MACRA 101: Advanced Alternative Payment Models

Bherti Patel
Associate Editor
Loyola University Chicago School of Law, JD 2018


The Quality Payment Program (QPP) will reward delivery of quality patient care through the following two programs: the Merit-based Incentive Payment System (MIPS) and the Advanced Alternative Payment Models (APMs). These two programs will allow clinicians and physicians to provide care in a streamlined payment system and improve the overall quality of patient care.  This article will examine the APM program.

What Is an Advanced APM?

An APM is simply the MACRA terminology for a value based care model. The MACRA end goal is to move as much reimbursement as possible over to Advanced APMs and to move away from the traditional fee-for-service arrangements.  In pursuit of this ideal, the rule incentivizes the participation in Advanced APMs, but not all value based care models will qualify as an Advanced APM at the outset. To qualify, Advanced APMs must meet three requirements: use certified electronic health records (EHR) technology, base payments on quality measures comparable to MIPS, and require providers to bear more than nominal risk.

Advanced APMs must bear a certain level of financial risk in order to qualify under MACRA.  An APM must provide that if actual expenditures exceed expected expenditures during a set timeframe, CMS can: withhold payments to the APM and Qualified APM Participants (QP), reduce payment rates to the APM and QPs, or require the APM to pay money to CMS (note there are additional parameters for Medical Home Models).  After establishing that an APM meets the financial risk standard, APMs are then evaluated on whether that risk is greater than a nominal amount.  The final rule responded to many proposed rule comments by reducing the nominal risk required to qualify as an Advanced APM to 8% of all Medicare reimbursement or 3% of the expected expenditures for which the QPs are responsible for under the APM. In determining this risk amount, CMS retracted the proposals related to marginal risk and the minimum loss ratio due to their complexity.  These elements will still apply to Other Payer Advanced APMs starting in 2019.

How Do Clinicians Qualify to Participate in APM Reimbursement?

For performance years 2017 and 2018, clinicians can only become a QP if they participate in an Advanced APM.  However, CMS states that for years 2019 and beyond other models will be available including expanded lists of approved APMs and Other Payer Advanced APMs.

Clinicians who become a QP are exempt from submitting data under the MIPS program.  In order to become a QP, clinicians must have significant participation in an APM as evidenced by meeting thresholds for patient count or payment amount, which increase annually.

CMS recognized that some clinicians participate in APMs that are not considered Advanced APMs under the rule.  These programs will be characterized as “MIPS APMs,” subjecting providers to reporting requirements and payment adjustments under the MIPS track. However, in response to comments and in an effort to recognize these clinicians’ participation in delivery reform, CMS finalized a proposal that MIPS-eligible clinicians who participate in MIPS APMs will be scored using the APM scoring standard instead of the one generally applicable to MIPS. MIPS requirements will also apply to any eligible clinicians in Advanced APMs who do not meet participation thresholds.

Advanced APM Examples:

The final rule identifies the following as Advanced APMs for 2017: Comprehensive ESRD Care Model (LDO and non-LDO two-sided risk arrangements); Comprehensive Primary Care Plus Model; Medicare Shared Savings Program Tracks 2 and 3; and Next Generation ACO Model.  CMS is exploring the enhanced ACO Track 1+ model for 2018 which will lower the amount of downside risk required for a provider to participate in an Advanced APM.  CMS further intends to revisit the Comprehensive Care for Joint Replacement (CCJR) model and others to expand the options providers have in regards to which models qualify as an Advanced APM. CMS will complete its initial set of Advanced APM determinations no later than January 1 of next year.

Looking Forward:

CMS has made very clear their intention to incentivize providers to move towards participation in an Advanced APM.  The incentives are high with respect to the reimbursement possibilities with QPs receiving a 5% lump sum bonus for years 2019-2024 and then a higher fee schedule increase each year beginning in 2026.  In addition, QPs will not have to undertake the burden of reporting under MIPS or the ever changing reimbursement rates from year to year.  CMS has evidenced their willingness to be flexible so that more providers are able to participate in the APM track.  Organizations need to be cognizant of the fact that this is the direction CMS would like to see reimbursement move towards in the future and that the incentives to provide care in one of these models will likely continue to get stronger.  These incentives should encourage providers and organizations to begin making moves to transition towards an Advanced APM.  Compliance officers must be forward thinking and begin strategically planning for how their organization can begin to move closer to a value based care model.