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The reality of CCJR: Understanding new risks facing hospitals

The projected debut of the Comprehensive Care for Joint Replacement (CCJR) Model is less than three months away, and it represents an entirely new approach for care and cost management. Affected hospitals are beginning to realize that the financial, operational and clinical risk they are responsible for managing is a much larger task than they had originally envisaged.

When the Centers for Medicaid & Medicare Services (CMS) first proposed the program, CMS wanted to demonstrate a new way to achieve better care, smarter spending, together with healthier people and communities through coordination of care across inpatient and outpatient healthcare providers. Hospitals are realizing their internal resources are not well-aligned with the requirements for analyzing and administering a CCJR program.

What is the risk hospitals must manage?

A large proportion of services included in a CCJR episode are non-hospital based. In terms of actual cost, CMS estimates that these non-hospital services account for 45% of the total cost for a lower extremity joint replacement (LEJR) procedure.

During the first year of the program, hospitals will not have to reimburse CMS when total costs exceed the aggregate targeted amount for the LEJR. However, in Year 2 a reconciliation payment back to Medicare, capped at 10% of the aggregate target price, will be required for instances where payment exceeded targeted cost. This requirement would grow in years 3-5 to a cap of 20%. The program does allow for gain-sharing that beginning in Year 1, but most organizations are initially looking at risk rather than gain-sharing given the negative impact this could have for their bottom line.

The financial implications may be significant. Let’s take the example of a hospital that performs 150 LEJR annual procedures at an aggregate target price of $25,000 per case. The total episode amount would be $3,700,000, and as shown in Figure 1, the upside/downside amounts can greatly affect a hospital’s bottom line:

Is your hospital ready for CCJR?

CCJR places the burden of responsibility clearly upon the hospital to manage the totality of care, cost and quality for 90 days following discharge. Every hospital understands the processes that influence cost, quality and outcomes within its walls. However, looking at these same factors for non-hospital providers is, with rare exception, an exercise most hospitals would consider a trip into uncharted waters.

Allscripts consultants understand the complicated nature of episode-based bundled payments and can conduct a readiness assessment specifically tailored to the CCJR model. Understanding risk points across the entire episode of care will help hospitals identify opportunities to reduce variations in care, reduce cost and optimize patient outcomes through care coordination with post-acute partners.

If you would like to discuss how CCJR will impact your hospital and what you can do now to ready your organization for January, please contact us.

Editor’s Note: Matt Fusan, Allscripts Strategic Sales Consultant, contributed to the content of this blog post.

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