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Alternative Payment Models (APMs)

APMs vary in design, but all aim to restructure payments in a way that financially incentivize low-cost, high-value care. Common types of APMs include patient-centered medical homes and specialty practices, episodic or bundled payment models, Accountable Care Organizations (ACOs), population-based capitated payment models, and direct contracting models.  In 2019, 41% of Medicare payments, 30% of commercial payments, 53% of MA payments, and 23% of Medicaid payments were tied to APMs (source: Health Care Payment Learning & Action Network).

Advanced Alternative Payment Models

The Medicare Access and CHIP Reauthorization Act of 2016 (MACRA) established the Medicare Quality Payment Program (QPP), which rewards clinicians for significantly participating in a class of APMs that meet rigorous criteria for technology, quality, and financial risk, known as Advanced APMs. In addition to any model specific payments, clinicians who substantially participate in Advanced APMs- known as Qualified APM Participants (QPs)- are excluded from MIPS (Medicare’s default pay-for-performance program) and can earn a 5% Medicare bonus (through the 2022 performance year). Clinicians can qualify based on their participation in Medicare, Medicare Advantage (MA), Medicaid, and private sector models.

Read about ACP’s APM and QPP related advocacy efforts

2020 Updates

  • ACP submitted a revised proposal of its Medical Neighborhood Model to the PTAC (the Physician-Focused Payment Model Technical Advisory Committee), an independent body tasked with recommending physician-led private sector APMs to CMS.
  • CMS announced it will require private sector medical homes to align with CMS in order to qualify as an Advanced APM (see page 23 of CMS’ 2020 QPP Overview Fact Sheet).
  • The number of new MSSP ACOs (Medicare Shared Savings Program Accountable Care Organizations) declined after new rules went into effect July 1, 2019 that, among other changes, reduced the time allowed in 1-sided risk and lowered shared savings rates.

More on Advanced APMs

1. What models currently qualify as Advanced APMs?

Click here for a full list of qualifying 2020 Advanced APMs, including Medicare Advantage and private payer models.

2. How do I become a Qualifying Advanced APM Participant (QP)?

To be considered a QP for a given performance year, an eligible clinician must have a certain portion of their patients or payments flow through Advanced APMs. The 2020 thresholds are listed below. Clinicians may qualify based on their participation in Medicare AAPMs alone or based on their combined participation in Medicare, Medicare Advantage, Medicaid, private payer, and multi-payer APMs. Clinicians will have three opportunities to qualify each year based on three overlapping “snapshots” of claims data from January-March, January-June, and January-August. To find out whether you are considered an eligible professional and satisfy the QP thresholds for a given year, visit CMS’ QPP Participation Status Lookup Tool.

2020 Medicare Threshold Option

  Payments Patients
QP 50% 35%
Partial QP 40% 25%

2020 All-Payer Combination Threshold Option 

  Payments Patients
QP 50% (25%) 35% (20%)
Partial QP 40% (20%) 25% (10%)

*Note: QP thresholds are set to increase to 75% in 2021 unless Congress intervenes.

3. What is a Partial QP?

Clinicians who participate in Advanced APMs but fall short of the QP threshold may reach a separate, smaller threshold and qualify as a Partial QP. Partial QPs have the option to opt out of MIPS. APM- participating clinicians who do choose to participate in MIPS will be scored under the MIPS APM Scoring Standard. Partial QP determinations are made at the APM Entity level. If a clinician opts out of MIPS, it will apply to all of their TIN/NPI combinations. The 2020 partial QP thresholds are listed in parenthesis in the tables under Question 2.

4. What rewards do clinicians who participate in AAPMs receive?

MIPS eligible clinicians who achieve QP status in Advanced APMs will: 

  • Receive supplemental or performance-based payments according to the rules established under their APM (e.g., care coordination or infrastructure payments, shared savings, bundled payments, etc.);
  • Be exempted from participating in MIPS;
  • Receive a 5% lump sum bonus payment on their fee-for-service reimbursements through the 2024 payment years (based on 2022 performance).
  • Receive a 0.5% higher Physician Fee Schedule update starting in 2026 (0.75% instead of 0.25%).

CMS Resources:

Have more questions? Email us at policy-regs@acponline.org.