From bundled payments to accountable care organizations, alternative payment models (APMs) are not new to healthcare providers. But the final MACRA implementation rule created a new subset of Advanced APMs, which could bring providers more revenue under the Quality Payment Program.
Eligible clinicians in the Quality Payment Program have two participation options: the Merit-Based Incentive Payment System (MIPS) or the Advanced APM track. CMS anticipates most eligible clinicians to enter MIPS in 2017, but the projected 70,000 to 120,000 clinicians in Advanced APMs will be up for greater incentive payments.
Qualifying participants, or Advanced APM clinicians, can earn a 5 percent Medicare payment adjustment in 2019 for participating in an approved model during the 2017 performance year. CMS estimated that qualifying clinicians in 2019 will receive a total of $333 million to $571 million in incentive payments.
MIPS adjustments cap out at just 4 percent for the same period. Since the value-based reimbursement system is also budget-neutral, about half of MIPS eligible clinicians will receive a total of $199 million in positive Medicare payment adjustments and the other half will face a total penalty of $199 million.
The Advanced APM track may seem like a more attractive Quality Payment Program pathway, but qualifying participants must sufficiently participate in one of just eight approved models in 2017. Only a handful more have since been added to the 2018 Advanced APM list.
In the following sections, RevCycleIntelligence.com examines Quality Payment Program requirements for earning maximum incentive payments, and also explores the current range of CMS-approved Advanced APMs.
Understanding the ABCs of Advanced APMs
According to the final MACRA implementation rule, Advanced APMs “contribute to better care and smarter spending by allowing physicians and other clinicians to deliver coordinated, customized, high-quality care to their patients within a streamlined payment system.”
Unlike MIPS eligible clinicians, qualifying participants follow each model’s innovative payment structure, which reward high-value care delivery for a specific condition, care episode, or population.
Alternative payment models must also meet the following requirements to be considered an Advanced APM:
- Mandate participants to use certified EHR technology
- Reimburse participants based on quality measures comparable to those in MIPS
- Require participants to bear more than nominal financial risk for monetary losses or be part of a medical home
CMS defines nominal two-sided financial risk as a marginal risk rate of 30 percent, a minimum loss rate of 4 percent or lower, and a stop loss rate that requires the participant to repay 4 percent of the denominator of the total care costs or target price.
In other words, qualifying participants must be accountable for repaying at least 30 percent of any financial losses that are greater than 4 percent of the denominator or the maximum financial loss must be at least 4 percent of expected spending.
While alternative payment models must meet certain requirements, eligible clinicians are also on the hook for participation thresholds. To be a qualifying participant, clinicians must meet revenue- or volume-based requirements.
In 2017 and 2018, eligible clinicians must receive 25 percent of Medicare reimbursement or see 20 percent of Medicare patients through the Advanced APM to be considered a qualifying participant.
CMS plans to up the threshold percentages to 50 percent of Medicare payments and 35 percent of Medicare patients in 2019 and 2020. By 2021 and later, the thresholds will be 75 percent of Medicare payments and 50 percent of Medicare patients.
The federal agency also intends to include non-Medicare reimbursements and patients as part of 2019 Advanced APM requirements.
If eligible clinicians meet participation requirements and join an approved model, then they will receive a 5 percent incentive payment based on their Medicare Part B revenue from the previous year. Qualifying participants will can earn the payment just by participating in an Advanced APM, meaning achieving model goals will not be considered when determining payments.
Qualifying participations will also be exempt from MIPS reporting and payment adjustments.
The 5 percent incentive payment will apply to 2017 to 2022 performance years. After that, qualifying participants will receive a higher Medicare Physician Fee Schedule update than non-qualifying participants.
ACO opportunities for Advanced APM participation
Accountable care organizations (ACO) incentivize providers from across the care continuum to improve care quality and reduce costs for patient populations while requiring providers to become more financially accountable for the care delivery.
