CMS Mandatory Innovation Center Payment Models

The Center for Medicare and Medicaid Innovation (CMMI) — created by the Affordable Care Act at 42 U.S.C. § 1315a — tests new payment and service delivery models for Medicare and Medicaid. Most CMMI models are voluntary: providers choose to participate. A smaller number are mandatory: providers in selected geographic areas must participate whether they want to or not. Mandatory models are more controversial because they bind providers who may prefer the traditional fee-for-service system, but CMS argues they are the only way to obtain unbiased evidence of impact — voluntary participation biases results toward providers who believe they will succeed.

The implementing regulations for mandatory CMMI models are at 42 CFR Part 512 — Standard Provisions for Mandatory Innovation Center Models and Specific Provisions for Certain Models. The rule covers five mandatory models across different clinical areas: Radiation Oncology, End-Stage Renal Disease Treatment Choices, Transforming Episode Accountability, Increasing Organ Transplant Access, and the Ambulatory Specialty Model.

Current Rule (2026)

Key Mechanics

Mandatory CMMI models operate through geographic random selection of Core-Based Statistical Areas (CBSAs), binding all eligible providers in those areas to a new payment methodology. Providers receive either bundled episode payments (RO, TEAM) or payment rate adjustments tied to performance benchmarks (ETC, IOTA). Reconciliation at year-end compares actual Medicare spending against model target prices; hospitals and facilities either receive shared savings or must repay shared losses. Standard provisions across all models (42 CFR Part 512, Subpart A) set uniform rules for beneficiary protections, data cooperation, compliance monitoring, remedial action, and the near-total preclusion of administrative and judicial review.

What This Rule Does

Mandatory CMMI models test whether changing how Medicare pays for specific services reduces cost and improves quality. Unlike voluntary models where self-selected providers participate, mandatory models randomly select geographic areas (typically Metropolitan Statistical Areas or CBSAs) to be "selected areas" where all eligible providers must participate. This experimental design allows CMS to compare outcomes in mandatory-participation areas against matched control areas — producing evidence about what the payment model actually causes rather than what high-performing, self-selected providers achieve.

Standard Provisions (Subpart A) apply to all mandatory models covered by Part 512:

• § 512.120 — Beneficiary protections: participants may not restrict beneficiaries' freedom to choose any provider; may not steer beneficiaries toward lower-quality or lower-cost services to increase shared savings; must notify beneficiaries of their participation in the model
• § 512.130 — Cooperation with evaluation: participants must provide CMS with data and access necessary for the model evaluation — clinical data, cost data, beneficiary surveys; refusal to cooperate is grounds for remedial action
• § 512.150 — Monitoring and compliance: CMS may conduct site visits, audits, and review of billing records; must comply with all applicable laws including fraud and abuse statutes (Anti-Kickback Statute, Civil Monetary Penalties)
• § 512.160 — Remedial action: CMS may impose a corrective action plan, withhold payment, recoup payments, or terminate a participant's model participation for non-compliance
• § 512.165 — CMS model termination: CMS may end a mandatory model if it runs out of funds, is expanded under § 1115A(c) (scaling up a successful model nationally), or is terminated for policy reasons
• § 512.170 — Limitations on review: the most significant procedural provision — there is no administrative or judicial review of CMS decisions about model selection, participant selection, payment methodology, or model termination; this sweeping preclusion of review was upheld by federal courts but remains a significant point of objection from mandatory model participants who believe their inclusion was unfair

Key Models Under Part 512

Radiation Oncology (RO) Model — Subpart B (22 sections)

The RO Model tests episode-based bundled payments for cancer radiation therapy, replacing traditional fee-for-service billing with a single payment covering the entire treatment course.

