CMS Final Rule Revises and Extends CJR Model for Three Years

May 3, 2021

The Centers for Medicare & Medicaid Services (CMS) released a final rule last week to extend the Comprehensive Care for Joint Replacement (CJR) model for three years. The rule also made significant changes to the model’s design, including:

  • Changing the participation requirements
  • Revising the episode definition to include total hip arthroplasty (THA) and total knee arthroplasty (TKA) performed in the outpatient setting
  • Combining inpatient and outpatient episodes to calculate target prices
  • Risk adjusting the target price calculations

The CJR model was extended through December 31, 2024. It would have expired on September 30, 2021. The extension only applies to hospitals located in the 34 metropolitan statistical areas (MSAs) selected by CMS in 2018. CMS is eliminating the voluntary participation option during the extension period, so the model will end on September 30, 2021, for hospitals that remained in the model after they were no longer required to participate.

Nearly all GNYHA member hospitals are located in the MSAs selected by CMS to participate in the CJR, and many have performed well. Regardless, GNYHA continues to oppose mandatory episode-based payment models, including the CJR, because not all hospitals have sufficient resources to succeed. CMS finalized its proposal to prohibit current voluntary participants from continuing in the model during the three-year extension due to concerns about selection bias, noting that hospitals that remained were more likely to lower episode costs and achieve shared savings. In comments (attached) submitted to CMS last year, GNYHA opposed prohibiting current voluntary participants from future participation in the CJR model, arguing that participants should not be excluded simply because they performed well.

CMS is also adding outpatient joint replacements to the CJR program by grouping them with the applicable Diagnosis Related Group-based inpatient episodes to calculate target prices. GNYHA opposed this approach and recommended that CMS instead establish separate target prices for inpatient and outpatient lower extremity joint replacement episodes because CMS’s policy risks setting target prices that are inappropriately low for more complex inpatient stays. CMS will also add episode-level risk adjustment to its methodology and will adjust for three new variables: the number of hierarchical condition category (HCC) conditions, beneficiary age, and dual eligibility. CMS did not originally propose adjusting for dual eligibility but chose to include this adjustment in the final rule in response to comments and a revised analysis. GNYHA had evaluated CMS’s proposed risk adjustment model and found that further adjustment was necessary. GNYHA remains concerned that the model fails to adequately adjust for differences between inpatient and outpatient originating episodes and ignores the variation in the impact on costs of different HCCs.

CMS made several other changes to the model, including:

  • Moving from three years of data to a single year to calculate target prices
  • Simplifying the reporting process for the THA/TKA Patient-Reported Outcome quality measure
  • Changing the quality adjustment methodology
  • Eliminating the gainsharing cap
  • Revising the high-episode spending cap and target price adjustment for regional market trends
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