CMS Publishes Final Regulations for Joint Replacement Bundled Payment Model

The Centers for Medicare and Medicaid Services (CMS) has published the official version of final rule governing the Comprehensive Care for Joint Replacement (CJR) Model. As previously reported, under the CJR model, practically all hospitals in 14 counties in New York will be paid for lower-extremity joint replacements (LEJRs), performed on Medicare fee-for-service beneficiaries, based on costs and quality within an episode of care. The model provides financial incentives for hospitals to partner with physicians and post-acute care providers, such as home health agencies and nursing homes, to coordinate care and optimize outcomes, while reducing overall costs. The following counties in New York State were selected for the new model: Dutchess, Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester, Erie, and Niagara. The list of hospitals required to participate in the model is available here.

Covered Episodes

Commencing Apr. 1, 2016 until Dec. 31, 2020, all covered episodes in hospitals located in the selected counties will be subject to the CJR model. Covered episodes include any procedure within the Medicare Severity Diagnostic Related Groups (MS-DRG) 469 or 470, including lower-extremity joint replacement procedures or reattachment of a lower extremity. However, only episodes of care provided to beneficiaries who meet all of the following criteria are covered:

Enrolled in Medicare Parts A and Part B.
Medicare eligibility is not based on end stage renal disease.
Not enrolled in any managed care plan (for example, Medicare Advantage).
Not covered under a United Mine Workers of America health care plan.
Primary payer is Medicare.

Episodes begin with an admission to the hospital for a lower-extremity joint replacement or reattachment and last 90 days from discharge from the hospital, with the date of discharge representing the first day of the 90-day post discharge period.

Nearly all Medicare Parts A and B items and services during the episode are covered by the bundled payment arrangement, including, but not limited to, the following:

Physicians' services.
Inpatient hospital services (including hospital readmissions).
Inpatient Psychiatric Facility services.
Long Term Care Hospital services.
Inpatient Rehabilitation Facility services.
Skilled Nursing Facility services.
Home Health Agency services.
Hospital Outpatient services.
Outpatient therapy services.
Clinical laboratory services.
Durable Medical Equipment.
Part B drugs and biologicals.
Hospice services.
Certain Per Beneficiary Per Month (PBPM) payments under new payment models.

The following items and services are excluded from the bundle:

Hemophilia clotting factors.
New technology add-on payments under the hospital Inpatient Prospective Payment System.
Transitional pass-through payments for medical devices under the hospital Outpatient Prospective Payment System.
Items and services unrelated to the anchor hospitalization, as determined by CMS.
Inpatient hospital admissions for MS-DRGs that group to the following categories of diagnoses:
- Oncology.
- Trauma medical.
- Chronic disease surgical, such as prostatectomy.
- Acute disease surgical, such as appendectomy.
Medicare Part B services, as identified by the principal ICD-CM diagnosis code on the claim, that group to the following categories of diagnoses:
- Certain chronic disease diagnoses, as specified by CMS.
- Acute disease diagnoses, such as severe head injury.
Certain PBPM payments under models under new payment models being tested by the CMS Innovation Center.

In addition, to mitigate the risk associated with the model, payments for items and services that would otherwise be included in the bundle are excluded to the extent that they exceed two standard deviations from the mean regional episode payment. CMS will be posting information about excluded payments, services, and diagnosis codes on its CJR website.

Relationship to Bundled Payments for Care Improvement (BPCI) Models

Hospitals in the selected counties that are participating in BPCI Model 1 or are participating in BPCI Models 2 or 4 for the LEJR clinical episode will remain in BPCI and will not be required to participate in the CJR model. If a BPCI hospital participant terminates its BPCI model for the LEJR episode, it will be required to participate in the CJR model. BPCI Model 2 and Model 3 LEJR episodes initiated by participating post-acute care providers or physician groups take precedence over CJR episodes. For example, an episode attributable to a BPCI Model 3 post-acute care episode initiator would not be included in CJR.

Retrospective, 2-Sided Risk Model

The CJR payment model provides for two-sided (upside and downside) risk based on retrospective reconciliation against a target price, with hospitals bearing financial responsibility for a portion of the costs in excess of the target and receiving a share of savings achieved. Providers furnishing services during a covered episode will bill Medicare at their usual fee-for-service rates. Medicare fee-for-services payments for each episode in a performance year will be compared to an “episode target price” two months after the conclusion of each performance year. CMS will calculate a “net payment reconciliation amount” (NPRA) for each hospital based on (i) the relationship between actual payments and the target price, (ii) any significant increase in post-episode spending, (iii) loss and gain limitations, and (iv) the hospital’s composite quality score.

