10 Things to Know About the Comprehensive Care for Joint Replacement (CJR) Model

On Monday, November 16th, the Centers for Medicare and Medicaid Services (CMS) released the final rule on the Comprehensive Care for Joint Replacement (CJR) Model. CJR is a pilot bundled payment model with the goal of achieving the three-part aim by helping reduce expenditures while improving the quality of care for Medicare beneficiaries. The target episodes of care for the model are lower-extremity joint replacement or reattachment (LEJR) episodes of care. These procedures were chosen because they are the most common inpatient surgeries for Medicare beneficiaries and display a wide variance in expenditures among providers both within and across US Census Divisions that determine regional prices.

The CJR model incentivizes providers to redesign and coordinate patient care to achieve optimal recovery and outcomes by holding the participant hospitals accountable for all care services provided during an LEJR episode. The model is similar to Medicare’s voluntary Bundled Payments for Care Improvement (BPCI) initiative that was instituted in 2013. Medicare plans to build on previous successes and knowledge with bundled payment models from innovative approaches such as BPCI, the ACE Demonstration Project, and the Oncology Care Model.

As a result, CJR will further test and expand an innovative payment reform approach across a wider spectrum of hospitals and markets with a focus on LEJR procedures. The program will be implemented in 67 metropolitan statistical areas (MSAs) beginning April 1, 2016. This article highlights and summarizes some of the key points of the announced CJR model. Comparisons to the BPCI program have been made where applicable. For further details and explanations, please refer to the CJR program document.

Ten Things You Need To Know:

1.  Start Date and Scope

CJR is scheduled to begin April 1, 2016 and extend five performance years until December 31, 2020. The first performance year ends December 31, 2016 while the remaining performance years are a full 12 months. CJR is mandatory for acute care hospitals in 67 MSA-based markets.

Despite some similarities to BPCI, CMS makes it clear that CJR is not an expansion of BPCI, but is a unique model. CJR is set to test the bundled payment model in a broader subset of hospitals with a wider range of characteristics than BPCI. The development, initiation, and timing of CJR implementation shows the dedicated and continued effort of CMS to implement payment and care reform models to reduce Medicare costs while providing quality patient care.

2.  Provider Participation: Hospital Required Participation

The CJR model includes only acute-care hospitals as episode initiating providers and participation is mandatory for all hospitals in the 67 markets selected by CMS. The included markets can be located on the CMS website. CMS is excluding hospitals in the selected markets that are already participating in the voluntary risk-bearing phase of BPCI Models 2 and 4 for LEJR episodes and hospitals participating in BPCI Model 1.

The hospital-only and mandatory nature of the CJR model is in contrast to the voluntary BPCI initiative that includes physicians, physician group practices, post-acute providers, and hospitals as episode initiators. The CJR model includes only acute-care hospitals, as CMS believes hospitals are more likely to have the resources to coordinate and manage patient care throughout the episode, the infrastructure required to address claims analysis, and program operations without the support of a convening organization.

3.  Episode Definition: Episodes Last 90 days Following Surgical Discharge

The episodes covered by the CJR model are LEJR procedures paid under IPPS included in MS-DRGs 469 or 470. This includes total hip, knee and ankle arthroplasties; partial hip and knee replacements; lower leg, ankle, and thigh reattachment; and hip resurfacing. Trauma-based hip arthroplasties originating from hip fractures are included in these DRGs.

Included episodes require an inpatient admission and are subject to the two-midnight stay rule unless the performed procedures are included on the “inpatient only” list that permits an inpatient Medicare Part A component to be billed regardless of the length of the acute care stay. The episode begins with admission to a participant hospital for a MS-DRG 469 or 470 LEJR procedure. The episode includes the inpatient acute-care stay and extends for 90 days post discharge from the anchor hospitalization.

All related care covered under Medicare Parts A and B during the episode will be included in the episode. CMS provides an exclusion list to exclude non-LEJR related procedures from complications and comorbidities, however, a majority of all care provided to a beneficiary during the episode will still be included in the episode payment.

4.  Target Price: Transition from Historical Hospital-Specific Rate to Regional Rate

The target prices will be based on the episode expenditures in the previous three years and will be calculated on a rolling basis prior to years one, three, and five of the model. Target prices in CJR for MS-DRGs 469 and 470 will be calculated using a blend of hospital-specific episode expenditures and regional episode expenditures. CMS will communicate target prices to each participant hospital prior to the beginning of the performance period in which the target prices take effect. There will be exceptions to this process for hospitals with low case volume.

