NAACOS: Medicare Payment Incentives Favor Clinicians in Fee-For-Service

Medicare payment incentives favor clinicians participating in fee-for-service models rather than those in advanced alternative payment models (APMs), according to the National Association of Accountable Care Organizations (NAACOS).

Advanced APMS, such as accountable care organizations (ACOs), have demonstrated the ability to generate savings for Medicare and participating providers.

To help encourage accountable care, Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015, which established unified reporting systems and provided financial incentives for clinicians to join APMs.

Specifically, MACRA offered 5 percent incentive payments for clinicians in advanced APMs, which helped participants expand care teams, establish population health infrastructure, and create programs to improve care. Since MACRA was implemented, participation in advanced APMs has increased by more than 173 percent, according to NAACOS.

The 5 percent incentive payment ended in 2022 and Congress introduced a 3.5 percent extension for Performance Year 2023. Congress also provides a higher conversion factor update for clinicians in advanced APMs.

According to the NAACOS blog post, MACRA’s incentives for Payment Year 2026 and Performance Year 2024 will favor clinicians who do not participate in advanced APMs and remain in the Merit-Based Incentive Payment System (MIPS).

In 2026, MIPS clinicians will receive a 0.25 percent conversion factor update and can receive additional positive payment adjustments in MIPS. The average MIPS adjustment is typically 3 percent, meaning the total potential payment adjustment would be 3.25 percent.

Meanwhile, clinicians in advanced APMs will only receive a 0.75 percent conversion factor update. Incentives will not favor clinicians in advanced APMs again until 2032.

Despite the 3.5 percent incentive extension, the increase in MIPS adjustments calls for stronger incentives to encourage participation in risk-based payment models, NAACOS wrote. The organization urged lawmakers to support the Value in Health Care Act, which would extend MACRA’s original 5 percent incentive for two years and adjust the one-size-fits-all approach to qualification thresholds.

The blog post also noted that the $1.8 billion ACOs saved in 2022 surpasses the $644 million spent on incentives.

Congress must develop long-term solutions to incentivize participation in accountable care, NAACOS said. Lawmakers should separate advanced APMs from MIPS and structure MIPS to incentivize participation in APMs. Additionally, they should simplify the incentive structure to account for providers serving rural and underserved populations.

Physician payment incentives should have a three-tier system. The first track should be for fee-for-service and MIPS. It should include adequate payment adjustments for physicians but no additional incentives unless clinicians are looking to transition to accountable payment models.

The second track should be for clinicians in ACOs or other APMs. These clinicians should be exempt from MIPS quality reporting and receive financial incentives that acknowledge the upfront and ongoing investments required to be successful in APMs.

Lastly, there should be an advanced APM track that has the strongest financial incentives and flexibility for clinicians participating in risk-based models.