In simple terms, if the aggregate actual spending for the covered episodes is lower than the target price, and the hospital’s composite quality score is “acceptable” or better, the hospital will receive a "reconciliation payment" -- a share of the savings it has generated. Hospitals that perform well on quality measures may also be eligible for quality incentive payments. In performance years 2 through 5, if the aggregate actual spending for the covered episodes is higher than the target price, the hospital must repay a portion of the excess. In the first year of the model, hospitals will not be responsible for repaying amounts in excess of the target price, but will be eligible for reconciliation payments of up to 5 percent of the target price. Caps on reconciliation payments and repayment amounts will rise incrementally to 20 percent of the target price by years 4 and 5.

CJR Collaborations with Post-Acute Care Providers

The CJR model contemplates risk sharing and clinical collaborations between hospitals and post-acute care providers (CJR collaborators). CJR collaborators may include the following:

Skilled nursing facilities
Home health agencies
Long term care hospitals
Inpatient rehabilitation facilities
Physician Group Practices
Physicians, non-physician practitioners, and providers and suppliers of outpatient therapy.

All risk sharing arrangements must be documented in written agreements between the hospital and collaborators and must comply with applicable fraud and abuse laws. Hospitals may share reconciliation payments and/or internal cost savings realized through care redesign activities with collaborators that furnish services during a CJR episode. To qualify for gainsharing payments, collaborators must participate with the hospital in care redesign activities and meet quality criteria established by the hospital that relate to the CJR episode. Risk sharing arrangements may also require collaborators to share up to 50 percent of the hospital’s repayment obligation to CMS. No single collaborator may be asked to bear more than 25 percent of the repayment responsibility of the hospital. Neither gainsharing payments nor repayment obligations may be based on the volume or value of referrals or business generated between the hospital and the collaborator. Risk sharing arrangements must not induce the hospital or the collaborators to reduce or limit medically-necessary services nor restrict the ability of any collaborator to make decisions in the best interests of the patient.

Waivers

The CJR model incorporates the following waivers:

In performance years 2 through 5, the SNF 3-day rule following a CJR hospitalization is waived for qualifying SNFs. A SNF is qualified for this waiver, if its overall Star rating is 3 stars or more in at least 7 of the most recent rolling 12 months. CMS will post to its website the list of qualified SNFs in advance of each applicable calendar quarter.
Post-discharge home visits incident to a physician service during an episode need not be directly supervised by a physician, provided that they are furnished by clinical staff under the general supervision of a physician or non-physician practitioner.
The geographic site requirement for telehealth is waived (except for the face-to-face requirement for home health certification), provided that the service may be provided via telehealth under existing requirements and is included within the episode.
The originating site requirement for telehealth (except for the face-to-face requirement for home health certification) is waived to permit a telehealth visit to originate in the beneficiary’s home for a service that may be provided via telehealth under existing requirements and is included within the episode.
Certain payment provisions are waived to accommodate originating a telehealth visit in the beneficiary’s home.
Certain post-operative global billing requirements are waived to permit home visits, and deductible and coinsurance payments are waived in relation to reconciliation payments and repayments.

Beneficiary Choice, Notification and Incentives

The CJR model is not intended to interfere with the beneficiary’s choice of providers or suppliers. Hospitals participating in the CJR model are required to inform beneficiaries, as part of discharge planning, of all Medicare participating post-acute providers in the area and must identify those post-acute care providers with which they have a risk sharing arrangement. Although a hospital may recommend preferred providers and suppliers, consistent with applicable laws, it may not limit beneficiary choice.

Hospitals must notify beneficiaries that their care is covered by the CJR model upon admission or immediately after the decision to schedule an LEJR surgery. Post-acute care providers that have executed a collaborator agreement with a hospital must notify applicable beneficiaries at the time that they commence services during the CJR episode.

Hospitals may provide “in-kind patient engagement incentives” to beneficiaries in a CJR episode that are reasonably connected to medical care provided during the episode. The incentive must be a preventive care item or service or must advance a CJR clinical goal by engaging the beneficiary in better managing his/her own health. Items and services involving technology are subject to additional requirements and limits.

Additional information is available on the CMS CJR website. CMS is presenting webinars on the new model which are being recorded and posted on the website. Slides from the first webinar are available here.

Contact: Karen Lipson, klipson@leadingageny.org, 518-867-8383 ext. 124