On November 24, 2015, the Centers for Medicare and Medicaid Services (CMS) issued a final rule implementing the Comprehensive Care for Joint Replacement (CJR) payment model. Under the CJR model, 67 acute care hospitals located in randomly selected metropolitan areas will receive bundled payments for services furnished to certain Medicare beneficiaries undergoing lower extremity joint replacement or reattachment of a lower extremity. Under the CJR model, participating hospitals will be financially responsible for all Medicare Part A and Part B services provided to the beneficiary for a 90-day period of care beginning on a patient’s date of discharge from the hospital.

In order for participating hospitals to receive reimbursement under the CJR model, Medicare beneficiaries receiving hip and knee replacements must meet the following criteria during the entire episode period:

  • Patients must be enrolled in Medicare Part A or Part B,
  • Medicare enrollment must not be based on the presence of end stage renal disease,
  • Patients must not be enrolled in any managed care plan,
  • Patients must not have coverage under a United Mine Workers of America health care plan; and
  • Medicare must be the patient’s primary payer.

An episode covered by the CJR model begins when a patient is admitted to a participating hospital for a hip or knee replacement procedure resulting in a discharge under MS-DRG 469 or 470. CJR model reimbursement is intended to cover services through 90 days after the patient is discharged from the hospital. During the 90-day period, an episode can be canceled if the beneficiary no longer meets the inclusion criteria, is readmitted to another participating hospital, initiates a hip or knee replacement surgery at a hospital participating in the Bundled Payments for Care Improvement program, or dies at any time during the episode.

Payment under the CJR model is made on a retrospective basis.  Initially, providers and suppliers caring for Medicare beneficiaries in CJR episodes are expected to bill Medicare as usual under the applicable Medicare payment system. At the end of a CJR performance year, CMS will compare the amounts paid for services against episode quality thresholds and target prices set by CMS for the performance year. If the actual episode payment is less than the target price and the hospital meets certain quality thresholds, CMS will make a reconciliation payment to the hospital. However, if the actual episode payment exceeds CMS’s target price, the hospital will be required to make repayment to CMS beginning in performance year two.  The final rule also sets forth requirements for hospitals wishing to engage in financial arrangements with providers and suppliers sharing in reconciliation payments or responsibility for Medicare repayment.

With the exclusion of the first year, each performance year aligns with the calendar year.  While the final rule goes into effect on January 1, 2016, CMS has postponed the first performance period until April 1, 2016.

The CJR model establishes waivers from certain Medicare program rules for services provided to CJR beneficiaries. Waivers for post-discharge home visits, telehealth services and skilled nursing facilities (SNFs) are detailed below.

  • The post-discharge home visits waiver allows CJR beneficiaries not otherwise qualifying for home health services to receive up to nine post-discharge visits during the 90-day period.
  • The telehealth waiver allows CJR beneficiaries to receive services related to a CJR episode via telehealth in their place of residence, provided that all other Medicare telehealth service requirements are met.
  • The SNF three-day rule waiver allows CJR beneficiaries to be discharged to a SNF without previously having been admitted for a three day inpatient hospital stay.

A list of hospitals selected for participation in the CJR model can be found here.