Medicare & Medicaid

Extending Medicare APM incentives is key to value-based care’s future

Kevin B. O'Reilly , Senior News Editor

AMA News Wire

Extending Medicare APM incentives is key to value-based care’s future

Jul 10, 2023

What’s the news: As part of its campaign to fix the unsustainable Medicare physician payment system, the AMA is outlining in a quick, easily navigable fashion the policy changes needed to realize the robust physician pathway to alternative payment models (APMs) that Congress envisioned.

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The AMA has achieved recent wins in 5 critical areas for physicians.

The AMA’s two-page explainer on advancing value-based care with APMs (PDF) outlines how there are far fewer opportunities for physicians to participate in Medicare APMs than Congress foresaw under the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015.

While the goal was to give most doctors a chance to transition into APMs, the Center for Medicare & Medicaid Innovation “models implemented to date often have steep financial risk requirements, lack funding needed to successfully redesign care delivery, and are usually only available in selected regions,” the AMA explains.

Now eight years since MACRA’s passage, it’s clear that critical changes are needed to enhance physician participation in APMs, improve patient outcomes and cut unnecessary Medicare spending.

Specifically, Congress needs to take these steps.

Reauthorize crucial 5% incentive payments to increase physician participation in Advanced APMs before they expire at the end of 2023. Since there is a two-year lag associated with the APM payments, these additional financial incentives will be allocated in association with, at minimum, the 2024 performance year.

Make APM revenue thresholds that need to be met to even qualify for earning the incentive payments more flexible and realistic, thus preventing abrupt increases scheduled to take effect in 2024. 

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Fixing Medicare physician pay system a top priority for the AMA

Increasing the current revenue threshold that participants need to achieve to even be eligible to receive the 5% incentive payments from 50% to 75% will only further stifle the movement towards APMs. The most current data available from Medicare shows that 63% was the average amount of revenue generated from participants in the largest APM, specifically the Medicare Shared Savings Program.

Update criteria for adopting and expanding Medicare APMs. That’s because the criteria for achieving Medicare savings quickly led to the termination of multiple types of payment models and limited adoption amongst specialty physicians. Meaningful pathways are needed for APM proposals developed by stakeholders, especially those endorsed by the Physician-focused Payment Model Advisory Committee, to be implemented in Medicare.

Learn about how you can take part in the fight to fix Medicare on behalf of your patients and practices at the AMA's Fix Medicare Now website.

Leading the charge to reform Medicare pay is the first pillar of the AMA Recovery Plan for America’s Physicians.

The AMA has challenged Congress to work on systemic reforms and make Medicare work better for you and your patients. Our work will continue, fighting tirelessly against future cuts—and against all barriers to patient care.

Why it’s important: Since APMs have to show “savings for Medicare within a short timeframe, they are often terminated instead of being improved and expanded nationwide,” says the AMA explainer.

A Government Accountability Office report on practices in rural or underserved areas noted that “many lack the capital to finance the upfront costs of transitioning to an APM and face challenges acquiring or conducting data analysis necessary for participation,” the AMA notes.

“There is also no nationwide primary care medical home model in Medicare, despite multiple Medicare demonstrations of this model, so patients insured by Medicare are not benefiting from the improvements in preventive care, health care quality and management of chronic conditions that medical homes can provide.”

The AMA and other key physician stakeholders are working to reintroduce bipartisan, stand-alone legislation, the Value in Health Care (VALUE) Act, to help ensure the continued viability of APMs.

Related Coverage

Bipartisan support in Congress for extending 5% APM incentives

This legislation would extend the original 5% APM incentive payments and make further improvements to encourage increased APM development and physician participation. It also would give the Secretary of Health and Human Services greater authority to more slowly increase the revenue thresholds associated with qualifying for the incentive payments.

Reps. Darin LaHood, R-Ill., Suzan DelBene, D-Wash., and Brad Wenstrup, R-Ohio, are expected to introduce an updated version of the VALUE Act in this session of Congress. 

One encouraging sign regarding the Biden administration’s ongoing commitment to APMs is the Centers for Medicare & Medicaid Services’ announcement about the Making Care Primary model in early June.

“We’re encouraged to see many of the AMA’s recommendations featured in this model including a longer model test, a voluntary, progressive model that meets practices where they are and provides on-ramps for them to advance into prospective payment, and meaningful alignment with Medicaid,” said AMA Immediate Past President Jack Resneck Jr., MD.

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“The longer test period of 10.5 years directly responds to AMA efforts calling for more transparency and stability to foster trust and encourage physician participation,” he added. “The AMA strongly believes value-based care models are essential to the long-term well-being of the Medicare program and its ability to meet the needs of a diverse and aging population. We appreciate the administration’s ongoing work to improve patients’ equitable access to care and look forward to reviewing the details of the model when they become available.”

Learn more: The AMA has declared Medicare physician payment reform to be an urgent advocacy and legislative priority. To help physician advocates and lawmakers get a stronger a grasp on the complicated terrain of Medicare physician payment reform, the AMA has developed a series of additional explainers that outline problems with the issues mentioned above and offer solutions:

In addition, the AMA submitted a statement (PDF) for a House Energy and Commerce Committee hearing last month called “MACRA Checkup: Assessing Implementation and the Challenges that Remain for Patients and Doctors.”

Visit AMA Advocacy in Action to find out what’s at stake in reforming Medicare payment and other advocacy priorities the AMA is actively working on.