CMS made available the First Annual Report (the Report) evaluating performance year one of the Comprehensive Care for Joint Replacement (CJR) model. Although performance year one was abbreviated (only April 1, 2016, to December 31, 2016), the Report found that the CJR model achieved a “statistically significant reduction in total episode payments.” The Report provides an early snapshot of the successes of CJR, including the areas with the greatest potential for healthcare providers to reduce costs, thus increasing the opportunity to share in savings.
The CJR model is an episode-based bundled payment based on hip and knee replacements for beneficiary discharges under MS-DRGs 469 and 470. The CJR model episodes begin with hospitalization and extend for 90-days post-discharge. CMS holds participating hospitals in the CJR model financially accountable for the quality and cost of the entire 90-day episode, from initial hospitalization through post-acute care (PAC). The CJR model accomplishes this with a complex methodology of quality-adjusted target prices, which includes both hospital- and regional-specific data (depending on the performance year). Subject to a participating hospital’s total costs in relation to its quality-adjusted target price, that hospital may receive a reconciliation payment (i.e., CMS shares part of the savings achieved from the clinical episodes for the performance year) or owe a repayment to CMS.
The CJR model provides various mechanisms to incentivize participants to achieve cost savings and care redesign. This includes the ability of participating hospitals to contract with collaborators (in CJR parlance) to share in any reconciliation payments, or cost savings, through gainsharing payments. Various regulatory requirements govern such arrangements, including fraud and abuse waivers that, if met, allow the parties to provide gainsharing payments.
The Report indicates that participant hospitals, responding to the incentives built into the CJR model, chose actions that led to shifting patients to less intensive and lower cost PAC settings. After analyzing claims and primary data from providers involved in the episode of care, the Report corroborated that cost reductions were “largely driven by reductions in institutional PAC payments.” As a result, the Report cites that average episode spending decreased by more than $910.
Interviews with participating hospitals, conducted as part of the Report, indicate they focused on reducing or changing PAC use. Hospital interviewees cited that “expanding patient education efforts, . . . beginning discharge planning earlier, . . . increasing coordination with PAC providers, and developing preferred provider networks” contributed to the reduction in costs and changes in utilization of certain PAC settings. Of note, the Report found that participant hospitals in high episode payment areas and those in low episode payment areas were each able to achieve lower episode spending.
Although the Report generally concludes that the CJR model results in reduced payments, future reports will include more varying information (based on participants, markets, and patients) about the possibilities of CJR as an alternative payment approach.
