On November 16, 2016, CMS posted the final rule to implement the Comprehensive Care for Joint Replacement (CJR) model, which is a new Medicare payment model intended to hold acute care hospitals financially accountable for the quality and cost of a CJR episode of care and incentivize increased coordination of care among hospitals, physicians, and post-acute care providers. The regulations are effective on January 15, 2016, and applicable on April 1, 2016 when the first model performance period begins.
Under the CJR model, acute care hospitals in certain selected geographic areas will receive retrospective bundled payments for episodes of care for lower extremity joint replacement (LEJR) or reattachment of a lower extremity. An episode of care begins with an admission to a participant hospital of a beneficiary who is ultimately discharged under Medicare Severity-Diagnosis Related Group (MS-DRG) 469 (Major joint replacement or reattachment of lower extremity with major complications or comorbidities) or 470 (Major joint replacement or reattachment of lower extremity without major complications or comorbidities) and ends 90 days post-discharge in order to cover the complete period of recovery for beneficiaries. All related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries are included in the episode, except for certain exclusions.
All hospitals paid under the Inpatient Prospective Payment System and located in the selected geographic areas are required to participate in the model, except those hospitals participating in Model 1 or Models 2 or 4 of the Bundled Payments for Care Improvement initiative for LEJR episodes. According to CMS, as of November 16, 2015, approximately 800 hospitals are required to participate in the model. Hospitals outside the selected geographic areas will not be able to participate.
The CJR model has 5 performance years with the first performance year beginning on April 1, 2016 and ending on December 31, 2016. During the performance years CMS will pay hospitals and other providers and suppliers in accordance with Medicare Fee-for-Service payment systems. However, after the completion of a performance year, the Medicare claims payments for services furnished to the beneficiary during the episode, based on claims data, will be combined to calculate an actual episode payment. The actual episode payment is defined as the sum of related Medicare claims payments for items and services furnished to a beneficiary during a CJR episode. The actual episode payment will then be reconciled against an established CJR target price that is stratified based on the beneficiary’s fracture status, with consideration of additional payment adjustments based on quality performance, post-episode spending, and policies to limit hospital financial responsibility. The amount of this calculation, if positive, will be paid to the participant hospital. If the amount is negative, the participant hospital will be required to repay the difference between the actual episode payments and the CJR target price. The repayment obligation will be phased in beginning in performance year 2. Hospitals will be limited on how much they can gain or lose based on their actual episode payments relative to target prices.
CMS will make reconciliation payments to participant hospitals that achieve quality outcomes and cost efficiencies relative to the established CJR target prices in all performance years of the model. Beginning in performance year 1 and continuing throughout the duration of the model, CMS will make reconciliation payments only to those CJR participant hospitals that meet or exceed a minimum performance threshold on the measures. The CJR model participant hospitals’ performance on the three measures will be compared to the national distribution of results for each of the measures. CMS will use the absolute value of the CJR model participant hospital’s result to determine if that participant hospital is eligible for a reconciliation payment. All three outcome measures will be risk-adjusted.
To address the potential for hospitals to inappropriately withhold or delay a variety of types of services until the episode of care concludes, beginning in performance year 2, if the hospital’s average post-episode spending exceeds a specified threshold, the participant hospital will repay Medicare for the amount that exceeds such threshold. Specifically, CMS will identify whether the average 30-day post-episode spending for a participant hospital in any given performance year is greater than three standard deviations above the regional average 30-day post-episode spending, based on the 30-day post-episode spending for episodes attributed to all CJR regional hospitals in the same region as the participant hospital.
Eligible beneficiaries who elect to receive care at a participant hospital will automatically be included in the model. Beneficiaries enrolled in Medicare Advantage plans are not eligible for the CJR model since CMS makes capitated payments to Medicare Advantage organization for their members and is unable to capture or appropriately attribute related Medicare payments to the episode.
CMS expects the CJR model to result in savings to Medicare of $343 million over the 5 performance years of the model.
CMS and HHS Office of the Inspector General (OIG) will jointly issue waivers of certain fraud and abuse laws for purposes of testing this model.
The final rule will be published in the Federal Register on November 24, 2016.