The shift to value-based care continues to impact healthcare. And Medicare Advanced Payment Models (APMs) are a hot-button, pivotal piece of the transformation. With a new administration and value-based care’s position within healthcare, sustainability, equity and impact are in question. Legislative and policy changes aim to reshape the healthcare field, to prompt providers and payers alike to reassess how they engage with these models. The organizations that succeed will be those with access to timely, integrated data and the ability to translate insight into strategic action.
The State of APMs in 2025
Medicare Advanced Payment Models were designed to incentivize providers to move beyond fee-for-service reimbursement by rewarding quality and cost outcomes. Models such as the Medicare Shared Savings Program (MSSP), Direct Contracting (now ACO REACH), and bundled payment arrangements continue to evolve as CMS iterates on design and participation criteria.
Participation in APMs has grown steadily, with over 13 million Medicare beneficiaries now attributed to an APM. However, the large adoption doesn’t account for the complexity of these models, which prove to be both an opportunity and a barrier. Organizations with the infrastructure to manage risk and act on complex datasets are seeing returns while those without this visibility struggle to meet the reporting demands and quality benchmarks required for success.
In 2023 and 2024, CMS signaled a return to accountability and equity through updated ACO REACH requirements, a stronger emphasis on health equity benchmarks and renewed scrutiny of downside risk. As a result, the APM structure has evolved for 2025. Participation alone is no longer enough. Success with Medicare APMs now depends on a deeper ability to analyze, interrogate and act on population-level insight.
The Legislative Influence on Value-Based Care
Recent legislation has clarified and accelerated the path forward for APMs. The Consolidated Appropriations Act of 2023 extended the 5% advanced APM incentive through 2025, encouraging continued participation. The Centers for Medicare and Medicaid Innovation (CMMI) released its 2030 Strategy Refresh, reinforcing a goal of having all Medicare beneficiaries in a value-based relationship by decade’s end.
In tandem, Congress has begun exploring new policies to incentivize care coordination, improve rural access, and adjust benchmarking methodologies to prevent unintended penalization of high-performing providers. The emphasis is now on both equity and sustainability, driving providers to think differently about how they deliver and measure care.
Legislature is also in progress in the form of the Preserving Patient Access to Accountable Care Act (H.R. 786 / S. 1460). This act would extend the 5% incentive well past 2025, freeze QP thresholds at 2023 levels and ensure access for Medicare beneficiaries.
Without this continued momentum and legislation, the future of APMs could prove challenging. From the lack of financial incentive to remain in or join APS to greater strain on rural and small health systems to a lack of benefits for patients and clinicians with a push to Merit-Based Incentive Payment Systems (MIPS), the negative implications could be far reaching.
These changes reflect a growing understanding that value-based care can only work when data is not just collected but used meaningfully. It’s not enough to submit claims and quality reports. Stakeholders need actionable, longitudinal insight to manage cost, improve outcomes, and mitigate risk.
The Role of APMs in Value-based Care
APMs function as a structural bridge between traditional fee-for-service and full-risk arrangements. They allow providers to gradually accept more responsibility for cost and quality while testing innovative approaches to care delivery. In doing so, APMs help organizations build the muscle required for population health management, coordinated care and whole-person outcomes.
Not all organizations succeed when it comes to Medicare APMs. The most common reasons these healthcare organizations underperform include:
- Limited visibility into cost and utilization patterns
- Poor alignment between clinical and financial leadership
- Fragmented data systems that slow down decision-making
- Gaps in identifying and engaging high-risk populations
While the impact of these challenges can be immense, these challenges are solvable. It takes the right tools, the right expertise and the right implementation.
Where Analytics Meets Action
To succeed, healthcare organizations must be able to see beyond siloed claims and episodic reporting. A true advantage lies in being able to unify payer, provider and population-level data into one view that makes it easier to identify variation, measure performance and intervene with precision.
Analytics should help uncover driving factors to readmissions among dual eligibles. Analysis should indicate which providers deliver favorable outcomes at lower cost and where care gaps persist across service lines. Audit trails should be simplified for quality performance and make benchmarking less burdensome. And most importantly, proper analytical platforms should enable in-the-moment analysis and action vs retrospective, static reporting.
Paired with that data must be expertise. Healthcare organizations typically navigate the APM environment with lean resources or changes in leadership. Access to consultants or embedded experts who understand the policy landscape and can translate insight into action can reduce the learning curve and ensure shared savings dollars aren’t left on the table.
How to Maximize Medicare APM Performance
Strategies to Maximize APM Performance
Whether you’re just entering an APM or trying to improve your existing results, there are several proven approaches to keep in mind:
- Know Your Benchmarks
Understand how performance is measured and how it compares across peers. Pay close attention to regional versus national benchmarks and how these affect savings targets. - Integrate Financial and Clinical Operations
Create a shared governance model that aligns finance, care management and IT. Ensure all parties work from the same data set and operational playbook. - Standardize Your Data
Normalize data across payer types and care settings to reduce inconsistencies and accelerate data-driven insight. Ensure data feeds are timely, complete and traceable. - Act Early on High-Risk Populations
Use predictive analytics to identify populations at risk of costly episodes or poor outcomes. Intervene early with care coordination, outreach or alternative care pathways. - Measure What Matters
Focus on the metrics that align incentives and clinical impact. Avoid chasing data points that don’t drive decisions or improve care. - Build an Internal Feedback Loop
Make performance data accessible across the organization. Encourage in-the-moment course correction instead of retrospective review.
Looking Ahead for ACOs and APMs
The evolution of Medicare APMs represents a broader truth about healthcare transformation. Value-based care is complex. Striving toward a value-based future requires functional, advanced tools, expertise and curiosity.
As legislation continues to shift and models become more nuanced, the need for trusted analytics and policy fluency continues to grow. APMs offer a path toward the transition to value-based care. However, the path demands clarity and coordination to act on what the data reveals.
APMs aren’t just a compliance requirement. They’re a strategic lever for long-term impact.
