so it becomes part of your value proposition to the community you serve. When you can demonstrate that you have bent the cost curve for costly healthcare needs, you gain a competitive advantage in the marketplace.

There are plenty of stories that demonstrate how APM-driven care model innovations enhance the patient experience, reduce costs, improve functional outcomes, and decrease adverse clinical events. But just because it is possible does not mean it is guaranteed! If you followed the steps above, you are better positioned to realize real organizational benefits in deploying this step, which is focused on growth.

For example, many large employers adopt Center of Excellence programs for improved outcomes. Lowes and Boeing leverage concierge services that funnel patients with common and expensive care needs to healthcare providers with demonstrated excellence in performance, outcomes, and value. Leveraging existing payer relationships and building employer relationships can help unlock the potential of your care model so that as many patients can benefit as possible. 


Healthcare systems are all on a fast-moving, ever-shifting trajectory. Those tasked with implementing smart, strategic, and future-focused healthcare models and bundled payment innovations today can move their entire team of patient experience players forward confidently on every play.

Making sure that all your participating providers are equally incentivized to gain from each play—while maintaining optimal patient experiences and health outcomes—is a winning strategy. Be willing to trust the data in new ways to keep your competitive positioning across markets, health systems, and clinical service areas.

Learn more about Propeller's healthcare industry experience.

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