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CMS Proposal Encourages Advanced Alternative Payment Model Participation

Summary

Early adoption and participation in an AAPM can provide a higher incentive payment to Medicare clinicians than MIPS.

On July 12, 2018, the Centers for Medicare & Medicaid Services (CMS) released proposed changes to the Quality Payment Program (QPP) for calendar year (CY) 2019. The proposed changes affect the third year of the QPP, which established two value-based payment pathways for clinicians billing under Medicare Part B: (1) the Merit-based Incentive Payment System (MIPS); and (2) advanced alternative payment models (AAPMs).

Most clinicians subject to the QPP are expected to participate in the MIPS pathway (i.e., “MIPS eligible clinicians” or “ECs”). The AAPM track is an option for clinicians who have selected to participate in a Medicare payment model that requires downside risk (Figure 1).

In 2019, MIPS ECs will be subject to a maximum payment adjustment of +/- 7%. A separate $500 million bonus pool will be available for exceptional performers. Clinicians who sufficiently participate in AAPMs (i.e., “qualifying APM participants” or “QPs”) are exempt from MIPS and will instead receive a 5% lump-sum bonus payment.

Under the proposed rule, positive MIPS payment adjustments will total $372 million. An additional $500 million will be provided to clinicians who qualify for the exceptional performance bonus. AAPM bonus payments will range from $600 to 800 million, depending on the ultimate final number of QPs.

According to CMS’ projections for QPP performance in 2019, average incentive payments to clinicians participating in AAPMs will be 6 times greater than the average positive MIPS payment adjustment (Figure 2). Even factoring in MIPS-eligible clinicians who receive the exceptional performance bonus, the AAPM incentive payment is projected to be 1.8 times greater.

As previous Avalere research has shown, the AAPM bonus payment can help offset most, if not all, of the risk associated with participation in a downside risk payment model and provide valuable financial incentives to participants. Early participation in an AAPM allows clinicians to lead the healthcare system’s transformation to value-based care and will provide vital early experience as AAPM requirements increase.

Methodology

The figures cited in this Insight are based on CMS projections of the impact of proposed policies contained in the proposed rule, “Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2019; Medicare Shared Savings Program Requirements; Quality Payment Program; and Medicaid Promoting Interoperability Program” issued on July 12, 2018 and published in the Federal Register on July 27, 2018. CMS projections may change in the final rule based on updated information available to CMS and changes to the proposed policies.

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