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Alternative payment models (APMs) refer to an umbrella term used to describe payment methodologies that focus on quality, cost of care, or both, rather than utilizing pay-for-volume or fee-for-service payment models. Typically, APMs are defined across a continuum, which moves from fee-for-service all the way to sub-capitation. APMs are used across all payers—Medicare, Medicaid, and commercial—in different ways and at different levels. In 2017/2018, there were 38 state Medicaid programs that used at-risk capitated contracts with managed care organizations to finance and deliver Medicaid covered services. Of those states, 22 included some kind of requirement for the MCOs to reimburse provider organizations using alternative payment models and methodologies.

There are a number of variables associated with each state’s move to alternative payment models, including how the state defines APMs, how the state measures an MCO’s progress in moving to APMs, and the requirements placed on the MCO.

This report updates our 2016 report and looks at the use of APMs in state Medicaid programs, specifically which states require managed care organizations (MCO) to use APMs for reimbursement to provider organizations. The report outlines whether the state has capitated, at-risk MCOs; whether APMs are included in the MCO’s contract; the specific requirements; and how states define APMs.

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