Compare Medicare Models Side-by-Side
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- Key Results
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- Financial Arrangements
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What is Medicare Delivery System Reform?
Policymakers, health care providers, insurers, and researchers continue to debate how best to introduce payment and delivery system reforms into our health care system to tackle rising costs, quality of care, and inefficient spending. Medicare has taken a lead in testing a variety of new models that include financial incentives for providers (such as doctors and hospitals) to work together to lower spending and improve care for patients in traditional Medicare. In general, the goal of these financial incentives is to link a portion of Medicare’s payments for services to “value” as determined by provider performance on spending and quality targets.
Many of the new Medicare payment models are managed through the Center for Medicare and Medicaid Innovation (CMMI), which was established by the Affordable Care Act (ACA) and is housed within the Centers for Medicare & Medicaid Services (CMS). The ACA authorized an appropriation of $10 billion for CMMI through 2019 and for each subsequent decade in order to test innovative payment and delivery models across Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). Additionally, the ACA authorized the Secretary of Health and Human Services to expand and/or extend models that demonstrate quality improvement without an increase in spending, or spending reduction without a decline in quality.
What are the Major Models in Medicare and Where Can I Learn More?
Three of the major Medicare payment models that CMS and CMMI are managing are accountable care organizations (ACOs), medical home models, and bundled payment models. Over 10 million Medicare beneficiaries are receiving care from various types of Medicare ACOs in 2017, and almost 2 million are receiving care from medical homes. Combined, these two models account for about 1 in 5 Medicare beneficiaries overall and 30 percent of all beneficiaries in traditional Medicare. Additionally, if counts of Medicare beneficiaries in bundled payment models were included (currently unavailable), then the share of beneficiaries in these major models would be even higher.
The Evidence Link synthesizes the latest available results on Medicare savings and quality improvements associated with each model. It describes key design features of the various programs running within each of these models, such as how providers are paid, the number of beneficiaries receiving care under each model, where models are being tested, and model timelines.
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Accountable Care Organizations
ACOs are groups of doctors, hospitals, and other health care providers who voluntarily form partnerships to collaborate and share accountability for the quality and cost of care delivered to their patients. In Medicare, payments to ACOs incorporate a variety of financial incentives for lowering Medicare costs and improving quality.
Medicare ACO Models
The Pioneer ACO model, which ended in 2016, included financial risk and reward for all participating ACOs, based on their overall Medicare spending, relative to a benchmark amount and quality scores. Providers in Pioneer ACOs entered with experience taking on financial risk through contracts with other payers. The Pioneer ACO model was the framework for the Next Generation ACO model.
Medicare Shared Savings Program (MSSP) ACOs
The MSSP is a permanent ACO program in traditional Medicare that provides financial incentives for meeting or exceeding savings targets and quality goals. The MSSP program has multiple tracks that allow ACOs to choose between sharing in both savings and losses, or just savings. These are: Track 1, Track 1+, Track 2, and Track 3.
Advance Payment ACOs
The Advance Payment ACO model, which ended in 2015, was a subset of the MSSP. It provided up-front payments to ACOs to support infrastructure development and operations, particularly among smaller and/or rural providers. Advance Payment ACOs also received monthly, population-based payments and could share in savings after CMS recouped the advance payments. Some former Advance Payment ACOs remain in the MSSP program.
Next Generation ACOs
The Next Generation ACO model is designed to be the “next generation” of the Pioneer ACO model, similarly requiring both upside and downside financial risk. The Next Generation ACO model offers multiple payment structures with increasing levels of financial risk and reward as incentives for lowering overall spending and reaching quality goals. Additionally, the Next Generation ACOs model includes options to waive certain Medicare coverage requirements.
ACO Investment Model (AIM)
The ACO Investment model is a subset of the MSSP. It provides several options for upfront and monthly pre-payments to assess whether or not early investments increase participation in the MSSP among smaller and/or rural providers. These ACOs are eligible for shared Medicare savings, and are encouraged to transition to models that take on financial risk.
Medical Home Models
Medical homes are typically team-based primary care practices that provide the majority of their patients’ health care either directly, or through coordination with other providers. Medicare and other insurers that support medical homes generally pay monthly care management fees or provide other resources to support certain activities designed to enhance care quality and streamline the provision of care.
Medicare Medical Home Models
Federally Qualified Health Center (FQHC) Advanced Primary Care Practice (APCP)
In the FQHC APCP model, which ended in 2014, CMS paid each participating FQHC monthly care management fees per Medicare beneficiary to support activities and services associated with requirements for becoming a “Level 3” patient-centered medical home, as recognized by the National Committee for Quality Assurance (NCQA).
