Medicare Alternative Payment Models (APM)

Delivering quality, cost-efficient care in exchange for taking on risk-related patient outcomes.

What is an Alternative Payment Model?

An Alternative Payment Model (APM) is a payment approach that rewards providers for delivering high-quality and cost-efficient care. APMs require healthcare organizations (often a hospital and affiliated physician practices) to align themselves with the goal of taking better care of a population of patients, often defined by a geographic region.  These payment models can apply to health care populations, episodes of care, or specific clinical conditions. APMs include bundled payments models, Accountable Care Organizations (ACOs), and Patient-Centered
Medical Homes (PCMHs), and others. APMs that do not qualify as Advanced APMs are required to participate in the Merit-based Incentive Payment System (MIPS).A common example of an APM is a Medicare Shared Savings Plan (MSSP) also known as an Accountable Care Organization (ACO).

What is an Advanced Alternative Payment Model?

Advanced APMs are entities that are formed to participate in an Advanced APM with CMS through a direct agreement. Physicians would participate in an Advanced APM by forming an APM Entity. Each APM Entity has its own TIN for participating in a specific Advanced APM. These Advanced APMs are a subset of APMs that allow practices to earn more rewards in exchange for taking on risk related to patient outcomes. Advanced APMs are also one of two payment paths under the Quality Payment Program (QPP) that will be used to determine Medicare Part B payment adjustments. In the Advanced APM track of the QPP, physicians may be exempt from participation in the Merit-based Incentive Payment System (MIPS) and be eligible to receive a 5% lump sum bonus payment.

Advanced APM criteria:
  • Be a certain Center for Medicare & Medicaid Innovation Model (CMMI), Shared Savings Program track, or certain federal demonstration program;
  • The APM requires participants to use certified EHR technology;
  • The APM bases payment on quality measures comparable to those in the MIPS quality performance category;
  • Is a Medical Home Model expanded under CMMI; or
  • The APM either requires APM entities to bear more than nominal financial risk for monetary losses or is a Medical Home Model expanded under Center for Medicare & Medicaid Innovation authority (CMMI).
    • While the specific risk arrangement is determined under each specific APM, generally, the risk is determined by identifying a target for expected expenditures (costs) that the APM Entity is responsible for if its actual expenditures exceed that target. Generally, if the APM Entity’s actual costs come in below that benchmark, it will be able to share in the savings (“shared savings”); if the APM Entity’s actual costs come in above that benchmark, it may be responsible for some or all the excess costs (“shared losses”).

Note: Each APM will have its own participation requirements that specify the level of CEHRT use, risk arrangement under that APM, shared savings/losses under that model, etc.

What is a MIPS Alternative Payment Model?

If you’re in a specific type of APM called a MIPS APM and you are NOT excluded from MIPS (only Advanced APMs are excluded from MIPS), you may be scored using a special APM scoring standard. The APM scoring standard is designed to account for activities already required by the APM. For example, the APM scoring standard eliminates the need for MIPS clinicians to duplicate submission of Quality and Improvement Activity performance category data and allows them to focus instead on the goals of the APM.

Most Advanced APMs are also MIPS APMs so that if an eligible clinician participating in the Advanced APM does not meet the threshold for sufficient payments or patients through an Advanced APM in order to become a Qualifying APM Participant (QP), thereby being excluded from MIPS, the MIPS eligible clinician will be scored under MIPS according to the APM scoring standard. 

What is an All-Payer Advanced Alternative Payment Model?

Eligible clinicians are now able to become Qualifying Alternative Payment Model Participant (QPs) through the All-Payer Option. This Option is attainable through participation in a combination of Advanced APMs with Medicare and Other Payer Advanced APMs. Other-Payer Advanced APMs are non-Medicare Fee For Service (FFS) payment arrangements with other payers including:
  • Medicaid;
  • Medicare Health Plans (including Medicare Advantage, Medicare-Medicaid Plans, 1876 Cost Plans, and Programs of All Inclusive Care for the Elderly (PACE) plans);
  • Payers with payment arrangements in CMS Multi-Payer 4 Models; and
  • Other commercial and private payer arrangements that meet the criteria to be an Other-Payer Advanced APM.

Qualified Participation in an Advanced APM

Physicians and practitioners who participate in an Advanced APM are referred to as Qualified Participants (QP) or Partial Qualifying Participants (PQ), and may not be subjected to MIPS and may be eligible for a 5% bonus.

Participation in an Advanced APM is determined at the APM Entity level meaning all physicians and other eligible clinicians identified on the APM Entity’s Participant List must collectively meet the QP/PQ thresholds as an APM Entity group for each individual physician to receive credit for participation in an Advanced APM. CMS uses two methods to arrive at a QP or PQ determination:
     1. Medicare Payment Count Method – based on the percentage of Medicare payments they receive through an Advanced APM, and
     2. Medicare Patient Count Method – based on the percentage of Medicare patients they see through an Advanced APM.

Clinicians can use the QPP Participation Status Tool to check their QP status and see whether they'll receive a 5% APM incentive payment and be excluded from MIPS. The tool also includes participant data for Advanced APMs and MIPS APMs. Performance Year (PY) 2019 QPP APM Incentive payment information is now available on the QPP website, where participants can log in via the QPP account  to view those details.

Types of Advanced Alternative Payments Models

For proposed, current, and no longer active models, search the CMS Innovation Models web page. Use the search and search options function to locate specific models and locations.

How to Join an APM

  1. Locate specific APMs in your area and find one that fits your practice.
  2. Contact the APM and inquire if they are accepting new applicants and obtain information about the application process.

Additional Resources