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CJR Hospitals Must Implement CMS' CJR Model by April 1, 2016

News | January 14, 2016

In November of 2015, the Centers for Medicare and Medicaid Services (CMS) released a final rule to implement a new payment model known as the Comprehensive Care of Joint Replacement Model (CJR). CJR effectively changes Medicare reimbursement for hip and knee replacements from fee for service to a bundled payment. A summary of key features of the CJR Model is set forth below.

This CJR Model is required to be implemented by certain hospitals located in designated metropolitan statistical areas (the CJR Hospitals) by April 1, 2016. A list of the CJR Hospitals is linked at the bottom of this page. Given the short implementation deadline and the complexity of the CJR Model, we wanted to bring this to your attention.

Implementation of the CJR Model requires the development of a number of agreements, including participation agreements, gainsharing agreements and service agreements with other participants in the program, as well as compliance materials to ensure that the arrangements fall within waivers issued in connection with the CJR Model. Existing physician arrangements may also need to be reviewed and reformed to integrate with the CJR Model requirements. Attorneys in our health care practice group have experience with these arrangements and issues and would be glad to consult with you regarding any questions.

Summary of the CJR Model

The CJR model holds CJR Hospitals financially accountable for the quality and cost of a CJR episode of care and incentivizes increased coordination of care among hospitals, physicians and post-acute care providers. The model applies to “episodes of care” involving Medicare-covered hip and knee replacements discharged under MS-DRG 469 (major joint replacement or reattachment of lower extremity with major complications or comorbidities) and MS-DRG 470 (major joint replacement or reattachment of lower extremity without major complications or comorbidities) (each, a “CJR Procedure”). The episode begins when a patient is admitted for a CJR Procedure at a CJR Hospital and ends 90 days after the date of discharge from the CJR Hospital. The episode includes the CJR Procedure, the inpatient stay, and all related care covered under Medicare Parts A and B within the 90 days after discharge, including hospital care, post-acute care and hospital services, with the exception of certain exclusions.

CMS will test this new payment model for five performance years. The first performance year will be a “short year” beginning April 1, 2016 and ending December 31, 2016. Each successive performance year will be measured on a calendar-year basis, causing the five performance year period to end December 31, 2020.

During each performance year, Medicare will continue to pay hospitals and other providers and suppliers according to the usual Medicare payment systems. After completion of each year, Medicare will calculate the Medicare payments for services furnished to the patient during the care episode to determine an actual episode payment. The actual episode payments will then be reconciled against a target price (which is set using a risk stratification methodology based on the patient’s fracture status within each MS-DRG), with consideration of additional payment adjustments based on quality performance, post-episode spending, and policies to limit hospital financial responsibility. The amount of this calculation, if positive, will be paid to the CJR Hospital. If negative, beginning with the second performance year, Medicare will require repayment of the difference between the actual episode payments and the target price.

The CJR program also contains certain beneficiary protections, and CMS and other agencies have issued certain other regulatory waivers in connection with the program, provided certain conditions are met.

If you have questions about the CJR Model, please contact your Kutak Rock attorney or a member of our National Health Care Group

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