Advanced Alternative Payment Models Part I: Understanding the Medicare Shared Savings Program

This article is the first of four parts.

In May 2016, CMS formally announced the six Advanced Alternative Payment Models (APMs) that it will consider as fully qualifying APMs under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) in a proposed rule.(1) Although seemingly insignificant to the uninitiated, this is a major step toward moving the entire national healthcare system toward “fee-for-performance” reimbursement models.(2) This is noteworthy for all physicians practicing in the United States, because if an APM is not embraced by any given practice, the result could be that the said practice would be forced to “compete” for reimbursements against predetermined peer groups through the non-APM Merit-Based Incentive Payment system (MIPS), which replaces the former Sustainable Growth Rate-driven conversion factor in determining how RVUs are altered for specific practices under the former fee-for-service system.

For some, MIPS may represent an unacceptable risk to practice viability, as changes in reimbursement levels can vary from ± 4% to ± 9% starting in 2019 and beyond. Although some may “win” and receive bonuses through MIPS, just as many may see significant losses through not meeting CMS performance targets. Thus we have chosen to highlight the most critical aspects of the Advanced APMs listed as acceptable alternatives to the MIPS-driven reimbursement structures to help foster understanding of these programs (Table 1).

What Is the Shared Savings Program?

The Medicare Shared Savings Program is one of the APMs that focus on transforming a practice or organization into an Accountable Care Organization (ACO). Based on the results of the previous trial runs of the Pioneer ACO program, the Shared Savings Program is a refined ACO designed to be both appropriate and practical for a plethora of clinical settings. Practices operating under this program are guided by the principle that, based on quality and cost performance conducive to improved patient outcomes and savings for CMS, they will be able to share savings and reap benefits from cost effectiveness in prescribing treatment and overseeing high-quality patient management. Following the concept that coordinated care and interdisciplinary communication among providers both improve quality and reduce costs, coordination of patient care across healthcare delivery settings is a central theme to the Medicare Shared Savings Program.

In previous years, the Medicare Shared Savings Program has operated through three possible tracks, with the first track addressing only the savings benefits, whereas the second and third tracks are focused predominantly on sharing both gains and losses in a “two-sided” risk/reward setup. Under the recent rules set by CMS, only the two-sided tracks (Tracks 2 and 3), will qualify as Advanced APMs. Previous participants will be allowed to continue under Track 1 as they see appropriate; however, they will not fully qualify to receive the incentive benefits granted by CMS for participation as an Advanced APM if they chose to do so through the first reporting period in 2017. CMS expressly states that the “one-sided,” benefit-sharing-only Track 1 option is designed predominantly for organizations or practices unfamiliar with the necessary techniques and who may run high risks of incurring “losses,” under the plan’s definitions, during their first few years attempting to refine their approach to cost reduction and quality improvement.

The Shared Savings Program operates under a series of CMS established benchmarks for costs and quality of care, determined by the most recent three-year expenditures of beneficiaries seen by ACOs, with a minimal amount of savings required to be observed on an aggregate per capita basis before any sharing of gains is made between the practice and CMS.(3) For two-sided plans, this includes losses as well. As in MIPS and other APM systems, quality and performance measures are aligned with the Electronic Health Record Incentive Program, Physician Value Modifier, and the Physician Quality Reporting System across the domains of patient experience, care coordination/patient safety, preventive health, and at-risk population management. The total amounts of shared savings/losses are determined, up to a maximum limit, based on the track chosen, performance measures reported, and aggregate patient demographics/health status (Table 2).

Who Can Qualify for Participation in the Shared Savings Program?

According to the final rule published in mid-2015 by CMS,(4) primary care and specialist physicians, nurse practitioners, physician’s assistants, and clinical nurse specialists may be allowed to participate in this ACO model. By design, it is meant to be all-encompassing and nonspecialty-specific so as to allow for flexibility in deployment and operation. Organizations operating across a diverse spectrum can participate, ranging from outpatient ambulatory care clinics to skilled nursing facilities. No apparent limitations are inherent in the wording of the final rule published on the CMS website. However, it is presumed that practices and organizations can only participate in one track of this program and only one overall APM, be it advanced or not, during any given reporting period.

How Do I Apply for the Shared Savings Program?

