• Revenue Cycle Management
  • COVID-19
  • Reimbursement
  • Diabetes Awareness Month
  • Risk Management
  • Patient Retention
  • Staffing
  • Medical Economics® 100th Anniversary
  • Coding and documentation
  • Business of Endocrinology
  • Telehealth
  • Physicians Financial News
  • Cybersecurity
  • Cardiovascular Clinical Consult
  • Locum Tenens, brought to you by LocumLife®
  • Weight Management
  • Business of Women's Health
  • Practice Efficiency
  • Finance and Wealth
  • EHRs
  • Remote Patient Monitoring
  • Sponsored Webinars
  • Medical Technology
  • Billing and collections
  • Acute Pain Management
  • Exclusive Content
  • Value-based Care
  • Business of Pediatrics
  • Concierge Medicine 2.0 by Castle Connolly Private Health Partners
  • Practice Growth
  • Concierge Medicine
  • Business of Cardiology
  • Implementing the Topcon Ocular Telehealth Platform
  • Malpractice
  • Influenza
  • Sexual Health
  • Chronic Conditions
  • Technology
  • Legal and Policy
  • Money
  • Opinion
  • Vaccines
  • Practice Management
  • Patient Relations
  • Careers

Alternative Payment Model could be saving grace for quality improvement


An APM can potentially serve as an opportunity for a practice or organization to generate new ways to improve their patient’s care while simultaneously developing a means to promote financial viability in the new ‘value driven’ system.

The passage of the Medicare & CHIP Reauthorization Act (MACRA) of 2015 has formally defined the role that a new set of reimbursement models, known collectively by the Centers for Medicare & Medicaid Services (CMS) as Alternative Payment Models (APMs), will play in the upcoming decades in setting the terms for provider reimbursement.1 This set of models stands in contrast against the upcoming Merit-Based Incentive Payment System (MIPS) modifications to the traditional Fee-For-Service (FFS) reimbursement system that has been the cornerstone for CMS reimbursement for decades. Since fully qualifying APMs are not required to participate in upcoming competitive comparison of provider and organizational metrics (and subsequent positive or negative fee schedule adjustments) in a somewhat bell curve fashion like MIPS will, it is becoming increasingly prudent for many ‘at-risk for penalization’ practices to consider moving to these models in anticipation of the new changes. Despite the looming penalizations some will face under MIPS, it is worth reminding many that the goal of APMs is not to force MIPS-based provider competition for reallocated reimbursements.

The ‘Mysterious’ Structure of an APM

The technical definition of a fully qualifying APM, as defined in MACRA, is “a participant in the Comprehensive Primary Care (CPC) initiative through the Center for Medicare & Medicaid Innovation (CMMI), a model expanded under the CMMI which does not include Health Care Innovation Award recipients, a Medicare Shared Savings Program Accountable Care Organization (ACO), or is approved in a Medicare Health Care Quality Demonstration Program OR Medicare Acute Care Episode Demonstration Program.” Furthermore, an APM that is CMS approved must also track and meet “quality measures comparable to measures under MIPS (see below), use a certified Electronic Health Record (EHR), bear more than ‘nominal financial risk’ (presumptively far less than the CMS’s ‘substantial risk’ definition of 25% of revenues) OR is a medical home expanded under the CMMI, and has increasing percentage of payments linked to value through Medicare or all third party payer APMs (which can range in time to between 25-75% of all-payer reimbursements).”2


Further reading: MACRA/MIPS is the problem, individual health freedom is the answer


This may all seem like incomprehensible jargon at first, but the fundamental common thread on further analysis is that any adoption of an alternative model (either a modified version of one that already is in wide spread use or a genuinely novel one) must be approved by CMS through a prior effective clinical demonstration of feasibility and must provide ongoing metric based performance evaluation of provider quality improvement. These performance criteria must then be gauged against a set of CMS quality standards that have been in place for quite some time under a variety of names and initiatives. These initiatives, mostly implied rather than listed by name in the legislation, include the Modified Stage 2 or 3 Meaningful Use Criteria of the EHR Incentive Program, the Physician Quality Reporting System (PQRS), and the Value Modifier (VM), which will all be consolidated under MIPS changes to the FFS reimbursement schedule in 2019. For all of the complicated phrasing of MACRA’s definitions, this is the underlying technical definition based on current and upcoming CMS initiatives.


Available CMS resources, which are fairly consistent across their website, openly state that any novel APM, and presumably all current APMs, must comply with the CMS Quality Strategy while adhering to guidelines set forth in MACRA, which we discussed above. Table 1 highlights the 6 primary goals of the CMS Quality Strategy.3 It is from this set of goals and the definitions stated above that we now have at least a regional overview of what drives the overall strategic scope, boundaries, and spirit of an effective APM. Namely, it is any alternative reimbursement model that is an innovative way to either meet CMS quality goals for services provided, improve measurable patient outcomes, and/or reduce the bottom line that CMS has to pay out for services rendered that can be tracked for outcomes and can be reasonably certified for provider use by CMS. From this guiding framework, at least we can generate a reasonable mold to build and judge a CMS compliant APM with less amorphous metrics to gauge performance.

Make care safer by reducing harm caused in the delivery of care.
Strengthen person and family engagement as partners in their care.
Promote effective communication and coordination of care.
Promote effective prevention and treatment of chronic disease.
Work with communities to promote best practices of healthy living.
Make care affordable.




Related: MACRAnomics: A guide for physicians


In summary, the goal of CMS promoting this new seemingly amorphous group of ill-defined APMs is not necessarily to punish well-meaning providers through forcing competition under MIPS through a lack of APM exposure, but rather to allow for a free form innovative environment to foster APM development in a non-constrictive way. The overarching goal of many new APMs is to promote the improvement of patient care in a way that offers financial incentive for the most cost effective and outcome driven interventions that are presumably non-billable under the traditional FFS.


Innovation in the realm of the APMs will undoubtedly be an ongoing priority for most professional organizations and cooperative efforts with groups such as the Center for Healthcare Quality and Payment Reform (CHQPR) will be crucial to creating a ‘win-win’ for all key stakeholders. In order for a somewhat stable continuation of financial revenues to promote viability of some practices, it has become prudent for some to begin looking into this issue early to avoid the inevitable challenge of being the ‘top dog’ under MIPS. The early transition to an APM prior to 2019 may be required for relevant organizations to not be forced to compete on the competitive ‘win or lose’ metric based sliding reimbursement scale of MIPS and to maintain their going concern with a hedging of reimbursement risk, at least if the provider is heavily dependent on reimbursements from CMS and not readily in a position to forego those revenues.


Further reading: Physicians bleeding money to report quality metrics


An APM can potentially serve as an opportunity for a practice or organization to generate new ways to improve their patient’s care while simultaneously developing a means to promote financial viability in the new ‘value driven’ system.  Continue to follow the debate through resources such as this publication, CHQPR.org, PaymentReform.org, AMA-ASSN.org, and your specialty specific professional organization for updates.



1.) https://www.congress.gov/bill/114th-congress/house-bill/2/text (Accessed March 2nd, 2016)

2.) http://www.aafp.org/practice-management/payment/medicare-payment/apm-mips.html (Accessed March 2nd, 2016)

3.) https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html (Accessed March 2nd, 2016)

Related Videos