Decoding MACRA’s Alternative Payment Model (APM)

Alternative Payment Model

The MACRA Final Rule formalizes the “transition year” during CY 2017 to modify reporting requirements of the QPP for that year. CMS has also lowered the thresholds for provider participation and reduced the amount of measures required for reporting under the Advancing Care and other MIPS categories. CMS also reduced the degree of risk Advanced APMs must accept. Under the final rule, more providers can be exempt from MIPS if they receive a large portion of their reimbursement from an Advanced Alternative Payment Model (APM).

Eligibility Criteria under APMs

A healthcare provider qualified for reimbursement under the Alternative Payment Model (APM) can be a Accountable Care Organization (ACO). It can also be a model expanded under the Centre for Medicare and Medicaid Innovation (CMMI) that is not a Health Care Innovation Award recipient. To be an advanced APM, providers must meet additional payment and patient count thresholds in order to be a Qualifying APM Participant or Partial Qualifying APM Participant.

The APM can be used where the provider uses quality measures comparable to the performance measures used under MIPS. A healthcare provider that used a certified electronic health record is eligible for APM. To qualify for reimbursement as an APM, the law requires the provider to accept financial risk for the quality and effectiveness of care provided. The provider assumes more than a nominal risk or is a medical home expanded under CMMI. A qualifying threshold must meet a volume threshold of Medicare payments or beneficiaries paid through the alternative payment model. The exception is the Patient-Centered Medical Home (PCMH), which are required to accept financial risk but need to demonstrate to Medicare that they can improve quality without increasing costs, or can lower costs without compromising on quality. The providers would have to demonstrate that a substantial portion of their payments come from APM.

APMs and Advanced APMs the Same?

From 2017, some existing APMs may not meet the statutory requirements needed to be categorized as Advanced APMs, and these will be categorized as MIPS APMs. 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

To be an advanced APM, providers must meet additional payment and patient count thresholds in order to be a Qualifying APM Participant or Partial Qualifying APM Participant. Participants in Advanced APMs must bear more than nominal risk under the reimbursement model. In the Final Rule, for 2017 and 2018, this is eight percent of all Medicare reimbursements or three percent (from four in the Proposed Rule) of the expected expenditures for which the provider is responsible under the APM itself. To determine the required risk amount, CMS has retracted proposals relating to marginal risk and minimum loss ratio (MLR) (however, these still apply to “Other Payer” Advanced APMs starting in 2019). For medical home models, unique standards are established.

CMS is considering an enhanced ACO Track 1+ model for 2018 to qualify providers for Advanced APM treatment, and will revisit the Comprehensive Care for Joint Replacement (CCJR) model and will reopen application periods for other models to expand the options providers have. CMS will complete the initial determination of Advanced APMs by January 1, 2017.

Incentives and Penalties

Healthcare providers that get a significant share of revenue through an APM would get annual lump-sum bonuses of 5% each year from 2019 through 2024 on all services paid under Medicare’s physician fee schedule. The 5% bonus is a lump-sum payment based on the aggregate amount of Medicare-covered services for that professional for the preceding year. However, in order to actually receive the bonus payment, APMs are not required to perform well on quality or reduce cost for clinicians.

They can also earn more if they meet savings targets. However, APMs that take on direct financial risk might have to pay back Medicare if they don’t meet their savings targets. Providers can transition into payments with more risk. From 2026, providers will get a 0.75% annual baseline payment update.

Now is the time to start reviewing the CMS requirements to determine whether your payment model is an APM or Advanced APM.

ProfEdOnDemand has lined up a series of MACRA conferences to help the healthcare study make a smooth transition to a new Medicare payment system.

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