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Medicare Alternative Payment Models

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The AMA's successful effort to repeal Medicare's sustainable growth rate formula also created new opportunities for physicians to develop and participate in alternative payment models, or APMs.

The Medicare Access and CHIP Reauthorization Act (MACRA) provides a 5% annual lump sum payment to physicians who participate in qualified APMs at certain threshold levels, and it exempts them from the new Merit-Based Incentive Payment System or MIPS.

Participation in other APMs, or participation in qualified APMS at levels below the MACRA thresholds, will allow physicians to improve their MIPS scores.

In addition, MACRA created a Physician-Focused Payment Models Technical Advisory Committee to review and make recommendations on stakeholder proposals for new Medicare APMs.

Download the Guide to Physician-Focused Payment Models

The AMA and Center for Healthcare Quality and Payment Reform's Guide to Physician-Focused Alternative Payment Models (PDF, members only) describes 7 ways of structuring APMs that can be used to address the most common opportunities and barriers that physicians face.

It describes 7 alternative payment models that can help physicians in every specialty redesign the way they deliver care in order to improve their patients' care, help lower costs and qualify for MACRA incentive payments.

Having several common frameworks for new Medicare APMs will not only make it easier for particular specialties to create payment models that match their needs, but should also make it easier for Medicare and other payers to implement payment models for multiple specialties, including smaller specialties.

Five-Step Process to Develop an APM

The AMA encourages medical societies to use a simple 5-step process for developing the types of APM proposals that will work effectively for physician practices and that Medicare and other payers can implement under MACRA:

  • Establish a committee of physicians who are willing to spend the time needed to develop 1 or more APMs.
  • Identify specific opportunities to improve patient care that are likely to result in specific types of spending reductions, and identify the specific barriers in existing payment systems that make it difficult for physicians to implement these improvements in patient care.
  • Identify the payment changes needed to overcome these barriers. Not all APMs actually overcome the barriers, and some have unintended consequences that can create new problems for physicians.
  • Analyze whether the benefits for patients and the savings for payers and patients are sufficient to justify any costs associated with appropriate payment changes.
  • Design a payment model that removes the barriers to improving care so that physicians can improve outcomes for patients and achieve savings for payers.

Opportunities to Improve Care and Reduce Spending

There are a number of areas where physicians can look to find ways to improve care for patients that can also help reduce spending for payers and out-of-pocket costs for patients.

The following are examples of work currently underway by specialty societies to develop APMs for several patient conditions.

Angina (Stable)

For the specialties of cardiology and primary care, opportunities include:

  • Help patients quickly and accurately determine the causes of chest pain and their risk of a heart attack
  • Reduce unnecessary use of stress tests and cardiac imaging
  • Reduce unnecessary invasive cardiac tests and procedures
  • Reduce the risk of heart attacks

Asthma

For the specialties of allergy and immunology, opportunities include:

  • Improve diagnostic accuracy, treatment planning and medication adherence
  • Reduce work and school absenteeism and increase productivity
  • Reduce emergency visits and hospitalizations due to asthma exacerbations

Cancer

For the specialties of medical oncology, pathology, radiation oncology and surgical oncology, opportunities include:

  • Improve cancer outcomes through accurate diagnosis and staging, as well as appropriate use of treatments
  • Help cancer patients in managing psychological, physical and financial challenges of their disease
  • Reduce nausea, vomiting, pain, dehydration and other complications of cancer
  • Reduce complications requiring emergency visits and hospital admissions
  • Improve appropriateness of imaging during surveillance for progression and recurrence of disease

Chronic Kidney Disease

For the specialties of nephrology and vascular surgery, opportunities include:

  • Slow progression to end stage renal disease and improve treatment planning
  • Plan ahead for hemodialysis patients' vascular access to create and maintain arteriovenous fistula and avoid use of multiple catheters
  • Avoid emergency visits and hospitalizations

Diabetes

For the specialties of endocrinology and primary care, opportunities include:

  • Reduce complications and associated hospitalizations
  • Prevent or slow disease progression from pre-diabetes and diabetes
  • Improve patient understanding and self-management of their condition

Epilepsy

For the specialty of neurology, opportunities include:

  • Improve accuracy of diagnosis
  • Reduce frequency and severity of seizures
  • Reduce injuries and complications requiring emergency visits and hospitalizations

Ovarian and Endometrial Cancer

For the specialty of gynecologic oncology, opportunities include:

  • Improve outcomes of cancer treatment through more accurate diagnosis and appropriate treatment
  • Reduce repeat surgeries and readmissions
  • Avoid unnecessarily invasive surgery and reduce complications of surgery

Pregnancy

For the specialties of obstetrics and gynecology, opportunities include:

  • Reduce elective early deliveries and use of elective C-sections
  • Reduce low birthweight deliveries and need for neonatal ICU care
  • Reduce complications of delivery
  • Deliver babies in lower-cost settings

Stroke

For the specialties of neurology, radiology, psychiatry, primary care and vascular surgery, opportunities include:

  • Get rapid and accurate diagnosis
  • Improve coordination and reduce fragmentation
  • Return patients to maximum functionality
  • Use the most cost-effective facilities and services for rehabilitation
  • Prevent additional strokes
Physician Payment and Delivery Models

Read more about tools and resources for assessing and choosing payment models.

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