By: Christopher Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, MA.
A Health Care Provider Defense and Compliance Firm

The July 2025 MedPAC Data Book makes one thing clear: value-based care and alternative payment models (APMs) aren’t going anywhere. With nearly 80% of Medicare beneficiaries already aligned to Medicare Advantage or Accountable Care Organizations (ACOs), CMS is deepening its push away from traditional fee-for-service. For non-hospital providers, especially primary care groups, multispecialty practices, and behavioral health organizations, this is not a drill. It’s time to understand the implications and prepare for a landscape where commercial payers are likely to follow Medicare’s lead.

What’s Happening with Medicare APMs?

• MSSP ACOs Dominate the APM Landscape: The Medicare Shared Savings Program (MSSP) remains the dominant model, with 18% of Medicare beneficiaries assigned to an MSSP ACO in 2025. Total participation has held steady at about 11 million beneficiaries despite a drop in the number of ACOs over time.
• Specialist Participation Is Growing: While MSSPs are still primary-care centric, a growing number of specialists—including cardiologists, pulmonologists, and even orthopedic surgeons—are participating in ACOs and other APMs.
• Advanced APM Bonuses Create Strong Incentives: Over 384,000 clinicians qualified for a 5% Medicare bonus in 2024 by participating in Advanced APMs (A–APMs), such as MSSPs, Primary Care First, and Bundled Payments for Care Improvement Advanced (BPCI-A). That number continues to climb, even as the bonus rate is set to decrease to 3.5% in 2025 and 1.88% in 2026.
• Bundled Payment Models Remain Popular for Specialists: BPCI-A continues to be a popular model for physician groups, especially in orthopedics, neurology, and cardiology. 90% of physician groups participating in BPCI-A in 2025 initiated episodes in orthopedics.
• Primary Care First and Other Models Target Non-Hospital Providers: CMS’s Primary Care First initiative, while winding down, shows strong interest in capitated care coordination and performance-based incentives for primary care providers. Future models will likely continue this trend.

What Does This Mean for Non-Hospital Providers?

Medicare is signaling to commercial payers how it expects providers to be paid: through shared risk, care coordination, and outcome-driven contracts. Commercial insurers are already piloting their own versions of ACOs and bundles. Expect them to lean into Medicare-aligned incentives, especially in high-cost areas like chronic disease, mental health, and substance use disorder treatment.

Three Practical Steps for Providers Right Now

1. Evaluate Your Readiness to Take on Risk

   Run internal assessments on your practice’s infrastructure: Do you have the data analytics, care coordination, and billing sophistication to succeed in a value-based contract?

2. Engage in or Prepare for ACO or Bundle Participation

   Whether joining an MSSP ACO, contracting under BPCI-A, or preparing for commercial payer carve-outs, practices should understand how these models distribute risk and reward—and how to protect themselves contractually.

3. Stay Ahead of Regulatory Expectations

   Most (but not all) of the fraud and abuse enforcement principles that apply in fee-for-service apply to APMs. Gainsharing, referral arrangements, and provider incentives must be carefully vetted under the Anti-Kickback Statute, Stark Law, and CMS’s Value-Based Exception framework.

Why This Matters Now

Even if you don’t contract with Medicare directly, commercial payers increasingly model their reimbursement strategies after CMS. Behavioral health providers, addiction treatment centers, SNFs, and large primary care networks should expect payer RFPs to include shared savings, bundled payment, and “value” metrics in the next 12–18 months. If you’re not prepared, you may be left out of major networks. Parrella Health Law helps non-hospital providers assess risk, prepare for APM participation, and structure compliant value-based arrangements with payers. The key is early engagement and strategic planning. If your organization needs legal counsel to navigate alternative payment models or prepare for payer contract changes, contact Parrella Health Law at 857.328.0382 or email Chris directly at cparrella@parrellahealthlaw.com.

Read the Full Report: MedPAC July 2025 Data Book – Section 5: Alternative Payment Models