Practices Urged to Consider APMs, Despite Greater Risks

Rebecca Vesely | November 8, 2016

Nov. 8—Physician group practices should try to qualify for an advanced alternative payment model (APM) under Medicare’s fast-approaching and massive payment overhaul, according to practice payment experts.

While physicians would be taking on more risk at the start of an APM, they ultimately could be in a better position in the long-term, speakers said at the annual conference for the Medical Group Management Association (MGMA).

The national medical practice association dedicated a large slice of its annual conference, held in San Francisco, on nuts and bolts provider impacts from MACRA (Medicare Access and CHIP Reauthorization Act of 2015).

MACRA will replace in 2017 Medicare’s longstanding physician payment system.

Just one-fifth of physicians are familiar with MACRA, according to a recent survey.

The Centers for Medicare & Medicaid Services (CMS) issued its final rule on MACRA in October, with participation required in 2017 to avoid penalties.

Physician practices have two pathways under MACRA: They can default into a Merit-based Incentive Payment System (MIPS) or move to an APM.

“These are models that afford you a fork in the road,” Anders Gilberg, senior vice president of government affairs at MGMA, told conference attendees.

Providers will be automatically placed in MIPS, but they should not assume that’s the best choice, speakers said.

For one, APMs are exempt from the performance categories of MIPS. And there is larger potential financial upside. Physicians in advanced APMs receive a five percent annual lump sum bonus payment through 2024, and a 0.5 percent higher fee schedule update from 2026 onward, Gilberg said.

The APMs’ financial incentives aim to move physicians into a more value-based system.

“The intent of Congress is for practices to not remain in MIPS but move towards advanced APMs,” said Gilberg.

But that could take time. APMs can start under the program in January 2017, but only about 10 percent of clinicians will qualify next year, according to the CMS. That number of APM physicians is expected to increase to 25 percent in 2018, Gilberg said.

CMS is expected to release the final list of models that qualify as advanced APMs for 2017 by January.

MIPS, meanwhile, consolidates three current quality improvement initiatives: the Physician Quality Reporting System; the Value-Based Modifier Program; and Meaningful Use of EHRs. Replacing these initiatives will be four performance categories: quality; advancing care information (formerly Meaningful Use); clinical practice improvement activities; and cost/resource use.

There’s more potential for providers to create systems that work best for their local patients under APMs, speakers said. There’s no set structure for APMs. They can be accountable care organizations (ACOs), patient-centered medical homes or bundled payments, and more payment systems will be developed over time.

“Keep in mind, each advanced APM is intended to be unique,“ said Gilberg.

One Practice’s Path

Coastal Carolina Health Care, a multispecialty, physician-owned group with more than 60 providers serving eastern North Carolina, plans to choose an advanced APM path.

Coastal Carolina launched its ACO under Medicare’s Shared Savings Program in 2012 and this year renewed its contract with the CMS to continue it.

Stephen Nuckolls, CEO of Coastal Carolina, said the practice has maintained a quality score of 98 percent and saw continued improvement in diabetes and hypertension care. It experienced a 25 percent drop in patient admissions from baseline.

Coastal Carolina officials are looking carefully at the risk profiles of various APM models and have rejected several because of the high risk to physician income. If the practice doesn’t meet targets in several of the APM tracks, the required repayments would “wipe out 100 percent of income for our physicians,” Nuckolls said, to audible gasps from audience members. “Their W2s would be zero.”

Beyond repayment risk, another drawback to the APM choice is that there is a two-year gap between when participants begin reporting (2017) and when incentive payments begin (2019), said Gilberg. “We have been critical of this gap.”

However, choosing MIPS would not give Coastal Carolina enough financial incentives, especially over the time, because that payment system is designed to provide diminishing returns, Nuckolls said.

“CMS is trying to create pain in MIPS to get groups to move over to alternative payment models,” Nuckolls said.

The challenges of an APM include the upfront cost of participation, such as the required ability to conduct sophisticated population health management and use adequate health information technology systems. Another challenge stems from “lost revenue through a risk-based model,” Nuckolls said.

Nuckolls offered 10 strategies for success in APMs:

  • Develop competent physician and administrative teams
  • Obtain the means to handle potential paybacks for not meeting milestones, such as setting up a ‘war chest’ account
  • Allow patient-sharing with other organizations to ensure the APM meets the size requirements set by regulators
  • Enhance quality reporting, especially through EHRs
  • Target wasteful spending by combing through claims data and other reports
  • Monitor utilization of services
  • Measure and compare patient satisfaction
  • Develop and follow clinical pathways
  • Treat all patients the same, with the same quality measures regardless of payer
  • And provide the care that you would want for yourself and your family

Overlooked Component

One often-overlooked component of MACRA, whether physicians choose MIPS or APMs, is that the primary provider is responsible for the patient no matter where that patient receives care.

“You are still on the hook for total cost of care,” Nuckolls said. “We cannot emphasize this enough.”

One option is for providers to stick with MIPS for the first year until they can ramp up and see what opportunities arise to transition over to APM, speakers said. But they shouldn’t get complacent.

The timeline is important,” said Gilberg. “You can’t really forget MIPS because you are trying to get out of MIPS.”

CMS is expected to provide more tools to help providers choose the path that works best for them.

“These changes are very complex,” said Nuckolls. “They not only impact the financials but the care of our patients.”

Source:  HFMA