An Alternative Payment Model (APM) is a new payment approach to paying for medical care that holds providers accountable for achieving specific quality performance goals in an efficient manner. In turn, group practices participating in an APM receive added incentive payments to achieve those goals.
APMs can apply to a specific clinical condition, a care episode, or a patient population. APMs utilize reimbursement methods that are different from traditional fee-for-service payments, but an APM may also retain elements of fee-for-service payments as part of its reimbursement structure.
In general, the aim of an APM is to achieve better quality care or patient outcomes without increasing spending. Thus, model design, implementation, and success all center around improving patient outcomes while paying adequately for necessary services. There is no single approach to APMs that will work for all practices or specialties. Different specialties are responsible for different types of care and thus there is no one-size-fits all approach to APM design.
Congress passed MACRA to incentivize participation in APMs. MACRA also created a second payment pathway for those not in an APM, the Merit-based Incentive Payment System (MIPS), which was intended to be an on-ramp to APM participation.
When the Centers for Medicare and Medicaid Services (CMS) implemented regulations under MACRA, it began referring to the two payment pathways as the Quality Payment Program (QPP). Additionally, CMS established that only a subset of APMs, designated as Advanced APMs, quality for MACRA’s second payment track.
The Advanced APM pathway of MACRA offers physicians and group practices incentives to provide high-quality, cost-effective care under payment models that move away from the fee-for-service payment system. To earn incentives, providers must be in a qualifying Advanced APM and become a qualifying participant (QP) by achieving threshold levels of payments or patients.
Advanced APM Incentives
QPs receive an annual five percent lump-sum payment bonus, which is based on the previous year’s Medicare Part B payments. The bonus applies in payment years 2019-2024.
QPs are also exempted from MIPS participation and payment adjustments. Additionally, there are model-specific rewards, such as the opportunity to join in shared savings earned for Medicare for efficient care delivery or quality performance, as well as access to waivers that grant practices additional flexibilities to coordinate care and engage beneficiaries in safe and efficient manners.
Qualifying Model Types
For performance years 2019 and 2020, the following models currently qualify as an Advanced APM:
An eligible clinician’s QP status is determined using one of two thresholds: one for patient count and one for payment amounts. For the 2019 performance period, an Advanced APM entity must do one of the following for all of its eligible clinicians to be QPs:
Eligible clinicians that are not considered QPs can be considered partial QPs if the Advanced APM entity meets at least one of the following thresholds:
- Receive at least 50% of its Medicare Part B payments through the Advanced APM, or
- See at least 35% of its Medicare patients through the Advanced APM
Clinicians that become partial QPs do not have to report for MIPS but will not receive the five percent APM incentive payment.
- Receive at least 40% of its Medicare Part B payments through the Advanced APM, or
- See at least 25% of its Medicare Part B patients through the Advanced APM.
Starting in 2019, clinicians can also achieve QP status through the All-Payer Combination Option, which is a combination of Medicare and non-Medicare payer arrangements. The All-Payer option is available for clinicians who do not meet the QP patient or payment threshold under their Medicare Advanced APM. Advanced APM entities or eligible clinicians can request that CMS use the All-Payer option to determine their QP status. To do so, entities or clinicians must submit payment and patient data from their Other Payer APM to CMS.
QP Determination Timeline
CMS will make QP determinations using each Advanced APM entity's Participation List at three "snapshot" dates during the APM performance period: March 31, June 30, and August 31. For each of the three QP snapshot dates, CMS will use the APM entity's Medicare administrative claims data from January 1 through the snapshot date. CMS uses a 60-day claims run out following each snapshot date and anticipates releasing QP status information 30 days following the claims-run out period, or 90 days after a given snapshot date. Like MIPS, the performance period for Advanced APMs and achieving QP status is two years prior to the payment year.
For additional information about thresholds, QP determinations, and snapshot dates, review the QP Methodology Fact Sheet. To check your QP status, use the QPP participation status look-up tool.
