On August 2, 2016, the Centers for Medicare & Medicaid Services (“CMS”) published a Proposed Rule establishing three new mandatory retrospective bundled payment models and creating an incentive payment program for cardiac rehabilitation services. In this Proposed Rule, CMS also outlined several proposed changes to the recently implemented Comprehensive Care for Joint Replacement (“CJR”) program. The CJR Model is a retrospective bundled payment program limited to lower extremity joint replacement (“LEJR”) procedures and is designed to encourage hospitals to collaborate with other providers in care redesign measures to improve quality and control costs in LEJR care episodes. This article will provide a summary of the Proposed Rule’s revisions to the CJR regulations. (Click here to view the November 2015 CJR Final Rule and here to view Hall Render’s summary of the CJR Final Rule). A high level summary of the entire Proposed Rule is provided in our related Health Law News article, which can be found here.
Revisions Applicable to Reconciliation Process. The Proposed Rule outlines several modifications to the CJR reconciliation and payment process. These modifications include a proposal to change the term “episode target price” as used in the 2015 Final Rule to “quality-adjusted target price” (“QATP”) in order to align with the episode payment models (“EPMs”) outlined in the Proposed Rule. The QATP would represent the price used to determine whether the CJR participant hospital is eligible for a reconciliation payment from Medicare or required to make a repayment to Medicare. Other proposed revisions to the CJR reconciliation process would include technical updates to calculation methodologies to account for post-episode spending amounts; inclusion of Medicare Shared Savings Program (“MSSP”) accountable care organizations (“ACOs”) as collaborators in CJR episodes; and inclusion of ACO payments, reconciliation payments and repayments in calculating and updating the QATP for CJR Model performance years three through five.
Overlap with ACOs. Due to commenter concern regarding overlap between the CJR Model and other performance-based plans under the 2015 Final Rule, CMS has now proposed to exclude beneficiaries who are prospectively aligned with a Next Generation ACO or End Stage Renal Disease Seamless Care Organization from CJR episodes of care. This proposal aligns with the EPM approach taken in the Proposed Rule.
Financial Arrangements Between Hospitals and Other Providers. The Proposed Rule would involve a number of revisions to permitted financial arrangements under the CJR Model.
- CJR Collaborators. CMS proposed to expand the categories of collaborators with which CJR participating hospitals may enter into financial sharing arrangements to include MSSP ACOs, other Inpatient Prospective Payment System hospitals and critical access hospitals. Previously, eligible CJR collaborators were limited to skilled nursing facilities, home health agencies, long-term care hospitals, inpatient rehabilitation facilities, physicians or physician group practices (“PGPs”), non-physician practitioners and outpatient therapy providers/suppliers. CMS noted that, in particular, it believes CJR participant hospitals would benefit from the care coordination and care redesign expertise of MSSP ACOs.
- Sharing Arrangements and Collaborator Agreements. The term “collaborator agreement” would be deleted from the CJR regulations, and all requirements for financial arrangements between a CJR participant hospital and a collaborator would be encompassed under the term “sharing arrangements” (a term that was essentially used interchangeably with the term “collaborator agreement” under the 2015 Final Rule). The Proposed Rule details all of the requirements for written sharing arrangements, most of which reflect the requirements for collaborator agreements under the 2015 Final Rule.
- Gainsharing Payments, Alignment Payments and Internal Cost Savings. Most requirements for payments under sharing arrangements would not change under the Proposed Rule. However, because MSSP ACOs would be permitted collaborators under the Proposed Rule, CMS has outlined certain requirements related to the “direct furnishing” of a billable item or service to a beneficiary in order to receive gainsharing payments. Because ACOs do not directly furnish billable services, an ACO must have had an ACO provider or supplier that directly furnished, or an ACO participant that billed for, an item or service rendered to a CJR beneficiary during a CJR episode in the same performance year for which the gainsharing payment was made or the repayment amount assessed. The ACO must have also contributed to CJR activities and must have been clinically involved in the beneficiary’s care. These requirements are much the same as those applicable to PGPs under the 2015 Final Rule.
- Distribution Arrangements. Distribution arrangements are financial arrangements between ACO or PGP collaborators and other individuals or entities called “collaboration agents,” (a term that includes individual PGP members, ACO participants or ACO providers/suppliers). Under the 2015 Final Rule, a PGP that receives a CJR gainsharing payment from a hospital may distribute such payments only to those individual PGP members who have furnished a billable service to a CJR beneficiary during the relevant performance year. Further, such distribution payments may not exceed 50 percent of the total professional fees received by the PGP member for care of CJR beneficiaries during the performance year.
One of the most significant CJR revisions contained in the Proposed Rule would also allow PGPs to distribute gainsharing payments to PGP members in accordance with the Stark Law’s PGP exception. Very briefly, in order to comply with the Stark PGP exception, a PGP must meet requirements related to the structure, size and business decision-making of the practice; the scope and percentage of services each physician provides through the group practice; and the methodology for calculating compensation to individual physicians (including, for example, a requirement that overall profits of the group are not distributed in a manner directly related to the volume or value of designated health services referrals made by the physician).
Under the Proposed Rule, so long as the PGP distributes any gainsharing payment in compliance with the Stark PGP exception, the PGP could distribute part of a gainsharing payment to a physician who made no contribution to CJR activities and who provided no care to beneficiaries in CJR episodes. Moreover, so long as the distribution is made in compliance with the Stark PGP exception, distributions to individual physicians would not be subject to the cap of 50 percent of the physician’s aggregate professional fees for care of patients in CJR episodes.
