In January 2015, the Centers for Medicare & Medicaid Services (CMS) released an initiative to quickly move the Medicare payment system away from traditional fee-for-service reimbursements and toward those linked to value and quality – including alternative (or value-based) payment models. Most, if not all, healthcare providers are at least partially affected by these models. CMS’ goal is for 50% of Medicare reimbursements to come from an alternative payment model this year and for 90% of them to be associated with quality by the end of 2018.

The Melting Pot of CMS Initiatives

The CMS Innovation Center website details at least 72 different payment innovation initiatives, and some healthcare providers may be overwhelmed by this list of new payment models. To help clear up some of the confusion, we’ve provided a high-level analysis of the models that are discussed most frequently.

1. Comprehensive Care for Joint Replacement Model (CJR)

The CJR is the first nationwide, mandatory (for selected regions) Medicare bundled-payment system. This model aims to improve quality and reduce costs associated with hip and knee replacements. The CJR holds hospitals accountable for quality and cost of a 90-day episode. It also requires the cooperation of multiple provider types and enables incentive-sharing arrangements. Depending on performance, participating hospitals may either receive additional payments from Medicare or be forced to repay the program (note: this repayment is settled via the cost report).

2. Comprehensive Primary Care Plus (CPC+)

CPC+ is a five-year, primary care “medical home” model that the CMS plans to implement in January 2017. It empowers primary care physicians to increase the quality and efficiency of care while reducing unnecessary procedures. Although participation is voluntary, the model does require communication between multiple provider types. CPC+ will have two “tracks,” each of which pays a per-member, per-month fee to the primary care practice in addition to regular fee-for-service payments. Physicians are also eligible to receive performance-based incentives.

3. Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)

MACRA and its merit-based incentive payment system (MIPS) resulted from bipartisan legislation that dramatically changed Medicare physician reimbursement and replaced the sustainable growth rate. Reimbursement is driven by a composite performance score (CPS), which is initially comprised of four categories:

  • cost (10%);
  • quality (50%);
  • practice improvement (15%); and
  • advancing care information, or “meaningful use” (25%).

MACRA is merit-based and also budget-neutral. It rewards high-performing practices with funds from a reimbursement pool. Providers receive payment adjustments depending on the relationship between their CPS and the MIPS performance threshold. Regardless of whether the CPS falls above or below the threshold, payment adjustments generally cannot exceed 4%. Providers with exceptional performance may receive an additional bonus.


Physicians and practices who participate in advanced alternative payment models (such as CPC+) are exempt from MIPS payment adjustments and qualify for a 5% Medicare Part B incentive payment.
4. Nursing Home Value-Based Purchasing Demonstration

Under this demonstration, CMS assesses nursing homes on four criteria (staffing, appropriate hospitalizations, minimum data set outcomes, and survey deficiencies) and ranks homes in each state by performance. The top 20% of homes (based on quality and improvement) in each state are eligible for shared savings.


There are currently 182 nursing homes across three states – Arizona, New York, and Wisconsin – participating in this annual demonstration. In the future, CMS may choose to expand this demonstration to the entire U.S.

CRI Can Help You Integrate Alternative Payment Models into Your Organization

There have been more changes affecting Medicare reimbursement in the last few years than in the previous few decades combined. The CRI healthcare team is well versed in the different alternative payment models and can help you create a customized implementation plan for your organization. Contact us today!