CMS recently released an updated "frequently asked questions" document for the Comprehensive Care for Joint Replacement (CJR) program. Of interest in that FAQ was statistics regarding the number of hospitals currently participating in CJR. As most followers of mobile payment programs are aware, CMS reclassified 33 of the 67 formerly-mandatory Metropolitan statistical areas (MSAs) to be voluntary, allowing hospitals in those MSAs to cease participation in the CJR program. The results of that process are noted in the FAQ document. According to that document, approximately 800 acute-care hospitals initially participated in the CJR program, but only 465 are currently participating. It appears that about 350 hospitals were classified into voluntary MSAs, but only 75 of them elected to continue in CJR.
These statistics mirror our experience with our CJR clients. Many of our clients are located in voluntary MSAs, and asked for our assistance in assessing the option to continue participation. Two major factors were the drivers of the decision to terminate participation: the transition to regional targets and the removal of total knee arthroplasty (TKA) from the Medicare inpatient-only list.
Regional targets
A primary reason for termination was the transition from historically-based targets to those based on regional averages. In programs utilizing historically-based targets such as the BPCI program, hospitals can achieve financial success by reducing their episode costs from the levels incurred in the baseline period. Theoretically all hospitals can achieve success under this methodology, and a strong majority of our clients ended up with financial surpluses, many of which exceeded the stop-gain limits. However, targets in the remaining periods of CJR are computed from regional average cost, not from each hospital's historical baseline. This means that hospitals that have been successful in the early years of CJR but his costs still exceed regional averages will incur deficits in the remaining periods. And while theoretically all hospitals but I surpluses when targets are based on each hospital baseline, only about half of hospitals will have episode costs lower than the regional average; therefore many hospitals that achieve financial success in the early periods of CJR would lose money in the later periods. We performed these analyses for our clients who were in voluntary MSAs, and many chose to discontinue participation upon seeing the effect of the new targets on their performance in the coming performance period. Target based on regional averages can't be used in voluntary programs because hospitals whose cost exceeded the average would decline to participate, which is what ultimately happened in the voluntary CJR MSAs.
Outpatient total knee arthroplasty
The other major CMS initiative that propelled the Exodus from voluntary CJR MSAs was a reclassification of total knee arthroplasty (TKA) off of the "inpatient only" list, allowing it to be performed on an outpatient basis. As we noted in this article, removal of these lower-cost episodes from the CJR program will raise the average cost of the remaining episodes. Since CMS has provided no information as to how they will adjust targets to compensate for this change, and since the magnitude of this change can be significant, many hospitals in voluntary MSAs elected to avoid that risk entirely by terminating their participation in the CJR program.
Effect on the CJR demonstration
At this point the only real "demonstration" occurring in the CJR demonstration project is with the mandatory hospitals. Voluntary hospitals remaining in the program should all achieve financial success, assuming that they properly analyzed the performance under the new targets. A recent JAMA article analyzed the results of the first performance period of CJR and found that 57% of hospitals achieved savings, but this percentage will probably decrease during the fourth and fifth performance periods because of the implementation of regionally-based targets.