Note: CMS has released the Final Rule for the CJR program. Updates descriptions of the program are at this and this link.
On July 9, CMS released a proposed rule describing its Comprehensive Care for Joint Replacement (CCJR) payment model, a pilot bundled payment program for major joint replacements of the lower extremity. While CMS’s increasing interest in bundled payments has been apparent, the announcement of this mandatory initiative was a surprise to many, given that the Bundled Payment for Care Improvement (BPCI) demonstration program is still in its early stages for many participants. In addition, CMS recently requested comments on the expansion of the BPCI program, which it states is not related to the CCJR pilot. Nonetheless, this program, which will be mandatory for about 1,200 hospitals, appears poised for implementation in January 2016.
This article presents an overview of the CCJR program, highlighting its major components and comparing it to the BPCI program where appropriate. Obviously we summarized and omitted some of the details of the 438-page CMS proposal, so please refer to that document for specific details.
1.It’s not mandatory for everyone, but it might be for you
CMS identifies 75 metropolitan statistical areas (MSAs) that are high volume for Medicare fee-for-service major joint replacements and low participation for the BPCI program. Hospitals that are located in one of those MSAs would be required to participate in the CCJR program, with few exceptions. If a hospital is already participating in BPCI, it would continue under that program and the CCJR would not apply.
2.Hospitals only – no physicians or post-acute providers
CMS did not believe it was appropriate to mandate physicians or post-acute providers to participate. CMS notes that physicians generally do not have the financial strength to deal with the financial effects of bundled payment participation without the intervention of a third party convener, which isn’t permitted in CCJR. CMS also noted that as episode initiators physicians rarely have the infrastructure necessary to provide the care coordination required under bundled payment programs. Post-acute providers are excluded as episode initiators because they would overlap the episodes in which the hospitals participate.
3.Episodes would cover the inpatient admission and 90 days post discharge
Similar to the BPCI program, CCJR is based on an “episode" of care beginning with a hospital admission in one of the specified DRGs, and continuing for 90 days after discharge. Unlike the BPCI program, participants cannot choose the episode length; the CCJR program would cover episodes of care that begin with a hospital admission in one of the two specified DRGs and continuing for 90 days after discharge. The “cost” of the episode include Medicare payments for all related, covered services (other than Part D drugs) for all providers, including physicians; skilled nursing facilities; home health agencies; inpatient rehab facilities; and other outpatient services. The episode would also include all related readmissions during the 90-day period.
4.Episodes are triggered by inpatient discharges for DRGs 469 and 470, with few excluded services
As in the BPCI program, episodes are defined by the DRG of the index inpatient admission. CMS considered other alternatives for defining episodes, but concluded that DRGs are the only approach that has broad acceptance and is widely understood. This proposed program would cover discharges for DRGs 469 (Major joint replacement or reattachment of lower extremity w MCC) and DRG 470 (Major joint replacement or reattachment of lower extremity w/o MCC). These two DRGs were selected because they are the most popular in the BPCI program, have significant episode volume, involve relatively few physicians during the initial admission, have relatively few readmissions, and have significant opportunities to reduce spending for post-acute services.
Also similar to BPCI, for the CCJR program, CMS proposes to exclude relatively few unrelated diagnoses/services from the episode. Among the few excluded services are unrelated surgical procedures, such as appendectomies, and acute disease diagnoses, such as head injuries and cancer. There are still many diagnoses/services that clinicians may believe are unrelated to joint replacements that are included in the CCJR episodes.
In addition, some patients may be excluded from CCJR payments based on their Medicare status. For example, Medicare Advantage beneficiaries are excluded as are end-stage renal disease patients and beneficiaries for whom Medicare is not the primary payer.
5.It’s a 5 year program with staggered internal timeframes
The program would begin with admissions occurring on January 1, 2016 and end with discharges as of December 31, 2020. As described below, various characteristics of the program, such as responsibility for losses, take effect at different points throughout the program.
6.Target prices will reflect a blend of regional and hospital data
Target prices for the two major joint episodes will be set using Medicare claims data from a baseline period. For the first two performance years, the targets will be computed blending 2/3 of a hospital-specific rate and 1/3 of a regional rate. For the third performance year, the targets will be 1/3 hospital specific and 2/3 regional. In the fifth performance year, targets will be entirely based on regional averages. There are exceptions to this process for low volume hospitals and new providers.
The baseline period would be comprised of three years of Medicare FFS claims experience, with the three-year period moving forward by two years in the third and fifth performance years, creating a moving target. The historical baseline data will be adjusted for changes in Medicare payment rates and for national trends in utilization. However, the targets will be prospective, as opposed to the retrospective BPCI targets.
7.Hospitals will have gains and losses
To determine savings or losses under the CCJR program, CMS proposes a calculation process that is similar to the BPCI program; the average episode costs for each participating hospital would be compared their calculated target for each DRG. The average difference is multiplied by episode volume to arrive at a gross total. The total amounts may be limited, as described below, and are also tied to the achievement of quality metrics. There are also some limited exceptions for rural hospitals, sole community hospitals, and others.
