August 30, 2018

What You Need to Know About Advanced Alternative Payment Models, Even if You Aren’t in One (from the 2019 Proposed Medicare Physician Fee Schedule)

On July 12, the Centers for Medicare & Medicaid Services (CMS) published its 2019 Medicare Physician Fee Schedule Proposed Rule (Proposed Rule) covering a wide range of topics.  In our series of articles, we have summarized and offered our insights on several key provisions.  Note that comments on the Proposed Rule were due to CMS by September 10, 2018, and we expect CMS to publish the Final Rule later this fall.   Of the 15,313 comments CMS received on the Proposed Rule, 1,212 of them included the acronym MIPS.  You can review all the comments here.

Each year, as part of the Medicare Physician Fee Schedule proposed rule, CMS publishes updates to the Quality Payment Program (QPP), including both the Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (AAPMs).  In the 2019 proposed rule, CMS does not propose significant structural changes to the AAPM path:  there are no new Medicare programs that qualify as an AAPM in 2019, and the Qualifying Participant (QP) thresholds remain the same as previously planned.

Instead, with the All-Payer Combination Option going into effect in just a few months, CMS focuses its proposals on the finer details of implementing Other Payer AAPMs.

All-Payer Combination Option to Start in 2019

For the first two years of the QPP (2017 and 2018), providers could have only participated in a Medicare Advanced APM to earn a 5% payment bonus and be exempt from MIPS reporting requirements.  Participation alone was not enough to earn the 5% payment bonus; Medicare AAPM participants must have a minimum percentage of their Medicare patients or dollars flowing through the AAPM to be considered a QP.  (Figure 1 outlines the three potential outcomes for AAPM participants.)

Starting in 2019, rather than solely rely on a Medicare AAPM, providers can participate in a combination of both Medicare AAPMs and Other Payer AAPMs to meet the QP threshold and earn a 5% bonus payment.  For example, a physician group in both the two-sided risk track of the Oncology Care Model and an AAPM with a commercial payer can count their percentage of patients or dollars in both AAPMs to reach the QP threshold.


Currently, most Medicare AAPM participants are meeting QP status because the thresholds are relatively low (25% of Medicare dollars or 20% of Medicare patients).  But starting in performance year 2019, the payment amount QP threshold for Medicare AAPMs doubles, increasing from 25% to 50%.  By performance year 2021, thresholds for the Medicare-only option increase even more, up to 75% of Medicare payments or 50% of Medicare patients.

With such high thresholds in place, providers may need to start relying on Other Payer AAPMs.  The ability for providers to combine participation in Medicare AAPMs with Other Payer AAPMs (the “All-Payer Combination Option”) will help more providers reach the QP status.  Table 1 outlines the specific thresholds required for either the Medicare-Only or All-Payer Combination Option, starting with performance year 2019/payment year 2021.

To be clear, many of these All-Payer Combination Option policies have been in place since the 2017 Quality Payment Program Final Rule.  But these policies serve as important context for the proposals that were included in the 2019 proposed rule, where CMS addressed many of the loose ends regarding Other Payer AAPMs.  CMS’ 2019 proposals include the following updates:

  • Refinements to its process for reviewing and approving Other Payer AAPMs
  • Modification to requirements for Certified EHR Technology (CEHRT) and quality measures
  • Updates to the Other Payer AAPM approval process
  • Additional alternative methodology for QP determinations under the All-Payer Combination Option

For the most part, these changes will not directly impact providers—instead, CMS is signaling to Medicare Advantage plans, Medicaid, and commercial payers what will be required to qualify as an Other Payer AAPM.  That is how CMS will impact the development of value-based payment arrangements in these markets, in the same way it influenced the creation and adoption of EHRs.  CMS didn’t directly tell EHR vendors how to create their products; rather, they established standards to which providers would be held accountable, thus impacting the development of EHRs.

What Does This All Mean?

This proposed rule leaves us asking some questions about what is next for AAPMs and why CMS has made very few changes that impact provider behavior.  Is CMS merely tweaking rules for 2023 when the All-Payer Combination Option is truly significant (i.e., when providers would otherwise be asked to have 75% of Medicare dollars flowing through an AAPM, a challenging feat)?  Or is this mainly an alternative agenda, where the federal government is indirectly trying to influence commercial plan structures?

Commercial payers are picking up the pace at which they present providers with opportunities for risk-based contracts.  There are plenty of factors for providers to use when evaluating these opportunities (internal preparedness, maximum risk, competitor behavior, etc.), but going forward, one of these factors should be whether the contract terms comply with CMS’ Other Payer AAPM criteria.

In the meantime, keep an eye on the general direction of AAPM regulations, even if you are still participating in MIPS.  One can easily imagine this being the focal point of the QPP in just a few years.  It will be interesting to see how CMS tries to expand participation in AAPMs—both those they design and those influenced through this type of regulation.

We have simplified these technical proposals considerably—and a detailed review is not necessary, unless you already participate in an Other Payer AAPM (or were already planning to in 2019).  For other proposed changes to AAPMs in 2019, we encourage you to review CMS’ summary document published here.

PYA assists organizations in understanding and developing strategies for success under the Medicare Quality Payment Program.  For more information, contact one of our PYA executives below at (800) 270-9629.


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