The Centers for Medicare & Medicaid Services (CMS) recently published the final rule for the Comprehensive Care for Joint Replacement (CJR) model, a mandatory bundled payment model for lower extremity joint replacement (LEJR) services in certain geographic areas. Hip and knee replacements are the most common inpatient surgery for Medicare beneficiaries and can require lengthy recovery and rehabilitation periods.
In 2014, more than 400,000 Medicare beneficiaries received a hip or knee replacement, costing more than $7 billion for the hospitalizations alone. The quality and cost of care for these surgeries varies significantly by region and by hospital. This is true both for the care received inside the hospital and for post-acute care received outside the hospital during the critical period of recovery. In part, this variation is due to the way Medicare pays for this care today — spread among multiple providers, with no single entity held accountable for the total patient experience. As a result, care can be fragmented, leading to adverse outcomes.
Building on lessons learned from CMS’s previous and existing bundled payment models, the CJR model seeks to incentivize Medicare providers and suppliers to work together to improve the quality and reduce the costs of care for patients undergoing lower extremity joint replacement procedures. Under the CJR model, which has been refined and finalized after considering nearly 400 comments, the acute care hospital where the LEJR procedure occurs will be accountable for aggregate Medicare expenditures and the overall quality of related care, furnished by any provider or supplier, from the time of the surgery through 90 days after hospital discharge. We define this period as the CJR episode of care.
This model will include participant hospitals located in 67 Metropolitan Statistical Areas (MSAs) throughout the country. Acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) and located in the selected MSAs will be included in the model, with the exception of hospitals currently participating in Model 1 or Models 2 or 4 of the Bundled Payments for Care Improvement (BPCI) initiative for LEJR episodes.
Depending on the participant hospital’s quality and aggregate spending performance during the CJR episode, the hospital may receive an additional payment from Medicare, or—starting in year 2 of the model—may need to repay Medicare for a portion of the episode spending if spending exceeds targets established for the model. As a result, hospitals will need to work with physicians and post-acute care providers, such as home health agencies and skilled nursing facilities, to ensure patients get the coordinated care they need. The CJR model creates incentives that encourage collaboration among hospitals, physicians and other clinicians, and post-acute providers, as we believe this collaboration will be essential to success. Engagement with patients and care planning will also be critical to success.
The CJR model incentivizes the delivery of high quality, well-coordinated, efficient care over the full episode of care. When a hospital included in the model discharges a patient following an inpatient admission for an LEJR procedure, the hospital is accountable for the cost and quality of care furnished to that patient for 90 days. The model challenges hospitals and other providers to plan and coordinate carefully the care they provide in a way that best meets all of the patient’s needs.
By incentivizing the hospital to think through a broad range of care issues, we believe that hospitals will take preventive measures to ensure that patients receive the care they need and reduce costly services, such as hospital readmissions and lengthy post-acute care stays, when clinically appropriate. We are also providing waivers of certain existing Medicare program rules to give hospitals and clinicians flexibility to be successful and deliver high-quality care in the manner preferred by patients, as well as permitting certain financial arrangements to assist hospitals in aligning the financial incentives of collaborating post-acute care providers, physician group practices, physicians, and other clinicians.
The CJR model also represents the first time CMS will require the participation in a model of nearly all hospitals in given geographic areas. Testing of this model will go hand-in-hand with CMS’s testing of voluntary episode-based payment models such as the BPCI initiative. The BPCI initiative includes four models testing 48 clinical episodes, including LEJR, across a range of providers. The CJR model will provide hospitals with an additional opportunity to participate in an episode payment model and for providers to engage in care redesign and coordination for beneficiaries receiving LEJR procedures. The evaluation of the CJR model will provide CMS with valuable information on the effects of this payment model across a range of hospitals with varying levels of experience with bundled payment, which can be used in determining the viability of expansion of the model in the future.
By holding hospitals accountable for episode spending and quality associated with services included in CJR episodes, the CJR model will encourage hospitals to consider carefully the needs of each individual patient. Given this responsibility, we anticipate providers will be motivated to engage in a number of quality improvements, such as better care coordination and improved care transitions between medical settings that result in better outcomes for Medicare beneficiaries. This model supports the Department of Health and Human Services’ efforts efforts to drive the health care system towards better care, smarter spending, and healthier people by incentivizing care transformation and payment reform.
You can read the final rule at https://s3.amazonaws.com/public-inspection.federalregister.gov/2015-29438.pdf.
Editor’s Note
As noted above, this post was authored by Dr. Patrick Conway, CMS Deputy Administrator for Innovation and Quality and Chief Medical Officer; and Rahul Rajkumar, Amy Bassano, Matthew Press, Claire Schreiber and Gabriel Scott (also CMS officials). In addition to the authors listed, the following CMS officials provided significant input to the CJR final rule and to this blog: Carol Bazell, MD, MPH; Nisha Bhat, MHS; Erin Colgan, MA; Daniel Duvall, MD; Shannon Flood; Lein Han, PhD; Mary Kapp; Hillary Loeffler, MPP; Esther Markowitz; Michael McCormick; Karen Nakano, MD, MS; Susanne Seagrave, PhD; Akash Shah, MS; Mark Vinkenes, MS, MPA; Andrew York, PharmD, JD
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