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The most common type of inpatient surgery for Medicare beneficiaries is the hip and knee replacement with the average Medicare expenditure for surgery, hospitalization, and recovery ranging from $16,500 to $33,000 across geographic areas. This significant variation in spending has created an opportunity to test and evaluate a new payment model that specifically focuses on a defined set of procedures.

As of April 1st, CMS has implemented a five year Comprehensive Care for Joint Replacement (CJR) model for Medicare Part A and B under section 1115A of the Social Security Act. Under the CJR bundle, acute care hospitals in certain selected geographical areas will receive retrospective bundled payments for episodes of care for lower extremity joint replacement or reattachment of a lower extremity (LEJR).

This model tests bundled payment and quality measurement for an episode of care associated with hip and knee replacements to encourage hospitals, physicians, and post-acute care providers to work together to improve the quality and coordination of care from the initial hospitalization through the recovery cycle to reduce complications and avoidable hospital readmissions.

The American College of Surgeons National Surgical Quality Improvement Program identified the
top 10 reasons for readmission of a hip or knee arthroplasty

Surgical site infections
Prosthesis issues
Venous thromboembolism
Orthopedic related
Ileus or Obstruction
How the CJR Bundle Works

Episodes will begin with admission to an acute care hospital for an LEJR procedure that is paid under the Inpatient Prospective Payment System (IPPS) through Medical Severity Diagnosis-Related Group (MS-DRG) 469 (Major joint replacement or reattachment of lower extremity with MCC) or 470 (Major joint replacement or reattachment of lower extremity without MCC) and end 90 days after the date of discharge from the hospital.
The episode will include the LEJR procedure, inpatient stay, and all related care covered under Medicare Parts A and B within the 90 days after discharge
. The day of hospital discharge is counted as the first day of the 90-day bundle.

This 5 year model is mandatory for the 800 hospitals chosen in 67 metropolitan statistical areas. The list of selected hospitals is available on the CJR model website The 800 hospitals selected for participation are all paid under the Inpatient Prospective Payment System (IPPS) and are not currently participating in the BPCI models 1, 2, or 4 for LEJR episodes.

Medicare beneficiaries whose care will be included in the CJR model must meet the following criteria upon admission to the anchor hospitalization:

The beneficiary is enrolled in Medicare Part A and Part B;
The beneficiary’s eligibility for Medicare is not on the basis of the End-Stage Renal Disease benefit;
The beneficiary is not enrolled in any managed care plan;
The beneficiary is not covered under a United Mine Workers of America health plan;
Medicare is the primary payer.
If at any time during the episode the beneficiary no longer meets all of these criteria, the episode is canceled.

CMS will continue paying hospitals and other providers and suppliers according to the usual Medicare fee-for-service payment systems during all performance years. After completion of a performance year, Medicare will compare or “reconcile” actual claims paid for a beneficiary during the 90 day episode to an established target price. The target price is an expected amount for the total cost of care of the episode. Hospitals will receive separate target prices to reflect expected spending for episodes assigned to MS-DRGs 469 and 470, as well as hip fracture status. If the actual spending is lower than the target price, the difference will be paid to the hospital, subject to certain adjustments, such as for quality. This payment will be called a reconciliation payment. If actual spending is higher than the target price, hospitals will be responsible for repayment of the difference to Medicare, subject to certain adjustments, such as for quality. The target price is based on 3 years of historical data.

CMS calculates a composite quality score for each participant hospital for each performance year, which equals the sum of the following:

The hospital’s quality performance points for the hospital-level risk-standardized complication rate following elective primary total hip arthroplasty and/or total knee arthroplasty measure (NQF #1550).This measure is weighted at 50 percent of the composite quality score.
The hospital’s quality performance points for the Hospital Consumer Assessment of Healthcare Providers and Systems Survey measure also known as CAHPS® Hospital Survey, is a survey instrument and data collection methodology for measuring patients’ perceptions of their hospital experience. The survey asks recently discharged patients 32 questions about aspects of their hospital experience(NQF #0166). This measure is weighted at 40 percent of the composite quality score.
If applicable, 2 additional points for successful THA/TKA voluntary data submission of patient-reported outcomes and limited risk variable data. Successful submission is weighted at 10 percent of the composite quality score. Based on their composite quality score, hospitals may be eligible for quality incentive payments of 1% or 1.5% of their episode price, changing the effective discount percentage at reconciliation to 2% or 1.5%.
Please see the table below summarizing the 5 year payment model:

Performance Years Reconciliation CAP Special Considerations
Year 1
April 1-Dec. 31 2016 0% No responsibility to repay Medicare during the first year
Year 2
Jan. 1-Dec. 31 2017 5% of targeted prices 2 midnight rule waived if discharged to a 3-Star rated (or better) facility
Year 3
Jan.1-Dec.31 2018 10% of targeted prices
Year 4
Jan.1-Dec.31 2019 20% of targeted prices
Year 5
Jan. 1-Dec.31 2020 20% of targeted prices

Consistent with applicable law, participant hospitals may have certain financial arrangements with Collaborators to support their efforts to improve quality and reduce costs. CJR Collaborators may include the following provider and supplier types:

Skilled Nursing Facilities
Home Health Agencies
Long Term Care Hospitals
Inpatient Rehabilitation Facilities
Physician Group Practices
Physicians, non-physician practitioners, providers and suppliers of outpatient therapy
CMS will continue to make reconciliation payments and recoupments solely with the hospital and the hospital is responsible for payment and recoupments with its collaborators according to the agreements between those entities. CMS limits the hospital’s sharing of risk to 50% of the total repayment amount to CMS. The hospital is required to retain 50% of the downside risk and the hospital is not permitted to share more than 25% of its repayment responsibility with any one provider or supplier.

So, how can SNF/Rehab providers prepare for the CJR payment model? Here are a few suggestions to consider:

Admissions team is prepared to admit and discharge patients seven days a week.
Therapy should evaluate the patient promptly after admission.
Assess pain and establish a pain management plan as part of the admission process.
Review rehabilitation scheduling with an emphasis on consistent assignment and efficient, outcome oriented plans of care. For example, you may consider BID therapy and consistent weekend therapy to promote goal progress with shorter length of stay.
CJR condition care pathway development in coordination with medical director followed by staff training on application.
Avoidable hospital readmission task force with focus on CJR condition prevention planning.
Outcomes Tracking Systems in place to measure length of stay by RUG and quality outcomes.
Communication tool and format established to report facility quality outcomes to participating partner hospitals.
By: Emily King OTR, RAC-CT, Clinical Consultant

Contact Proactive for assistance in implementing a successful CJR program in your facility.

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