For the first two years, the target price will be calculated by blending 2/3 of the hospital specific-rate and 1/3 of a regional episode rate. In year 3, the target price will be calculated blending 1/3 of the hospital-specific rate and 2/3 of a regional episode rate. Finally, for years 4 and 5, the target price will be entirely based on regional episode payments. The target prices will be updated to account for Medicare payment updates at least two times per year effective each October 1 and January 1. In BPCI, CMS applied a discount factor of two percent to each target price during reconciliation. In CJR, the discount factor will be set at three percent with the capacity to be adjusted downward based on composite quality metric scores.

One major difference between BPCI and CJR is establishment of a separate target price calculation for fracture procedures. In CJR, MS-DRGs 469 and 470 will have separate target prices for elective and trauma procedures (four target prices total). Determination of a trauma (fracture) case will be based on the primary ICD-9/10 diagnosis code assigned for the emergent procedure. The list of ICD-CM fracture codes being considered can be found on the CMS website. The ICD-CM diagnosis codes assigned at discharge will thus determine which MS-DRG is billed and the relevant target price to which the episode will be measured against.

5.  Gainsharing: Gainsharing Is Allowed but Capped

CMS has implemented specific rules regarding gainsharing in the CJR model. Specifically, gainsharing can only occur with “collaborators” furnishing services directly to the patient that are involved in the care redesign process. This includes CJR collaborators such as physicians, non-physicians practitioners, and other providers of direct patient care. CJR hospitals can enter into gainsharing with collaborators by establishing a required “CJR sharing arrangement.”

Gainsharing payments are capped and cannot exceed 50 percent of the Medicare fee-for-service spend for any individual collaborator during a performance period. Gainsharing dollars can be derived from both internal cost savings (direct variable cost reduction in the acute care setting) and reconciliation payments, no other amounts can be incorporated.

6.  Risk sharing and Two-Sided Risk Model: Gain and Loss Repayments are Limited

CJR is a full financial risk bundled payment model for its participating hospitals. Hospitals can achieve financial gain if they are able to provide patient-centric quality care at a lower cost than the adjusted episode target price, but are liable for repayment of cost overruns to CMS if they exceed the adjusted episode target price. To limit losses, CMS has implemented a stop-loss concept. Similarly, CMS has implemented a concomitant stop-gain limit. These limits have been established to allow a gradual entry into the full risk concept as suggested in numerous comments supplied during the open comment period.

Stop-gain limits will be implemented beginning in year one and stop-loss limits will be implemented beginning in year two when hospitals begin to take on financial risk. Stop-loss and stop-gain limits will be set at five percent of the target price in performance years one (stop-gain only) and two, ten percent of the target price in performance year three, and 20 percent of the target price for performance years four and five.

In the CJR model, the hospital is the “participant” and is directly regulated by CMS. In this capacity, the hospital participant is solely responsible for ensuring their compliance and the compliance of CJR collaborators with CJR rules and regulations. Under the CJR model, the hospital must always retain a minimum of 50 percent of the total financial risk. As such, individual CJR collaborators can represent no more than 25 percent of the repayment amount. Due to the stop-loss limit and how it changes over time, the minimum amount of target price repayment from the hospital and maximum amount of repayment from the CJR collaborator(s) will vary during the CJR program (see the table below).

 

Target Price % Repayment Year 1 Year 2 Year 3 Year 4 Year 5
Stop-loss limit of target price 0% 5% 10% 20% 20%
Hospital (minimum) 0% 2.50% 5% 10% 10%
CJR collaborator (maximum) 0% 1.25% 2.50% 5% 5%

 

7.  Reconciliation Process: Retrospective and Occurs Annually

The reconciliation process in the CJR model will occur retrospectively, similar to the BPCI program. However, the reconciliation process will occur annually with CJR compared to quarterly in the BPCI initiative. CMS will conduct an annual reconciliation calculation with one subsequent reconciliation true-up that will occur 14 months after the end of a performance year. To explain further, performance period claims will be processed for reconciliation three months after the end of the performance year. Participating hospitals will receive their first reconciliation data roughly 30 days thereafter.

