CMS' Center for Medicare and Medicaid Innovation (CMMI) on Thursday issued a proposed rule that seeks to extend Medicare's Comprehensive Care for Joint Replacement (CJR) payment model for an additional three years and make some updates to the model, such as adding outpatient hip and knee replacements.

Tool: Care Coordination Episode Profiler

About CJR

The CJR model, which Medicare implemented in April 2016, holds participating hospitals accountable for episodic spending performance on eligible fee-for-service hip and knee replacements for Medicare beneficiaries. Hospitals that meet certain benchmarks for quality and cost measures receive a bonus payment, while hospitals that exceed the set target could be penalized.

For the first two performance years, CMS implemented the model in 67 U.S. regions where 800 hospitals were required to participate. However, CMS in December 2017 published a final rule that, among other things, made the program voluntary for 33 of the 67 metropolitan areas.

As of February 2018, about 465 hospitals were participating in the program, according to CMS. CJR is currently scheduled to expire on Dec. 31.

CMMI proposes CJR updates, 3-year extension

CMMI under the proposed rule would extend the CJR model for mandatory participants through Dec. 31, 2023. CMS in a fact sheet said the extension would allow the agency to evaluate proposed updates to the payment model.

For example, CMMI under the proposed rule would alter the definition of a CJR "episode" to include outpatient hip and knee replacements. CMS said the update is needed to align with regulations that removed total hip and knee replacements from Medicare's inpatient-only list, allowing Medicare to begin paying for total hip and knee replacements provided in outpatient settings under the Hospital Outpatient Prospective Payment system.

In addition, CMMI proposed changing the basis for calculating CJR target prices. For instance, instead of relying on three years' worth of claims data, CMMI under the proposed rule would calculate the target prices based on one year of the most recent claims data. CMMI under the proposed rule also would no longer consider anchor factors and weights when calculating the target prices, nor the national update factor and twice yearly updates to target prices that account for changes under Medicare's fee schedule and prospective payment system. But CMMI would begin incorporating more risk adjustments into target price calculations and alter its current methodology for calculating high episode spending caps.

CMMI also proposed several changes to the CJR model's payment reconciliation process. Under the proposed rule, the model would have one reconciliation period six months after the close of each performance year, instead of two.

In addition, CMMI proposed adding more episode-level risk adjustment to the reconciliation process and updating the methodology it uses to calculate high episode spending caps during the reconciliation process. For instance, CMMI proposed adding a retrospective trend adjustment factor to the process, and altering the quality discount factors that are applicable during the reconciliation process for participants with good and excellent quality scores in a way that CMS said would "better recognize high quality care."

CMMI under the proposed rule also would update CJR's appeals process, beneficiary notification requirements, gainsharing caps, and waiver requirements to align with the other changes and the extension called for under the rule.

CMS projected that extending the CJR model with the proposed changes could save the federal government $269 million over the additional three model years.

CMMI seeks feedback on potential payment model for ASC joint replacements

CMMI in the proposed rule also requested public feedback on how to design a potential bundled payment model for lower extremity joint replacement (LEJR) procedures performed in the ambulatory surgical center (ASC) setting. CMMI said it is considering the potential payment model as CMS this year began paying for total knee replacements at ASC settings and could start paying for other LEJR procedures at ASC settings in the future.

CMS will accept public comments on the proposed rule through April 20 (Brady, "Transformation Hub," Modern Healthcare, 2/20; King, FierceHealthcare, 2/20; O'Brien, HealthLeaders Media, 2/21; CMS fact sheet, 2/20; CMS proposed rule, 2/20).