Positioning your practice for alternate payment models

How physicians are paid is changing very soon, and now is the time to begin getting ready. Part B payment under Medicare has primarily been based purely on fee-for-service volume, until recent years, when quality incentives/disincentives were built in as add-ons or negative payment adjustments to (or takeaways from) current reimbursement. In the new Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) payment system, payment will shift to being based on “value,” which is a term that reflects both the quality and efficiency (cost) of the care provided to a patient population. Parallel changes are also taking place within the private sector.

Practices will have 2 options from which to choose for payment adjustments occurring in 2019 under traditional Part B Medicare: an alternate payment model (APM) or the merit-based incentive payment system (MIPS). The performance period for these 2 options is expected to begin as early as 2017. Last month's Practice Tips discussed how to prepare for MIPS. This month focuses on APMs.

APMs incentivize quality and value. Additional new models will be developed later, but according to the MACRA law, the following existing entities are considered alternative payment models: all CMS Innovation Center (CMMI) models (except Health Care Innovation Awards), Medicare Shared Savings Program accountable care organizations (ACOs), demonstrations under the Health Care Quality Demonstration Program, and “demonstrations required by federal law” (i.e., the Medicare Independence at Home demonstration). A patient-centered medical home (PCMH) model, authorized by CMMI, is considered an APM.

For an eligible professional (EP) to receive bonus payments, he or she must meet certain thresholds from an eligible payment model. For an APM to be considered eligible, it must use certified EHR technology and provide payment based on quality measures and either bear “more than nominal” financial risk for monetary losses or be a medical home model expanded under CMMI authority. EPs will have to meet certain thresholds to be “qualified participants” (QPs) and qualify for incentive payments, which will be phased in over time.

For example, in 2019 and 2020, 25% of Medicare payments or patients must be attributable to an eligible alternative payment entity to meet the threshhold requirement. In future years, the percentages increase, and the type of payer arrangement to meet thresholds expands. Given these requirements, at least in the beginning, only a few APM programs will be designated as eligible APMs, and an even smaller number of practices will meet the threshold requirements.

EPs who participate in APMs that do not meet the attribution requirements will be subject to MIPS and will receive favorable scoring under the MIPS clinical practice improvement activities for their APM participating activities. For services furnished during 2019 through 2024, physicians who meet the threshold requirements and are participating in qualified APMs will receive annual lump-sum bonus payments equal to 5% of their covered Medicare Part B professional services. They are also eligible to receive any additional payments that are part of the APM, such as shared savings.

Because there is much that is yet to be defined by the regulations, and because initially there will be limited APMs that meet the “eligibility” requirements, how can practices prepare for this somewhat vaguely defined alternate payment system?

Practices are encouraged to do 3 things: Join a Practice Transformation Network (PTN), join an ACO, or become a PCMH. PTNs are peer-based learning networks designed to coach, mentor, and assist clinicians in developing core competencies specific to practice transformation. They are part of the CMS's new Transforming Clinical Practices Initiative . As an ACO or PCMH, practices must establish processes that will help them be successful in the new system. Many ACOs are requiring certified EHRs, quality reporting, and population management. These are areas that will become integral parts of the APMs as they become more fully defined. In addition, many of the requirements to become a PCMH will necessitate that practices transform and use technology in ways that will position them to meet the anticipated requirements of APMs of the future.

To learn more about ACP's role in the Transforming Clinical Practices Initative, including how to join a PTN in your region, visit ACP's Running a Practice website . For more information about alternative payment models, go to ACP's Running a Practice website . ACP's Practice Advisor is an affordable, self-paced, interactive practice improvement tool to help practices work on many of these aspects.