Tuesday, 13 October 2015 21:14

CMS Marches Forward with Alternative Payment Models for Comprehensive Care for Joint Replacement (CCJR)

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On July 9, 2015 a Centers for Medicare & Medicaid Services (CMS) press release announced a proposed “major initiative for hip and knee replacements.” And hospitals were front and center in the model!

The proposed model was detailed for comment in the July 14, 2015 Federal Register. The comment period ended Sept. 8, 2015. The proposed implementation date is January 1, 2016.

Why is CMS targeting lower extremity joint replacement (LEJR)?

In 2013 there were more than 400,000 inpatient primary LEJR procedures for Medicare recipients. The cost to Medicare was more than $7 billion for hospitalization only. Furthermore, there is significant regional variation in readmissions and complications for these procedures, resulting in average Medicare expenditure ranges from $16,500 to $33,000 across geographic areas.

Goal of Comprehensive Care for Joint Replacement (CCJR)

In the aforementioned press release, U.S. Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell said that “this model will incentivize providing patients with the right care the first time and finding better ways to help them recover successfully.”

“Hospitals and physicians have an incentive to work together to deliver more effective and efficient care,” Burwell added, noting that CMS anticipates a $153 million saving through the CCJR model.

Hospitals Are the Overall Accountable Party and at Financial Risk

Key Points:

  1. Five-year payment model demonstration
  2.  Payment for an episode of care:
    • Episode begins with a hospital admission and ends 90 days post-discharge (MS-DRG 469 or 470)
    • Includes both Part A and part B services
  3. Required participation by all hospitals in 75 MSAs (except hospitals currently participating in Bundled Payments for Care Improvement (BPCI) initiative for LEJR episodes)
  4. Applies to all Medicare fee-for-service beneficiaries

Target Pricing and Payment


  1. Medicare establishes hospital-specific episode prices (target prices) for MS-DRG 469 and 470 each year for five performance years. Hospitals receive notice of target prices prior to the start of each performance year.
  2. Target prices are based on three years of historical payment data. Years Nos. 1 and 2 will use historical CCJR episodes between the start of 2012 and the end of 2014. Years Nos. 3 and 4 will use historical episodes from the start of 2014 through the end of 2016.
  3. Target prices begin with a 2-percent reduction from historical episode spending in years 1 through 5 of model.
  4. Target prices blend together hospital-specific and regional historical CCJR episode payments. The blend transitions from primarily hospital-specific to completely regional historical episode spending over the course of the five performance years.
  5. Target price includes inpatient hospital services, including readmissions, physician services, inpatient psych facility (IPF) services, LTCH, IRF, SNF, HHA, hospital outpatient, independent outpatient therapy, clinical lab, DME, Part B drugs, and hospice.

Payment: Retroactive Bundled payment model

  1. All providers and suppliers for the episode are paid under the existing Medicare payment system throughout the performance year.
  2. At the end of each performance year, the actual episode spending is compared to target LEJR episode spending.
    • If target LEJR spending is below the Medicare target and all three quality thresholds are met, the hospital is eligible for a positive reconciliation payment up to a specified cap.
    • If LEJR episode spending exceeds target price, hospital is required to make repayment up to a specified limit. The repayment component of the model is phased in during the second year.

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Last modified on Tuesday, 13 October 2015 21:27

Sylvia Coolidge Moore is an experienced hospital executive (COO) leading operations across a range of organizations from large to medium size for over 20 years. As the COO she has led organizations to adopt performance improvement and patient safety as key organizational priorities. She has guided boards, executives, management and staff through education and understanding of High Reliability No Harm Health Care, Pay For Performance Requirements and the financial rewards and penalties imposed by CMS. She has led the adoption of a High Reliability No Harm Health Care culture commitment, organizational assessment and cultural change priorities and actions. Additionally she has led organizations to significant improvement in Value Based Purchasing, HAC and Readmission Reduction parameters of the CMS Pay For Performance System. Most recently she has established a private consultancy service (FE3 Catalytics) focusing on her two passions in healthcare: High Reliability No Harm Healthcare and Patient Experience.