Revenue Cycle Management Blog | GroupOne Health Source

What is an Advanced Alternative Payment Model?

Written by Jeff Jones, CPHP | June 7, 2016

The MACRA final rule details how Alternative Payment Models (APM) will enhance or replace some of the current fee-for-service payments. While the criterion may seem simple in theory, additional details help clarigy the difference between an Advanced Alternative Payment Model and an Alternative Payment Model.

We've been publishing some content over the past couple of months on the MACRA final rule, how to participate in MIPS, and even released a MACRA resource hub. But, there are still a number of questions surrounding what makes an Alternative Payment Model an Advanced Alternative Payment Model.

Today, we're going further into Advanced Alternative Payment Models and discussing the pieces that make up an Advanced APM.

What is an Advanced Alternative Payment Model?

The Medicare Access and CHIP Reauthorization Act states that in order to qualify as an Advanced Alternative Payment Model, the entity must:

  1. Require participants to use certified EHR technology,
  2. Base payment on quality measures comparable to those in the MIPS quality performance category
  3. Either:

(A) requires APM entities to bear more than nominal financial risk for monetary losses; or

(B) is a Medical Home Model expanded under CMMI authority.

This blog post will take a closer look at the details behind this criterion.

[Also: How to Pick Your Pace for the Quality Payment Program]

Certified EHR Technology

The first criterion is that the Advanced APM is required to use Certified Electronic Health Record Technology (CEHRT). In order to meet this criterion the Advanced APM must:

  • Require atleast 50% of the eligible clinicians in each APM Entity to use CEHRT to document and communicate clinical care for the 2017 performance period. This threshold will remain at 50% for second performance year and beyond and CMS will consider making potential changes through future rule making. If the APM has hospitals as its APM Entities, the APM would need to require the hospitals to use CEHRT in order to be an Advanced APM, and the 50% threshold does not apply.
  • For the Shared Savings Program only, the APM may apply a penalty or reward to APM entities based on the degree of CEHRT use among its eligible clinicians
  • Example:
    • An Advanced APM has a provision in its participation agreement that at least 50% of an APM Entity’s eligible clinicians must use CEHRT

MIPS-Comparable Quality Measures

The second criterion for an APM to be an Advanced APM is that it provides for payment for covered professional services based on quality measures comparable to measures under the MIPS quality performance category. CMS interprets this criterion to require the APM to incorporate quality measure results as a factor when determining payment to participants under the terms of the APM. CMS finalized that the quality measures on which the Advanced APM bases payment must include at least one of the following types of measures, provided that they have an evidence-based focus, and are reliable, and are valid; and that at least one such measure must be an outcome measure unless there is not an applicable outcome measure on the MIPS quality measure list at the time the APM is developed:

  • Any of the quality measures included on the proposed annual list of MIPS quality measures;
  • Quality measures that are endorsed by a consensus-based entity;
  • Quality measures developed under section 1848(s) of the Act;
  • Quality measures submitted in response to the MIPS Call for Quality Measures under section 1848(q)(2)(D)(ii) of the Act; or
  • Any other quality measures that CMS determines to have an evidence-based focus and be reliable and valid

Financial Risk for Monetary Losses

The third criterion that an APM must meet to be an Advanced APM is that it must either be a Medical Home Model expanded under section 1115A(c) of the Act, or the APM Entities under the APM must bear financial risk for monetary losses under such APM that are in excess of a nominal amount.

The proposed rule would require providers to have a minimum of 30 percent marginal risk, a minimum loss rate of no more than 4 percent, and a total potential risk that amounts to at least 4 percent of expected expenditures. 

This criterion requires an Advanced APM to meet two standards:

  • Financial Risk Standard – APM Entities must bear risk for monetary losses
  • Nominal Amount Standard – The risk APM Entities bear must be of a certain magnitude

The Financial Risk Standard 

CMS states that the generally applicable financial risk standard for Advanced APMs would be that an APM must include provisions that, if actual expenditures for which the APM Entity is responsible under the APM exceed expected expenditures during a specified performance period, CMS can:

  • Withhold payment for services to the APM Entity and/or the APM Entity’s eligible clinicians;
  • Reduce payment rates to the APM Entity and/or the APM Entity’s eligible clinicians; or
  • Require the APM Entity to owe payment(s) to CMS

The Nominal Amount Standard

CMS states in the final rule that if the APM risk arrangement meets the proposed financial risk standard, then CMS would consider whether the amount of the risk is in excess of a nominal amount in order for this Advanced APM criterion to be met.

CMS has finalized two ways that an APM can meet the Advanced APM nominal amount standard.

