Comprehend Comprehensive Care for Joint Replacement Payment
Manage costs and maximize quality related to the procedures paid under the new model.
Effective April 1, 2016, acute care hospitals located in 67 geographic areas will be subject to a new payment model for lower extremity joint replacement (LEJR) services. Under the Comprehensive Care for Joint Replacement (CJR) payment model, the U.S. Department of Health & Human Services (HHS) will make participating hospitals accountable for the quality and cost of care related to LEJR.
Hospitals Included in CJR
All hospitals reimbursed under the Inpatient Prospective Payment System (IPPS) and located in one of 67 geographic areas selected by the Centers for Medicare & Medicaid Services (CMS) will be required to participate in the CJR payment model. The geographic areas are defined by a metropolitan service area (MSA) and include all hospitals within the boundaries of the MSA. A hospital’s location is determined by the address associated with its CMS Certification Number (CCN). Hospital participation will include those within the MSA on April 1, 2016, and will not change if the MSA is adjusted during a performance period.
Because the CJR payment model is mandatory for all IPPS hospitals within an MSA, Medicare patients receiving services from a CJR payment model-participating hospital must participate, as well. The CJR payment model will only apply to patients with original Medicare as their primary insurance — beneficiaries enrolled in Medicare Advantage plans are excluded. Participating hospitals are required to provide specific notices to original Medicare patients to educate them regarding the model and certain beneficiary rights.
The CJR payment model will be tested for five performance periods between April 1, 2016, and December 31, 2020. The first performance period will run April 1, 2016, to December 31, 2016, and subsequent performance years will be based on the calendar year. During a performance year, the hospital and other providers will be reimbursed for LEJR services under the usual Medicare fee-for-service payment systems. At the end of each performance year, CMS will calculate a reconciliation payment based on comparison of the “total CJR target price” and the actual “episode payments.”
When the hospital obtains efficiencies and has episode payments below the total CJR target price, the hospital will be entitled to additional reconciliation payment, as long as quality measures are satisfied. Beginning in the second performance year, if a hospital’s actual episode payments exceed the total CJR target price, the hospital will be responsible for repayment of the difference between the actual episode payments and the total CJR target price. The amount of potential repayment will be capped at a set percentage of the total CJR target price, with the percentage cap increasing each performance year.
Definition of a LEJR Episode Payment
For purposes of the CJR payment model, LEJR services are defined as hospital services reimbursed under the IPPS using either MS-DRG 469 (Major joint replacement or reattachment of lower extremity with major complications or comorbidities (MCC)) or MS-DRG 470 (Major joint replacement or reattachment of lower extremity without MCC). The LEJR episode for which a hospital is responsible begins with the Medicare patient’s admission for a service that’s assigned to MS-DRG 469 or 470 under IPPS, and continues for 90 days post-discharge. The episode payment includes all services provided to the Medicare patient and reimbursed under Medicare Part A or Part B during this time period related to the LEJR procedure.
Episode payment determination may include payments for physician services, inpatient and outpatient hospital services, inpatient psychiatric facility services, long-term care hospital services, inpatient rehabilitation services, skilled nursing facility services, home health services, outpatient therapy services, clinical laboratory services, durable medical equipment, Part B drugs, and hospice services related to the LEJR.
The episode payment will exclude services that report certain MS-DRG or ICD-10-CM codes as a principal diagnosis. This list of episode exclusions includes chronic conditions that generally are not affected by the LEJR procedure or post-surgical care (such as removal of the prostate) and acute clinical conditions not arising from existing episode-related chronic clinical conditions or complications of LEJR surgery (such as appendectomy).
Determination of the CJR Target Price
The total CJR target price will be a sum of the CJR target prices for each episode of LEJR services the hospital provides during the performance period. To account for changes in fee schedule and clinical risk factors, each hospital will have a set of established CJR target prices. Separate CJR target prices will be set based on whether the service is provided January 1 to September 30 or October 1 to December 31 of the performance year to adjust for changes in the Medicare fee schedules. The CJR target price will be risk-adjusted based on use of MS-DRG 469 or 470 and the patient’s hip fracture status. Further, separate CJR target prices will be set based on whether the hospital successfully reports the voluntary patient-reported outcome measure.
The rates for each CJR target price will be determined based on three years of historical Medicare payment data, updated every two years. The historical data will be a blending of individual hospital data with regional data.
If at the end of a performance year a hospital’s episode payment is less than the total CJR target price, the hospital is entitled to a reconciliation payment, adjusted based on the quality category to which the hospital is assigned for that performance year. Hospitals participating in the CJR payment model will be assigned a composite quality score based on quality performance and improvement on the total hip arthroplasty (THA)/total knee arthroplasty (TKA) complications measure (NQF #1550) and the Hospital Consumer Assessment of Healthcare Providers and Systems’ survey measure (NQF #0116), as well as submission of THA/TKA voluntary patient reported outcomes and limited risk variable data. The composite quality score will then be used to place the hospital in one of four quality categories for each performance year, “below acceptable,” “acceptable,” “good,” and “excellent.” Hospitals in higher quality categories will be entitled to a greater percentage of reconciliation payment.
Fraud and Abuse Waivers
In implementing the CJR, HHS recognized that hospitals may be able to achieve greater efficiency and quality through collaboration with other entities who participate in the provision of care during an LEJR episode. HHS, provides waivers of certain fraud and abuse requirements to participating hospitals so they can make financial arrangements with collaborating providers to share reconciliation payment risk.
Like any fraud and abuse exception or safe harbor, the CJR waivers include specific requirements that must be satisfied for the collaboration arrangement to qualify. These requirements may include:
- Executing collaboration agreements prior to the provision of services;
- Developing hospital policies and procedures related to the collaboration;
- Establishing methodology to divide the gainsharing payments, which must include quality criteria and cannot be based on the volume or value of referrals; and
- Publicly notifying on the hospital’s website of all entities with whom the hospital collaborates.
HHS also provides limited waivers to the hospitals:
- To incentivize patients to adhere to a drug regimen or care plan, reduce readmissions and complications, or manage chronic diseases that could be affected by a LEJR procedure;
- To allow home health services without satisfying incident-to requirements;
- To create new G codes to report telehealth services provided related to the CJR payment model; and
- To waive the three-day hospitalization requirement for a patient to qualify for skilled nursing services in certain facilities.
Hospitals that provide LEJR services to Medicare patients and are located in one of the 67 geographic areas selected for participation in the CJR payment model should assess their ability to manage costs and maximize quality related to these procedures. Collaboration agreements among providers should be carefully structured to satisfy fraud and abuse waiver requirements. Necessary preparations should be in place by April 1, 2016.
Stacy Harper, JD, MHSA, CPC, is a healthcare regulatory attorney with Lathrop & Gage LLP. She serves on AAPC’s Legal Advisory Board and formerly served on the National Advisory Board. Harper regularly counsels healthcare providers related to complex billing and coding standards, Medicare participation and payment requirements, Stark Law, Anti-kickback Statute, HIPAA, and other state and federal healthcare laws. She is a member of the Kansas City, Mo., local chapter.