Multi-Payer Advanced Primary Care Practice (MAPCP)
In the MAPCP model, which ended in 2016, participating state agencies were responsible for aligning several aspects of their medical home program across multiple insurers, including Medicare, Medicaid, and commercial insurers. These aspects included care management fees, medical home activity requirements, quality standards, and payment incentives.
Comprehensive Primary Care (CPC) Initiative
In the CPC model, which ended in 2016, CMMI convened multiple payers—including Medicare, Medicaid, and commercial insurers—to align care management fees, quality goals, and efficiency incentives across payers. CMMI also provided data feedback to medical homes on the spending and services use of their Medicare patients. Practices had the opportunity to share in regional savings. This model was the framework for the current CPC+ model.
Independence at Home (IAH)
The IAH model focuses on providing primary care services to chronically ill beneficiaries in their own homes. IAH practices are eligible to share in savings with Medicare for meeting quality and spending targets; however, practices do not receive monthly care management fees.
Comprehensive Primary Care Plus (CPC+)
Like its predecessor (CPC), the CPC+ model convenes multiple payers—including Medicare, Medicaid, and commercial insurers—to align payments and incentives across payers. CPC+ offers varying levels of risk, care management fees, and advance payments as well as incentives for meeting quality and utilization benchmarks that, if not met, can be recouped by CMS. CPC+ includes hybrid provider payments, which combine quarterly upfront payments with discounted per-visit payments.
- To learn more about these medical home models, see our Medicare Medical Home Model FAQs.
- To see the latest evaluation results and compare key features, see our Medicare Medical Home Side-by-Side comparison tool.
Bundled Payment Models
In bundled payment models, Medicare establishes a total budget for all services provided to a patient throughout an episode of care. If the episode’s spending on services is below budget, the providers may share in Medicare savings; alternatively, if providers’ costs exceed the budget, the providers may incur losses. In some cases, bundled payment models can span across multiple health care settings. Provider participation in some of the Medicare bundled payment models is voluntary, while for other models, participation is mandatory for hospitals in selected areas of the country. The Department of Health and Human Services (HHS) recently proposed reducing the number of mandatory bundled payment models.
Medicare Bundled Payment Models
Bundled Payments for Care Improvement (BPCI) Initiative Model 1
BPCI Model 1, which ended in 2016, was a voluntary model in which CMS bundled payments throughout all inpatient hospital services for an episode of care and applies a discount to the usual Medicare hospital payment. Participants gained financially if total spending for an episode (determined retrospectively) was below the “target price.”
Bundled Payments for Care Improvement (BPCI) Initiative Model 2
BPCI Model 2 is a voluntary model in which CMS bundles payment for all inpatient hospital services, physician services, post-acute care services, and other related services and any readmissions throughout an episode of care. Participants gain financially if total spending for an episode (determined retrospectively) is below the “target price.
Bundled Payments for Care Improvement (BPCI) Initiative Model 3
BPCI Model 3 is a voluntary model in which CMS bundles payment for all post-acute care services and any readmissions throughout an episode of care, which for this model, begins after discharge from an inpatient hospitalization. Participants gain financially if total spending for an episode (determined retrospectively) is below the “target price.”
Bundled Payments for Care Improvement (BPCI) Initiative Model 4
BPCI Model 4 is a voluntary model in which CMS bundles payment for all inpatient and physician services during the initial hospital stay and any readmissions, but not post-acute care services. In this model, CMS makes a prospective payment to the hospital at the start of the episode of care, rather than reconciling payments after the episode of care. Participants gain financially if total spending for an episode is below the amount CMS paid.
Comprehensive Care for Joint Replacement (CJR)
The CJR model is a mandatory model for acute care hospitals in 67 geographic areas. This model effectively bundles payment for lower extremity joint (hip and/or knee) replacement episodes across all inpatient hospital services, physician services, post-acute care services, and any readmissions or other related services through 90 days after the initial hospital discharge. Participants gain financially if actual expenditures for an episode (determined retrospectively) are below the “target price.” A CMS proposed rule, published August 17, 2017, would allow participation to be voluntary for hospitals in about half of the originally designated mandatory areas, as well as for small or rural hospitals in the remaining mandatory areas.