• Who is covered (§ 512.210): Medicare-enrolled physician group practices (PGPs), freestanding radiation therapy centers, and hospital outpatient departments (HOPDs) that furnish radiation therapy services in ZIP codes linked to selected CBSAs; participation is mandatory for providers in selected geographic areas
• Episode definition (§ 512.245): an RO episode begins when a participant bills the start-of-episode (SOE) modifier and ends 90 days after the end of treatment; all included radiation services during the episode are paid under the bundled amount rather than individually
• Included modalities (§ 512.240): 3DCRT (3-dimensional conformal RT), IMRT (intensity-modulated RT), SBRT (stereotactic body RT), SRS (stereotactic radiosurgery), proton beam therapy (PBT), and IGRT (image-guided RT); these cover the vast majority of modern radiation oncology delivery systems
• Payment structure (§ 512.265): CMS pays a participant-specific Professional episode payment and Technical episode payment (separate payments for physician work and equipment/facility work); the episode payment amounts are based on national historical average costs adjusted for case mix and the participant's own historical experience; a reconciliation process at year-end adjusts for quality performance (§ 512.285)
• Track One vs. Track Two (§ 512.220): participants in Track One receive the full episode payment but face downside risk (must repay CMS if actual costs exceed the episode target); Track Two provides payment reconciliation without full downside risk in early model years, with a gradual transition to risk
• Quality adjustment (§ 512.275): quality measures include patient experience surveys and clinical quality metrics; an Aggregate Quality Score (AQS) adjusts episode payments upward or downward based on quality performance

ESRD Treatment Choices (ETC) Model — Subpart C (18 sections)

The ETC Model tests whether financial incentives change the rates at which end-stage renal disease (ESRD) patients use home dialysis rather than in-center dialysis, and the rates at which patients receive kidney transplants.

• Who is covered (§ 512.325): all Medicare-certified ESRD facilities and Medicare-enrolled managing clinicians (nephrologists) in selected geographic areas must participate; no opt-out is available
• Model period (§ 512.320): January 1, 2021 through December 31, 2025 — a 5-year mandatory model designed to shift dialysis modalities toward lower-cost, patient-preferred home therapies
• Home dialysis payment adjustment (HDPA) (§§ 512.340–512.350): CMS adjusts the base ESRD Prospective Payment System (PPS) rate upward for claims related to home dialysis training and home dialysis; the adjustment started at +3% in 2021 (calendar year 2021) and declines over the model period; the incentive applies to both ESRD facility claims and managing clinician claims
• Performance payment adjustment (PPA) (§§ 512.355–512.380): beyond the base HDPA, participants can earn additional upward or downward payment adjustments based on their performance on two metrics: (1) home dialysis rate — the percentage of attributed ESRD beneficiaries using home dialysis; and (2) transplant rate — the percentage of attributed beneficiaries who receive a kidney transplant or are placed on a transplant waitlist; facilities with higher home dialysis and transplant rates receive positive PPAs (up to +6%); those below benchmarks receive negative PPAs (down to -6%)
• Attribution (§ 512.360): ESRD beneficiaries are attributed to the facility where they receive the most dialysis treatments in a measurement period; attribution determines which facility's performance score the patient counts toward
• Policy rationale: home dialysis is significantly less expensive than in-center dialysis ($72,000/year vs. $91,000/year average Medicare cost) and consistently preferred by patients in quality-of-life surveys; the policy goal is to shift toward home modalities while ensuring that financial pressure does not push patients toward home dialysis when it is medically inappropriate

Transforming Episode Accountability Model (TEAM) — Subpart E (36 sections — largest)

TEAM is the successor to the earlier Bundled Payments for Care Improvement (BPCI Advanced) voluntary model, but as a mandatory episode payment model for selected surgical procedures. TEAM links surgical episode costs across inpatient care and post-acute care (skilled nursing, home health, inpatient rehabilitation) into a single bundled payment.

• Who is covered: acute care hospitals in selected CBSAs must participate in TEAM for five high-cost, high-volume surgical episodes; the procedures include coronary artery bypass graft (CABG), major joint replacement (hip and knee), lower extremity joint replacement (LEJR), spinal fusion, and similar surgeries that generate significant post-acute care costs
• Episode structure: a TEAM episode begins at inpatient surgical admission and continues for 90 days post-discharge; the bundle includes all Medicare FFS payments to all providers during the episode — hospital, surgeon, anesthesiologist, post-acute care facilities, readmission costs; CMS sets a target price for the entire episode based on historical costs
• Payment reconciliation: if the sum of actual Medicare payments during the episode falls below the target price, the participating hospital receives a reconciliation payment (shared savings); if costs exceed the target, the hospital must repay the difference (shared loss)
• Quality thresholds: hospitals must meet minimum quality thresholds (drawn from existing Hospital Quality Reporting metrics and patient-reported outcomes) to receive any positive reconciliation payment; hospitals performing below quality thresholds are not eligible for savings even if they reduce costs

Increasing Organ Transplant Access (IOTA) Model — Subpart D (27 sections)

The IOTA Model tests whether payment changes increase the rate at which patients with end-stage organ disease are evaluated for and receive organ transplants. IOTA covers kidney, liver, heart, and lung transplant centers in selected geographic areas.

