The Comprehensive Care Joint Replacement Model

The Comprehensive Care Joint Replacement Model

Updated March 31, 2016
The Comprehensive Care Joint Replacement Model
The Medicare program has been criticized for failing to
performance year for hospitals in certain geographic areas.
include policies that financially incentivize health care
Under Section 1115A of the SSA, the Secretary may
providers to deliver efficient, high-quality health care. The
expand the duration, scope, and geographic areas included
Patient Protection and Affordable Care Act (P.L. 111-148)
in the model if certain requirements are met.
added Section 1115A to the Social Security Act (SSA),
authorizing the creation of the Center for Medicare &
CMS randomly selected metropolitan statistical areas
Medicaid Innovation, the Innovation Center. The
(MSAs) to be included for participation in this
Innovation Center is an agency within the Centers for
Comprehensive Care Joint Replacement (CJR) model. An
Medicare & Medicaid Services (CMS) that supports the
MSA is composed of a county or counties (or parishes and
development and testing of alternative payment and service
boroughs) and represents economically and socially
delivery models to promote care coordination, quality, and
integrated populations. Of the 384 total MSAs in the United
efficiency of health care services.
States, 188 MSAs were ineligible to participate in the CJR
model because too few LEJR episodes had been performed
Examples of alternative payment models under way at the
by acute-care hospitals within the MSAs over the past few
Innovation Center include the Bundled Payment for Care
years (not participating in the BPCI) or because more than
Improvement (BPCI) initiative. The BPCI currently tests
50% of LEJR episodes included acute-care hospitals,
different retrospective or prospective episode-based
skilled nursing facilities, or home health agencies
payment initiatives to improve the efficiency of care
participating in the risk-bearing phase—where participants
delivery. For example, one such model allows hospitals and
assume financial risk—of the BPCI model. The remaining
post-acute care providers that choose to participate to enter
196 MSAs were stratified by population, LEJR procedure,
into gain-sharing agreements—agreements that
and Medicare spending 90 days after discharge over the
retrospectively distribute a portion of reduced health care
past three years. CMS randomly selected 67 MSAs using a
expenditures that fall below a target episode price among
methodology that proportionally underweighted more
parties. However, after a preparation period (Phase I), under
efficient MSAs and overweighted more expensive MSAs.
the risk-bearing phase (Phase II) participants must also
repay a portion of health care expenditures that exceed a
All acute-care hospitals located in the 67 MSAs will
target episode price under risk-sharing agreements.
participate in the CJR model beginning April 1, 2016,
Participants may choose the duration of the episode (30
unless otherwise excluded. Excluded hospitals include (1)
days, 60 days, or 90 days) and the clinical episode that will
hospitals not reimbursed under Medicare’s inpatient
trigger the bundled episode payment. As of October 13,
prospective payment system and (2) hospitals participating
2015, roughly 298 acute-care hospitals were participating in
in the BPCI models that include LEJR episodes. According
the BPCI models that included lower-extremity joint
to publically-available information on the Innovation
replacement (LEJR) episodes.
Center website, 798 acute-care hospitals across the 67
MSAs will participate in the CJR model.
Comprehensive Care Joint Replacement
Model Participants
LEJR 90-Day Post-Discharge Episode
On November 24, 2015, CMS finalized in the Federal
Under the CJR model, eligible acute-care hospitals located
Register a new mandatory episode-based payment model
in one of the 67 MSAs will participate in the CJR model
for certain acute-care hospitals. Under CMS’s SSA Section
and be at financial risk of Medicare spending per
1115A authority, beginning April 1, 2016, the Innovation
beneficiary for LEJR episodes. The episode begins with a
Center will test a 90-day retrospective episode-based
hospital inpatient admission for an LEJR procedure, most
payment to certain acute-care hospitals for Medicare
often a total hip or knee replacement procedure. The
beneficiaries enrolled in Parts A and B who receive LEJR
episode ends 90 days after the patient is discharged from
procedures. This model is being conducted to improve
the hospital following the LEJR procedure. Medicare
coordination and incentivize higher-value care across the
episode spending will include physicians’ services,
different care settings for a common, high-expenditure
inpatient hospital services and related hospital
medical procedure (i.e., LEJR) with substantial regional
readmissions, post-acute care services (i.e., skilled nursing
variation in care delivery and spending. The model is to
facility and home health services), hospital outpatient
include five performance years, beginning April 1, 2016,
services, durable medical equipment, drugs reimbursed
and ending after December 31, 2020. All providers continue
under Medicare Part B, and hospice services. The target
to receive typical Medicare Part A and Part B
episode price will be adjusted for LEJR episodes that begin
reimbursements for care provided during the episode.
with a hospital inpatient admission for hip fracture.
However, under the model, each eligible hospital’s
Medicare episode spending will be reconciled against a
Two-thirds of the target episode price will initially be based
hospital-specific target episode price following a
on each hospital’s average LEJR episode spending over the
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The Comprehensive Care Joint Replacement Model
past three years. The remaining one-third will be based on
increase to 3% but may be reduced based on the hospital’s
average LEJR episode spending over the past three years in
