The Centers of Medicare and Medicaid Services (CMS) issued a Final Rule (the Rule) on April 29, 2021 extending and making various revisions to the Comprehensive Care for Joint Replacement Model (the CJR Model). The CJR Model is an episode-based alternative payment program that involves hip and knee replacement surgeries for Medicare fee-for-service beneficiaries. The CJR Model began on April 1, 2016 and was scheduled to terminate on September 30, 2021. The extension will continue the CJR Model for hospitals required to participate through December 31, 2024.
As originally designed, the CJR Model was mandatory for hospitals in 67 designated Metropolitan Statistical Areas (MSAs). In 2018, the CJR Model was amended to only be mandatory for hospitals in 34 MSAs who were not rural or low-volume hospitals. Hospitals in the other 33 MSAs, as well as rural and low-volume hospitals in the 34 mandatory MSAs, could participate voluntarily. Currently there are 472 hospitals participating.
The CJR Model tests whether participating hospitals can control costs of the hip and knee replacements. The model sets an episode target price for each participating hospital for each covered hip and knee replacement procedure (MS-DRGs 469 and 470) episode. Each hospital continues to bill the Medicare program as it has. The episode covers all Medicare Part A and B costs (with limited exceptions) commencing with the hospitalization for the procedure and for 90 days post-discharge. The total Medicare Part A and B costs during the hospitalization and 90-days’ post-discharge are then determined and measured against the target price. Based on the reconciliation for all covered procedures by a participating hospital in a Performance Year as adjusted based on quality indicators, the participant hospital is either paid additional sums if total costs are below the target price or will owe money to CMS if costs exceed the target price.
In the most recently concluded Performance Year, 52% of participating hospitals received performance payments totaling $90.5 million in performance payments. For mandatory CJR hospitals during the first three performance years, Medicare savings were $61.6 million. It has also been reported that quality of care measures improved or were maintained under the CJR Model. Unplanned readmissions declined 3.1% and the complication rate declined by 7.4%.
The extension of the program reflects CMS and its Innovation Center’s determination to continue to test the value of this episode-payment model. At the same time, CMS in the Rule made a number of modifications to the CJR Model, reflecting updates it deemed appropriate. The updates largely resulted from Medicare policy changes since inception of the CJR Model.
Among the more significant revisions to the Rule are:
In the Rule, among other modifications, CMS (i) will utilize one year of regional only baseline data as opposed to three years of both regional and hospital specific data because of the belief that such an approach will better capture spending trends related to site of service procedures and other market-based changes; (ii) will revise anchor factors and weights as a result of PPS changes and instead will rely upon market trend factors; and (iii) will modify the method to derive high episode spending caps.
By extending the CJR Model for another three (3) plus years CMS, CMS has confirmed its commitment to continue testing alternative payment models that were originated in the Affordable Care Act, including through the use of bundled payments. The CJR Model reflects a continuation of making providers accountable for the cost and quality of the care they provide.