The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would extend and modify the Comprehensive Care for Joint Replacement (CJR) Model, under which CMS makes a “bundled” payment to participant hospitals for an “episode of care” for lower extremity joint replacement (LEJR) surgery, covering all services provided during the inpatient admission through 90 days post-discharge (with certain exceptions). Notably, CMS has proposed incorporating outpatient hip and knee replacements into the episode of care definition, now that these procedures are no longer on the CMS “inpatient only” list. CMS also requests comments on a potential future bundled payment model focusing on LEJR procedures performed in ambulatory surgical centers (ASCs). CMS will accept comments on until April 24, 2020.

Highlights of the proposed rule include the following:

  • Extension of CJR Model. The CJR Model began April 1, 2016 and currently is scheduled to run through December 31, 2020. CMS has proposed extending the model for an additional three years, through December 31, 2023 for participant hospitals physically located in the 34 mandatory metropolitan statistical areas (MSAs), excluding rural or low-volume hospitals in those MSAs. CMS anticipates that approximately 350 participants would participate in the CJR model during the proposed three-year extension, compared with about 470 providers as of October 2019.
  • Outpatient Joint Replacements. The proposed rule would expand the definition of a CJR “episode” to include outpatient total knee arthroplasty (TKA) and total hip arthroplasty (THA), in light of previously-adopted CMS policies that allow total knee and total hip replacements to be treated in the outpatient setting. This change would apply to episodes initiated by an “anchor procedure” furnished on or after October 4, 2020 (because the 90-day episode would end on or after January 1, 2021, the first day of proposed new plan year 6). CMS proposes to group all outpatient TKA procedures into MS-DRG 470 (LEJR without complications and/or comorbidities) without hip fracture historical episodes for purposes of calculating a single, site-neutral target price. Outpatient THA cases would be grouped into either MS-DRG 470 with hip fracture or MS-DRG 470 without hip fracture depending on hip fracture status.
  • Target Price Calculation. CMS has proposed changing the basis for the target price from three years of claims data to the most recent one year of claims data. The proposed rule also would discontinue the use of the regional and hospital anchor weighting steps in the target price calculation methodology, and it would end the annual updates to the target prices. Furthermore, CMS proposes to incorporate additional risk adjustment to the target pricing and modify the high episode spending cap calculation methodology.

The proposed rule also would, among other things:

  • Modify the reconciliation process, including adding a market trend adjustment and incorporating two patient-level risk factors to the target prices during reconciliation.
  • Eliminate the 50% cap on gainsharing payments, distribution payments, and downstream distribution payments when the recipient of these payments is a physician, non-physician practitioner, physician group practice, or nonphysician practitioner group practice for episodes that begin on or after January 1, 2021.
  • Make changes to the appeals process in order to clarify the reconsideration review (second level appeal) process.
  • Extend the waiver of the skilled nursing facility three-day rule, and extend the waiver of direct supervision requirements for certain post-discharge home visits to hospitals furnishing services to CJR beneficiaries in the outpatient setting.

Finally, because CMS has authorized TKA procedures to be covered by Medicare in the ASC setting beginning January 1, 2020, and because “advances in medical technologies and surgical techniques may make ASCs an appropriate setting for THAs at a future point in time,” CMS invites comment on the design of a potential future bundled payment model for LEJR procedures performed in ASCs. Further, CMS seeks comments on how such a model “could better recognize the role of the surgeons and clinicians in LEJR episodes.”