On February 20, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule in the Federal Register which proposes a three-year extension and changes to the episode definition and pricing in the Comprehensive Care for Joint Replacement Model.
The CJR Model was established through notice and comment rulemaking and began on April 1, 2016. The model, which is currently scheduled to end on December 31, aims to reduce expenditures while preserving or enhancing quality of care by supporting better and more efficient care for beneficiaries undergoing the most common inpatient surgeries for Medicare beneficiaries: hip and knee replacements, also called lower extremity joint replacements or LEJR.
The proposed rule aims to change certain aspects of the CJR Model, including incorporating outpatient hip and knee replacements into the episode of care definition, the target price calculation, the reconciliation process, the beneficiary notice requirements, gainsharing caps, and the appeals process.
And to allow time to evaluate the proposed changes, the rule proposes to extend the length of the CJR Model for an additional three years, through December 31, 2023, for certain participating hospitals.
WHAT'S THE IMPACT
The CJR Model is a CMS Center for Medicare and Medicaid Innovation model that aims to reduce Medicare expenditures while preserving or enhancing quality of care for Medicare beneficiaries.
The model tests whether bundled payment and quality measurement for an episode of care associated with hip and knee replacements encourages hospitals, physicians, and post-acute care providers to work together to improve the quality and coordination of care from the initial hospitalization through recovery.
Under the CJR Model these participating hospitals receive retrospective bundled payments for episodes of care for lower-extremity joint replacement or reattachment of a lower extremity, collectively referred to as LEJR. Currently, a CJR episode begins with an inpatient admission for 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 includes, with limited exception, all care for 90 days following discharge.
THE PROPOSED CHANGES
Notably, the proposed rule seeks to extend the CJR Model for an additional three performance years -- performance year 6 (2021) through performance year 8 (2023). The proposed rule also aims to make changes to the definition of a CJR "episode" to include outpatient knee and hip replacements.
This episode definition change is being made to address changes to the inpatient-only list that now allows for total knee and total hip replacements to be treated in the outpatient setting.
The rule also proposes changes to the CJR target price calculation. Specifically, CMS has proposed changing the basis for the target price from three years of claims data to the most recent one year of claims data; to remove the national update factor and twice-yearly update to the target prices that accounts for prospective payment system and fee schedule updates; to remove anchor factors and weights; to incorporate additional risk adjustment to the target pricing; and to change the high-episode spending cap calculation methodology.
CMS has also proposed several changes to the CJR reconciliation process. Specifically, the proposed rule has suggested a move from two reconciliation periods (conducted two and 14 months after the close of each performance year) to one reconciliation period that would be conducted six months after the close of each performance year, to add an additional episode-level risk adjustment beyond fracture status such that target prices will be further adjusted at the episode level based on the individual beneficiary's age and HCC condition count.
Also proposed is a change to the high-episode spending cap calculation methodology used at reconciliation, to add a retrospective trend adjustment factor that will better capture changes in Medicare program payment updates and care delivery patterns; and to change the quality (effective or applicable) discount factors applicable at reconciliation to participants with excellent and good quality scores to better recognize high quality care.
The proposed rule intends to make conforming changes to the beneficiary notification, gainsharing caps, appeals process, and waiver sections to align with the proposed model extension as well as the proposed changes modifications to episode definition.
THE LARGER TREND
The Comprehensive Care for Joint Replacement Model appears to be reducing average Medicare payments for hospitals at a greater rate compared to hospitals not taking part in the program, a July 2019 Lewin Group analysis showed.
Looking at data from April 2016 to December 2017, the data shows that hospitals participating in the program saw Medicare payments for care episodes dip by $997 more than their non-participating hospital counterparts.
Overall, hospitals in the CJR model saw a 3.7% decrease in average episode payments for lower extremity joint replacements. There were also decreases in episode payments for fractures and elective episodes.
ON THE RECORD
"Premier is encouraged by the Center for Medicare and Medicaid Innovation's changes to the proposed three-year extension of the Comprehensive Care for Joint Replacement model," said Blair Childs, senior vice president of public affairs at Premier. "Hospital members of Premier's Bundled Payment Collaborative participating in the CJR program have outperformed their peers by 30% in achieving savings payments and by 25% in achieving 'excellent' quality scores in the most recently reported performance year.
CMS' proposal to change the definition of an 'episode of care' to include outpatient procedures aligns with Premier's recommendations," he said. "This change will help remove the current risk of lower performance in the program when conducting joint replacements in the most appropriate care setting, which might be outpatient. However, we're concerned that CMS has limited the extension to only hospitals in the mandatory regions. We believe hospitals that have voluntarily chosen to participate and are invested in this model should be allowed to participate in the extension."