to payment and CMS will provide
increased fee schedule payment updates
for qualifying APM participants to
incentivize this transition. Compared
with the proposed rule, CMS made
several changes related to APM
participation in the MACRA final rule
When deciding whether to partici-
pate in an APM, however, it is important
to consider that participation in an APM
comes with some level of financial risk—
APMs are essentially shared risk-based
payment models. Consider these two
1. In an upside risk arrangement, providers share in cost savings if the cost
of care stays below the target budget.
2. In a downside risk arrangement, providers share in financial losses if costs
exceed the predetermined budget.
How Is APM Defined?
MACRA defines any of the following as
n An innovative payment model ex-
panded under the Center for Medi-
care & Medicaid Innovation (CMMI)
or another payer, including Compre-
hensive Primary Care (CPC) initiative
participants, but not Health Care
Innovation Award recipients
n A Medicare Shared Savings Program
accountable care organization (ACO)
n Medicare Health Care Quality Dem-
onstration Program or Medicare
Acute Care Episode Demonstration
Program, or another demonstration
program required by federal law
What Are Examples of APMs?
n ACOs are collections of health care
organizations that contract with CMS
for management of group beneficia-
ries with shared savings and risks.
Initial contracts include one-sided
share in savings only or two-sided
share in savings and risks.
n Episodes of care and bundled pay-
ments set a predetermined budget
for a patient’s total care for a specific
condition. Different retrospective
payment models include inpatient
DRG treatment payment only, inpa-
tient plus post discharge treatment
periods and only post acute care
service payment models. Payments
are based on fee-for-service with
reconciliation based on established
payment rates. The prospective pay-
ment model of single payment to a
hospital with funds distributed by the
hospital to the providers for inpatient
and post readmission periods is also
available. An example is major joint
replacement, which had significant
savings by transferring patients in the
post acute care period from inpatient
rehabilitation to skilled nursing or
home health care.
n Condition-specific population mod-
els such as Million Hearts (cardio-
vascular reduction model), compre-
hensive end stage renal disease care
initiative and oncology care models
are available. To date, no spine-
specific model is available.
n Comprehensive primary care initia-
tives such as primary care medical
homes are also available.
n Physician-focused payment models
as outlined by AMA are concepts in
progress and addressed below.
MACRA established the Physician-Focused Payment Model Technical
Advisory Committee (PTAC) to review
and assess payment models submitted
by stakeholders to increase the number
of qualifying models.
Physician-Focused Payment Models
The MACRA final rule expanded the
definition of PFPM to include practitioners other than physicians. Payment
models can target the quality and costs
of services that other practitioners provide, order, or significantly influence,
rather than just physician services.
Advanced APMs are a subset of APMs
that require additional risks and require-
ments. To qualify as an advanced APM,
the following requirements must be met:
n participants must use certified EHR
n payment within APM must be based
on quality measures similar to MIPS;
n APM entities must bear monetary
risk more than nominal amount or
be a medical home model.
CMS will release a list of qualifying
advanced APMs in early 2017. Cur-
rently, the following models qualify as
n Comprehensive End Stage Renal
Disease Care Model ( Two-Sided Risk
n Shared Savings Program Track 2
n Next Generation ACO Model
Figure 3. Range of Possible MIPS Adjustments to Medicare Payments By Year