Understanding the Advanced Alternative Payment Model

What is AAPM?

The Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 began a reformation of modern healthcare from fee-for-service (FFS) to value-based care. Among other policies, MACRA legislation repealed the Medicare Part B Sustainable Growth Rate (SGR) reimbursement methodology, and it initialized a phasing out of the Medicare Physician Fee Schedule (PFS). In addition, MACRA legislation introduced the Quality Payment Program (QPP), a new, more streamlined performance-based payment system consisting of two scoring and reimbursement frameworks:

  • The Merit-based Incentive Payment System (MIPS) [and]
  • The Advanced Alternative Payment Model (AAPM) system.

Both frameworks are regulatory “environments” that establish performance measurements used to score clinicians to determine payment adjustments and bonuses.

Whereas the Merit-based Incentive Payment System is the default scoring and performance pathway in the QPP, the Advanced Alternative Payment Model (AAPM) is the most advanced scoring and performance pathway. The goal of the Quality Payment Program’s Medicare reform is to gradually move clinicians from solely practicing under MIPS, to practicing under an Alternative Payment Model (APM), to ultimately practicing under the Advanced Alternative Payment Model (AAPM). An APM is an “in-between” payment structure that incorporates a modified MIPS and APM Scoring Standard. Advanced APMs are often referred to as “subsets” of APMs; however, this is misleading, because Advanced APMs are an “advanced” form of the Alternative Payment Model, a higher level of APM participation, exempt from MIPS.

The goal of the Quality Payment Program’s Medicare reform is to gradually move clinicians from solely practicing under MIPS, to practicing under an Alternative Payment Model (APM), to ultimately practicing under the Advanced Alternative Payment Model (AAPM). 

It’s helpful to note that clinician groups that operate under the Advanced Alternative Payment Model (AAPM) are also referred to as Advanced APMs (AAPMs). The interchangeable use of the AAPM acronym and label can be confusing at times, so it’s valuable to be aware that the Advanced Alternative Payment Model term can be used to refer to the payment model and the Advanced APM entity group adhering to the model.

Understanding the Advanced Alternative Payment Model (AAPM)

Each year the Centers for Medicare and Medicaid Services (CMS) invites clinicians and organizations to propose new payment models for consideration as Advanced APMs. Advanced APM entity groups coordinate and agree with CMS to adhere to higher levels of healthcare criteria; specifically, Advanced APMs take on a greater amount of “downside risk,” or “two-sided risk.” Because Advanced APMs manage greater financial risk, CMS exempts them from the MIPS reporting system and any payment adjustments, and CMS rewards them with a 5% lump sum performance bonus. 

To qualify as an Advanced APM (AAPM), the entity group must meet the following CMS eligibility requirements:

  • ‍Pay for professional services that record Quality Measures comparable to those used in the quality performance category of MIPS.
  • Require at least 50% of participants to use Certified Electronic Health Record Technology (CEHRT).
  • Assume more than a “nominal amount” of financial risk for monetary losses or be a Medical Home Model expanded under the Center for Medicare and Medicaid Innovation (CMMI) authority.

Each year CMS provides a list of care models that qualify as Advanced APMs. For 2018, the following models are considered Advanced APMs:

  • ‍Comprehensive ESRD Care Model (LDO and Non-LDO arrangements)
  • Comprehensive Primary Care Plus (CPC+)
  • Medicare Shared Savings Program (MSSP ACOs Track 2 and Track 3)
  • Next Generation ACO Model
  • Oncology Care Model (only two-sided risk arrangements)
  • Comprehensive Care for Joint Replacement (CJR) Payment Model (Track 1 – CEHRT)
  • Vermont Medicare ACO Initiative (as part of the Vermont All-Payer ACO Model)
  • Cardiac Rehabilitation (CR) Incentive Payment Model
  • Acute Myocardial Infarction (AMI) Model (Track 1 – CEHRT)
  • Coronary Artery Bypass Graft (CABG) Model (Track 1 – CEHRT)
  • Medicare-Medicaid Accountable Care Organization Model (MMACO Tracks 2 and 3)
  • Advancing Care Coordination through Episode Payment Models Tracks 1 and 2
  • Medicare ACO Track 1+
  • Surgical Hip/Femur Fracture Treatment (SHFFT) Model (Track 1 – CEHRT)

At the time of this article, there were approximately 49 qualifying Alternative Payment Model (APM) entity groups listed in the Quality Payment Program (QPP) and only 14 of those meet the requirements as an Advanced APM entity group.

Who can participate in an AAPM?

Ultimately, CMS would like every eligible clinician (EC) to move into the Advanced Alternative Payment Model framework by joining a qualified Advanced APM entity group. Eligible clinicians in MIPS must qualify to participate in Advanced APMs by achieving payment amount or patient count thresholds during each performance year. For example, in performance year 2018, for eligible clinicians to become qualifying participants, they must receive at least 25% of their Medicare Part B payments or see at least 20% of their Medicare patients through the Advanced APM. These thresholds increase over time.

If achieved, the MIPS eligible clinicians become Qualified Participants (QPs) in the AAPM framework, exempting themselves from MIPS scoring and payment adjustments. If eligible clinicians do not qualify, or only partially qualify, as participants in an Advanced APM, then they are subject to special scoring in MIPS with a modified APM scoring standard. It’s worth noting that eligible clinicians (ECs) can become Qualifying Participants (QPs) or Partial Qualifying Participants (Partial QPs) in multiple APM or Advanced APM entity groups. CMS estimates that almost 100% of eligible clinicians in Advanced APMs will be Qualifying Participants (QPs) based on performance year 2017, meaning that they will be eligible to receive a 5% lump sum performance bonus in 2019.


In spite of the complexity and ongoing evolution of the Quality Payment Program, the Centers for Medicare and Medicaid Services (CMS) is committed to making sure of the following: the Program’s measures and activities are meaningful; clinician burden is minimized; care coordination is better; and clinicians have a clear way to participate in Advanced APMs. CMS has dedicated a website to providing resources to help clinicians understand the workings of the Quality Payment Program (QPP). This resource library includes detailed information and ongoing updates regarding the Merit-based Incentive Payment System (MIPS) and the Advanced Alternative Payment Model (AAPM), and involving category scoring, measures and guidelines, performance thresholds, payment adjustments, program timelines and other important information alluded to in this article. You can find it here https://qpp.cms.gov/.


North Texas Clinically Integrated Network, Inc. (dba TXCIN) is a non-profit ACO that began in late 2014. A small group of independent physicians aligned to initiate clinical integration and value-based contracting. Partnering with RevelationMD and its state-of-the art information platform, TXCIN has become the largest independent network of physicians in North Texas.




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