- Clarification of “Actually and Proportionally Related.” The Proposed Rule would clarify the 2015 Final Rule’s requirement that any gainsharing payments to collaborators and distribution payments to collaborator practice agents must be “actually and proportionally related to care of beneficiaries in a CJR episode.” CMS proposed instead a requirement that such payments must be substantially based on quality of care and the provision of CJR activities and that the methodology for calculating such payments may take into account the amount of CJR activities provided by a CJR collaborator relative to other CJR collaborators.
- Downstream Distribution Arrangements. CMS proposed other revisions to the 2015 Final Rule designed to accommodate ACOs as collaborators, including provisions to address distributions to individuals termed “downstream collaboration agents.” These provisions largely mirror those related to distributions to PGP members under the 2015 Final Rule.
Beneficiary Incentives. Beneficiary incentives under the CJR model allow hospitals to provide Medicare beneficiaries with certain items or services that promote the engagement of a beneficiary in the management of his or her own care. The Proposed Rule makes only a few changes to these requirements, including a requirement that participant hospitals retain and provide CMS with access to beneficiary incentive documentation.
Skilled Nursing Facility (“SNF”) 3-Day Waiver Beneficiary Protections. Under the 2015 Final Rule, CMS waived the so-called “SNF 3-day rule” for all CJR episodes in performance years two through five if the admitting SNF had a rating of three stars or better on the Five-Star Quality Rating System. In the Proposed Rule, CMS would add additional beneficiary financial protections under the SNF 3-day waiver due to concerns that a beneficiary may be subject to financial liability for non-covered SNF services related to misuse of the waiver. CMS has proposed to hold participant hospitals financially responsible for SNF stays where the waiver requirements are not met. Specifically, when a participant hospital has discharged a beneficiary to a non-qualifying SNF without providing the required notice of financial responsibility to the beneficiary, the financial responsibility for the non-covered SNF stay will rest with the participant hospital rather than with Medicare or the beneficiary.
Mandatory Participation in Surgical Hip/Femur Fracture Treatment (“SHFFT”) Model. CMS has proposed that the SHFFT model under the Proposed Rule would be implemented in those metropolitan statistical areas (“MSAs”) where the CJR Model is currently implemented. All current CJR participant hospitals would be required to participate in the SHFFT EPM under the Proposed Rule. Click here for more details regarding the SHFFT EPM.
Advanced Alternative Payment Models. Under the Proposed Rule, CMS also seeks to align the CJR Model with other pay-for-performance models, including the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”). Very briefly, the MACRA physician Quality Payment Program links quality to payment through, among other things, allowing clinicians to participate in Advanced Alternative Payment Models (“APMs”). Eligible clinicians who meet the requirements to participate as Qualified Providers (“QPs”) in Advanced APMs can receive APM incentive payments and favorable payment updates under the Medicare Physician Fee Schedule. In the Proposed Rule, CMS outlines how the EPMs and the updated CJR Model meet the requirements to be considered Advanced APMs, thus permitting physicians collaborating with hospitals in these programs to meet the requirements to be considered eligible QPs under the Advanced APMs.
CMS proposed to implement two different CJR tracks: Track 1, an Advanced APM track; and Track 2, a non-Advanced APM track. CJR participant hospitals interested in participating in Track 1, and thus qualifying their CJR Model programs as Advanced APMs, must attest to their use of certified electronic health information technology (“CEHRT”) functions (as set forth in the definition of CEHRT under CMS’s proposed regulation at 42 CFR 414.1305) to document and communicate clinical care with patients and other health care professionals. In order to allow CMS to determine whether CJR collaborating clinicians are QPs for purposes of MACRA, CJR participant hospitals must also provide CMS a list of clinician financial arrangements that discloses each clinician’s name, tax identification number and national provider identifier, as well as the start and end dates for the financial sharing agreement under which the clinician participates. As a practical matter, CMS points out that participation in Track 1 does not otherwise change any CJR participating hospital’s obligations (including obligations to make any required repayments) under the CJR Model, nor does participation in Track 1 alter the hospital’s opportunity to earn reconciliation payments under the CJR Model. However, by providing an opportunity for physicians and other clinicians to meet QP requirements under MACRA, participation in Track 1 may provide an additional incentive for such clinicians to take an active role in collaborating with hospitals under the CJR Model.
Practical Takeaways and Next Steps
Hospitals currently participating in the CJR model should begin assessing their readiness to comply with the proposed revisions to the 2015 Final Rule. This may include preparing to enter into sharing arrangements with ACOs and other hospitals, evaluating current payment methodologies and preparing for new calculation methods under the QATP. CJR participant hospitals should also assess their preparedness to participate in the SHFFT EPM, which CMS proposed to make mandatory for CJR participant hospitals under the Proposed Rule.
Providers and other interested parties should contact CMS with comments and concerns regarding the Proposed Rule. Comments must be received by CMS by 5:00 PM EDT on October 3, 2016. CMS invites comments to the Proposed Rule, and it is critical that providers, especially those who will potentially be subject to the CJR regulations, address their concerns before a final rule is implemented. Further, providers often must raise comments in the proposed rulemaking phase in order to appeal an issue from the final rule.
If you would like additional information about this topic, please contact:
- Jennifer Skeels at (317) 977-1497 or jskeels@wp.hallrender.com;
- Colleen Powers at (317) 977-1471 or cpowers@wp.hallrender.com;
- Allison Emhardt at (317) 429-3649 or aemhardt@wp.hallrender.com;
- Alyssa James at (317) 429-3640 or ajames@wp.hallrender.com; or
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