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Published 5/1/2018
Andrea Leyton-Mange, BA; John P. Andrawis, MD, MBA; Karl Koenig, MD, MS

APMs and BPCI Advanced: What They Mean for Orthopaedists

Several new payment models have been introduced under the Medicare Access and CHIP Reauthorization Act (MACRA). The most common is the Merit-Based Incentive Payment System (MIPS), which requires providers to report directly on performance measures including outcomes, cost, and operational data. Performance on these metrics, as well as how much data the clinician reports, determine the reimbursement adjustment with a maximum of +/- 4 percent to start, increasing to +/- 9 percent in 2022.

Another option for orthopaedic surgeons is an Alternative Payment Model (APM), which is an alternative to fee-for-service models that aim to align financial incentives to encourage quality and reduce cost. Participation in an APM may earn you financial rewards and reduced reporting requirements under MACRA, depending on the type of APM and how large a part it plays in your practice (as determined by patient count and payment volume thresholds) (Table 1).

It’s important to note the exemptions for MIPS reporting, such as being in your first year of practice or having a low volume of Medicare patients. However, if a clinician does not meet these criteria and is not involved in a qualifying APM, he or she will then be eligible for an incentive or subject to a penalty. Although CMS has provided specific metrics for their performance measures, the actual return on investment clinicians can expect from MIPS remains to be seen.

Advanced APMs
Advanced APM (AAPMs) are a subset of APMs defined by CMS as meeting high standards for quality assurance and the amount of financial risk assumed by providers for costs of care.

Full participation in an AAPM earns providers numerous benefits under MACRA. Qualifying participants are exempt from MIPS reporting, and instead of having their reimbursement adjusted according to a MIPS score, they receive an annual 5 percent lump sum bonus. Starting in 2026, they will also have a higher payment rate increase (0.75 percent) than other clinicians (0.25 percent).

The U.S. Centers for Medicare & Medicaid Services (CMS) uses three criteria to determine which APMs qualify as AAPMs. They are as follows:

  1. Participants must bear more than nominal risk for monetary losses.
  2. Participants must use certified electronic health record technology.
  3. The model must base payments on quality measures comparable to those in MIPS.

AAPM options in orthopaedics
Currently, the two Medicare AAPMs that include orthopaedic procedures are the Comprehensive Care for Joint Replacement (CJR) Track 1 and the newly announced Bundled Payments for Care Improvement Advanced (BPCI Advanced). Both are episode-based payment models.

Participation in CJR is open only to acute care hospitals, and participation is currently mandatory for all acute care hospitals within certain CJR Metropolitan Statistical Areas (MSAs). Effective Jan. 1, the number of these MSAs was reduced from the originally mandated 67 to 34.

BPCI Advanced is a modified version of BPCI designed to meet MACRA’s AAPM requirements. It is a voluntary payment model that extends beyond arthroplasty and includes one outpatient and 10 inpatient orthopaedic procedures.

Both physician groups and acute care hospitals can apply to participate in BPCI Advanced, playing the central role of reporting quality measures and tracking spending. Unlike BPCI, other healthcare entities such as post-acute care providers can only apply to participate in BPCI Advanced if they are bearing financial risk on behalf of a group of downstream hospitals or physician groups.

On Oct. 1, BPCI participant hospitals in mandatory CJR MSAs will become CJR participants and will no longer be eligible for BPCI Advanced. BPCI episodes will continue to have precedence over CJR until Sept. 30, at which point, all lower extremity joint replacements performed on Medicare beneficiaries in CJR hospitals will fall under CJR.

BPCI Advanced’s payment structure is similar to BPCI. Medicare determines a target price for an episode of care. Regular fee-for-service payments are made to the hospital or physician group, but these payments are reconciled with the target price semi-annually. Reconciliation payments are capped at 20 percent in either direction. The payments are also subject to adjustments based on various quality measures. One key difference is that the target price in BPCI Advanced will be subject to risk adjustment based on case mix, which serves to put providers treating higher-risk populations on an equal footing. (For more information on BPCI Advanced, see “A Closer Look at BPCI Advanced” on page 25).

Are you a QP?
It is important to know if you will be a qualifying participant (QP) in BPCI Advanced or CJR. QPs are eligible for the 5 percent incentive payment and are exempt from MIPS. Whether clinicians associated with an AAPM (e.g., surgeons operating at a CJR-participating hospital) are considered QPs is determined by what percentage of the surgeons’ Medicare Part B volume goes through the AAPM. Patient volume is assessed using both patient count and payment amounts. Importantly, this determination is made cumulatively for all clinicians associated with the AAPM (e.g., all providers treating arthroplasty patients at a CJR-participating hospital will together be labeled as QPs, partial QPs, or neither). Partial qualifying participants do not receive the 5 percent incentive payment, but may still be exempt from MIPS participation.

APMs that do not meet the strict criteria to be AAPMs but that still hold their participants accountable for cost and quality can also afford benefits under MACRA. CMS designates these as MIPS APMs, appropriately named because they are APMs whose participants are also required to participate in MIPS. Participants in MIPS APMs are not eligible for the 5 percent lump sum bonus payment granted to full qualifying participants in AAPMs, nor are they excluded from MIPS. But in acknowledgement of the fact that participation already involves some risk and quality data reporting, participants have a reduced reporting burden and receive some scoring benefits under MIPS. BPCI Advanced qualifies as both an AAPM and a MIPS APM, so providers in BPCI Advanced who do not qualify as a QP or partial QP may also receive these benefits. This “MIPS APM scoring standard” may apply to you if you perform a small number of cases at a BPCI Advanced participating hospital and the rest of your practice is at a nonparticipating hospital.

