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The Comprehensive Care for Joint Replacement (CJR) Model – set to begin on April 1, 2016 – will test bundled payment and quality measurement for hip and knee replacements and/or major leg procedures to encourage hospitals, physicians, and post-acute care (PAC) providers to work together to improve quality and coordination of care throughout an entire episode of care, from the initial hospitalization through recovery.

The model will be tested in 67 geographic areas throughout the country, and nearly all hospitals in those geographic areas are required to participate.

By “bundling” payments for an episode of care, CMS believes hospitals, physicians, and PAC providers will have an incentive to work together to deliver more effective and efficient care. Depending on the hospital’s quality and cost performance during the episode, the hospital will either earn a financial reward or, beginning with the second performance year, be required to repay Medicare for a portion of the spending above an established target.

The model was announced as a final rule in the November 24 Federal Register by the Centers for Medicare & Medicaid Services (CMS) Innovation Center. “Over the 5 performance years of the Model [2016 through 2020], we estimate $343 million dollars in savings to the Medicare program, out of $12.299 billion in total episode spending,” CMS stated in the final rule’s Regulatory Impact Analysis.

“Every year during the approximate five performance years of this model, CJR hospitals will receive separate episode target prices for MS-DRGs 469 and 470, reflecting the differences in spending for episodes initiated by each MS-DRG. CMS will also use a simple risk stratification methodology to set different target prices for patients with hip fractures within each MS-DRG.”

By holding participant hospitals accountable for episode spending and quality associated with services included in CJR episodes, hospitals will be encouraged to carefully consider the needs of each individual patient. Given this financial and quality responsibility, CMS anticipates 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.

The episode of care begins with an admission to a participant hospital of a beneficiary who is ultimately discharged under 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 ends 90 days post-discharge in order to cover the complete period of recovery for beneficiaries.

The episode includes all related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries, with the exception of certain exclusions.

Every year during the approximate five performance years of this model, CJR hospitals will receive separate episode target prices for MS-DRGs 469 and 470, reflecting the differences in spending for episodes initiated by each MS-DRG. CMS will also use a simple risk stratification methodology to set different target prices for patients with hip fractures within each MS-DRG. All providers and suppliers are paid under the usual payment system rules and procedures of the Medicare program for episode services throughout the year. At the end of a model performance year, actual spending for the episode (total expenditures for related services under Medicare Parts A and B) is compared to the Medicare target episode price for the responsible hospital.

Also, hospitals in the model “will be provided access to additional tools – such as spending and utilization data and sharing of best practices – to improve the effectiveness of care coordination. The model also gives providers additional flexibilities that are not otherwise available under Medicare so they can better manage the care of patients, including patients who are at home,” CMS noted.

Ultimately, “this alternative payment model will contribute to the Medicare goals set by the Obama Administration of having 30 percent of all Medicare fee-for-service payments made via alternative payment models by 2016 and 50 percent by 2018.”

Hip and knee replacements are the most common inpatient surgery for Medicare beneficiaries and can require lengthy recovery and rehabilitation periods. In 2014, there were more than 400,000 procedures, costing more than $7 billion for the hospitalizations alone. The CJR Model addresses low quality and high costs that come from fragmentation by promoting coordinated, patient-centered care. Average total Medicare expenditure for surgery, hospitalization, and recovery ranges from $16,500 to $33,000 across geographic areas. Basis for this variation, CMS believes: Incentives to coordinate the whole episode of care – from surgery to recovery – are not strong enough. Also, a patient’s health may suffer as a result, such as more complications after surgery, higher readmission rates, and protracted rehabilitative care.

 

Category: Payment Reform

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