With higher levels of accountability, CMS included five ACO models on its most recent approved model list and the federal agency plans to add more as the Quality Payment Program matures. The following ACO programs are designated as 2017 Advanced APMS:
- Medicare Shared Savings Program (MSSP) Track 2
- MSSP Track 3
- Next Generation ACO Model
- Comprehensive End-Stage Renal Disease (ESRD) Care Two-Sided Risk Model
- Vermont Medicare ACO Initiative
Under the Affordable Care Act’s authority, CMS launched the MSSP ACO program to facilitate the value-based care transition. The program is divided into three tracks based on downside financial risk levels. However, only MSSP Tracks 2 and 3 contain more than nominal financial risk as defined by Advanced APM requirements.
The financial risk structure in MSSP Track 2 has a shared savings rate of up to 60 percent and a shared loss rate between 40 percent and 60 percent. ACOs in MSSP Track 3 face greater rates in both shared savings and losses as they will increase up to 75 percent.
While including MSSP Tracks 2 and 3 on the Advanced APM list opened the participation pool, many healthcare stakeholders still voiced disappointment that CMS limited the approved model list. The American Hospital Association (AHA) stated that the narrow list would significantly limit participation by permitting less than 10 percent of clinicians to qualify for the maximum incentive payment.
In response, CMS developed an additional MSSP track for the 2018 Advanced APM list. The MSSP Track 1+ will contain less downside financial risk than Tracks 2 and 3, but still include enough risk to qualify as an Advanced APM. MSSP Track 1+ ACOs will face a 50 percent shared savings rate and a fixed 30 percent shared losses rate.
The new MSSP track will be open to new MSSP applicants as well as MSSP Track 1 ACOs. CMS plans to start the application process in May 2017.
Providers looking to take on a more advanced Medicare ACO model to receive the maximum Quality Payment Program incentive payment can look to the Next Generation ACO program. CMS designed the program as a stepping stone from previous Medicare ACO initiatives, such as the MSSP.
Next Generation ACOs can choose from rates of both shared savings and losses of up to 80 percent or elect to take on full financial accountability for care with a 100 percent shared savings and losses rate.
Another ACO model on the Advanced APM list is an initiative targeting end-stage renal disease care. The Comprehensive ESRD Care model contains ESRD Seamless Care Organizations, an ACO-like collaborative structure of dialysis facilities, nephrologists, and other providers.
Participating providers can join either an upside-only or two-sided financial risk track. However, only those in the two-sided financial risk pathway will be considered qualifying participants.
CMS also noted that both the large dialysis organization and non-large dialysis organization payment pathways will be considered an Advanced APM as long as participants are in the two-sided risk model.
The final ACO program qualifying for Advanced APM status is the Vermont Medicare ACO Initiative. Starting earlier this year, Vermont launched the first voluntary all-payer ACO model. Through the all-payer model, the state aims to align ACO design across payers.
As part of the new program, CMS also developed the Vermont Medicare ACO Initiative, a state-tailored model with its own benchmarks. Vermont ACOs will be considered Next Generation ACOs in 2017 as the state’s health board develops initiative-specific benchmarks.
Bundled payment models included in the Advanced APM pathway
Rather than taking on financial risk for a patient population as in an ACO model, qualifying participants can scale back downside risk structures to care episodes. For 2017 Advanced APM participation, CMS approved two bundled payment programs: the Oncology Care and Comprehensive Care for Joint Replacement models.
The Oncology Care bundled payment model reimburses providers for a six-month episode of chemotherapy administration to cancer patients. Participants primarily receive reimbursement through Medicare fee-for-service, but CMS also pays them a per-beneficiary Monthly Enhanced Oncology Services payment and performance-based payments.
Eligible clinicians must be part of the two-sided financial risk track to be considered a qualifying participant. Under the two-sided Oncology Care Model, providers must repay CMS a percentage of the financial losses if the care episode’s costs exceed the episode’s target price.
However, providers in the risk-based track face a smaller Medicare discount compared to other model participants. The target price will be the provider’s benchmark costs for the care episode minus a 2.75 percent discount. Other model participants face a 4 percent discount.
