The Medicare Quality Payment Program Part II: An Overview of Advanced APMs and 2018 Updates

Douglas Schoeneman


Aegis Compliance & Ethics Center, LLP

The Medicare Quality Payment Program Part II: An Overview of Advanced APMs and 2018 Updates

In 2015, Congress passed the Medicare Access and CHIP Reauthorization Act (“MACRA”) which abolished the much-despised Sustainable Growth Rate (“SGR”) payment formula for providers. Continued use of the SGR required annual “doc fixes” to prevent a reduction in provider payments. Intending a shift away from fee-for-service to pay-for-value, MACRA replaced the SGR with the Quality Payment Program (“QPP”) – see Centers for Medicare and Medicaid Studies (“CMS”) Final Rule for 2017 (81 FR 77008)  – creating two new provider payment tracks: (1) the Merit-Based Incentive Payment System (MIPS) and (2) the Advanced Alternative Payment Model (Advanced APM). Both payment tracks rolled out in 2017 and, as the first reporting year nears an end, CMS has published a list of changes and additions to both in its Final Rule with Comment Period for 2018 (82 FR 53568). Part II is an overview of Advanced APMs and the changes and additions effective January 1, 2018 (and subsequent years). For information on changes and additions to the QPP’s other payment track, MIPS, please see Part I of this article.

Advanced Alternative Payment Models (Advanced APMs)

Essentially, an Alternative Payment Model (“APM”) is any Medicare payment model that deviates from traditional fee-for-service provider payments. While APMs predate the Quality Payment Program, Advanced APMs are APMs making participating entities (clinicians billing through an Advanced APM) subject to “more than nominal” financial risk, use Certified EHR Technology (“CEHRT”) and report to CMS on quality measures comparable to “the quality performance category under MIPS.” CMS classifies entities participating in an Advanced APM during a performance period as Qualifying APM Participants (“QPs”). QPs will receive a 5% incentive payment for years 2019 through 2024 (based on performance periods two years prior), exemption from MIPS reporting requirements, and a 0.75% annual increase in payment rates starting in 2026 (entities subject to MIPS reporting will only receive a 0.25% increase). QPs receive the 5% incentive payment regardless of their quality ranking, as CMS believes Advanced APMs are self-policing and will punish participating entities for failing to meet quality standards.

More detail on the statutory requirements:

Bearing More than Nominal Financial Risk: under an Advanced APM, if actual expenditures exceed expected expenditures during a performance period CMS may: (1) withhold payment for services, (2) reduce the payment rate or (3) require repayment; the total annual amount at risk is equal to or greater than 8% of the “average estimated total Medicare Parts A and B revenues” of participating entities. The 8% figure applies to performance years 2017 through 2020 – CMS has not decided on a percentage for subsequent years but states it will be higher.

Meaningful Use of CEHRT: EHRs (Electronic Health Records) are computerized versions of patients’ charts. EHR technology is certified by the Office of the National Coordinator for Health IT (ONC). Essentially, CMS looks for entities to use CEHRT for activities such as prescribing drugs, exchanging health information electronically (without violating HIPAA), and submitting quality data reports.

Quality Measures Comparable to MIPS: an Advanced APM satisfies this requirement by including an actual MIPS quality measure or a quality measure that is “evidence-based, reliable and valid.” CMS believes the integrity of quality measures used in Advanced APMs (CMS is responsible for approving and monitoring them) is sufficient to deter stinting on necessary patient care under the guise of meeting cost expectations. CMS, when writing its rules, sometimes cherry picks stakeholder comments suggesting a more stringent standard so that the final CMS determination seems moderate by comparison. In lieu of a more “robust” set of quality requirements for Advanced APMs, CMS proposed and finalized a requirement that all APMs (including Advanced) use at least one patient “outcome” measure. This requirement obviously has limited value for those specialties where patient mortality is high so CMS limits the requirement to where a patient outcome measure is available on the MIPS list of quality measures.

Changes and Additions to the Advanced APM Incentive Effective in 2018 (and Subsequent Years)

Nominal Financial Risk Standard: when CMS promulgated the QPP in 2016, the 8% of Medicare Parts A and B as total potential risk was scheduled for performance years 2017 through 2019 – thereafter the total amount would be higher. In the update, CMS extended the 8% figure through performance year 2020 and has yet to finalize a higher figure for subsequent years (but it will be higher).

QP Performance Period and Partial QPs: CMS makes three QP determinations a year: March 31, June 30, and August 31. APM entities failing to meet the minimum threshold (billing under the model or percentage of patients seen) for QP may be classified as “Partial QPs.” Partial QPs do not receive the Advanced APM incentive but are exempted from the MIPS reporting requirement (they also won’t receive the MIPS payment adjustment). Because some entities may not participate in an Advanced APM for the entire performance period, CMS will make the QP and Partial QP determination based on at least 60 days of participation during one of the performance periods.

Identifying MIPS-APM Entities: entities participating in an APM (other than QPs and Partial QPs) are subject to MIPS reporting requirement and CMS refers to them as MIPS-APM Entities. CMS is adding a fourth determination date for MIPS-APMs: December 31 (the other dates are the same as for Advanced APMs).

Other Payer Advanced APMs: CMS now calls “Other Payer” / Advanced APM combinations the “All Payer Combination Option”. CMS defines the All Payer Combination as Advanced APMS under Medicare and Advanced APMS using payers other than Medicare (e.g. Medicaid, private payers). These APMS will be available during performance periods in 2019.




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