BPCI Advanced

BPCI Advanced, administered by the CMS Center for Medicare and Medicaid Innovation (CMMI), replaces the original BPCI initiative that ended September 30, 2018. Instead of paying each provider separately for every service rendered during a hospitalization and its aftermath, CMS sets a prospective target price for the entire 90-day clinical episode—anchored to an inpatient admission or, in later model years, select outpatient procedures. Participating Episode Initiators (EIs)—either acute-care hospitals (ACHs) or physician group practices (PGPs)—become financially accountable for total episode spending. If actual spending beats the target (minus a 3% CMS discount), the EI receives a reconciliation payment; if spending exceeds the target, the EI owes CMS the difference. Target prices are set prospectively before each model year, rebased annually starting in model year 3, and adjusted for case mix.

For orthopedic practices, the most relevant clinical episodes include lower extremity joint replacement (LEJR), which covers both hip and knee arthroplasty, as well as fracture-related episodes. AAOS advocacy secured the addition of outpatient total knee arthroplasty (TKA) as a distinct episode beginning in model year 3 (January 2020), reflecting CMS's 2018 removal of TKA from the Medicare inpatient-only list. Attribution of a clinical episode follows a precedence hierarchy: (1) the PGP whose claim carries the attending physician's NPI, (2) the PGP whose claim carries the operating physician's NPI, and (3) the ACH where the triggering services were furnished.

Quality performance is not optional. Each EI commits annually to either the Administrative Quality Measures Set or the Alternate Quality Measures Set. CMS rolls individual measure scores into a Composite Quality Score (CQS), which then adjusts the final reconciliation amount—capped at ±10% in the first two model years. Because BPCI Advanced qualifies as an Advanced APM, clinicians who meet participation thresholds can earn the QPP incentive bonus and are exempt from MIPS reporting requirements for that performance year, making the quality layer doubly consequential for physician compensation.

Orthopedic surgeons who are Episode Initiators bear direct financial risk: if the care team runs over the 90-day target price—due to excess imaging, prolonged SNF stays, readmissions, or high-cost implants—the reconciliation payment turns negative and the practice or hospital writes a check back to CMS. Conversely, disciplined post-acute utilization and protocol-driven care can generate meaningful shared-savings payments. Separately, participation affects QPP status: qualifying as an Advanced APM shields the surgeon from MIPS penalties and unlocks an incentive bonus, so a coding or attribution error that removes a physician from the BPCI Advanced participant list mid-year can trigger unexpected MIPS exposure and eliminate bonus eligibility retroactively.