Tracks 2 and 3 are open to enrollment for organizations and practices not previously participating in any of the tracks previously, with Track 1 only being an option for those not exceeding the maximum agreement period or who are new to the program. The current rule allows for extension of one three-year agreement for currently participating Track 1 organizations and, presumably, up to two three-year agreements for practices electing this track for the first time. It should be reiterated, however, that Track 1 does not qualify as an Advanced APM and, despite being an APM, will not be considered adequate for the incentive payments given by CMS for Advanced APM participation in the 2017 reporting period and beyond. CMS describes three major steps in the Shared Savings Program application process, each of which is highlighted in Table 3.(5) Although many of the deadlines for the 2017 reporting period have passed, interested organizations and practices can assume that these dates will be cyclical, with only minor variation year to year.

Further information can be obtained through the CMS website(6) using the links provided in the references at the end of this article for interested organizations and providers. Publications such as this one and those distributed by the AMA and other specialty-specific organizations also are invaluable tools for further understanding the suitability of each Advanced APM given the unique clinical space that a physician or other clinical provider may occupy.

Are There Other Advanced APMs that I May Qualify For?

As of the publication of this article, the Shared Savings Program is the only annually recurring APM available for entry for the 2018 reporting period. Thus for 2017 applicants, the Shared Savings Program is listed as the only fully qualifying APM for MACRA’s explicitly stated 5% annual incentive bonuses for the 2019 through 2024 adjustment years.(7) The other Advanced APMs listed in Table 1 are closed to applicants as of the 2017 application period. Although other models may emerge over time, this makes the Shared Savings Program the only Advanced APM that can be entered for the 2018 reporting period. It is worth remembering, however, that other APMs exist, and even being a partially qualifying provider under any CMS acceptable APM, such as Track 1 of the Shared Savings Program, is presumably enough to be allowed exemption from the possible negative adjustments from MIPS, at least according to the language of MACRA.(8) These APMs represent the most viable alternative to MIPS until CMS either begins allowing further applicant entry into existing programs or approves further Advanced APMs through the Center for Medicare and Medicaid Innovation.(9,10)

References

1. Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and criteria for physician-focused payment models. FederalRegister.gov . May 9, 2016. https://federalregister.gov/a/2016-10032 . Accessed July 6, 2016.

2. Self RH, Coffin J. Alternative payment model could be saving grace for quality improvement. Medical Economics. July 18, 2016. http://medicaleconomics.modernmedicine.com/medical-economics/news/finding-best-macra-rout-provider-reimbursement?page=0,3. Accessed July 6, 2016.

3. Centers for Medicare & Medicaid Services. Methodology for determining shared savings and losses under the Medicare Shared Savings Program. CMS.gov . April 2014. www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/ACO_Methodology_Factsheet_ICN907405.pdf . Accessed July 6, 2016.

4. Finalized changes to the Medicare Shared Savings Program Regulations. CMS.gov . June 4, 2015. www.cms.gov/newsroom/mediareleasedatabase/fact-sheets/2015-fact-sheets-items/2015-06-04.html. Accessed July 6, 2016.

5. Shared Savings Program: how to apply. CMS.gov . June 13, 2016. https://www.cms.gov/medicare/medicare-fee-for-service-payment/sharedsavingsprogram/application.html . Accessed July 6, 2016.

6. Centers for Medicare & Medicaid Services. Accountable Care Organizations: what providers need to know. CMS.gov . March 2016. www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/ACO_Providers_Factsheet_ICN907406.pdf. Accessed July 6, 2016.

7. Self RH, Coffin J. Finding the best MACRA rout to provider reimbursement. Medical Economics. February 8, 2016. http://medicaleconomics.modernmedicine.com/medical-economics/news/finding-best-macra-rout-provider-reimbursement?page=0,3. Accessed July 6, 2016.

8. Medicare Access and CHIP Reauthorization Act (MACRA), Pub. L. No. 114-10, 129 Stat. 87 (codified at 42 U.S.C. 1305 (2015)).

9. Self RH, Coffin J. A sampling of alternative payment models. J Med Pract Manage. 2016;32:125-127.

10. Self RH, Coffin J. Creating loose alternative payment models guiding principles: a brief overview. J Med Pract Manage. 2016;32:6-8.