Alternative Payment Models (APMs)

Quality & Practice

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What is an Alternative Payment Model (APM)?

An APM is a general term used to describe payment arrangements that are not purely fee-for-service. These tend to be value-based payment approaches that apply financial incentives intended to foster the provision of high-quality and cost-efficient care. APMs can apply, for example, to a specific clinical condition, a care episode, or a patient population.

Most Medicare clinicians will initially participate in the Quality Payment Program (QPP) through MIPS to earn a performance-based payment adjustment. Clinicians who take a further step towards care transformation may participate in Advanced APMs to earn a Medicare incentive payment for participating in an innovative payment model.

To qualify as an Advanced APM, APMs must meet specified criteria related to the use of certified electronic health record technology, payment based on quality measures comparable to those used in MIPS (see separate definition), and financial risk. As an alternative to the financial risk requirement, some APMs may qualify as Advanced APMs if they are medical home models that meet certain criteria specified by CMS. Significant participation in Advanced APMs can allow participants of Advanced APMs to qualify for a 5% incentive payment from 2019 through 2024, or higher annual payment updates than they would otherwise receive starting in 2026. Learn more about Medicaid and the QPP.

APM Glossary

AAPM&R recognizes that APMs can include complex terminology regarding health system transformation and delivery system reform. The Academy has created a glossary to reflect AAPM&R’s current understanding of these terms.

AAPM&R 2022 APM Benchmark Survey Report

The Academy conducts a member survey every two years to assess the use of APMs across its membership. The survey data is used to generate ideas within innovative payment and practice models, set the Academy's advocacy agenda, and potentially develop new resources for members. Take a glance at the 2022 APM Benchmark Survey Report below. 

CMS APMs and Advanced APMs


Please note: APMs are not limited to CMS. There are many available through commercial insurers. 

Where can I learn more?


Please note: due to the risk involved, it is important to understand your options thoroughly.