The New CMS Joint Replacement Mandate

The wait and see approach is over. Medicare’s mandatory Comprehensive Care for Joint Replacement (CJR) initiative goes live April 1st, 2016. This marks a declarative shift to value based care; officially placing hospitals at financial risk if health systems are unable to deliver good outcomes for patients with hip and knee joint replacements. This bold move should prompt aggressive transition for hospitals in the 67 major MSA’s affected and force the question, “Are we prepared?”

CJR Background

The purpose of CJR will be to test if bundled payments to hospitals for lower extremity joint replacement (LEJR) surgeries will reduce Medicare expenses while simultaneously improving the coordination of care from surgery all the way to recovery.

According to Medicare, hip and knee replacements constituted about 400,000 procedures and more than $7 billion in hospitalizations alone, with the costs of the procedure varying greatly from region to region.It is estimated that the CJR initiative will affect approximately 23% of all LEJR procedures and generate approximately $343 billion in Medicare savings over 5 years.

10 Things You Should Know

  1. The CJR initiative is an attempt to encourage healthcare providers to work together and improve both the efficiency and quality of care provided to Medicare beneficiaries.
     
  2. The CJR model will last for five years and affects Medicare beneficiaries only. The first year of the model will begin April 1, 2016 with a performance period of 9 months. The other performance periods will last for 12 months beginning Jan 1st.  
     
  3. Patients can still choose their own doctors, facilities, and other providers.
     
  4. The hospital will continue to be paid under existing Medicare fee-for-service (FFS) rules but will now be accountable for the entire LEJR episode of care. This includes all costs and outcomes of care from admission to 90 days post discharge.
     
  5. Applies to an LEJR procedure with an MS DRG 469 or MS-DRG 470
     
  6. Each episode consists of the procedure, inpatient stay, and all other post acute care services, hospital care services, and physician services under Medicare Parts A and B.
     
  7. CMS will provide a bundled payment to hospitals and cover all services provided during the inpatient admission through 90 days post-discharge.
     
  8. A hospital will receive a “reconciliation payment” if the episode payments fall below the target price of that episode and if certain quality measurements are met. However, a hospital will be required to repay Medicare for a portion of spending if it exceeds the target price during the second performance year.
     
  9. CMS is waiving the Stark Law to allow for gain sharing amongst collaborators to take place. Quality criteria will have to play a part in determining gain sharing payments.
     
  10. CJR will be mandated in 67 metropolitan statistical areas (MSAs). Certain hospitals that are actively participating in specified models of the CMS Bundled Payments for Care Improvement (BPCI) will be excluded.

What’s Next?

While there are many questions that still need to be answered with CJR, what is crystal clear is that providers will have to critically examine their joint arthroplasty care pathways and implement new methods to meet CJR benchmarks. This, in particular, holds true for post acute care, where the majority of cost variability exists. Any effort to reign in spending, should it be required, will likely come from this setting.

This isn’t to say that physicians will simply cut post acute care services. Rather, physicians will look to develop strategic partnerships with “preferred providers” who will be able to optimize both clinical outcomes and healthcare costs. These ideal providers will likely be those who have been able to leverage certain remote monitoring and tele-rehabilitation technologies and have been able to transition to value based care models. Post acute care facilities that have implemented these new practices could be very attractive to physicians, who will be having an even greater influence on how post acute care is delivered.

by Ben Torres