CMS announces new voluntary bundled payment model

On January 10, 2017, the Centers for Medicare and Medicaid Services (CMS) through the Center for Medicare and Medicaid Innovation (CMMI) announced a new Medicare bundled payment model, Bundled Payments for Care Improvement Advanced (BPCI-Advanced), which will be an advanced alternative payment model (AAPM) under the Medicare Access and CHIP Reauthorization Act’s (MACRA) Quality Payment Program (QPP). The model establishes alternative payment structures for 32 distinct clinical episodes, where providers can participate on a voluntary basis and receive performance-based payments for delivering care at less than a target amount and meeting quality standards.

Following on the 2013 CMMI BPCI initiative, BPCI-Advanced demonstrates CMS’ continued support of bundled payments on a voluntary basis to encourage both providers and suppliers to coordinate care across multiple settings and meet cost and quality benchmarks. This program is intended as an opportunity for providers to gain experience in care coordination and shared payment structures on their own terms. Details on BPCI-Advanced are described below.

Model details

CMMI is now accepting applications for BPCI-Advanced and will continue to accept applications through March 12. Application review will run through June.

The first group of participants will begin billing under the BPCI model on October 1, 2018, with the performance period running through December 31, 2023. Once a participant joins under the initial round, they must commit to be held accountable under a given clinical episode, and may not add or drop episodes until January of 2020, when a second round of applications will also be issued.

BPCI-Advanced is entirely voluntary, offering a single payment and risk track over a 90-day clinical episode duration.

Of the 32 episodes, 29 are inpatient-based, with 3 additional outpatient clinical episodes, each qualifying as AAPMs under MACRA. A BPCI-Advanced Clinical Episode begins either with the start of an inpatient admission to an Acute Care Hospital (ACH), or at the start of a qualifying outpatient procedure. Qualifying inpatient admissions (Anchor Stays) are identified by MS-DRGs, and outpatient procedures (Anchor Procedures) are identified through Healthcare Common Procedure Coding Sets (HCSPCS) codes. All clinical episodes end 90 days after the admission or procedure.

The full listing of eligible clinical episodes is as follows:


  • Disorders of the liver excluding malignancy, cirrhosis, alcoholic hepatitis (New episode added to BPCI Advanced)
  • Acute myocardial infarction
  • Back & neck except spinal fusion
  • Cardiac arrhythmia
  • Cardiac defibrillator
  • Cardiac valve
  • Cellulitis
  • Cervical spinal fusion
  • COPD, bronchitis, asthma
  • Combined anterior posterior spinal fusion
  • Congestive heart failure
  • Coronary artery bypass graft
  • Double joint replacement of the lower extremity
  • Fractures of the femur and hip or pelvis
  • Gastrointestinal hemorrhage
  • Gastrointestinal obstruction
  • Hip & femur procedures except major joint
  • Lower extremity/humerus procedure except hip, foot, femur
  • Major bowel procedure
  • Major joint replacement of the lower extremity
  • Major joint replacement of the upper extremity
  • Pacemaker
  • Percutaneous coronary intervention
  • Renal failure
  • Sepsis
  • Simple pneumonia and respiratory infections
  • Spinal fusion (non-cervical)
  • Stroke
  • Urinary tract infection


  • Percutaneous Coronary Intervention (PCI)
  • Cardiac Defibrillator
  • Back & Neck except Spinal Fusion

Payment parameters

The “Target Price” for a clinical episode includes all items and services furnished to a BPCI-Advanced Beneficiary during the episode, including outlier payments. The Target Price is calculated with a 3% CMS Discount from the benchmark price. Payment occurs on a retrospective basis, meaning that the usual fee-for-service (FFS) payments are made, with a reconciliation occurring semi-annually. During the reconciliation, CMS will compare aggregate Medicare expenditures for all items in a clinical episode against a pre-determined Target Price. Based on the reconciliation, participants will either be eligible for an additional shared savings payment, or will be obligated to repay a certain amount to CMS.

How to participate

Participants are required to enter into a formal participation agreement with CMS that will require them to take on immediate downside risk. Participants are grouped in two categories. Convener Participants, which may include eligible entities that are both Medicare-enrolled and non-enrolled providers and suppliers, including ACHs and Physician Group Practices (PGPs). “Conveners,” also referred to as “Episode Initiators,” bring together other entities, facilitating coordination and determining and distributing financial risk across all participants. “Non-conveners,” which may be ACHs and PGPs, do not bear the direct risk, but operate downstream under risk-bearing agreements with the Convener.

More information on BPCI-Advanced, including quality measures, application materials, and the full Request for Applications are available at the CMS Innovation Center’s BPCI-Advanced webpage.


Anne Phelps
Principal | Deloitte Risk and Financial Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
Latest conversations from Anne Phelps on Twitter

Daniel Esquibel
Senior Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

Ethan Joselow
Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

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Deloitte shall not be responsible for any loss sustained by any person who relies on this article.

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