Glossary · Reimbursement

Advanced APM (Alternative Payment Model)

An Advanced APM is a Medicare payment track under MACRA's Quality Payment Program that requires certified EHR use, ties payment to quality performance, and demands that participating entities bear meaningful financial risk. Eligible clinicians who hit specified payment or patient-count thresholds become Qualifying APM Participants (QPs), unlocking incentive bonuses and a higher Medicare conversion factor while escaping MIPS reporting obligations entirely.

Verified May 8, 2026 · 4 sources ↓

Drawn from CMSPhysiciansadvocacyinstitute

Definition

Source · Editorial summary grounded in 4 cited references ↓

Advanced APMs sit at the more demanding end of the Quality Payment Program spectrum. To qualify as an Advanced APM, a model must clear three federal criteria: participants must use ONC-certified EHR technology (meeting at least the 2015 Edition Base EHR standard); payment must be tied to quality measures that are evidence-based, reliable, and valid—with at least one outcome measure included; and participants must carry genuine financial risk, meaning they share in losses when actual expenditures exceed expected expenditures for their attributed population.

For orthopedic practices, the most relevant Advanced APMs have historically included the Bundled Payments for Care Improvement Advanced (BPCI Advanced) model, which wraps a single episode-of-care payment around procedures such as joint replacements, and the Medicare Shared Savings Program (MSSP) ACO tracks that carry downside risk. Performance is evaluated on total cost and quality for an attributed patient population—not just on what happens inside the OR, but across the entire episode, including post-acute care, readmissions, and downstream specialist visits.

Clinicians who meet or exceed the payment-amount or patient-count thresholds become QPs. QPs receive an APM Incentive Payment and, beginning with the 2024 performance period (2026 payment year), a higher Medicare conversion factor applied to all covered professional services. They are also fully exempt from MIPS reporting requirements and any associated payment adjustments. Clinicians who participate in an Advanced APM but fall short of the QP thresholds are treated as MIPS-eligible and subject to standard MIPS rules. An All-Payer Option also exists, allowing clinicians to count qualifying non-Medicare arrangements—such as commercial payer or Medicaid contracts—toward QP status when combined with Medicare Advanced APM participation.

Why it matters

Missing the QP thresholds by even a small margin has direct financial consequences: the practice loses the APM Incentive Payment and the higher conversion factor, and every eligible clinician in the group reverts to MIPS, which carries its own reporting burden and potential downward payment adjustment. For orthopedic groups in bundled-payment models such as BPCI Advanced, inaccurate diagnosis coding and poor documentation of patient comorbidities can distort risk adjustment, cause the group to underestimate expected expenditures, and result in unexpected loss-sharing payments to CMS at reconciliation.

Common mistakes

Where people most often go wrong with this concept.

Source · Editorial brief grounded in cited references ↓

Assuming QP status is automatic upon joining an Advanced APM—clinicians must independently meet either the payment-amount or patient-count threshold during each determination period.
Underestimating the financial-risk component: many practices enroll expecting shared-savings upside but are unprepared for downside reconciliation when post-acute costs (SNF, home health, readmissions) exceed the episode target price.
Incomplete or inaccurate comorbidity coding that lowers risk-adjusted expected expenditures, effectively making the practice's target price easier to breach and triggering loss payments.
Failing to track the All-Payer Option: orthopedic groups with qualifying commercial or Medicaid value-based contracts can count those toward QP status but often never submit the required attestation.
Conflating MIPS APM participation with Advanced APM participation—most but not all Advanced APMs are also MIPS APMs, and the eligibility rules differ materially.
Ignoring annual model-year updates: CMS may change episode definitions, quality measure sets, or risk-adjustment rules from one performance period to the next, altering the financial calculus mid-contract.

Related codes

Codes commonly involved when this concept appears in practice.

CPT

ICD-10

M17.11 M17.12 M51.26

Frequently asked questions

Source · Generated from the editorial pipeline, verified against 4 cited references ↓

01What is the difference between an APM and an Advanced APM?

Any payment arrangement that meets the statutory definition qualifies as an APM. An Advanced APM is a subset that must also satisfy three additional federal criteria: certified EHR use, quality-based payment tied to at least one outcome measure, and meaningful financial risk. Qualifying for Advanced APM status is what makes a clinician eligible to become a QP and escape MIPS.

