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The Essential Elements of CJR
By Maria C. Miranda, FACHE, Director of Reimbursement Services, BESLER Consulting
Introduction
While the Comprehensive Care for Joint Replacement (CJR) program is positioned as a “test,” given the infrastructure being put in place by CMS to run the program, CJR is likely just the start of a larger effort by CMS to implement additional mandatory bundled payment programs. Therefore, it’s very important that hospital financial stakeholders become familiar with CJR even if their hospital isn’t currently a participant.
Program Summary
The Comprehensive Care for Joint Replacement (CJR) bundled payment model is effective April 1, 2016 and is set to continue through five performance periods ending on December 31, 2020. CMS is implementing this model via its authority under section 1115A of the Social Security Act as modified by Section 3021 of the Affordable Care Act, which established the Center for Medicare and Medicaid Innovation (CMMI). CMMI was created to test new payment and service delivery models with the goals of reducing CMS program expenditures while maintaining or improving outcomes.
CJR will test a new bundled payment model for inpatient lower extremity (i.e. hip and knee) joint replacements.
Unlike voluntary programs such as BPCI, with few exceptions participation in CJR is mandatory for hospitals in 67 selected MSAs.
CJR Episodes
A CJR episode starts with admission of an eligible beneficiary for an LEJR procedure ultimately discharged under one of the following two MS-DRGs:
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CMS refers to these two MS-DRGs as “anchor MS-DRGs.”
The episode also includes all related Medicare Part A and Part B care for 90 days after discharge. This includes additional hospital stays, care received at SNFs and other post-acute providers, physician visits, physical therapy, etc. unless the provided service is on a CMS exclusion list.
The day of discharge counts as the first day of the 90 day post-discharge period.
CMS will exclude subsequent unrelated hospital stays from the episode based on MS-DRG. Similarly, CMS will identify unrelated outpatient care based on ICD-9 / ICD-10 code. CMS will update the lists for both exclusion types on an annual basis, at a minimum, during the CJR program. The exclusions will apply to the calculation of both target prices and episode spending.
Target Prices
CMS uses three years of historical data to set target prices. The historical data will be updated every other year during the program. Both hospital-specific and regional data is used. Regional pricing is included in the calculations to provide gainsharing opportunities for hospitals that are already well-performing.
CMS will provide hospitals with a number of target prices for each performance year, segmented by MS-DRG, presence of hip fracture and submission of optional quality data. In addition, since CMS will normalize prices based on various IPPS and OPPS program changes (which go into effect on 10/1 and 1/1 of each calendar year, respectively), CMS will further distinguish target prices for episodes initiated between January 1 and September 30 vs. episodes initiated between October 1 and December 31.
CMS applies a discount factor to the target prices, which is Medicare’s portion of the reduced expenditures from the CJR episodes.
Episode Spending
CMS calculates the spending for an episode by summing payments for qualified hospitalizations under MS-DRG 469 and 470 and all subsequent related Part A and Part B care for 90 days post-discharge.