The second bundled payment Advanced APM focuses on lower extremity joint replacements. Under the Comprehensive Care for Joint Replacement model, providers are accountable for the cost and quality of care starting with a hospital admission and lasting for 90 days after discharge.
If the actual costs for replacements are two percent over the target price, providers may face repayment. In the first participation year, providers are not on the line for financial losses. Even so, the model phases in shared losses are at 10 percent of target prices in the second year and 20 percent of target prices in the third to fifth years.
Only participants in the certified EHR use pathway can earn the Advanced APM incentive payment.
With only two bundled payment models available, CMS announced three more in December 2016 for 2018 Advanced APM participation. The models will center on acute myocardial infarctions, coronary artery bypass grafts, and surgical hip and femur fraction treatments.
Like the Comprehensive Care for Joint Replacement model, the bundled payments will start with a hospital admission and continue for a 90-day post-discharge period. The models also gradually increase financial risk structures over several years.
All three of the models will boost shared savings rates according to the following schedule:
- 5 percent of target price in the first three performance years
- 10 percent of target price in the fourth performance year
- 20 percent of target price in the fifth performance year
In terms of shared losses, CMS plans to finalize a policy for no repayment requirements for the first two performance years. Starting in the third performance year, participants will face a reduced discount percentage for repayment.
The three bundled payment models will launch on July 1 and run until the end of 2021.
CPC+ and other specialty-specific Advanced APMs
CMS is also offering a specialized Advanced APM for primary care providers. The newly-launched Comprehensive Primary Care Plus (CPC+) program is multi-payer initiative that aims to transform primary care payment and care delivery systems.
Through the model, primary care practices receive a non-visit-based monthly care management fee for each beneficiary per month. CMS also pays participating practices a prospective performance-based incentive reimbursement, which is retrospectively reconciled based on quality and cost performance.
CPC+ primary care providers can join one of two payment tracks. Primary care practices in the first track continue to receive Medicare fee-for-service reimbursements, whereas Track 2 practices receive a hybrid reimbursement. The hybrid payment includes a discounted Medicare fee-for-service reimbursement and a Comprehensive Primary Care Payment.
The CPC+ payment is a lump sum reimbursement paid quarterly based on historical fee-for-service amounts for certain primary care services. With the hybrid payments, CMS expects Track 2 practices to provider enhanced primary care services.
The CPC+ launched earlier this year, but CMS plans to reopen the program’s Round 2 applications in late spring or early summer to boost Advanced APM participation.
CPC+ primary care providers have a specialized avenue to earn the 5 percent Advanced APM incentive payment for the next couple of years. Nevertheless, not many other specialists have such a clear-cut pathway for Advanced APM participation.
The Harvey L. Neiman Health Policy Institute recognized the Quality Payment Program’s limited specialist options in February 2017. Institute researchers specifically argued that radiologists should have more Advanced APM opportunities because of their role in many care episodes for imaging and other early diagnostic care.
To develop more specialty-specific Advanced APM tracks, researchers suggested that radiologists look to the MACRA Physician-Focused Payment Model (PFPM) opportunity. In the final MACRA implementation ruling, CMS established the PFPM Technical Advisory Committee that will review and approve alternative payment models submitted by stakeholders.
Since the committee opened proposal submissions in December 2016, stakeholders have put forth five potential alternative payment models. The possible PFPMs range from bundled payment models for colonoscopies, a medical home for inflammatory bowel diseases, and an asthma monitoring model.
Whether through the PFPM track or by reopening alternative payment model applications, CMS intends to increase Advanced APM participation. The federal agency anticipates about 25 percent of eligible clinicians in the Quality Payment Program to be part of an Advanced APM by 2018.
MIPS may be a suitable option for many eligible clinicians who are starting to shift away from fee-for-service. However, Advanced APM participation may be the key to drawing the healthcare industry closer to fully achieving value-based care.