Medicare & Medicaid

Value-based care’s future rests on reforms to Medicare APM incentives

Tanya Albert Henry , Contributing News Writer

As part of its aggressive campaign to fix the unsustainable Medicare physician payment system, the AMA has outlined 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’s two-page explainer on advancing value-based care with APMs (PDF) details 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 nine years since MACRA’s passage, it is 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 incentive payments that help physicians participate in Advanced APMs before they expire at the end of 2024. Physicians who participate in Advanced APMs in 2024 will receive the bonus payments in 2026.

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 2025. 

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. To date, not a single PTAC endorsed model endorsed by the advisory committee has been tested by Medicare.

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Raeford, North Carolina, family physician Karen Smith, MD, said that to keep providing services, Medicare payment reform is crucial for physicians who accept Medicare patients and are “practicing in a state of unknown.” 

“When we see reductions in regards to the payment from Medicare, that has impact in terms on the business operations that will also impact the services that I can provide,” said Dr. Smith, who is among the practicing physicians and AMA members who have taken time to share their firsthand perspectives on the impact of unsustainable Medicare physician payment in interviews with the AMA.

“When there is a reduction in terms of our payment for Medicare, I now have to rethink how we have developed our value-based payment model and determine what can I cut—something that we’ve proven to be useful, something that has been proven to allow savings in terms of cost—and now we’re going to cut an investment that we made to provide those services.”

The AMA is leading the charge to reform the Medicare payment system, which is the AMA’s top advocacy priority.

Learn 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.

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 U.S. 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 supports H.R. 5013/S. 3503, the Value in Health Care Act, which would restore the APM incentive payments to 5% for two years and establish a 50% revenue threshold that physicians in value-based care models must meet to qualify for the bonuses over the same time frame.  

The bill, among other things, would give the Health and Human Services (HHS) secretary the authority to further increase the revenue threshold, but at a pace of no more than 5% in any single year. 

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“These proposed policies would grant HHS the needed flexibility to adjust the financial risk at a pace that enables more physicians to participate in APMs, while building on the tremendous movement toward value-based care,” AMA Immediate Past President Jesse M. Ehrenfeld, MD, MPH, said when the bill was introduced last year.

The AMA joined 17 other national health care organizations, as cosigners of a letter (PDF) in support of H.R. 5013.   

Congress continues to closely analyze the movement towards APMs and the role of the Centers for Medicare and Medicaid Innovation (CMMI) in facilitating greater specialty physician participation in value-based care. 

The House Energy and Commerce Health Subcommittee held a June 13 hearing, “Checking-in on CMMI: Assessing The Transition to Value-Based Care.” Members of both parties used the hearing to emphasize concern surrounding the lack of competition and rising rates of consolidation in U.S. health care, citing numerous demonstrations that helped foster improved patient outcomes. The AMA was joined by several other organizations in submitting comments for the hearing (PDF).

The House Ways and Means Health Subcommittee held a separate hearing, “Improving Value-Based Care for Patients and Providers.” These hearings could represent the start of greater congressional scrutiny regarding the ideal ways to improve value-based care in the coming decades.

In June, the Medicare Payment Advisory Commission (MedPAC) released its recommendations and touched on APM incentives.

“The AMA strongly agrees with MedPAC’s concerns about the expiration of the bonus payments for physicians who participate in alternative payment models,” said AMA President Bruce A. Scott, MD. “Congress should continue to invest in these payments to provide the funding physicians need to transition to APMs, including carrying this momentum forward into specialties, geographic areas, and patient communities that have not yet had the opportunity to participate in APMs.”

While the AMA is working relentlessly to build understanding on Capitol Hill about the unsustainable path the Medicare payment system is on, preventing further cuts means getting to the root causes of what’s wrong with Medicare physician payment.

That is why the AMA created the Medicare Basics series, which provides an in-depth look at important aspects of the Medicare physician payment system. With these six straightforward explainers, policymakers and physician advocates can learn about key elements of the payment system and why they are in need of reform.

Senior News Editor Kevin B. O’Reilly wrote an earlier version of this article.

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