MACRA and Alternative Payment Models – What You Need to Know

When it comes to alternative payment models (APMs), organizations often ask “is it better to be a Medicare Shared Savings Program (MSSP) Track 1 Accountable Care Organization (ACO) or a Patient-Centered Medical Home (PCMH)?”

Typically, the answer depends on a few factors:  organizational goals, level of readiness to adopt new delivery models, and the mix of public and private payer incentive programs.

Going forward, however, the newest factor that organizations must consider is how they want to be scored under the incentive programs created by the Medicare Access and CHIP Reauthorization Act (MACRA).  As the Centers for Medicare and Medicaid Services (CMS) prepares to release the proposed rule for MACRA, the agency has made it clear that not all organizations participating in APMs will be considered “eligible” for purposes of the law’s APM incentive program.  The statute requires that eligible APMs, those which qualify for the APM bonus payment, have the following characteristics:

  1. Receive payment based on quality measures comparable to those in the Merit-based Incentive Payment System (MIPS) program.
  2. Require use of certified electronic health record EHR technology (CEHRT).
  3. Either (1) bear more than nominal financial risk for monetary losses or (2) be a medical home model expanded under the Center for Medicare and Medicaid Innovation (CMMI) authority.

Implications for MSSP ACOs

The requirement regarding nominal financial risk is particularly important for MSSP Track 1 ACOs. Because these ACOs share in the savings from their arrangement, but not the losses, it is highly unlikely they will be eligible for the incentive payment.  Excluding them from receiving the payment is another way policymakers hope to increase participation in APMs that entail “more than nominal financial risk,” such as Track 2 or Track 3 ACOs.

Track 1 ACO participants, however, still have an advantage under MACRA.  CMS has emphasized that APMs which do not meet the eligible APM criteria will still receive “favorable scoring” under the MIPS program, specifically within the clinical practice improvement activities category.  The law states that APM participants will receive a minimum score of half of the highest potential MIPS score for clinical practice improvement activities.  Because this is a new performance category for providers, it is encouraging to see that MSSP Track 1 ACO participants will receive at least 50% credit for it under the MIPS program.

Implications for Patient-Centered Medical Homes

The same requirement that excludes MSSP Track 1 ACO participants from MACRA’s APM incentive payments may allow patient-centered medical homes (PCMH) to be eligible without bearing financial risk.  Rather than define what a medical home is, the legislation specifies that “a medical home expanded under CMMI authority” may be eligible for incentive payments.  Since the CMMI has yet to expand the patient-centered medical home model, however, it is uncertain whether such an expansion will align with the existing PCMH certification programs and whether that will occur prior to 2019.  Organizations that have yet to commit to either an ACO or a PCMH model should keep a close eye on how medical homes are defined in the proposed rule.  Although they will still have to meet the first two requirements listed above, as well as the patient or revenue volume thresholds for the APM bonus payment, the medical home option may be more attractive than the risk-bearing ACO for some organizations.

The MIPS program also gives favorable treatment to medical homes.  A practice that is certified as a patient-centered medical home (or a comparable specialty practice), as defined by the Secretary, will receive the highest potential score for the clinical practice improvement activities performance category.  By contrast, as mentioned previously, non-eligible APM participants are guaranteed only 50% of the highest potential score for this category.  Despite the ambiguity in the phrase “as defined by the Secretary”, the reference to certification seems to allow for CMS to leverage existing certified PCMH programs.

While the proposed rule will provide more specifics around eligible APMs and corresponding incentive payments, one thing was made increasingly clear in the MACRA legislation ‒ fee-for-service is on its way out and alternative payment models are here to stay.  If your organization isn’t ready to embrace the ACO model, becoming a medical home is something to consider, given the favorable treatment in the MACRA incentive programs.  EHR Association members are invited to join the Delivery System Reform Workgroup to learn more about this trend, MACRA, and other related topics. Contact Emily LaMonica, staff to the Association, at to be added to our list.

Suzanne Travis, Chair, Delivery System Reform Workgroup (and VP, Regulatory Strategy, McKesson)

Amanda Adams, Vice Chair, Delivery System Reform Workgroup (and Strategist, Government and Policy, Cerner)

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