composite quality score.
all eligible CJR hospitals within the census region where
the hospital is located. The share of regional episode
Both repayments and reconciliation payments will be
spending within the target episode price will increase to
capped. Repayments cannot exceed 5% of the target
two-thirds in performance year three and to 100% for
episode price in performance year two, referred to as the
performance years four and five. For low-volume hospitals
stop-loss limit. The stop-loss limit will increase to 10% in
(hospitals with fewer than 20 CJR episodes), target episode
performance year three and to 20% in performance years
prices will be based on 100% of the regional episode
four and five. To account for a potential lower risk
spending from performance years one through five.
tolerance of certain CJR hospitals, for hospitals that are (1)
defined for Medicare reimbursement purposes as sole
The target episode price will be reduced by a discount
community hospitals, Medicare-dependent hospitals, or
factor, which may be different for each CJR hospital
rural referral centers; (2) classified as located in a rural
depending upon the hospital’s performance across quality
area; or (3) located in rural census tracts, the stop-loss limit
measures and submission of certain patient-reported
will be 3% in performance year two and 5% in performance
outcome data. The base discount factor is set at 3.0% and
years three through five.
serves as Medicare’s portion of reduced expenditures under
the CJR model. The discount factor will be different in the
Reconciliation payments will also be subject to a limit,
first two performance years for repayment determinations
referred to as a stop-gain limit. Under the stop-gain limit,
and additional payment determinations. To be eligible for
aggregate reconciliation payments cannot exceed 5% of the
additional payments, referred to as reconciliation payments,
aggregate episode target prices in each of performance
CJR hospitals must meet a certain minimum quality
years one and two. The stop-gain limit will increase to 10%
threshold.
in performance year three and to 20% in performance years
four and five.
Quality Performance, Reconciliation
Payments, and Repayments
Medicare Program Waivers Under the
The CJR model will adopt a composite quality score of
CJR Model
three quality measures to assess quality of care of
Under the CJR model, certain Medicare program
beneficiaries. The composite quality score will be used to
requirements may be waived to provide added flexibility to
determine if hospitals are eligible for reconciliation
hospitals and other participants. For example, the Medicare
payments under the CJR model. The three measures are (1)
requirement of a prior three-day hospital inpatient stay for
a complications outcome measure following elective total
100 days of post-discharge coverage in a skilled nursing
hip or total knee replacement procedures; (2) a patient
facility is eligible for waiver under the model. Additionally,
satisfaction survey measure conducted on a sample of
Medicare program requirements related to civil monetary
hospital patients regarding their hospital stays; and (3) the
penalties, the federal antikickback statute, and the physician
successful submission of data on patient-reported outcomes
self-referral prohibition are also waived under the CJR
related to total hip and total knee replacement procedures.
model.
The outcome and patient satisfaction measures are risk-
adjusted to account for beneficiaries who may be more
Financial Arrangements
susceptible to complications.
Hospitals may enter into financial arrangements with other
providers and suppliers that provide care for beneficiaries
Hospitals may be eligible for quality incentive payments by
during an LEJR episode (e.g., post-acute care providers)
way of a reduced discount factor (of up to 1.5%) for
and choose to participate in the CJR model, referred to as
meeting a high composite quality score threshold. Lower
collaborators. Such financial arrangements include gain-
discount factors provide a relatively easier benchmark to
sharing agreements and repayment agreements. Financial
receive reconciliation payments and avoid repayments.
agreements are required to be submitted to CMS and
subject to certain specifications and restrictions. For
Participating CJR hospitals that reduce LEJR episode
instance, (1) hospitals must retain at least 50% of the
spending for a given beneficiary below the discounted
repayment responsibility, (2) a collaborator cannot be
episode target price and meet minimum quality thresholds
responsible for more than 25% of the repayment
can receive a reconciliation payment in the amount of the
responsibility, and (3) a participating physician or physician
full difference in episode spending. Hospitals may begin
group practice cannot receive gain-sharing payments that
receiving reconciliation payments following performance
exceed 50% of the Medicare reimbursement amount for the
year one. Hospitals will not be required to make repayments
physician’s or group practice’s services during the LEJR
for any beneficiary’s episode spending that exceeds the
episode. Although a hospital may enter into financial
discounted episode target following performance year one.
arrangements with providers that wish to participate in the
In performance year two, to mitigate the potential impact of
CJR model, a hospital cannot require that a beneficiary
repayments, the episode target price discount factor for
receive services from a particular provider or interfere with
determining repayments will be 2% but may be reduced
the beneficiary’s freedom of provider choice.
based on the hospital’s composite quality score. Beginning
in performance year three, the discount factor for the
Marco A. Villagrana, Analyst in Health Care Financing
episode target price for determining repayments will
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The Comprehensive Care Joint Replacement Model

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