What is an APM?
An Alternative Payment Model (APM) is a payment system that gives added incentive payments to provide high-quality and cost-efficient care. APMs can pertain to a clinical condition, a care episode, or a patient population type.
Of the two payment tracks under MACRA’s Quality Payment Program (QPP), APMs have proven difficult for many to comprehend. As the name suggests, though, an APM is simply a model of a new, or alternative, payment approach that’s based on quality and cost metrics.
Examples of APMs include:
- Bundled Payment Models (also known as Episode-based Payment Models)
- Medicare Shared Savings Programs (consists of several tracks/options)
- Accountable Care Organizations (ACO)
- Patient Centered Medical Homes
- Models tested by the Center for Medicare and Medicaid Innovation (CMMI)
The Medicare Shared Savings Program (MSSP), for instance, is a type of APM, and the rules and structure of the MSSP model determine the way the Centers for Medicare & Medicaid Services (CMS) pays for healthcare—or, in this case, shares cost savings with participating healthcare organizations.
The rules and structure of an APM define which healthcare organization are eligible to participate. Participants belong to an APM Entity, which is a legal entity voluntarily created by a group of providers or facilities for the purpose of participating in the model.
In other words, eligible clinicians, hospitals, and suppliers might participate in the MSSP by establishing or joining an ACO, which is a type of APM Entity. The MSSP then rewards the ACO for lowering their healthcare costs while meeting high quality, patient-first performance standards.
The relationship between the APM and the clinician is hierarchal:
To qualify for APM incentives in 2020, eligible clinicians must receive 25% of their Medicare payments through an APM.
Types of APMs