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Alternative Payment Models - The MACRA Quality Payment Program

Published on 6/29/2017

Since the passage of the Medicare Access and CHIP Reauthorization Act (MACRA), we've heard a lot about the Merit-based Incentive Payment System (MIPS) and alternative payment models (APMs), both of which comprise the Quality Payment Program (QPP) implemented by the Centers for Medicare and Medicaid Services (CMS) this year.

Much of the discussion has centered around MIPS, as most providers will participate in that program in 2017 and 2018. It would be a mistake to neglect discussing APMs, particularly advanced APMs, given the increasingly important role they will play as the QPP evolves.

What is the current state of payment reform?

Before jumping into the details on advanced APMs, it's important to understand the current state of payment reform, as well as a few key terms.

Value-based care is here to stay, as evident by the many APMs introduced both by CMS and commercial payers in recent years. Even as the new administration begins to put its stamp on health care, payment reform and the desire to move to value-based care have bipartisan support. However, the terms "value-based care" and "alternative payment models" can take on different meanings depending on the definition, viewpoint and programs being discussed.

The diagram below illustrates what falls under the umbrella of value-based care from a Medicare perspective.

For an in-depth breakdown of these acronyms, check out our blog post, 18 MACRAnyms You Should Know.

There are three ways to categorize APMs, depending on who bears the financial risk and is responsible for meeting the requirements to change care delivery in specific ways. These categories are hospitals, providers and post-acute care organizations. Many APMs span more than one category; the mandatory bundled payment programs, Comprehensive Care for Joint Replacement and Episode-based Payment Models, span all three. We anticipate CMS will launch additional APMs in the coming years to continue the transition from fee-for-service to pay-for-performance.

APMs in the Quality Payment Program: Advanced APM Criteria

For purposes of the Quality Payment Program, it is important to separate APMs from advanced APMs. Alternative payment models require specific changes in care delivery and measure cost and utilization, but to be considered an "advanced" APM by CMS' standards, the model also must meet the following criteria:

  1. Requires participants to use certified electronic health record technology
  2. Provides payment for covered professional services based on quality measures that are comparable to the MIPS program
  3. Bears financial risk for monetary losses under the APM

The Medicare Shared Savings Program (MSSP) is an example for understanding the difference between an alternative payment model and an advanced alternative payment model. There are three tracks in the MSSP program, all of which are considered APMs as they meet the criteria outlined in the MACRA legislation. The Track 1 MSSP ACO, however, does not bear financial risk for monetary losses. Instead, Track 1 participants only receive upside gain sharing if they meet the program requirements to receive shared savings. Therefore, although the MSSP Track 1 model meets the APM definition and two of three advanced APM definition requirements, but does not meet the financial risk requirement, it does not qualify as an advanced APM.

This means that eligible clinicians participating in an MSSP Track 1 ACO will receive favorable scoring under the MIPS program, but are not exempt from participating in the program because they are not considered advanced APM participants.

The other two tracks in the MSSP program do bear financial risk, so eligible clinicians participating in an MSSP Track 2 or Track 3 program are considered participants in an advanced APM. This means the patients they see and payments they receive through the MSSP Track 2 or 3 ACO contribute to them achieving Qualified Participant status in the advanced APM, which, if attained, exempts them from participating in MIPS altogether.

By creating financial incentives to coordinate care and curtail unnecessary medical costs, CMS aims to bend the growing cost curve of medical expenditures while improving the quality of care delivery. APMs are the building blocks to accomplishing this goal, but policymakers and health care providers must work together to ensure participation in these programs is successful and can propel the industry toward true value-based care.

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