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Medicare Access and CHIP Reauthorization Act of 2015: The Future of Medicare Reimbursement – The Alternative Payment Models

On Behalf of | Sep 1, 2016 | Healthcare Law

When the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) goes into effect, some participating physicians will be eligible for the Alternative Payment Models (“APM”).  Under MACRA, a physician who participates in an eligible APM will qualify for incentive payments through that program and be exempt from the Merit-Based Incentive Payment System (“MIPS;” discussed in the last article in this series).  The intent of the APM is to implement new payment policies which move away from fee for service.  The APM program was scheduled to take effect in January, 2019.  However, on July 13, 2016, Andy Slavitt, the Acting Administrator of the CMS, testified before the Senate Finance Committee that implementation of MACRA may have to be delayed, due to fears of an adverse impact upon small and rural practices, so these timelines will likely be modified.

Starting in 2019, physicians participating in a qualified APM who successfully meet the quality and performance criteria and exceed the established Medicare beneficiary thresholds will be eligible for a 5 percent bonus payment on their total allowed Medicare chages.  APM qualifying physicians also will receive a higher Medicare physician fee schedule update (of 0.75 percent) starting in 2026.  It has been said that the purpose of MIPS is to prepare practitioners to participate in Medicare via a qualified APM (pursuit of the APM pathway is valuable even if a physician falls short of the applicable criteria, as APM participation is recognized as a Clinical Practice Improvement Activity (“CPIA”) under the MIPS pathway, so that efforts to participate in an APM will receive favorable scoring for the CPIA performance category in the MIPS program).

APM has been designed to facilitate new treatment delivery and payment models which move away from a fee-for-service concept, and thus most likely represents the future not only of Medicare reimbursement, but also reimbursement models which will be adopted by private health insurers as well.  MACRA encourages physicians to adopt APM.

MACRA provides that qualifying APMs must be established in one of four ways: 1) through the Medicare Shared Savings Program; 2) through Centers for Medicare and Medicaid Innovation (CMMI) programs expanded by the HHS Secretary; 3) through Medicare Quality or Acute Care Episode Demonstration projects; or 4) through demonstrations required by federal law.  In addition to meeting one of the four qualifying criteria set forth above, an APM must also meet established performance and quality thresholds, as follows:

  • 1APMs must report quality and performance measures comparable to those contained in the MIPS program.
  • APMs must use a certified EHR technology.
  • APMs must incur nominal financial risk for monetary losses or be a medical home model expanded under CMMI authority.

Finally, in order to qualify for the five percent bonus payment, an individual physician, or a group of physicians, must show that the required percentage of payments was received through a qualified and eligible APM.  For 2019 and 2020, in order to qualify, a physician must demonstrate that, at a minimum, twenty-five percent (25%) of their total Medicare payments are aligned with a qualified, eligible APM. Starting in 2021, the minimum threshold increases to fifty percent (50%), but the law allows physicians to use non-Medicare payments, such as those from Medicaid and private insurers, along with Medicare payments in order to meet the threshold.  As previously stated, one advantage of APM participation is that attempting to qualify as eligible to participate in an APM is recognized as a “Clinical Practice Improvement Category” under MIPS and would result in favo