What is an Alternative Payment Model (APM)?
In part two of this specific blog series on MACRA, I emphasized the CMS QPP decision tree and covered the MIPS path. In part three, we will discuss the APM path.
Alternative Payment Models (APMs) are new approaches to paying for care through Medicare that incentivize quality and value. The CMS Innovation Center develops new payment and service delivery models. Additionally, Congress has defined—both through the Affordable Care Act and other legislation—a number of demonstrations that CMS conducts.
APM entities must meet one of two thresholds each year for their physicians to be considered qualified participants: the Payment Amount threshold or the Patient Count threshold
Using the Payment Amount threshold, APM entities must receive a minimum percentage of Medicare Part B payments through the APM each performance year, with the percentage rising through 2022.
- A payment approach that provides added incentives to clinicians to provide high-quality and cost-efficient care.
- Can apply to a specific condition, care episode or population.
- May offer significant opportunities for eligible clinicians who are not ready to participate in Advanced APMs.
Advanced Alternative Payment Models (AAPMs)
Advanced APMs are a subset of APMs and enable practices to earn more rewards for taking on some risk related to patients’ outcomes and cost of care
Under the Quality Payment Program, clinicians who participate to a sufficient degree in Advanced APMs are excluded from MIPS and earn a 5% lump sum incentive payment based on their Part B professional services for a given year, and also receive greater rewards for taking on some risk related to patient outcomes.
Advanced APMs must meet the following three requirements:
- At least 50% of the clinicians in each APM Entity use certified EHR technology to document and communicate clinical care information with patients and other healthcare professionals.
- Bases payments on quality measures that are comparable to those used in the MIPS quality performance category.
- Be a Medical Home Model expanded under CMS Innovation Center authority or:
- Meet a revenue-based standard of financial risk that averages at least 8% of revenues at-risk for participating APMs
- Meet a benchmark-based standard of financial risk in which the maximum possible loss must be at least 3% of the spending target
In 2017, the following models are Advanced APMs:
- Comprehensive ESRD Care (CEC) – Two-sided Risk Arrangements
- Comprehensive Primary Care Plus (CPC+)
- Next Generation ACO Model
- Shared Savings Program – Track 2
- Shared Savings Program – Track 3
- Oncology Care Model (OCM) – Two-sided Risk Arrangement
In future performance years, we anticipate that the following models will be Advanced APMs:
- Comprehensive Care for Joint Replacement (CJR) Payment Model (Track 1- CEHRT)
- New Voluntary Bundled Payment Model
- Advancing Care Coordination through Episode Payment Models Track 1 (CEHRT)
- Vermont Medicare ACO Initiative (as part of the Vermont All-Payer ACO Model)
- ACO Track 1+
Under the AAPM path, clinicians will receive an annual 5% lump-sum bonus between 2019 and 2024, with a 0.75% increase to their Medicare physician fee schedule beginning in 2026. While the AAPM track does not carry the penalty risks present in the MIPS track, APM entities must have a risk-based payment model for clinicians to qualify for AAPM.
While Advanced APMs have a fixed bonus incentive of 5% through 2024, it is important to understand that the Quality Payment Program does not change the design of any particular APM. Instead, it creates extra incentives for a sufficient degree of participation in Advanced APMs.
How Do Eligible Clinicians Become a Qualifying APM Participant (QP)?
APM entities must meet one of two thresholds each year for their physicians to be considered qualified participants. CMS will calculate a percentage “Threshold Score” for each Advanced APM Entity using two methods:
- The Payment Amount threshold and the Patient Count threshold.
- Using the Payment Amount threshold, APM entities must receive a minimum percentage of Medicare Part B payments through the APM each performance year, with the percentage rising through 2022.
Using the Patient Count Method, APM entities must see a minimum percentage of Medicare patients through the APM each performance year, with the percentage rising through 2022.
- Methods are based on Medicare Part B professional services and beneficiaries attributed to Advanced APM.
- CMS will use the method that results in a more favorable QP determination for each Advanced APM Entity.
- The Threshold Score for each method is compared to the corresponding QP threshold table and CMS takes the better result.
- The QP Performance Period for each payment year will be from January 1—August 31 of the calendar year that is two years prior to the payment year.
Beginning in 2021, this threshold percentage may be reached through a combination of Medicare and other non-Medicare payer arrangements, such as private payers and Medicaid.
What is a Partial Qualifying APM?
Clinicians are considered Partial Qualifying APM participants if their APM entities participate in an Advanced APM, but meet a slightly lower threshold outlined by CMS.
Clinicians participating in the Partial Qualifying APM track will not receive AAPM’s 5% incentive payment, but they can opt into the MIPS path if they can meet its reporting requirements.
The shift from the Sustainable Growth Rate formula’s “fee-for-service” payment model to MACRA’s value-based payment model should ultimately help to preserve Medicare funds in the long-term while incentivizing ongoing initiatives that could make a positive impact on population health in the U.S. The Advanced APM track and the QP status may be desirable for many MIPS eligible providers. Due to the inherent financial risks involved in any AAPM, an organization should evaluate these programs with care and consideration.