Clinicians who participate in an APM that is not designated as an Advanced APM or who are not sufficiently participating in an Advanced APM must participate in MIPS or face a Medicare payment penalty. However, participants in certain APMs, termed “MIPS APMs” will receive favorable MIPS scoring and weighting that rewards them for their efforts participating in these innovative models.
In 2019, CMS announced the creation of several new APMs that are set to open for participation in 2020 or 2021. CMS expects each of these models to qualify as an Advanced APM starting in the 2021 performance year, except for the proposed mandatory End-Stage Renal Disease Treatment Choices model.
New APM Opportunities for 2020-2021
Primary Care First: New! Application period now open until Jan. 22, 2020; review materials, resources, and access the application portal here. This model was announced in April 2019 and will open for participation beginning in 2021. There are two participation options, a general track and a track for practices that treat seriously ill patients. Both tracks include capitated payments that are adjusted based on performance. Download MGMA’s member-exclusive resource for more detailed information.
Direct Contracting: New! Submit a letter of intent to apply by Dec. 10 and apply for participation by Feb. 25, 2020; access more informaiton here. The Direct Contracting model was announced by CMS in April 2019. There are two payment tracks under the Direct Contracting model that are open for participation starting in 2020. This model features capitated payments and a higher risk/reward structure than the Primary Care First model. To be considered for participation, interested parties must submit a letter of intent by Aug. 2, 2019 at 11:59pm ET. The letter of intent, fact sheets, and information about forthcoming webinars can be found on the Direct Contracting model homepage.
Kidney Care First: the payment structure is similar to the Primary Care First model and includes capitated payments adjusted based on performance. The Kidney Care First Model will be open to participation by nephrology practices across the country and their nephrologists, subject to meeting certain eligibility requirements.
Comprehensive Kidney Care Contracting: this model features three payment tracks: Graduated, Professional, and Global. It is similar to the Kidney Care First model but features higher risk and potential reward. Like the Kidney Care First model, the Kidney Care Contracting models are expected to run from Jan. 1, 2020, through Dec. 31, 2023, with the option for one or two additional performance years at CMS’s discretion. Health care providers interested in participating will apply to participate in the fall of 2019. For more information about the Kidney Care Contracting and Kidney Care First models, review CMS’ fact sheet.
End-Stage Renal Disease Treatment Choices [proposed]: this is a proposed model that would be mandatory for certain areas of the country if finalized. Participants would include managing clinicians and dialysis centers, who would receive new incentives to encourage dialysis in the home. Participation in the model would run from Jan. 1, 2020 through June 30, 2026. More information on the model and the comment process on the proposed rule establishing the model can be found on the ESRD Treatment Choices webpage. Note that this is the only model in this list that would not quality as an Advanced APM.
Radiation Oncology [proposed]: CMS proposed a mandatory model for radiation oncology to begin Jan. 1, 2020. The proposed Radiation Oncology Model would test prospective, episode-based payments in a site-neutral manner for 17 different cancer types. If finalized, this model would become mandatory in certain geographic areas. Visit the Radiation Oncology model webpage to learn more.
- MGMA testimony submitted to Senate Finance Committee on MACRA implementation [May 8, 2019].
- In comments on the 2019 PFS, MGMA advocates for increased opportunity to participate in advanced APMs and implement PTAC recommendations [Sept. 7, 2018].
- MGMA offers recommendations to CMMI in response to an RFI seeking feedback on a potential direct provider contracting model (press statement), supporting the idea as potentially increasing opportunities for physician group practices to participate in advanced APMs but cautioning CMS to avoid implementing policies that would further drive consolidation [May 24, 2018]
- MGMA offers recommendations to CMMI in response to an RFI seeking feedback on a “new direction” [Nov. 20, 2017]
- In written testimony submitted to the W&M Sub-health Committee, MGMA advocated for greater congressional oversight of CMS’ implementation of MACRA to ensure it aligns with congressional intent to reduce burden and create opportunities to participate in advanced APMs [Mar. 22, 2018].
- MGMA recommends CMS overhaul advanced APM criteria, expand the list of qualifying models, and seek opportunities to adopt private sector models and PCMHs as advanced APMs [Aug. 21, 2017]