What is Advanced Alternative Payment Model (Advanced APM)? Definition, Formula, and Benchmark

An Advanced Alternative Payment Model (Advanced APM) is an APM that meets specific CMS statutory criteria: use of certified EHR technology, quality-measure reporting comparable to MIPS, and — critically — acceptance of more than nominal financial risk for monetary losses. The distinction matters because only Advanced APM participation counts toward Qualifying APM Participant status and the associated MIPS exemption and APM Incentive Payment.

The "more than nominal financial risk" test is the most scrutinized criterion. CMS defines nominal-risk thresholds that an APM must exceed — typically requiring participants to bear at least 8% of expected revenue as potential losses (the Revenue-Based Standard) or 3% of expected expenditures (the Expenditure-Based Standard). APMs that pass these tests qualify as Advanced; APMs that do not meet the thresholds are standard APMs with no QP eligibility.

Current Advanced APM list includes MSSP Enhanced Track, ACO REACH Professional and Global tracks, BPCI Advanced, Kidney Care First (with downside risk), Primary Care First (Seriously Ill Population track), Enhancing Oncology Model, and Making Care Primary Track 3. The list evolves annually as CMS approves new APMs and adjusts existing thresholds.

MSSP Basic Track (upside-only) is notably NOT Advanced — its upside-only structure does not meet nominal-risk requirements. ACOs in Basic Track do not produce QPs even as they produce other financial and quality benefits. This is a frequent source of clinician confusion: participation in an ACO does not automatically produce QP status.

For practice-level strategy, the Advanced APM status of participating models matters for clinician payment and reporting planning. A practice choosing between MSSP Basic and Enhanced Track must consider both the shared-savings difference (40% vs 75%) and the QP implications (Enhanced Track can produce QPs; Basic typically cannot).

EHR-technology criterion requires that participating clinicians use certified EHR technology (CEHRT) — the same certification used for MIPS Promoting Interoperability. Most practices in Advanced APMs meet this criterion because CEHRT use is standard.

Quality-reporting criterion requires that the APM incorporate quality measurement comparable to MIPS. Most Advanced APMs meet this through their existing quality components (MSSP quality scoring, REACH quality performance targets, etc.). The practical effect is that Advanced APM participants do not separately report MIPS quality; the APM's own quality measurement serves.

From a board-reporting standpoint, Advanced Alternative Payment Model (Advanced APM) belongs in the compliance committee's quarterly dashboard. The reporting line should include volume, exception rate, and any open remediation action; reviewers tie Advanced Alternative Payment Model (Advanced APM) metrics to the broader compliance program KPIs so an emerging Advanced Alternative Payment Model (Advanced APM) risk surfaces before it becomes a formal finding. Pairing the Advanced Alternative Payment Model (Advanced APM) trend with qualifying apm participant gives the committee a single view of whether the control environment is strengthening or drifting.