Payment & Delivery Models

Bipartisan support in Congress for extending 5% APM incentives

Kevin B. O'Reilly , Senior News Editor

A bipartisan group of 44 members of Congress is calling on House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy to help ensure the success of Medicare value-based care by extending the 5% alternative payment model (APM) incentives that are set to expire this year.

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One of the main goals Congress sought when passing the Medicare Access and CHIP Reauthorization Act (MACRA) was to help physicians and health care organizations “transition away from fragmented, fee-for-service payment systems into APMs where providers are accountable for the quality and cost of care,” notes the letter (PDF), which was sent earlier this month. The 5% APM incentive was included to help encourage the switch and help physicians offset associated losses in revenue stemming from participation in value-based care models.

“These sensible value-based care investments are set to expire at the end of 2022, which would negatively impact nearly 300,000 clinicians who care for millions of Medicare beneficiaries and slow growth in future participation,” notes the letter to House leadership.

Extending the incentive payments, however, is only one part of the larger policy equation related to APMs. The AMA has also called for halting the automatic increase in the revenue threshold that APM participants need to reach to even qualify for the bonuses. Should Congress fail to act, the revenue threshold jumps from 50% to a nearly impossible-to-meet 75% in 2023. 

As a result, the AMA and other affected stakeholders are advocating that Congress give the Health and Human Services Secretary the authority to alter the revenue threshold, but limiting it to an increase of no more than 5% per year.

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The letter to House leadership comes on the heels of the AMA joining more than 800 health care associations, accountable care organizations (ACOs), medical practices and health systems urging Congress to extend (PDF) the 5% APM incentive payments.

In addition, the AMA recently teamed up with the National Association of ACOs, America’s Physician Groups, AMGA and others to form the Alliance for Value-Based Patient Care, which is a coalition of physicians, hospitals, medical groups and other health care stakeholders dedicated to ensuring patients receive the best possible care by:

  • Creating a cultural shift in the health system toward prioritizing high-quality care.
  • Promoting coordination across every member of a patient’s care team.
  • Establishing accountability to the best possible patient outcomes.

In the long-term, the alliance is dedicated to promoting federal policies that enable physicians to more easily join different types of APMs.

Leading the charge to reform Medicare pay is a critical component 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.

Before the end of 2022, Congress also should:

  • Provide relief from the scheduled 4.42% budget-neutrality cut in Medicare physician fee schedule payments.
  • End the statutory annual freeze and provide a Medicare Economic Index update for the coming year.
  • Waive the 4% pay-as-you-go sequester triggered by passage of the American Rescue Plan Act.

Visit AMA Advocacy in Action to learn about what’s at stake in reforming Medicare pay and other advocacy priorities the AMA is actively working on.

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Why APM incentives matter

The MACRA APM incentive payments enable doctors and others “to expand services beyond what is possible under the traditional fee-for-service system, including cost sharing reduction, patient transportation and meal programs, and engagement with care coordinators,” notes the letter to House leadership. “These types of care transformations save money for the Medicare Trust Funds while improving care, generating over $13 billion in gross savings over the past decade.”

In 2020, one type of APM—specifically, ACOs—saved Medicare $2.1 billion, says the letter from the House members. That is three times the $613 million spent on APM incentives.

“Not only do APMs save the Medicare program money, but they increase the quality of care for seniors across the country,” says the letter. “It’s clear that MACRA’s investments in value-based care have provided a strong return for the government that can continue providing savings in the future, while encouraging the kind of proactive, coordinated health care delivery that patients want and deserve.”

In their letter, the House members asked congressional leaders to include section four of the “Value in Health Care Act” (H.R. 4587) in an end-of-year legislative package. That bill is listed among the AMA’s policy recommendations on Medicare APMs (PDF), as one section of the bill extends the APM incentives and permits a more gradually increasing revenue threshold.

The House members’ letter says passing such legislation “would continue the responsible push toward innovation and coordination in healthcare and improving health outcomes.”