Alternative Payment Model Could be Saving Grace for Quality Improvement

The passage of the Medicare & CHIP Reauthorization Act (MACRA) of 2015 has formally defined the role that a new set of reimbursement models, known collectively by the Centers for Medicare & Medicaid Services (CMS) as Alternative Payment Models (APMs), will play in the upcoming decades in setting the terms for provider reimbursement.1 This set of models stands in contrast against the upcoming Merit-Based Incentive Payment System (MIPS) modifications to the traditional Fee-For-Service (FFS) reimbursement system that has been the cornerstone for CMS reimbursement for decades. Since fully qualifying APMs are not required to participate in upcoming competitive comparison of provider and organizational metrics (and subsequent positive or negative fee schedule adjustments) in a somewhat bell curve fashion like MIPS will, it is becoming increasingly prudent for many ‘at-risk for penalization’ practices to consider moving to these models in anticipation of the new changes. Despite the looming penalizations some will face under MIPS, it is worth reminding many that the goal of APMs is not to force MIPS-based provider competition for reallocated reimbursements.

The ‘Mysterious’ Structure of an APM

The technical definition of a fully qualifying APM, as defined in MACRA, is “a participant in the Comprehensive Primary Care (CPC) initiative through the Center for Medicare & Medicaid Innovation (CMMI), a model expanded under the CMMI which does not include Health Care Innovation Award recipients, a Medicare Shared Savings Program Accountable Care Organization (ACO), or is approved in a Medicare Health Care Quality Demonstration Program OR Medicare Acute Care Episode Demonstration Program.” Furthermore, an APM that is CMS approved must also track and meet “quality measures comparable to measures under MIPS (see below), use a certified Electronic Health Record (EHR), bear more than ‘nominal financial risk’ (presumptively far less than the CMS’s ‘substantial risk’ definition of 25% of revenues) OR is a medical home expanded under the CMMI, and has increasing percentage of payments linked to value through Medicare or all third party payer APMs (which can range in time to between 25-75% of all-payer reimbursements).”

This may all seem like incomprehensible jargon at first, but the fundamental common thread on further analysis is that any adoption of an alternative model (either a modified version of one that already is in wide spread use or a genuinely novel one) must be approved by CMS through a prior effective clinical demonstration of feasibility and must provide ongoing metric based performance evaluation of provider quality improvement. These performance criteria must then be gauged against a set of CMS quality standards that have been in place for quite some time under a variety of names and initiatives. These initiatives, mostly implied rather than listed by name in the legislation, include the Modified Stage 2 or 3 Meaningful Use Criteria of the EHR Incentive Program, the Physician Quality Reporting System (PQRS), and the Value Modifier (VM), which will all be consolidated under MIPS changes to the FFS reimbursement schedule in 2019. For all of the complicated phrasing of MACRA’s definitions, this is the underlying technical definition based on current and upcoming CMS initiatives.