Some hospital advocates have urged the use of waiver and demonstration authority to get around statutory requirements that limit qualifying payment models to those with downside risk.


Aug. 22—Physicians desperately need more advanced alternative payment models (APMs) through which they can garner Medicare pay bonuses, according to hospital advocates.

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) created two payment paths for physicians who are paid under Medicare Part B: the Merit-based Incentive Payment System (MIPS) and APMs. Although CMS has stated that it hopes most physicians move into APMs eventually, the vast majority are expected to fall under MIPS in the early years of MACRA implementation, which began this year.

“We believe that the incentives allowed under MACRA represent an important opportunity for hospitals and clinicians to align their efforts to improve the value of care, however, we remain concerned that the lack of available advanced APM options to date jeopardizes progress toward these goals,” Alyssa Keefe, vice president of federal regulatory affairs for the California Hospital Association, wrote in comments on the proposed rule for the 2018 performance year.

How to Do It

Although MACRA’s statutory language barred the participation of Medicare Advantage (MA) plans in APMs until an all-payer option becomes available in the 2019 performance year (for payment year 2021), Keefe suggested making use of waivers and demonstrations to create new models. Similarly, HFMA urged use of a demonstration under which participation in a voluntary MA APM would qualify clinicians for the 5 percent MACRA bonus and MIPS exemption.

Concerns about a lack of APMs followed the recent proposal from the Centers for Medicare & Medicaid Services (CMS) to eliminate three planned mandatory bundled payment programs and to scale back an existing fourth program, all of which were slated to qualify as APMs under MACRA.

“These new models are essential for providers to earn the 5 percent physician payment bonuses under the MACRA Quality Payment Program,” Blair Childs, senior vice president of public affairs for Premier, said when CMS proposed eliminating or scaling back mandatory bundles. 

The changes to bundled payments would still leave several other APM options, including six types of accountable care organizations, the Oncology Care Model, and the Comprehensive Primary Care Plus model.

However, those APMs include only a small share of physicians who are paid by Medicare. Also excluded are those in existing APMs that lack the criteria for downside financial risk, such as Track 1 of the Medicare Shared Savings Program, which comprises about 90 percent of Medicare accountable care organizations (ACOs).

“The AHA remains concerned that this approach fails to recognize the significant resources providers invest in the development of APMs,” the American Hospital Association wrote this week in a MACRA comment letter. “We continue to urge CMS to expand its definition of financial risk to include the investment risk borne by providers who participate in APMs and to develop a method to capture and quantify such risk.”

A similar concern was expressed by the Federation of American Hospitals, which represents more than 1,000 investor-owned or -managed community hospitals and health systems.

Chip Kahn, president and CEO of the FAH, wrote in a comment letter that having few APMs in year two of a payment track that provides a 5 percent annual bonus for only six years “leaves a narrow window for CMS to use the MACRA-established incentive payments to encourage providers to move into these models. The FAH is concerned that clinicians and their hospital partners ultimately may be unlikely to join together in APMs, and clinicians will instead choose the predictability of remaining in MIPS.”

FAH urged expedited designation of the Comprehensive Care for Joint Replacement program, which is Medicare’s first mandatory bundled payment program, as an APM. However, CMS recently proposed reducing the size of that program by half. Additionally, CMS has said it plans to introduce a new voluntary bundle that builds on the Bundled Payments for Care Improvement initiative, but details have not been released.

Alternatively, CMS could consider financial-risk options for APMs such as planned, incremental transitions from one-sided to two-sided risk, with participants granted APM status under MACRA during the entire transition period, Kahn said.

In its comments, America’s Essential Hospitals, which represents safety-net facilities, urged CMS to consider giving APM status to any organization that has taken on downside risk or required savings or discounts, or that has made significant up-front investments.

Estimates of start-up costs range from $11.6 million for a small ACO to $26.1 million for a medium-sized ACO, according to AHA.

The nominal riskstandard used in MACRA to define a qualifying APM “means rural providers, for whom the operational risk of participating in an APM is more than nominal risk, are essentially excluded from participation in APMs,” wrote Alan Morgan, CEO of the National Rural Health Association. “For these rural safety-net providers, CMS should consider the operational risk of participation in an APM.”

APM Warning

Among the entities seeking to tap the brakes on new APMs was the Children’s Hospital Association, which expressed concern that physician-focused payment models (PFPM) recommended by the Physician-Focused Payment Model Technical Advisory Committee (PTAC) are not required to be tested.

“We recommend an evaluation of current PFPMs to assess the application of the model’s criteria to Medicaid and CHIP due to the differences in the programs and populations served under Medicare and Medicaid and CHIP,” wrote M. James Kaufman, PhD, vice president of public policy.

Some hospital groups also warned of adverse consequences from CMS’s decision to increase the number of physicians who are exempt from MIPS participation from about 700,000 in 2017 to 806,879 in 2018.

“With the exclusion of such a large number of eligible clinicians, the FAH questions the possibility of positive payment adjustments for those clinicians and groups who successfully participate in MIPS,” given that the program is designed to be revenue-neutral, Kahn wrote.

Some suggested allowing physicians who are excluded based on having low Medicare patient volume or revenue to participate voluntarily.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, August 22, 2017