MIPS and Alternative Payment Models (APM)

In an earlier post, we reviewed the 5 things you need to know about the Merit-based Incentive Payment System (MIPS). The MACRA bill that introduced the MIPS program also provides incentives for participation in Alternative Payment Models (APM) in general and bonus payments to those in the most highly advance APMs. We detail the particulars of these incentives in this blog post.

MACRA rewards providers who participate in an eligible APM entity with an additional financial incentive of 5% of their Medicare reimbursements. To qualify for these Medicare incentive payments, a provider’s level of participation in a qualified APM must reach certain threshold levels, starting with 25% of either revenues or patients in 2019-20 and growing to 75% by 2023.

The APM entity must meet certain requirements including the use of a certified EHR, having quality measures in place comparable to MIPS measures, and bear more than nominal financial risk.

Eligible APM entities include Medicare Shared Savings Program ACOs, all CMS Innovation Center initiatives except Health Care Innovation awards, and certain demonstration programs. Physicians participating in patient-centered medical homes authorized by CMMI also qualify for bonuses and do not need to bear financial risk.

For the first 6 years of the program, physicians who meet threshold participation levels are eligible for lump sum bonuses of 5%. This 5% is on top of the regular payment updates for all physician services. It is also on top of any extra revenue the physician receives from the APM, such as savings achieved or monthly per-patient payments. Beginning in 2026, physicians in APMs receive annual payment updates of 0.75% whereas other physicians receive payment updates of 0.25%.

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