Oncology Care Model (OCM)
The OCM is a voluntary model in which oncology practices receive monthly care management fees and are eligible for bonus payments if they lower overall Medicare spending and meet quality goals for episodes of chemotherapy and related care. CMS offers multiple risk/reward options to participating practices. Commercial insurers are also participating.
Episode Payment Models (EPM)
The EPMs include three mandatory bundled payment models—the acute myocardial infarction (AMI) model, the coronary artery bypass graft (CABG) model, and the surgical hip and femur fracture treatment (SHFFT) model. The bundled payments for each of these models include all inpatient hospital services, physician services, post-acute care services, and other related services through 90 days after the initial hospital discharge. Participants can gain financially if total spending for an episode is below a quality-adjusted “target price.” Although a CMS proposed rule, published August 17, 2017, would cancel all the EPMs, they are currently scheduled to start on January 1, 2018.
Cardiac Rehabilitation (CR) Incentive Payment Model
The CR Incentive Payment Model is a mandatory, bonus-only model for hospitals in 90 geographic areas. In this model, CMS makes added payments to hospitals based on the number of cardiac rehabilitation sessions that applicable Medicare patients receive after discharge. Although a CMS proposed rule, published August 17, 2017, would cancel all the CR model, it is scheduled to begin on January 1, 2018.
- To learn more about these bundled payment models, see our Medicare Bundled Payment Model FAQs.
- To see the latest evaluation results and compare key features, see our Medicare Bundled Payment Side-by-Side comparison tool.
What's the Evidence on Medicare Savings and Quality for Each Model?
So far, the evidence on Medicare payment and delivery system reforms has been mixed. While some models are meetings and improving upon quality goals, overall net savings to Medicare has been relatively modest, with large variation in results between the major models as well as among the individual programs within each of them. For a detailed look at the available evidence on savings and quality, use our side-by-side comparison tools to compare your models of interest.
Accountable Care Organizations (ACOs)
|Table 1. Risk-bearing ACO Models Generated Net Medicare Savings Relative to Benchmarks (2016)|
|Type of ACO||No. of ACOs||At-Risk for Shared Losses?||Gross Medicare Spending on Services
|Medicare Payments to ACOs for Shared Savings
|ACO Payments to Medicare for Shared Losses
|Net Medicare Spending
|All MSSP ACOs||432||—||–$652||$701||–$9||+$40|
|MSSP Track 1||410||No||–$541||$61||n/a||+$72|
|MSSP Track 2||6||Yes||–$42||$24||$0||–$18|
|MSSP Track 3||16||Yes||–$69||$64||–$9||–$14|
|All ACOs||458||—||–$768 million||$796 million||–$29 million||–$47 million|
|NOTE: (–) Reduced spending (Medicare savings); (+) Increased spending (Medicare costs); *Incorporates $53 million in discounted benchmarks, plus $10 million in Medicare’s share of savings. Analysis excludes the Comprehensive ESRD Care Model.
SOURCE: Kaiser Family Foundation analysis of 2016 public use files for MSSP, Pioneer, and Next Generation ACOs, and unpublished CMS data.
Across ACOs (namely, MSSP, Pioneer, and Next Generation ACOs), net savings to Medicare totaled $47 million in 2016 relative to target (“benchmark”) levels, after accounting for shared savings and losses. While all of the models generated lower gross spending on Medicare services, only the models that required ACOs to be at risk for shared losses achieved net Medicare savings. In contrast, no-risk (“bonus only”) models generated net Medicare costs.
Among MSSP ACOs—the most prevalent ACO model—over half (56%) had spending that was lower than their benchmark in 2016. Although these ACOs generated $652 million in gross Medicare savings, the total amount that CMS paid to ACOs in shared savings bonuses ($701 million) exceeded gross savings. Even after CMS recouped about $9 million in shared losses from the 5 percent of MSSP ACOs that accepted risk, the overall net cost to Medicare for MSSP ACOs was $39 million relative to their overall benchmark. In 2015, these net costs were higher (over $200 million), suggesting improvement in 2016.
In contrast, the Pioneer ACO program, which required all ACOs to take on financial risk, achieved overall net savings each year. In 2016, the last year of the Pioneer ACO program, net Medicare savings totaled $24 million relative to benchmark levels. An independent evaluation also calculated Medicare savings (approximately 1-2%) for Pioneer ACOs relative to a comparison group for 2013.
In its first year (2016), the Next Generation ACO program, designed to follow the Pioneer ACO program, also achieved net Medicare savings ($63 million) relative to benchmark levels. These net savings incorporate “discounts” that CMS makes to each ACO’s benchmark. Of the 18 initial Next Generation ACOs, 11 had spending under their benchmarks and received shared savings payments.