In the first program year (2016), participants would be eligible to receive payments for creating savings, but would not be financially responsible for losses. In subsequent years, participants would be responsible for both gains and losses, similar to the BPCI program. Note that there is no "shared savings" component to this program, as is found in MSSP accountable care organizations and some other similar arrangements; hospitals retain all of the savings and are responsible for 100% of the losses.
8.Upside and downside risk are limited
The CCJR program proposes several mechanisms to limit participating hospitals’ gains or losses. High outlier limits would be established at two standard deviations above the regional average episode cost. Individual episode costs that exceed the outlier limit would be truncated to that limit. This differs from the BPCI program, in which participating providers are able to select outlier limits based on their own risk analysis (the 99th, 95th or 75th percentile of the national average cost). Another dissimilarity is that BPCI excess costs are not truncated, they merely are reduced to 20% of the excess over the limit. For major joint replacements, two standard deviations of the episode cost is close to the 95th percentile[1].
CMS also proposes to apply aggregate stop-loss limits on the amounts that hospitals would need to repay to CMS if deficits occurred. There’s no “downside risk” in the first participation year, and the maximum repayment amount in the second year of the CCJR program would be limited to 10% of the aggregate target amount and 20% of the target in subsequent years.
9.Medicare will take its discount off the top
As in BPCI, Medicare will reduce the target amount by a set discount percentage. This guarantees Medicare program savings even if the participating hospitals are unable to reduce cost. The discount is established at 2% of the target price, but participating hospitals can reduce that discount to 1.7% if they voluntarily submit certain requested quality related data elements.
10.Meeting quality metrics will be required for in order to receive savings payments
The CCJR program would implement quality performance standards that must be met in order for the participating hospital to receive reconciliation payments. These metrics are the Hospital-Level Risk-Standardized Readmission Rate (RSRR) and the Hospital-Level Risk-Standardized Complication Rate (RSCR) following elective primary total hip or knee arthroplasty, and the HCAPHS survey results, all measured in relation to national benchmarks. Hospitals not meeting the quality criteria would not receive any share of the savings created by reducing episode costs below target amounts. CMS considered, but did not propose, a sliding payment scale for higher quality scores.
11.Reconciliations will be annual
In BPCI, reconciliations are calculated on a quarterly basis, with three subsequent quarterly true-ups to account for claims runout. In the proposed CCJR program, reconciliations would be calculated annually, allowing for two months of claims runout. One subsequent true-up would be calculated the following year.
12.Gainsharing is allowed, within limits
The proposed rule notes that hospitals may wish to create financial relationships with other providers to coordinate financial incentives across the episode. There are also explicit rules limiting payments to sharing of CCJR reconciliation payments and/or internal hospital cost savings.
13.Claims data will be provided
CMS recognizes the need of participants for periodic claims data to effectively manage the clinical, operational and financial components of bundled payments. In the BPCI program, participants are provided with monthly claims data for their performance period episodes, as well as the baseline data from which targets were computed. In the CCJR program CMS proposes to provide baseline data several months after the start of the program and performance period data on a quarterly basis. CMS would also provide summary reports for those organizations that don’t have the internal/external capabilities to process the claim-level data feeds. In addition, some aggregate regional data would be provided showing high-level total inpatient and post-discharge costs within the census region.
There appear to be several differences between the BPCI and CCJR data provision processes: Rather than providing data for all episodes on a routine basis, it appears that under CCJR participating hospitals would need to request the data, possibly by specifying individual patients. This appears to be similar to the two-way commination used in the MSSP ACOs in which participants must submit a XML-coded file to a CMS portal with all beneficiary IDs being requested, to which CMS responds with the claims file for the requested beneficiaries. This is significantly more burdensome than the BPCI process, and would presumably require extracting the beneficiary IDs from the hospital’s billing system for those DRGs.
An additional complication under the CCJR proposal is that patients can opt out of the sharing of their claims data by calling the 1-800 MEDICARE phone number. A list of opted-out beneficiaries will be maintained by the CMS data contractor, which will not provide data requested for beneficiaries who opted out. It's not clear how hospital would know which beneficiaries opted out of data sharing. This process is puzzling because the hospital will, of course, have all the medical data for all beneficiaries for whom surgery was performed. Therefore, withholding the data will only limit provision of data for post-acute services.
14.Beneficiary incentives would be allowed, in a limited way
In its proposal, CMS notes that it may be appropriate to provide certain items of value to beneficiaries to facilitate their post-acute care; for example post-acute surgical monitoring equipment. However, gifts or services unrelated to patient care could not be provided.
15.Some Medicare rules will be waived
CMS notes that some current Medicare rules may impede effective care management under a bundled payment and suggests that some of these rules may be waived under the CCJR program. Mentioned specifically is the 3-day inpatient stay required prior to a SNF stay, as well as the incident-to rules dealing with home health services and some limits on telehealth services.
[1] Episode costs are not normally distributed, so the frequently-used population percentages within standard deviation ranges don’t apply.