Medicare Compliance & Reimbursement

Delayed start date gives you more time to prepare, but overall pacing won’t change.

In a groundbreaking final rule, the Centers for Medicare & Medicaid Services (CMS) is revolutionizing the way it pays for joint replacement surgery and accompanying services. And although healthcare providers may feel the pressure to ratchet up care quality, you’ll enjoy a more gradual transition to potential quality-based repayments.

On Nov. 16, 2015, CMS released the Comprehensive Care for Joint Replacement (CJR) Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services Final Rule. The CJR Model will begin on April 1, 2016. The model’s goal is to give hospitals a financial incentive to work with physicians, home health agencies, skilled nursing facilities, and other providers to ensure beneficiaries receive necessary coordinated care.

The CJR model final rule will mandate participation for certain acute care hospitals in a lower extremity joint replacement (LEJR) bundled payment program. The payment model essentially holds hospitals accountable for the quality of care they deliver to Medicare fee-for-service (FFS) beneficiaries for major hip/knee/leg procedures from surgery through recovery.

The CJR final rule was hotly anticipated, says Eric Fontana, practice manager with The Advisory Board Company’s Data and Analytics Group. “Due to public comments, this rule contained over 600 pages more than the proposed version.”

Expect a Slightly Delayed Start

According to a recent analysis by Eric Rogers, managing consultant for BKD CPAs & Advisors in Springfield, MO, the final rule differs from the proposed rule version in several key ways, including:

• CMS will delay the program for three months, supporting Medicare’s resolve to transition payments from FFS to risk-based models;
• Of the 75 MSAs originally selected, CMS excluded eight to account for overlapping participation in the Bundled Payments for Care Improvement (BPCI) initiative;
• CMS will adjust the proposed quality measure thresholds to provide stronger incentives for hospitals to improve quality;
• CMS is modifying curbs for stop-loss and stop-gain more favorably toward participant hospitals; and
• CMS and the OIG are jointly clarifying fraud and abuse waivers to encourage collaborative efforts.

Timing: Although the April 1 delayed start gives providers in the selected markets more lead time to prepare, beware that “the overall pacing of the program doesn’t change from the proposal,” Fontana cautions. “CJR will still run for five years as originally scheduled through Dec. 31, 2020, and there will be no downside risk until Jan. 1, 2017 — the start of Year 2, also consistent with the earlier proposal.”

Is Your MSA Excluded?

Hospitals in 67 selected geographic areas will receive additional payments if quality and spending performance are strong, according to CMS. And if not, these hospitals will potentially have to repay Medicare for a portion of the spending for care surrounding a LEJR procedure.

New: In the final rule, CMS changed its criteria for selecting what metropolitan statistical areas (MSAs) it would include in the model, which ultimately reduced the number of participating MSAs from 75 to 67, according to a Nov. 20 analysis by the Association of American Medical Colleges (AAMC).

CMS excluded eight proposed markets (see “Joint-Replacement Model: Did Your MSA Make the Cut?” on page 3) because they no longer met the eligibility criteria for having insufficient CJR-eligible volumes or they were in markets where the BPCI model predominates for LEJR, Fontana says. “Nevertheless, the final markets are significant, as they collectively anchor nearly a quarter of all LEJR episodes nationally.”

Caveat: “Keep in mind that being in a selected market does not automatically mandate participation,” Fontana notes. “Those hospitals participating in Model 1 of BPCI or the risk-bearing phase of Model 2 or 4 for LEJRs would be excluded from the program.”

Enjoy Lower ‘Stop-Loss’ Limits

Every participating hospital will have a unique spending target to meet to avoid paying money back to CMS — this is called the “target price,” which is a combination of a hospital’s blended regional and historical episodic spending data with a discount factor applied, Fontana explains. In the Final Rule, CMS set a more aggressive discount factor, increasing from a proposed 2 percent to 3 percent.

But the final rule takes a softer approach than the proposed version regarding risk and potential financial losses, Fontana states. For instance, CMS lowered the “stop-loss” amounts, effectively reducing the repayments required when episodic spending exceeds the target price in Years 2 and 3 — from 10 percent to 5 percent in 2016 and from 20 percent to 10 percent in 2017.

Look for Composite Quality Score, Instead of Threshold Methodology

Pay attention: Among the most significant changes in the final rule are those that CMS made regarding the quality scoring and methodology. CMS decided to incorporate an alternative methodology that uses an overall quality composite score to assess hospitals in the CJR program. In the proposed rule, hospitals would have needed to meet or exceed the thirtieth percentile performance threshold on three measures to qualify for savings.

In the Final Rule, however, CMS’s new methodology places hospitals into one of four categories, which “allows for a greater spectrum of bonuses or penalties depending on performance,” AAMC said. CMS will assess hospitals based on the total hip arthroplasty/total knee arthroplasty (THA/TKA) Complications measure, the Hospital Consumer Assessment of Healthcare Provider Systems (HCAHPS) survey, and a patient-reported outcomes (PRO) measure. CMS didn’t keep the THA/TKA Readmissions measure in the final rule.

“The composite methodology contains elements reminiscent of the scoring approach in the hospital value-based purchasing program — assigning credit for achievement and improvement on THA/TKA Complications and HCAHPS,” Fontana notes. And although CMS dropped the readmissions measure altogether, it will provide credit for organizations that voluntarily submit the PRO measure.

Impact: Based on the composite scoring methodology, CMS will give hospitals one of four grades: Excellent, Good, Acceptable, or Below Acceptable. “Excellent performers would see the benefit of an easier episodic target, while hospitals at the other end of the quality spectrum will see a hefty 3-percent discount,” Fontana says.

Final note: And like the Medicare Shared Savings Program (MSSP) and the Pioneer Accountable Care Organization (ACO) model, CMS says that it will provide either aggregated or claims-level data to help CJR program participants understand their LEJR episodic performance relative to their regional market, Fontana notes. You must, however, start submitting requests to CMS for data now — “organizations that submit now can expect to receive three years of baseline data before the April 1, 2016 start date.”

Resources: CMS published the CJR final rule in the Nov. 24 Federal Register, which you can access at www.gpo.gov/fdsys/pkg/FR-2015-11-24/pdf/2015-29438.pdf. You can find more information on the CJR Model at https://innovation.cms.gov/initiatives/cjr.