VBP Toolkit: LAN APM Framework

LAN APM Framework

VBP models are also called alternative payment models (APMs). We use VBP in Oregon to emphasize the importance of value in the payment model.

The Health Care Payment Learning & Action Network (LAN) is an active group of public and private health care leaders dedicated to providing thought leadership, strategic direction, and ongoing support to speed up our care system's adoption of APMs and accountable care. The LAN mobilizes payers, providers, purchasers, patients, product manufacturers, policymakers, and others in a shared mission to lower care costs, improve patient experiences and outcomes, reduce the barriers to participate in APMs, and promote shared accountability.

The LAN classifies payment models into four categories: 

• Category 1 is traditional fee-for-service (FFS). 
• Category 2 is based in FFS but links quality and value to enhanced payments or penalties.
  
• Category 3 payment models include shared savings (3A) and shared risk (3B).
• Category 4 includes condition-specific and/or population-based payments within capitated funding or global budget arrangements.
  

LAN APM Framework (PDF)

VBP models can include multiple categories

It is important to note that many payment models include a combination of APM categories. For example, a payer may have an agreement with a primary care entity that includes relatively small prospective per member per month (PMPM) payments (2A foundational payments) combined with financial incentives for providers that meet certain quality benchmarks (2C pay-for-performance).

Definitions of LAN APM categories and examples are included in the Glossary. The LAN’s goal is to increase the percentage of US health care payments tied to quality and value through two-sided risk alternative payment models. Currently, most alternative payment models are between payers and primary care provider entities, and shared savings arrangements are more common than two-sided, shared-risk arrangements in most markets.