Medi-Cal Explained: What Are Alternative Payment Models?

Athena Chapman
Samantha Pellón


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Medi-Cal Explained

This issue brief is part of CHCF’s Medi-Cal Explained series. The series provides an overview of the program, including the people it serves, the services it provides, and how it is organized, managed, and financed.

Over the past decade, the Centers for Medicare & Medicaid Services has increasingly used health care provider payment reforms that encourage better value in the health care system. These payment reforms are known as alternative payment models (APMs) and are defined as a provider payment method that uses financial incentives for the provision of care that is high quality, cost efficient, or both.

APMs are a departure from the fee-for-service payment model, which pays a hospital, medical group, or individual health care provider for each service rendered. APMs are designed to create a financial responsibility for the provider to be accountable for the provision of optimal, evidence-based care for their patients and incentivizes an efficient use of health care dollars.

This issue brief explores how Medi-Cal, California’s Medicaid program, has been developing APMs to align with federal initiatives and state financial and policy goals. It looks at the benefits of APMs and barriers to adoption. It is a companion to a second CHCF paper, Medi-Cal Explained: How Health Centers Are Paid.