02How does an orthopedic surgeon actually become a Qualifying APM Participant (QP)?

CMS reviews Medicare claims data during specified determination periods each year. If enough of a surgeon's Medicare payments—or enough of their Medicare patients—flow through an Advanced APM, CMS designates them a QP. The exact thresholds shift annually, so practices should verify current percentages on qpp.cms.gov before each performance period.

03Which Advanced APMs are most relevant to orthopedic practices?

BPCI Advanced is the most common entry point for orthopedic groups because it wraps episode-of-care payments around high-volume procedures like total hip and knee arthroplasty. MSSP ACO tracks with downside risk are another route, particularly for larger multispecialty groups that include orthopedics. CMS posts the full list of approved Advanced APMs at qpp.cms.gov.

04What happens if a clinician participates in an Advanced APM but does not hit the QP thresholds?

They are treated as a MIPS-eligible clinician for that performance year. They must meet MIPS reporting requirements and are subject to positive or negative MIPS payment adjustments. They also forfeit the APM Incentive Payment and the higher QP conversion factor.

05Why does accurate diagnosis coding matter so much under an Advanced APM?

Many Advanced APMs use risk adjustment to set the expected-expenditure target against which actual costs are measured. If comorbidities are undercoded, the expected cost is artificially low, making it easier for actual costs to exceed the target and trigger loss-sharing payments back to CMS. Accurate HCC-relevant coding protects the practice's financial baseline.

06Can an orthopedic group use commercial or Medicaid value-based contracts to qualify as QPs?

Yes, through the All-Payer Option. A clinician can combine a Medicare Advanced APM with qualifying non-Medicare arrangements (commercial, Medicaid) that meet criteria similar to Advanced APMs. Both sets of patient and payment data are pooled for QP threshold calculations, but the non-Medicare arrangements must be formally attested to CMS.

Sources & references

Editorial content was developed using the following public sources. Last verified May 8, 2026.

Mira AI Scribe

Mira flags Advanced APM participation status at the encounter level to protect documentation integrity and risk-adjustment accuracy—two variables that directly affect whether a practice meets QP thresholds and whether it ends up in gain-sharing or loss-sharing at reconciliation. For orthopedic encounters under an episode-based Advanced APM (e.g., BPCI Advanced joint replacement), Mira will: • Prompt capture of all active comorbidities (e.g., diabetes with CKD, obesity, CAD) that affect risk-adjusted target pricing—missing HCC-relevant diagnoses erodes the expected-expenditure baseline. • Flag when a post-op visit note lacks documentation of episode-related complications or improvement, which affects quality measure performance reported back to CMS. • Alert coders when a procedure CPT is inside an active episode window, signaling that downstream SNF, home health, or readmission charges will count against the episode target. • Surface the correct 7th-character specificity requirements for fracture coding (laterality, displacement, open/closed, encounter type) because under-specified codes can prevent accurate attribution and risk scoring. Mira does not select the APM model for the practice or determine QP thresholds—those are calculated by CMS at the end of each determination period. Its role is to ensure every encounter within an Advanced APM produces the most accurate, complete documentation possible so that risk scores, quality measures, and episode costs reflect clinical reality.

See Mira's approach

MIPS (Merit-based Incentive Payment System) is one of two participation tracks under CMS's Quality Payment Program (QPP), in which eligible clinicians earn a composite performance score across four categories that directly adjusts their Medicare Part B reimbursement—up or down—two years later.

Quality Payment Program (QPP) Reimbursement

The Quality Payment Program (QPP) is a CMS value-based reimbursement framework, established under MACRA in 2015 and launched in 2017, that ties Medicare Part B payment adjustments to clinician performance through two tracks: MIPS and Advanced APMs.

BPCI Advanced Reimbursement

BPCI Advanced (Bundled Payments for Care Improvement Advanced) is a voluntary CMS episode-based payment model in which a single target price covers all Medicare Part A and B services within a 90-day clinical episode, and participants bear financial risk or reward based on whether actual spending falls below or above that target. It qualifies as an Advanced Alternative Payment Model (APM) under the Quality Payment Program.

MACRA Reimbursement

MACRA (Medicare Access and CHIP Reauthorization Act of 2015) is the bipartisan federal law that repealed the Sustainable Growth Rate formula and replaced it with the Quality Payment Program, which ties Medicare physician reimbursement to value-based performance through MIPS or alternative payment models.