On February 20, 2020, the Centers for Medicare & Medicaid Services (“CMS”) issued proposed revisions (“Proposed Rule”) to the regulations governing the Comprehensive Care for Joint Replacement (“CJR”) program. Among other things, the Proposed Rule would extend mandatory participation in the CJR program an additional three years for certain current participants, revise the reconciliation and target price calculation processes, eliminate one of the caps on gainsharing payments between CJR hospitals and their collaborators and add outpatient procedures to the program.
The CJR program began on April 1, 2016, as a mandatory retrospective bundled payment program covering inpatient lower extremity joint replacement procedures, including total knee arthroplasty (“TKA”), total hip arthroplasty (“THA”) and total ankle replacement. Effective January 1, 2018, CMS made participation in the CJR program voluntary for participants in roughly half of the Metropolitan Statistical Areas (“MSAs”) that were previously covered by the program. After that date, hospitals located in voluntary MSAs, as well as low-volume and rural hospitals located in mandatory MSAs, were required to opt-in for continued participation in the program. The program currently covers five performance periods, the last of which is scheduled to end on December 31, 2020.
Material provisions of the Proposed Rule would do the following:
- Extend mandatory participation in the CJR program for three additional years for certain current participants in mandatory MSAs only. CJR performance years 6-8 would cover CJR episodes beginning January 1, 2021 and ending December 31, 2023. Importantly, no hospital currently participating in the CJR program on a voluntary basis would be permitted to continue its participation in the program after December 31, 2020. In other words, participation for low-volume and rural hospitals in mandatory MSAs, and participation for all hospitals in voluntary MSAs, would still terminate on December 31, 2020.
- Eliminate the current two-step reconciliation process for each CJR performance year in favor of a single reconciliation for each performance year. Currently, each CJR performance year is subject to an initial reconciliation that begins two months after each performance year, as well as a second reconciliation that begins 14 months after the end of each performance year. The Proposed Rule would eliminate the two-step process in favor of a single reconciliation using data available six months after the end of each performance year.
- Revise the current methodology for setting annual target prices to, among other things, allow additional reductions in the annual discount factor for hospitals with excellent or good quality scores, and revise the basis for calculating target prices from three years of claims data to one year of claims data. In addition, CMS states that the proposed revised target price calculations will take into account CMS’s decisions to remove both TKA and THA from the inpatient-only list. Many CJR hospitals had expressed concern that these decisions, which permitted TKA and THA to be covered by Medicare when appropriately performed in the outpatient setting, removed healthier patients from the CJR program, leaving only those more complex patients whose care was more expensive in the program. In the Proposed Rule, CMS states that the updated target pricing methodology is intended in part to address this concern; however, the updated target pricing methodology will apply only to those CJR episodes that begin January 1, 2021. As a result, the updated target pricing methodology will not address the concerns of hospitals whose financial performance in 2018 through 2020 was adversely affected by the removal of TKA and THA from the inpatient-only list.
- Remove the 50 percent cap on collaborator gainsharing payments and distribution payments for CJR performance years 6-8. Currently, a CJR hospital is permitted to make gainsharing payments to certain other providers (referred to as “collaborators”) that participate with the hospital in the CJR program. In turn, collaborators such as physician group practices are permitted to make downstream payments (referred to as “distribution payments”) to individual physicians or non-physician practitioners. Under the current CJR regulations, such gainsharing payments and distribution payments are limited to 50 percent of the total physician fee schedule payment the physician group practice or individual practitioner received for the care of patients in the CJR program. The Proposed Rule would eliminate the 50 percent cap, thus bringing the CJR program into alignment with other bundled payment programs, such as the Bundled Payments for Care Improvement Advanced program.
- Add lower extremity joint replacement procedures performed in hospital outpatient settings to the CJR program for program years 6-8. Currently, only procedures performed in inpatient settings are included in the CJR program. When the CJR program began in April 2016, CMS required that all lower extremity joint replacements be performed as inpatient procedures; this meant that nearly all lower extremity joint replacements performed in participating hospitals were included in the CJR program. However, as mentioned above, CMS removed TKA and THA procedures from the inpatient-only list effective January 1, 2018 and January 1, 2020, respectively. The Proposed Rule would in effect add back to the CJR program the less complex (and generally less expensive) TKA and THA procedures that have migrated to the outpatient setting, thereby allowing CMS to evaluate the effect of those episodes on the program overall.
The Proposed Rule solicits comments on a wide range of matters related to the CJR program. In addition, CMS requests comments on a potential bundled payment program focused on lower extremity joint replacement procedures performed in the ambulatory surgery center setting. Comments must be received by CMS no later than 5 PM EST on April 24, 2020.
If you have questions on the Proposed Rule or would like to submit comments on the Proposed Rule to CMS, please contact:
- Jennifer Skeels at (317) 977-1497 or jskeels@wp.hallrender.com; or
- Your regular Hall Render attorney
