What’s the news: Eligible physicians taking part in Medicare alternative payment models (APMs) will, once again, be able to receive a 3.1% bonus thanks to a provision in H.R. 7148—the Consolidated Appropriations Act, 2026—the recently passed bipartisan legislation that funds the federal government for the remainder of this fiscal year.
While the bonus expired in 2024, this new health care package that was attached to H.R. 7148 restores the incentive payments for 12 months as part of the 2026 performance year. Physicians who qualify for the bonus will receive it in the 2028 payment year, which matches how the incentive payments have historically been administered following enactment of the Medicare Access and Children’s Health Insurance Program Reauthorization Act of 2015 (MACRA).
This is one of eight major wins for patients and physicians included in the latest federal budget deal. These hard-earned victories didn’t happen by chance. They happened because the AMA fought for them, and they were only possible because the AMA brought the full strength of its advocacy to Capitol Hill. That powerful effort encompasses thousands of interactions with congressional offices, hundreds of letters and resources, congressional testimony and more, says the new “AMA Advocacy Impact Report.”
The AMA National Advocacy Conference, entering its final day and held in Washington, brings the power of organized medicine to the nation’s capital. The hundreds of physicians and medical society executives attending are hearing from members of Congress and the administration about federal efforts to improve health care, and advocating on crucial health care issues affecting physicians and patients.
The AMA is leading the charge to reform the Medicare payment system. The AMA and other physician and health care associations, especially the AMA co-founded Alliance for Value-based Patient Care, have long advocated for extending Medicare’s APM incentive payments.
The AMA and the Alliance for Value-based Patient Care worked together to introduce H.R. 786/S. 1460, the Preserving Patient Access to Accountable Care Act, and these bipartisan stand-alone bills helped drive federal lawmakers’ attention towards the importance of restoring the APM bonus payments. The combined advocacy efforts of the AMA and the Alliance for Value-based Patient Care are what propelled Congress to ultimately include an extension of the APM bonus within H.R. 7148.
APMs are a key approach to achieving value-based care, or paying physicians based on clinical outcomes, rather than the number of services provided to the patient, says an AMA issue brief (PDF). While they vary in structure, in general, physicians participating in APMs take accountability for their patients’ quality and cost of care in exchange for receiving performance-based payments, greater flexibility in way services are delivered, and/or sharing in associated savings generated from these models.
To be eligible for the APM bonus payments, physicians must also reach certain thresholds for the percentage of their Medicare revenues or patients associated with the APM. In addition to restoring bonus payments for an additional 12 months, H.R. 7148 also lowers the revenue threshold to a more reasonable level of 50% instead of 75%.
Why this win matters: Restoring meaningful incentives helps strengthen physician participation in APMs and value-based care.
The shift toward value-based care in Medicare has had bipartisan interest for two decades and APMs are a key approach to achieving that goal.
Incentive payments such as the 3.1% bonus help physicians, hospitals and other health care organizations cover up-front costs, such as data analytics, and ongoing investments needed to improve patients’ outcomes and expand services, such as care coordinators and community health workers.
Physician participation in these programs is important to the health care system because APMs can cut health care spending and boost patient outcomes by breaking down barriers in traditional payment systems to allow physicians to redesign care delivery, proactively manage patient care in between visits, and focus on chronic conditions management across the care continuum.
For example, accountable care organizations (ACOs)—the largest type of APM in Medicare—have lowered spending by more than $28 billion over a decade. More than half of traditional Medicare beneficiaries are in an accountable relationship with their clinician.
More than 500,000 physicians and other health professionals participate in APMs, but health care leaders want to continue to see these programs expand.
And financial incentives such as the 3.1% bonus and regulatory flexibilities—for example, exempting advanced APM participants from reporting under the burdensome Merit-based Incentive Payment System (MIPS)—are needed to help drive more physicians to participate in advanced APMs.
A letter (PDF) that the AMA, 23 physician and health care associations and more than 550 ACOs and other health care organizations sent to congressional leaders last year explains why it is important to take steps to sustain the nation’s transition to value-based care. They noted, among other things, that “financial uncertainty reduces the capacity of practices to manage complex patients, particularly in rural and underserved areas.”
Learn more: Explore further with this explainer from the AMA on how to advance value-based care with APMs, which is part of the AMA’s Medicare Basics series that provides an in-depth look at important aspects of the Medicare physician payment system.
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.
