MACRA News: When is an APM not an APM?

While it is clear that Congress intended to nudge physicians toward participation in alternative payment models (APMs) when it enacted the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), it is less clear which particular models Congress had in mind. Much will depend on how the Centers for Medicare and Medicaid Services (CMS) interprets the law in upcoming regulations – and specifically, how much financial risk CMS will require providers to accept to earn APM incentives.

The MACRA includes strong incentives for physicians who provide a significant amount of care through APMs – a bonus of five percent of their Medicare professional services payments in 2019 through 2024, exemption from the performance reporting requirements and payment adjustments under the Merit-based Incentive Payment System (MIPS) and beginning in 2026, a slightly higher annual increase to base Medicare rates than physicians paid through the MIPS. These incentives, plus the potential to share in savings realized under APM models, likely will result in increased interest in APM participation among physicians.

However, not all APMs are created equal under the terms of the MACRA. Eligible APMs under Medicare are limited to models tested by the Center for Medicare and Medicaid Innovation (CMMI); Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs); and certain other demonstrations under federal law.  A physician participates in the APM by working through an “APM entity” – such as a hospital, physician group practice or ACO – to provide care in accordance with the APM’s requirements.  Congress included certain requirements that an APM entity must meet before a physician’s participation “counts” for purposes of earning the MACRA APM incentives: the APM entity must participate in an APM that 1) requires participants to use certified electronic health record technology and 2) ties payment for professional services to quality measures comparable to those in MIPS; and the APM entity must bear more than nominal financial risk for monetary losses under the APM (or be a medical home expanded under CMMI authority).

These statutory requirements lead to many questions that CMS will need to address through rulemaking – for example, how will the agency assess whether an APM’s quality measures are comparable to those in the MIPS? And will CMS find a way to capture payments made by Medicare Advantage plans, even though Congress did not include those plans among its listed Medicare APMs? However, it is likely that the key question that will distinguish APMs that “count” from those that do not is what constitutes “more than nominal financial risk.” The AHA and other associations, including the American Medical Association, have pushed CMS to define this term broadly, so that it is not limited to models that require providers to accept downside risk but instead recognizes the significant financial investment providers undertake to implement APMs. However, CMS has signaled publicly that models with upside-only risk (such as MSSP Track 1 ACOs) may not meet the statutory threshold. It is expected that CMS will address the issue in proposed regulations anticipated this spring; stay tuned to our website (www.aha.org/MACRA) for additional information on this and other issues related to the new physician payment system.