CMS Extends CJR Model for Another Three Performance Years with Changes

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On April 29, 2021, CMS issued a final rule extending the Comprehensive Care for Joint Replacement (CJR) bundled-payment model for an additional three performance years (the Final Rule). Originally slated to end September 30, 2021, the CJR program will now extend through December 31, 2024. The Final Rule also makes a number of changes to the program moving forward, including broadening the scope of a CJR episode to include lower extremity joint replacement procedures performed in the hospital outpatient department setting.
Started in April 2016, the CJR Model is an episode-based bundled payment initiative for hip and knee replacements—the most common inpatient services for Medicare beneficiaries. Under the current CJR Model, the episode begins with an inpatient hospitalization for a knee or hip replacement and runs through 90-days post-discharge. Participating hospitals are paid one retroactive payment for all services incurred in that time frame. To reconcile the retroactive bundled payment with the total cost of the services, the CJR Model relies upon a complex methodology of quality-adjusted target prices. The total cost of the episode is compared to the relevant quality-adjusted target price. As a result of this comparison, the hospital may either owe a repayment to CMS or receive a shared savings or reconciliation payment. Through gainsharing payments, participating hospitals can contract with collaborating physicians and post-acute care providers to share these reconciliation payments.
The Final Rule makes several substantive changes to the CJR Model. Notably, the Final Rule revises the definition of a CJR episode to now include lower extremity joint replacement procedures performed in the hospital outpatient department setting. According to CMS, this expansion was necessary in light of changes to the Outpatient Prospective Payment System (OPPS) inpatient-only list policies over the past several years. The Final Rule also modifies the basis for the target price calculation, including: changing the basis from three years of claims data to the most recent one year of claims data; removing the national update factor and twice yearly update to the target prices; removing anchor factors and weights; incorporating additional risk adjustment to the target pricing; and modifying the high episode spending cap calculation methodology. The Final Rule also changes the reconciliation process in a number of ways, including reducing the two reconciliation periods (conducted two and fourteen months after the close of each performance year) to one reconciliation period to be conducted six months after the close of each performance year.
The three-year extension of the CJR model and the changes discussed above will exclude the rural and low-volume hospitals in the 34 mandatory Metropolitan Statistical Areas (MSAs) and any voluntary hospitals in the 33 voluntary MSAs that have opted into the model for performance years 3 through 5. In total, this will mean that the 139 voluntary, rural, and low-volume hospitals will not continue in the program past September 30, 2021. Approximately 330 hospitals will continue participating in the 34 mandatory MSAs through December 31, 2024.
The Final Rule is available here. CMS’s fact sheet is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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