MIPS: Why Alternative Payment Models Matter
By Grant Huang, CPC, CPMA
You now know that Medicare will be consolidating all of its existing major incentive programs into a single entity called the Merit-Based Incentive Program (MIPS), but you may not know that there’s a way to avoid participating in MIPS entirely. The same law that created MIPS also establishes a second path to pay-for-performance called Alternative Payment Models (APMs), and participating in the right APM means you don’t need to worry about MIPS.
Previous issues of The Business of Medicine have discussed in detail how quality reporting and meaningful use will change under MIPS, as well as how the overall MIPS program works on a point system to determine positive or negative final payment adjustments. This article addresses APMs, which operate in tandem with MIPS but have gotten far less publicity. Part of the reason is that APMs are described in the MIPS proposed rule, but in less detail than the MIPS program itself. Another reason is that APMs describe a wide variety of both existing payment models, such as Medicare’s Bundled Payments for Care Improvement (BPCI) program and a variety of Accountable Care Organizations (ACOs).
What are APMs?
APMs refer to payment models that are pay-for-performance as opposed to fee-for-service model that has long been the basis for Medicare payments. CMS defines two types of APMs: “advanced APMs,” which are considered eligible for complete exemption from MIPS, and “intermediate APMs,” which includes all other APMs that don’t meet the advanced criteria and thus do not allow providers to be exempt from MIPS.
Providers who are not participating in advanced APMs, but are participating in other APMs, do receive some credit toward the MIPS program under one of the four MIPS components, clinical practice improvement activities. Remember: The MIPS components are quality, which replaces the Physician Quality Reporting System (PQRS), advancing care information, which replaces the meaningful use program, cost, which replaces the value-based payment modifier, and clinical practice improvement activities, which replaces the similarly-named clinical practice improvement initiatives. It’s not a huge boost, since the clinical practice improvement category can only account for 15% of the overall MIPS composite score that determines payment.
Participation in an advanced APM is far more beneficial, and the payment bonuses are significant while the administrative burden is reduced since MIPS participation goes away. Providers in an advanced APM receive a positive 5% Medicare physician fee schedule update from 2019 through 2024. For years 2026 and beyond, these providers are guaranteed to receive higher fee schedule updates than other non-participating providers. During all of these years, they do not have to participate in MIPS.
In the MACRA proposed rule, CMS identifies six existing APMs as advanced and 18 others as not advanced. The six approved advanced APMs are:
- Comprehensive End-Stage Renal Disease (ESRD) Care
- Comprehensive Primary Care Plus
- Medicare Shared Savings Program, Track 2
- Medicare Shared Savings Program, Track 3
- Next-generation Accountable Care Organization
- Oncology Care Model, two-sided risk arrangement
Many other existing APMs, such as BPCI and another Medicare program, the Comprehensive Joint Replacement (CJR) model, are on this list from the proposed rule. As a result, specialty groups are pushing hard for their models to be included as advanced APMs, and CMS has signaled an openness to change. This represents the greatest hope for many practices who want to take the APM path rather than be continually subject to performance monitoring via MIPS.
CMS: It’s still early and we want to help
While there’s no guarantee that CMS will reclassify BPCI or CJR models as “advanced” APMs for MACRA purposes, the agency has publically stressed its openness to feedback and change. “We are on the beginning of a journey to move toward a new set of models that … give [providers] the flexibility to get reward for quality,” CMS Acting Director Andy Slavitt said during a Senate Finance Committee hearing on July 13. Slavitt emphasized that the current crop of APMs is open to change based on feedback, especially in the first few years of MACRA, and said the agency wants APMs that deliver better outcomes at lower cost while running “in the background” of the physician-patient interaction.
The full text of the MIPS proposed rule is available here. The public comment period officially ended on June 27 and the final rule is expected at the end of October or beginning of November.