• Objective: address the persistent gap between the number of patients on transplant waitlists and the number of transplants performed; the U.S. has over 100,000 patients waiting for kidneys alone, with thousands dying each year while waiting; IOTA tests whether changing how transplant centers are paid changes referral, evaluation, and listing patterns
• Payment adjustment: selected transplant centers receive prospective payment adjustments tied to their performance on increasing transplant access metrics (referral rates, evaluation completion, waitlist listing, and actual transplants); poor performers face payment reductions

Ambulatory Specialty Model (ASM) — Subpart G (18 sections)

The ASM is a newer mandatory model testing episode-based payments for outpatient specialist care — testing whether bundled payments for specialty services in outpatient settings can reduce total cost of care while maintaining quality.

How It Affects You

If you are a radiation oncologist or HOPD in a selected area: The RO Model changes how you are paid — you receive a single episode payment covering the full treatment course rather than billing for each individual service. This creates an incentive to reduce unnecessary services within the episode (fewer imaging sessions, more efficient treatment planning workflows) but also requires you to absorb cost risk if a patient's treatment turns out to be more complex than the target price assumed. Track One (full risk) vs. Track Two (limited risk) determines your financial exposure.

If you operate a dialysis clinic in a selected area: The ETC Model applies payment adjustments to all your Medicare claims whether you change your practice or not. To avoid negative payment adjustments, you need to actively manage your patients' modality choices — educating patients about home dialysis options, ensuring patients who are candidates for transplant are referred for evaluation, and improving your tracking of patient modality transitions. Facilities in rural areas with limited home dialysis support infrastructure have had difficulty meeting performance benchmarks.

If you are an acute care hospital in a TEAM-selected area: You bear financial risk for the total cost of care 90 days after certain surgical discharges, including costs at facilities you don't control (skilled nursing facilities, home health agencies). Success requires proactive post-discharge care management — selecting high-quality, low-cost post-acute partners, following up with patients, reducing preventable readmissions, and ensuring smooth transitions from inpatient to post-acute settings.

If you are a patient: Participation in a mandatory CMMI model is disclosed to you (beneficiary notification requirements in §§ 512.225, 512.330), but you retain the same freedom to choose any Medicare provider you want. The model is designed not to affect your clinical care — only the payment methodology your provider uses. However, you may notice your provider asking more questions about post-discharge plans or offering more home dialysis education, because those behaviors affect the provider's financial performance.

Legal Authority

This rule implements:

• 42 U.S.C. § 1315a — Innovation Center authority: created by ACA § 3021; authorizes CMS to test innovative payment and service delivery models that may reduce program expenditures while preserving or enhancing quality; the Secretary may expand successful models by regulation if independent evaluation shows they reduce costs without harming quality; § 1315a(d)(2) — the judicial review preclusion: "There shall be no administrative or judicial review... of the selection of models for testing or expansion... the selection of organizations, sites, or participants to test those models... [or] the payment methodologies under such models"
• 42 U.S.C. § 1302 — General rulemaking authority of the Secretary

Implementing Regulations

42 CFR Part 510 — Comprehensive Care for Joint Replacement (CJR) Model (concluded model, 2016–2024; 31 sections — the first mandatory bundled payment model CMS finalized, and the regulatory predecessor to the Part 512 mandatory model framework; authority: 42 U.S.C. § 1315a):

The CJR model required hospitals in 67 randomly selected Metropolitan Statistical Areas (MSAs) to participate in bundled payment arrangements covering all Medicare services during a 90-day episode beginning with a lower-extremity joint replacement (hip or knee arthroplasty) surgery (§ 510.100). Hospitals were the financially accountable entity — the participant hospital received a target price for the entire 90-day episode (determined by CMS as a blend of the hospital's historical costs and regional costs), and at year-end CMS reconciled actual spending against that target:

• Subpart B — CJR Participants (§§ 510.105–510.120): hospitals in selected MSAs were mandatory participants unless they qualified for a voluntary participation election after Year 2 (§ 510.115); low-volume and rural hospitals could elect voluntarily; hospitals could form Clinical Episode Payment collaborations with downstream providers (physicians, post-acute care facilities, home health agencies) who shared in the financial performance; collaborators must execute written collaboration agreements; the hospital bears full responsibility for the episode cost regardless of collaborator behavior
• Subpart C — Episode Scope (§§ 510.200–510.210): the episode begins on the date of the index hospitalization admission; excludes Medicare Advantage beneficiaries, beneficiaries with ESRD, and certain high-cost clinical complications; includes the index hospitalization, all Part A and Part B services during the 90-day post-discharge period except excluded services (chemotherapy, dialysis, clinical trial services); the episode ends at Day 90 from discharge or on beneficiary death, whichever comes first
• Subpart D — Pricing and Payment (§§ 510.300–510.325): the target price for each hospital was set by CMS as a blend of the hospital's own historical cost experience and the regional rate — the blend moved from 2/3 historical + 1/3 regional in early years to 1/3 historical + 2/3 regional in later years, driving hospitals toward regional efficiency norms; reconciliation: if the hospital's actual 90-day episode spending (at the FFS payment rates CMS would otherwise pay) was below target price, CMS paid the hospital the difference (gain sharing payment); if actual spending exceeded target, the hospital repaid the difference (with a stop-loss cap limiting maximum repayment); quality metrics adjusted the target price — hospitals with lower quality scores received reduced payments
• Subpart G — Waivers (§§ 510.600–510.615): to enable hospitals to share savings with physicians, CMS waived the anti-kickback statute and Stark Law self-referral prohibitions for certain financial arrangements between participant hospitals and CJR collaborators meeting the waiver conditions; waiver conditions included written agreement requirements, documentation of the relationship, and percentage-based sharing limits; this infrastructure was the template for subsequent bundled payment model waivers in Part 512

Outcomes and legacy: an independent evaluation (published 2020, 2022) found that the CJR model reduced Medicare episode spending by approximately $585 per episode (3.1%) compared to controls without reducing quality; readmission rates declined slightly; hip replacement episodes showed stronger savings than knee replacement episodes. CJR's mandatory design allowed for cleaner causal inference than voluntary models. The model ended as scheduled December 31, 2024; CMS cited budget neutrality constraints — the savings, while real, were insufficient to offset the evaluation and administration costs at scale. The model's infrastructure and lessons directly informed the design of the TEAM mandatory model (Part 512 Subpart E), which applies a similar bundle-and-reconcile structure to five additional surgical procedures beginning in 2026.

Recent Rulemakings

• TEAM Model finalization (2024 — 89 FR 77600): CMS finalized the Transforming Episode Accountability Model as a mandatory model replacing voluntary BPCI-Advanced for selected surgical procedures; the mandatory design was justified by the need for a statistically valid comparison group; participation mandatory for hospitals in selected CBSAs beginning January 2026
• IOTA and ASM finalization (2024 — 89 FR 77600): alongside TEAM, CMS simultaneously finalized the IOTA and ASM mandatory models; all three share the standard provisions infrastructure of Part 512
• ETC Model commencement (2021): ETC began January 1, 2021 and runs through December 31, 2025; an independent evaluation is required before CMS can determine whether to expand the model nationally under § 1315a(c)
• RO Model commencement (January 2022): delayed from its original 2020 start date due to COVID-19 PHE; geographic areas randomly selected from metro CBSAs with sufficient radiation therapy volume

Pending Action

The mandatory models in Part 512 are subject to ongoing political debate. The ACA's § 1115A authority to test mandatory models has been challenged by provider groups who argue the lack of judicial review violates due process. The Trump administration (2025) has signaled skepticism about mandatory CMMI models, raising the possibility that CMS could terminate or delay TEAM, IOTA, or ASM before they generate sufficient evidence. Providers in selected areas should monitor CMS guidance for any administrative changes to model requirements or performance periods.