Overall, CMS reports that ACO models have scored as well or better than providers in traditional Medicare on comparable quality measures, including ones for diabetes care, preventive services, and hospital readmissions. Additionally, ACOs showed improvement in performance on quality across years. Less than 1 percent of MSSP ACOs did not meet specified quality performance standards, which would either render them ineligible for any shared saving bonuses, or reduce their sharing rates, depending on the model.
Medical Home Models
Most medical home models incurred net costs to Medicare after taking into account payments to practices for care management fees. While the CPC model came close to breaking even in its third year relative to benchmark spending (i.e., savings on services were offset by similar spending on care management fees), net Medicare spending totaled $51 million in its fourth and final year, with additional payments for shared savings. In the MAPCP model, two of eight states achieved statistically significant net Medicare savings relative to comparison groups. The FQHC APCP model generated the same or higher spending, relative to comparison cohorts. The IAH model had modest net Medicare savings relative to their overall benchmark each year ($8 million in 2014), with about half of IAH participants earning shared savings bonuses.
Overall, quality scores for the medical home models were generally similar to matched comparison groups. For 2016, the vast majority of CPC practices (97%) met quality goals with slight improvements from the previous year noted on clinical quality and patient experience. The MAPCP evaluation reported that there was little evidence that MAPCP models provided beneficiaries with improved access to care relative to a comparison group. The FQHC APCP models performed the same or better on diabetes care, but the same or worse on most other quality measures relative to comparison groups. For the IAH model, CMS reported lower hospital readmissions, relative to a control group in the first two years, and in the second year, all IAH practices improved on at least two of six quality measures based mostly on standards of care.
Bundled Payment Models
BPCI Model 1, which focused on Medicare hospital admissions, achieved modest net savings ($10 million across two years), attributable mostly to discounted Medicare payments to hospitals. Most hospital participants ultimately withdrew, and the model has ended. Of the other BPCI models, the most prevalent is BPCI Model 2, which spans across hospitals, physicians, and post-acute providers. In its first two years, this model generated statistically significant Medicare savings per episode for one clinical category—hip/knee replacement (technically, major joint replacement of the lower extremity)—among the 23 categories that had enough episodes for statistical analysis. Medicare savings in the hip/knee replacement category was $1,273 per episode, relative to a comparison group.
For the newer CJR bundled payment model, which was mandatory for 800 hospitals and focused on hip and knee replacements, Medicare spending results are limited. In the first year of the program, about half of the hospitals received “reconciliation payments” indicating that they received added payments from Medicare because their spending was below their target benchmark in 2016. Reconciliation payments totaled $37.6 million, averaging $1,134 per episode. No spending information is available for hospitals that did not receive reconciliation payments.
Notably, episode-based spending results, including those reported for BPCI and CJR, do not account for changes in the number of episodes per participating provider. Therefore, any changes in the overall volume of episodes could have additional spending effects on Medicare.
For the BPCI models, quality results varied by clinical episode and model, but generally did not reveal major differences between the BPCI participants and comparison groups on measures that included claims analysis and patient surveys. Although BPCI Model 3 showed statistically significant declines in quality on several measures relative to comparison groups, greater patient complexity may have played a role in these results, particularly for SNF-based participants relative to comparison groups.
For the CJR bundled payment model, quality results are limited. CMS data show that in the first year of the program, among the hospitals that received any reconciliation payments for lower episode spending, 39 percent were classified as “excellent”; 53 percent as “good”; 8 percent as “acceptable;” and none as “below acceptable.” In general, these classifications were based on CMS analysis of medical complications and patient-reported assessments for each hospital.
What are the Start and End Dates for Each Model?
About the Evidence Link
The Kaiser Family Foundation’s Evidence Link is an interactive resource that pulls together the latest available evidence on Medicare payment and delivery system reform models, with an initial focus on accountable care organizations (ACO), medical home models, and bundled payment models. The Evidence Link synthesizes the most up-to-date results from publically available data and evaluation reports to help policymakers, the media, researchers, and other interested analysts understand how the models work and which ones have more or less success in achieving Medicare savings and improving the quality of patient care. Users of the Evidence Link can select individual programs within each major model to see how they compare with respect to savings and quality results, basic structure, size, location, financial incentives for providers, and more.
Contact us with questions or suggestions and/or to stay updated on the Evidence Link.