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What the Comprehensive Care for Joint Replacement (CJR) rule means for hospitals

On November 16, the Centers for Medicare & Medicaid (CMS) published the Comprehensive Care for Joint Replacement (CJR)* final rule, marking a significant milestone in the advancement toward value-based care. “Today, we are embarking on one of the most important steps we will take to improve the quality and value of care for hundreds of thousands of Americans who have hip and knee replacements through Medicare every year,” said Sylvia Burwell, secretary of Health and Human Services.

CJR will test whether or not bundled payments to hospitals for lower extremity joint replacement (LEJR) surgery episodes will reduce Medicare expenditures and enhance the quality of care for beneficiaries.  Due to the high number of public comments, the rule has expanded from about 400 pages to more than 1000.

What changed from the proposed rule to the final rule

Our preliminary observations regarding notable changes from the proposed rule include the following:

– The start date has moved from January 1, 2016 to April 1, 2016.

– Participation remains mandatory for the large majority of hospitals located within one of the designated geographical areas, which now number 67 instead of 75. The 67 geographical areas anchor almost one quarter of all LEJR episodes nationally.

– CMS will implement a specific pricing methodology for hip fracture patients due to the significantly higher spending associated with these more complex cases.

– The quality component of the model had the most significant changes. The proposed rule had three quality measures (readmissions, complications, Hospital Consumer Assessment of Hospital Providers and Systems [HCAHPS]) and a threshold methodology that did not reward hospitals for higher quality. In the final rule, there are only two quality measures (complications and HCAHPS). A composite quality score (CQS) will place hospitals into one of four quality rankings. The new CQS method provides significant financial incentive to improve quality, which the proposed rule lacked.

– In the proposed rule, the CMS discount factor was 2%, which could be reduced to 1.7% if the hospital voluntarily submitted patient reported outcomes. In the final rule, the CMS discount factor starts at 3.0% but can be reduced up to 1.5% based on the hospital’s CQS performance.

– The final rule implements a more gradual repayment plan and creates a parallel approach to align the stop-loss and stop-gain limits.

CJR will be one of many new value-based-care models

Preparing for the CJR model will help organizations prepare for success in other alternative payment models. In January 2015, HHS announced its goal to move 50% of Medicare payments to alternative payment models by 2018. It is likely that similar mandatory models will be implemented through the CMS Innovation Center over the next year.

Advanced planning for participation and careful execution will position organizations for future success in value-based-care models. If you would like to discuss how CCJR will impact your hospital and what you can do now to ready your organization, please contact us.


* Going forward the Comprehensive Care for Joint Replacement will be known as CJR. CMS changed the acronym from CCJR to CJR, because CCJR also stands for Current Concepts in Joint Replacement and was creating confusion.

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