Aiming for Incentives Under APMs

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) has set in motion a new approach to reimbursement, with year two of the program just about to begin. As established under MACRA, there are two reimbursement paths available to eligible physicians, the Merit-Based Incentive Payments System (MIPS) and the Advanced Alternative Payment Model (APM).

In the “phase in” stage of MACRA, many physicians have opted for the MIPS path for reimbursement, choosing to avoid penalties or aim for incentives through their relative performance to each other across quality and value measures. However, it is through Advanced APMs that the greatest opportunities exist for medical practices.

How MACRA Incentivises Advanced APMs

The principle goal of MACRA is to push physicians towards value-based care and risk. APMs- and Advanced APMs in particular- reward physicians toward higher levels of value (defined as the quality of care in relation to cost). The Advanced APMs give added incentives for practices to provide high-quality and cost-effective care, including the care of specific conditions, care episodes or populations by creating an APM entity or joining an existing one, such as a Medicare Shared Savings Program (MSSP) or an Accountable Care Organization (ACO).

Based on a UBM Medica survey, we know that high performing medical practices (about 24% of our surveyed 2,000 medical practice leaders, based on practice growth) are more than twice as likely to earn a MACRA incentive for year 1 of MACRA, mostly through the MIPS path. Although we are only in year two of MACRA, each year it will become less and less desirable to just be in MIPS.

In exchange for taking on more risk through Advanced APMs, practices have the opportunity to earn an annual 5% Part B incentive. Starting in the 2026 payment year, Advanced APM qualifying participants will accrue a higher annual Part B physician fee schedule increase of 0.75% rather than 0.25%.

In its first year, CMS projected that only 4 to 11 percent of Medicare providers would qualify for the Advanced APM payment approach. Not all APMs will meet the definition of Advanced APMs, to be excluded from MIPS reporting requirements and payment adjustments. Advanced APMs must meet the basic requirements of APMS plus the added requirements listed here, such as the use of Certified EHR technology, and clinicians must “sufficiently participate” in an Advanced APM to earn its benefits.

Although many successful APM entities have successfully earned CMS incentives for participation, these incentives have been offset through considerable investment and risk. Even large organizations are finding it difficult to rely on market clout alone to improve the bottom line.

In year 2 of MACRA, CMS introduced provisions to make it easier for eligible clinicians to participate in Advanced APMs, including an extension of the 8% general applicable revenue based nominal amount standard that allows APMs to quality as Advanced APMs, changing the requirement for Medical Home Models, and making it easier to participate in Advanced APMs that begin or end in the middle of the year.