Hip and Knee Bundled Payments Final Rule Changes

In July 2015, the Centers for Medicare and Medicaid Services (CMS) proposed the Comprehensive Care for Joint Replacement (CJR) model. After reviewing nearly 400 comments from the public, the agency published the final rule on November 17, 2015.

Several major changes were made from the proposed rule, including the model start date to April Fool’s Day, 2016 from January 1, 2016. No foolin’.

CJR Model

The CJR model will pay a bundled payment and quality measurements for an episode of care associated with hip and knee replacements. The new payment model will contribute to the Medicare goals of having 30% of all Medicare fee-for-service payments made via alternative payment models by 2016 and 50% by 2018.

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.

CMS has implemented the CJR model in 67 geographic areas, defined by metropolitan statistical areas (MSAs). MSAs are counties associated with a core urban area that has a population of at least 50, 000. Non-MSA counties (no urban core area or urban core area of less than 50, 000 population) were not eligible for selection. As of November 16, 2015, approximately 800 hospitals are required to participate in the CJR model

Final Rule Changes

In addition to the new start date for the program, other major changes from the proposed rule noted by the agency include:

• Site Selection: The CJR Model will be implemented in 67 metropolitan statistical areas (MSAs), instead of the proposed 75 MSAs, to respond to comments asking for us to incorporate the increased participation in the Bundled Payments for Care Improvement (BPCI) initiative since publication of the proposed rule and to incorporate BPCI physician group practice participation levels into our MSA selection methodology.
• Quality Measures in Model Pay-for-Performance: CMS is finalizing an alternative, composite quality score methodology, rather than the threshold methodology that we proposed, in order to provide stronger incentives for more hospitals to improve quality.
• Payment: In response to several commenters requesting a more gradual transition to downside risk and a lower stop-loss limit to allow hospitals more time to gain experience under the CJR model, CMS is finalizing a policy for no repayment responsibility in performance year 1, a stop-loss limit of 5 percent in performance year 2, a stop-loss limit of 10 percent in performance year 3, and a stop-loss limit of 20 percent in performance years 4 and 5 for participating hospitals other than rural hospitals, Medicare-dependent hospitals, rural referral centers, and sole community hospitals. A parallel approach has been finalized for the stop-gain limits to provide proportionately similar protections to CMS and hospital participants, as well as to protect the health of beneficiaries. We are also gradually phasing in repayment responsibility with a reduced discount percentage for repayment responsibility in years 2 and 3.
• Waivers: No waivers of any fraud and abuse authorities are being issued in the final rule. Rather, CMS and OIG [Office of Inspector General] will jointly issue a notice regarding the waiver of certain fraud and abuse laws for purposes of testing this model. The notice will be published on the CMS and OIG websites.

“This model is about improving patient care. Patients want high quality, coordinated care—not just for a day, but for an entire episode of care. Hospitals, physicians, and other providers who work together can be successful and improve care for patients in this model, and CMS will help providers succeed, ” said Patrick Conway, M.D., CMS’ principal deputy administrator and chief medical officer.

To read more about the payment model or final rule, click here.