APMs and Physical Therapy: Four Pillars for Private Insurance APMs

medical chart and desktop computer
By Robert Hall, JD, MPAff

Alternative Payment Models (APMs) were all the rage prior to the COVID-19 pandemic, and there will be a ramp-up in implementing these structures as a tool to address issues caused by the pandemic.

The government defines an APM as “a payment approach that gives added incentive payments to provide high-quality and cost-efficient care. APMs can apply to a specific clinical condition, a care episode, or a population.”1 Notice that this definition is not clinician-specific, and I think that may be one of the reasons that APMs have not adequately included physical therapy to date.

APTA has a strong resource on its website regarding APMs located under the Medicare and Medicaid tab that I urge you to review (see www.apta.org/Payment/Medicare/AlternativeModels/). Analysis of public payers is critical, and in fact one of the leading health policy and analysis firms based in Washington, DC predicts that 95% of post-acute care providers (including physical therapists) will be subject to new Medicare payment models in 2020 and 2021.2 But few resources have been created that compile private payer APM treatment of physical therapy practices. The following are four important pillars that should be considered when trying to model APMs to adequately address the contributions physical therapists can make to these proliferating health system structures.

The first pillar is the bottom line. A private insurance APM needs to be attractive to physical therapists in private practice to encourage them to participate. Private insurance is a market, even if a highly regulated one, and physical therapists should be free to affirmatively choose or decline to practice under an APM structure. In the APM itself, opportunities for higher payment must be widespread, particularly due to the administrative burden of practice redesign, data collection and analysis that the implementation of APMs require. Rather than a penalty approach of lowered payments for poor performance or the threat of them, incentive approaches will work better to persuade private practice physical therapists to “sign up,” especially when margins have been significantly impacted by the COVID-19 pandemic. For payers, incentive approaches make the most sense when there are savings to be generated over time that cannot be adequately captured in a traditional fee-for-service model. And in this regard, physical therapists have a good story to tell based on analyses like the Milliman study,3 which, along with other examples in the academic literature, helps prove that if the health system incentivizes direct access to physical therapists, three positive results occur in the context of lower back pain treatment. First, there are significant savings to be captured for the health system. Second, the overall health of the population has a better chance for improved health status. And third, the likelihood of improved function for the individual increases. As a side benefit, the Milliman study also proves lower utilization of infused opioids occurs with direct access.

The APM should also include significant leadership opportunities for physical therapists as the second pillar. Physical therapists know where savings are to be gained, and these instincts are more honed in the competitive private practice market. APMs should include opportunities for physical therapists to serve in leadership roles on APM boards and in other decision-making positions. The APM will benefit if it captures their expertise in understanding patient needs, plan design, and ultimately, payment incentives and rates. Even though there is controversy over whether physician-led APMs are more successful at generating savings,4 there is little demonstrated reason that they should be a protected class within APM leadership structures. Creating opportunities for physical therapists to serve in the APM’s leadership will more adequately address contributions physical therapists can make to the goals of the APM.

The third pillar needs to address patients’ lives and environment. APMs often do not adequately include attention to addressing social determinants of health, even though they are perhaps the most flexible payment structure to help address these needs. Traditional medical treatment is quite limited in impacting an individual’s overall health, impacting only about 10% to 20% of health status. Other issues such as housing, food insecurity, poverty, and pollution have more impact in some communities and can undo the good that important tools like physical therapy can make on overall health. New care models that emphasize multidisciplinary teams, community health workers, and partnerships with community-based organizations are possible in private insurance APMs, but have generally not been adopted.

The fourth pillar is built-in flexibility. APMs need to be flexible and recognize that unpredictable changes occur. I have not seen any APM that adequately planned for a disaster like the COVID-19 pandemic, for instance. In addition, many APMs are not nimble because of the often quarterly or annual time horizon for outcomes measurement and the challenges of changing enterprise cultures and clinicians’ behaviors. And then there are the unintended consequences of innovation that can be difficult to include in an initial APM structure. As just one example, as more private physical therapists turn to utilizing telehealth to continue care for individuals, there are anecdotal reports of value in seeing the home environment as a background to the video call. This result is one of the more unexpected benefits of the move to increased use of telehealth. But these unforeseen benefits of different modes of care are generally not included in APM planning and implementation. APMs need built-in structures for changing “on the fly.”

I am confident there are other important considerations when creating APM structures that will adequately utilize the contributions of physical therapists. But as a start, APMs should be sure to include attention to incentives, leadership, social determinants of health, and flexibility with physical therapists in mind. 


1Centers for Medicare and Medicaid Services. APMs Overview. https://qpp.cms.gov/apms/overview. Accessed July 6, 2020.

2Avalere Health. 2020 Healthcare Industry Outlook. https://images.info.avalere.com/Web/AvalereHealth/%7Bb0f6f7cb-c164-4828-b578-379f3287b83f%7D_2020_Avalere_Healthcare_Industry_Outlook_Document.pdf. Accessed July 6, 2020.

3Spector JM, Genina O, Doiron D. Impact of Physical Therapist Services on Low Back Pain Episodes of Care. https://ppsapta.org/userfiles/File/ImpactofPhysicalTherapistServicesonLowBackPainEOC.pdf. Published April 12, 2018. Accessed July 6, 2020.

4Childs B. Alternative Payment Models: Five Myths. https://www.healthaffairs.org/do/10.1377/hblog20180619.730563/full/. Published June 21, 2018. Accessed July 6, 2020.

Robert Hall, JD, MPAff, is a senior consultant for PPS working to advocate with private payers. He may be reached at rhall@ppsapta.org.

Copyright © 2018, Private Practice Section of the American Physical Therapy Association. All Rights Reserved.

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