January 22, 2016

MedPAC Develops Principles for Eligible Alternative Payment Entities

During its Jan. 14–15 meeting, the Medicare Payment Advisory Commission (MedPAC) discussed developing principles for Eligible Alternative Payment Entities (EAPMs) as possible recommendations to Centers for Medicare & Medicaid Services (CMS) and Congress.

Under terms of the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA), CMS will begin designating certain physicians and practitioners in 2019 as “qualifying APM participants” (QPs) who participate in EAPMs. These QPs will receive an incentive payment equal to 5 percent of the estimated aggregate Part B Medicare payment amounts for covered professional services for the preceding year from Jan. 1, 2019, to Dec. 31, 2024. They will subsequently receive higher annual base payment updates than their non-QP counterparts participating in the Merit-Based Incentive Program (MIPS) beginning Jan. 1, 2026.

To be considered an EAPM, quality measures comparable to those used under the MIPS must apply, certified EHR technology must be used, and the entity must either bear more than nominal financial risk if actual expenditures exceed expected expenditures or be classified as a medical home.

Moreover, in order to be designated as a QP, the physician or practitioner must receive a certain percentage of their Medicare and/or all-payer reimbursement for services that are attributable to the APM, with the percentage thresholds increasing over time.

For non-QPs, MACRA requires that CMS establish MIPS for Medicare fee-for-service payments that consolidate the current Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VM) and the Medicare Electronic Health Record (EHR) Incentive Program [often referred to as the Meaningful Use (MU) program]. MIPS provide increased reimbursement for qualified professionals who perform well on the measures relative to their peers and reduce payments for those who perform poorly, up to a maximum upward or downward adjustment of 9 percent by 2022.

After discussion, the MedPAC Commission agreed with the following draft principles:
Incentive payment for participants only if the entity is successfully controlling costs improving quality or both;
  • The entity must have a sufficient number of beneficiaries to detect changes in spending or quality;
  • The entity is at risk for total Medicare Part A and Part B spending;
  • The entity can share in savings with beneficiaries;
  • The entity is given regulatory relief; and
  • A single entity must assume risk.
Below are some other topics discussed at the meeting.
  • Specialist participation in APMs — There may need to be a broad set of APMs rather than a narrow set for specialists, including radiologists to participate. Specialty-specific APMs, such as episode-based bundles, may be an alternative way to ensure specialists have an opportunity to participate in APMs. It was noted that MACRA establishes an independent Physician-focused Payment Model Technical Advisory Committee (PTAC) that will review and provide comments and recommendations to CMS on physician-focused payment models submitted by stakeholders, including specialists. 
  • Nominal Financial Risk — Nominal financial risk may need to be presented in a way that physicians will want to join APMs. The start-up costs associated with setting up an APM should be considered nominal financial risk, as well as participation in an APM, and the risks associated with participating in APM should be considered nominal financial risk. 
ACR staff will continue to monitor MedPAC and will keep the College members informed about its activities. Please address questions to Laura Pattie at lpattie@acr.org.