Positioning ourselves for the future
BPCI will end on Oct. 1, 2018. For eligible hospitals and physician groups who had been BPCI participants, transitioning to BPCI Advanced is a logical choice. For interested parties who missed the 2018 application deadline, the next opportunity to apply will be in 2020. But a few important considerations will change the landscape going forward. First, acute care hospitals within the CJR-mandatory MSAs who had been grandfathered through BPCI will be required to transition to CJR. They can also participate in BPCI Advanced, but CJR will take precedence over BPCI Advanced for mutually eligible episodes. For physician group participants in BPCI Advanced, risk adjustment for target prices will be determined by the patient mix in the hospital where the anchor event (i.e., surgery) occurs. Post-acute care providers and other entities who had been eligible for BPCI will not be eligible for BPCI Advanced, and thus lose their opportunity to be the primary participants in orthopaedic bundled payment programs.

All these changes point to a shift in power dynamic in favor of hospitals. If physician groups apply to participate in BPCI Advanced, they will not be the responsible parties in lower extremity joint replacement episodes if the hospital where they operate is participating in CJR. Hospitals will perform the quality reporting and will bear the risk and reap the rewards of positive reconciliation payments. Post-acute care providers and clinicians may participate in gainsharing agreements with AAPM hospitals, but the current arrangement may be more conducive to hospitals being the coordinators of care and leaders in quality improvement. This results in a limited opportunity for physician leadership, and these concerns have been echoed by AAOS, the American Association of Hip and Knee Surgeons, and many other orthopaedics specialty and state societies.

Orthopaedic surgeons can maintain their position as leaders in payment reform by expanding beyond the episode-based bundled payment model. Orthopaedic conditions are often chosen as pilots for procedure-based bundles. However, we continually face the question of whether orthopaedic surgeons can be responsible for population health as leaders of accountable care organizations (ACOs) and ACO-like models, which seem to be naturally directed toward primary care providers. Like all things, it depends on one’s view of the future. As long as the definition of payment episodes remain anchored to procedures, then it will continue to be difficult for surgeons to truly engage in population health. Alternatively, as payers move more toward condition-based bundles, we’ll want to be in the “business” of managing the musculoskeletal health of patients (e.g., taking ownership of osteoporosis management after fragility fracture).

The decisions you make in this next phase of Medicare policy will depend on your risk appetite, the size of your practice, your ability to take on quality reporting, and the payment models of other local providers and how well you can coordinate among them. These factors will determine whether it is beneficial for you to participate in an AAPM or other APM, and what those benefits may be. In any case, it will be important to determine the plans of each hospital and physician group that you have relationships with, and perform detailed analyses of your particular mix of patients and payers.

Although this process seems burdensome, the need to rethink care delivery is by design. As we pay more attention to our partners in care, track processes and outcomes, and consider cost in our decision-making, we will become better stewards of our healthcare system.

Andrea Leyton-Mange, BA, is the 2017-2018 Value-Based Care Research Fellow at the Dell Medical School and a member of the class of 2019 at Columbia University’s College of Physicians and Surgeons.

John P. Andrawis MD, MBA, is the current Joseph M. Abell Arthroplasty and Value-Based Healthcare Fellow at the Dell Medical School.

Karl Koenig, MD, MS, is the medical director of the Musculoskeletal Institute at Dell Medical School and associate professor of Orthopaedic Surgery.

Advanced Alternative Payment Model; a type of Alternative Payment Model defined by CMS as meeting high standards for quality assurance and risk-bearing for participants

ACO–Accountable Care Organization; coordinated group of providers generally responsible for providing comprehensive healthcare services to a group of patients

APM–Alternative Payment Model; a non-fee-for-service payment scheme that aims to align incentives to encourage quality and reduce cost

BPCI–Bundled Payments for Care Improvement; an episode-based payment program for a variety of healthcare episodes

BPCI Advanced–a modified version of BPCI that qualifies as an AAPM

CJR–Comprehensive Care for Joint Replacement; an episode-based payment program for lower extremity joint replacement (CJR track 1 qualifies as an AAPM)

MACRA–The Medicare Access and CHIP Reauthorization Act; 2015 act that outlines a set of requirements for clinicians participating in Medicare

MIPS–Merit-Based Incentive Payment System; the track under MACRA in which Medicare payments are adjusted according to reported performance measures

MIPS APM–an APM whose participants are also required to participate in MIPS

MSA–Metropolitan Statistical Area; metropolitan area used to define mandatory CJR participation

QP–Qualifying Participant; provider meeting a high threshold of patient volume through an AAPM

Partial QP–Partial Qualifying Participant; provider meeting a lower threshold of patient volume through an AAPM

QPP–Quality Payment Program; the set of requirements outlined under MACRA including tracks for MIPS and AAPMs


  1. CMS MIPS Scoring Methodology Overview (https://www.cms.gov/Medicare/Quality-Payment-Program/Resource-Library/MIPS-Scoring-101-Guide.pdf)
  2. Porter, Michael E., and Elizabeth O. Teisberg. Redefining Health Care: Creating Value-Based Competition on Results. Boston: Harvard Business School Press, 2006.