Life Amidst the Comprehensive Joint Replacement Model

It sounds amazing!

Innovation Center! Doesn't that sound like a blast? Perhaps it's a think tank with the best and the brightest and an unlimited espresso bar! Or a beautiful light-filled space with all sorts of interesting materials to create art! Or even a place to eat carnival food and get on amusement rides, and have your picture taken with a theme park character. 

Or…maybe it's not quite that fun.

The Innovation Center we're going to look at today is the CMS Innovation Center. And we're going to examine one of its recent innovations - the Comprehensive Care for Joint Replacement model.

History, please. 

The CMS Innovation Center was developed as part of the Affordable Care Act. It's a center with a mission: "…to test innovative payment and service delivery models that have the potential to reduce Medicare, Medicaid, or Children’s Health Insurance Program (CHIP) expenditures while preserving or enhancing the quality of care for beneficiaries."[1] Laudable goals, to be sure. Specifically, this means there is a stated intention of moving 30 percent of all Medicare fee-for-service payments to alternative payment models by 2016. That number jumps to 50 percent by 2018.

What are these alternative payment models? Let's look at one: the CJR model mentioned above.

The CJR model aims to address and to rectify the disparity in costs associated with joint replacements. Hip and knee replacements are big business. Hospitalizations alone for joint replacements cost over seven billion dollars in 2014. In addition, the rate of post-surgical complications was three times higher at some facilities than others, and average Medicare expenditures for an entire episode of care ranged from a low of $16,500 to a high of $33,000, depending on where the surgery and follow-up care took place. [2]

Medicare wants to change that. It's using retrospective bundled payments as an incentive to help CJR-participant hospitals meet new targets when it comes to providing care for the joint replacement patient. The objectives have to do with cost and quality over the complete episode of care, from surgery to recovery.

The rule for the CJR model was initially floated on July 9, 2015. After a two-month comment period that included a review of almost 400 remarks, the final rule was placed on the Federal Register on November 16, 2015, with a program start date of April 1, 2016. 

Who's participating?

So who is affected by the CJR? Hospitals were randomly selected in 75 (eventually reduced to 67) metropolitan statistical areas (MSAs), and their participation is mandatory. Those facilities already participating in the Model 1, 2, or 4 Bundled Payments for Care Improvement Initiative were excluded. All told, about 800 hospitals are included in the CJR model.

Let's talk money.

The design of the CJR model looked backward at the costs associated with hip and knee replacements to set target costs for entire episodes of care going forward. The CJR model is a five-year program. At the end of each performance year, total expenditures for related services under Medicare Parts A and B will be compared to the target expenditures for each participating hospital. Quality measures will also be evaluated. Hospitals may receive additional payment from Medicare if their spending is in line with the new targets. Or they may be required to repay Medicare for a portion of their spending for joint replacement. Stop-loss and stop-gain limits that will curb how much a hospital can owe or recoup are being transitioned into place over the five years of the plan.

What are some issues faced by hospitals involved in the CJR?

Clearly, there are some challenges associated with participation in the CJR model. Budget planning jumps to mind; how does a financial administrator effectively plan for a potential year-end shortfall - or bonus - when the model dictating the outcome is in its infancy? Does the institution have useful data about its historical performance, especially as it relates to coordination of care with skilled nursing facilities and rehabilitation centers? If a hospital is one of those with more complications or higher costs in general, how does it realign itself to tighter parameters? Who are the possible partners a hospital can bring in to share costs and to increase savings?

How does documentation play into this?

Clinical documentation is a major component in the potential for gains or losses in this scenario. ICD-10 coding feels less like an entirely new world these days, but correctly assigning risk adjustment and complications is critical in the CJR model. Documentation needs to be precise. Coders need to be up to speed. Without accurate MS-DRG assignments, correct root operations, and replacement procedures, the chances of sharing in Medicare's savings is remote, and the potential for owing Medicare is very real.

Are you feeling innovative yet? 

What has your participating facility's experience been in these very early days of the Comprehensive Joint Replacement model? What changes have been made to accommodate the new guidelines and incentives? Who is responsible for overseeing the implementation of this model in your hospital? Have your coders and CDI specialists received any additional training to sharpen specific skills related to the CJR model?

This is a topic that will surely be revisited over the course of the next five years. We'd love to hear from you about your experience with the innovation that is CJR.