To appeal reconciliation claims, participant hospitals will have 45 days after they receive their first reconciliation consideration data to submit a calculation error form as well as have an opportunity to engage in dispute resolution. CMS will have an additional 30 days to respond.

The second calculation (a true-up process) to address overlaps and claims run-out will occur 14 months after the end of each performance year with the data supplied roughly 30 days thereafter.

Reconciliation payments will be made to participating hospitals if overall savings are realized. Similarly, repayment of over-expenditures will be due to CMS if aggregate costs exceed the expected cost based on the performance period target price.

8.  Data Sharing Process: Historical Data is Available, but It Must Be Requested

Data are key components to successfully manage the CJR model. Successful care redesign efforts (care pathways) are contingent upon identification of areas of overutilization, management of care transitions, and patient-centric care plans. Similar to BPCI, CMS will provide hospitals with up to three years of retrospective claims data to assess their historic performance.

However, unlike BPCI, participants in CJR will have to request the data from CMS. Once a hospital requests data, they will not need to make additional requests. The data itself will be both raw claims-level data and claims summary data for the participants. The data set will be limited to the minimum data necessary for the participants to conduct quality assessments and determine how best to effectively coordinate care for CJR Medicare beneficiaries. CMS will attempt to provide retrospective data to all requesting participants prior to the April 1, 2016 program start date.

In BPCI, CMS provided participants with monthly performance claims data in addition to historical claims information. Similarly, in CJR, CMS has stated they will provide the performance data, however it will be supplied on a quarterly basis on request and in accordance with the HIPAA Privacy Rule. CMS had indicated in the CJR proposal that beneficiaries could opt-out of having beneficiary-identifiable data shared. However, CMS is not finalizing the opt-out choice. CMS will not provide data to CJR model collaborators and they will need to request any relevant data from CJR participant hospitals.

9.  Quality Measures: Quality Scores Impact Reconciliation Payments

To align financial incentives and quality patient care, the CJR model incorporates measures of quality care through a composite quality score, which consists of two main quality measures:

  • The Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) measure (NQF #1550) (90 days), that is weighted at 50 percent of the composite quality score.
  • The Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey measure (NQF #0166), a patient survey that measures patient experiences and perspectives in hospital care that is weighted at 40 percent of the composite quality score.

An additional voluntary report of patient-reported outcomes can be submitted to contribute to the composite quality score that is weighted at ten percent of the composite quality score. The specific quality thresholds for this measure have yet to be finalized.

The Medicare discount rate applied to the trended baseline price will be adjusted based on the composite quality score. High composite quality scores will have the lowest discount rates and vice versa. Adjusted target prices will be affected similarly. Thus, the opportunity for a participating hospital to achieve the largest possible reconciliation payment or the smallest possible repayment amount is dependent on not only model performance, but also on quality measures.

CMS will publicly report quality measure results each year on the Hospital Compare website, including acknowledgment of hospitals that voluntarily submit data for the functional status measure with a special icon.

10.  Waivers: Medicare Waivers Promote Care Coordination

There are several waivers put into place by CMS in order for providers to provide better care for lower cost in the CJR model. First, CMS is waiving the geographic site requirement for telehealth services. Second, beginning in performance year 2, Medicare beneficiaries can be discharged to a Skilled Nursing Facility (SNF), if appropriate, with any length of stay in the acute care setting rather than reaching the normal three day qualifying acute-care stay. Third, up to nine post-discharge home visits by a physician or clinical staff member for patients who do not qualify for home health are allowed. Each of these waivers as well as additional waivers documented in the final ruling will allow for improved care coordination for patients and a reduction in overall episode expenditures.

Next Steps

Although these are ten important components of CJR, we have only scratched the surface in terms rules, regulations, and implementations of the CJR model. Due to the complexities of CJR, we would advise that you contract with a third party consultant that has significant knowledge and experience implementing alternative payment models, such as bundled payments. As the largest convener of orthopedic physician group practices in BPCI, Signature Medical Group through our SMG Bundled Payment division can serve as a resource for both direct and indirect CJR participants to successfully navigate the windy road of care redesign. We offer an array of services, including:

  • Clinical Program Development
  • Collaborator Alignment
  • Data Analytics
  • Stakeholder Engagement

The time to get started is now. 

 

For more information or assistance in working with bundled payments and value-based care, visit SMGbundles.com.

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