An APM would meet the nominal amount standard if, under the terms of the APM, the total annual amount that an APM Entity potentially owes CMS or foregoes is equal to at least:

  • For QP Performance Periods in 2017 and 2018, 8 percent of the average estimated total Medicare Parts A and B revenues of participating APM Entities (the “revenue-based standard”); or
  • For all QP Performance Periods, 3 percent of the expected expenditures for which an APM Entity is responsible under the APM (the “benchmark-based standard”).

CMS has noted that they are only finalizing the amount of the revenue-based nominal amount standard for the first two QP Performance Periods at this time. However, CMS intends to increase the revenue-based nominal amount standard for the third and subsequent QP Performance Periods.

This finalized nominal amount standard is a change from what was proposed. Under this final standard, CMS would not assess marginal risk or minimum loss ratios.

Also, instead of replacing the proposed benchmark-based total risk standard with the revenue-based standard, CMS is adopting the revenue-based standard as an additional option.

Therefore, if an APM’s financial design meets either of the two nominal amount standards, CMS would consider the nominal amount standard to be met.

The Medical Home Model Financial Risk Standard:

CMS finalized adopting a slightly different financial risk standard for Medical Home Models. For a Medical Home Model to be an Advanced APM, it must include provisions that CMS:

  • Withhold payment for services to the APM Entity and/or the APM Entity’s eligible clinicians;
  • Reduce payment rates to the APM Entity and/or the APM Entity’s eligible clinicians;
  • Require the APM Entity to owe payment(s) to CMS; or
  • Cause the APM Entity to lose the right to all or part of an otherwise guaranteed payment, if either:
    • Actual expenditures for which the APM Entity is responsible under the APM exceed expected expenditures during a specified performance period; or
    • APM Entity performance on specified performance measures does not meet or exceed expected performance on such measures for a specified performance period

The Medical Home Model Nominal Amount Standard:

To be an Advanced APM,  a Medical Home Model must require that the total annual amount that an Advanced APM Entity potentially owes us or foregoes under the Medical Home Model be at least the following amount in a given performance year:

  • In 2017, 2.5 percent of the APM Entity’s total Medicare Parts A and B revenue
  • In 2018, 3 percent of the APM Entity’s total Medicare Parts A and B revenue
  • In 2019, 4 percent of the APM Entity’s total Medicare Parts A and B revenue
  • In 2020 and later, 5 percent of the APM Entity’s total Medicare Parts A and B revenue (2020 and beyond)

CMS has also stated that they believe it would be appropriate to impose size and composition limits for the Medical Home Models to which these unique standards would apply to ensure that the focus is on organizations with a limited capacity for bearing the same magnitude of financial risk as larger APM Entities do.

Thus, CMS has finalized the limitation on applicability of the Medical Home Model financial risk and nominal amount standard to APM Entities with fewer than 50 eligible clinicians in their parent organizations.

This limitation would not apply to the first QP Performance Period that begins in 2017.

Therefore, any APM Entity participating in a Medical Home Model that meets the unique Medical Home Model Advanced APM standards will be considered to be participating in an Advanced APM and have the opportunity to become a QP for purposes of payment year 2019.

Starting in the QP Performance Period that begins in 2018, the Medical Home Model Advanced APM financial risk standard would not apply for APM Entities that are owned and operated by organizations with greater than 50 eligible clinicians.

Also, participation in a Medical Home Model Advanced APM by such an Advanced APM Entity would not offer the opportunity to attain QP status through that Medical Home Model unless the Medical Home Model meets the generally applicable Advanced APM financial risk criterion.

Beginning in the QP Performance Period of 2018, CMS will make this size limit determination for APM Entities in relevant Medical Home Models prior to a QP Performance Period using the most recently available information from the year prior to the QP Performance Period. Therefore, the first determinations of organization size will take place in 2017 using information gathered in 2017.

Advanced APMs in 2017

Looking at the final rule, and based on the criteria, the following APMs will be Advanced APMs in 2017 (click on an Advanced APM to find out more):

Where can I find more information?

Check out these resources from CMS for more information on MACRA.

Get the latest updates sent to you; join the Quality Payment Program list serv

[Also: 4 of the Best MACRA Resources for Your Practice]

Questions or Comments About MACRA?

Leave a comment below if you have a question regarding the final rule and how it will impact your practice.

We will also be publishing posts regularly to keep you updated on MACRA and providing further details about the Advanced Payment Models (APMs). Subscribe to updates today and receive notifications right to your inbox when these articles are published.

Note: The above information was obtained from the Medicare Access and CHIP Reauthorization Act final rule, published on October 14th, 2016. 

 

Receive Updates Straight to Your Inbox

Stay on top of the latest updates, trends, and best practices shaping the healthcare industry. Subscribe to our Practice Management blog today and start receiving updates right to your inbox.