Alternative Payment Models

APMs include Accountable Care Organizations, Bundled Payments and Medical Homes. Participating in a MACRA "advanced" APM can exempt you from MIPS, and can lead to more favorable financial incentives, including a potential 5% lump sum bonus payment. APMs give new ways to pay health care providers for the care they give Medicare beneficiaries. For example:

  • From 2019-2024, pay some participating health care providers a lump-sum incentive payment.
  • Increased transparency of physician-focused payment models.
  • Starting in 2026, offers some participating health care providers higher annual payments. Choosing an APM requires you to meet quality, risk and payer/revenue mix measurements
  • What are Alternative Payment Models (APMs)?

    APMs are systems of care and models for payment specifically designed to deliver value-based care by rewarding high-quality, low-cost care. APMs include, among other models, accountable care organizations (ACOs), patient-centered medical homes, and bundled payment models for specific conditions and procedures.

    What is driving the creation of APMs?

    The Affordable Care Act (ACA) has played a key role. The ACA created the Medicare Shared Savings Program (MSSP), a program designed to facilitate coordination and cooperation among providers to improve the quality of care for Medicare fee-for-service (FFS) beneficiaries and reduce unnecessary costs. Eligible providers, hospitals, and suppliers may participate in the Shared Savings Program by creating or participating in an Accountable Care Organization (ACO).

    The ACA also established the Center for Medicare and Medicaid Innovation, or CMMI, to encourage and evaluate new models of care for Medicare, Medicaid, and even private payers.

    For Medicare, the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, encourages physicians to participate in new models of care. The Centers for Medicare and Medicaid Services (CMS) has issued a proposed rule implementing MACRA, and a final rule is due out in November. The Society has delivered comments to CMS in response to the proposed rule.

    How does MACRA affect the payment of physicians working in APMs?

    Many details of this program are very technical and subject to revision in the final rule and in coming years. But here is what is known so far.

  • MACRA creates a new pathway within Medicare for physicians to earn substantial bonuses for participating in certain new “advanced” APMs. From 2019 through 2024, “qualifying” physicians with a substantial percentage of revenue (or patients) tied to services received through these “advanced” APMs can earn a 5 percent annual bonus. They are also exempt from reporting under the Merit-Based Incentive Payment System, or MIPS, a payment system that replaces the current Medicare quality programs. The percentage of revenue or patient percentage ranges from 25 percent the first year to 75 percent in later years. Bonuses will be based on participation two years earlier, so 2017 participation will determine 2019 bonuses. These APMs, for which the government has set very stringent standards, focus only on Medicare in the early years, but there is an all-payer APM option later on.
  • Physicians with slightly less revenue or patients in “advanced” APMs are not eligible for the bonuses, but they can opt out of MIPS reporting. For those who wish to qualify for MIPS bonuses, CMS plans to develop a reporting mechanism that could automatically transfer relevant APM data into the MIPS reporting system to avoid double reporting.
  • Physicians who do MIPS reporting can also receive credit for APM participation. Physicians who report under MIPS (and do not qualify for APM bonuses) can receive credit for their APM participation in the MIPS “clinical practice improvement activity” performance category.
  • MACRA also established a new Physician-Focused Payment Model Technical Advisory Committee to advise and support physicians in developing new models of care and to review proposals. The committee has held two public meetings to date.
  • Are there APMs specifically focusing on post-acute and long-term care?

    Not at the moment. The Society is working closely to develop Advanced APMs for MACRA. However, there are other primary care based programs, such as the Comprehensive Primary Care Plus and Next Generation ACOs that do qualify as Advanced APMs.

    Are post-acute and long-term practitioners currently involved in new models of care?

    Yes. The Bundled Payment for Care Initiative (BCPI) is an alternative payment model that does not currently qualify as an Advanced APM but does provide an alternative to the fee-for-service model.

    The Center for Medicare & Medicaid Innovation (CMMI) is also running an Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents but it is currently not an Advanced APM under MACRA.

    Educational Session: From Innovation to Implementation: How CMS Innovation Center-Funded Projects are Transforming Nursing Home Care

    What is the Society doing to help post-acute and long-term care practitioners participate in new models of care?

    The Society is partnering with a number of other stakeholder organizations to develop a framework for Advanced APM development. The Society participates in the Emerging Issues Workgroup of the AMA/Specialty Society Relative Value Scale Update Committee (RUC) in discussions on APMs.

    The Society is also a member of the Healthcare Payment Learning and Action Network (HCLAN) that disseminates educational materials and helps to develop APMs. HCLAN has developed a white paper on APMs with various other resources.