CMS Proposes Hip/Knee Bundle Extension; Adds Outpatient Procedures
The episode-based or bundled payment model has been used in health care for years. The goal of bundles is to alter the trajectory of payment from one of volume to value while providing more coordinated, high quality care across a patient’s full health care episode. The Centers for Medicare & Medicaid Services (CMS) through the Center for Medicare & Medicaid Innovation (CMMI) has used bundled payments to drive more value, most recently unveiling changes to the current mandatory Comprehensive Care for Joint Replacement (CJR) model.
Current CJR Model
The CJR model began in 2016 and is slated to end December 31, 2020. It is a mandatory Medicare episode-based payment model for inpatient total hip (THA) and knee replacements (TKA). The model originally applied to all prospective payment system (PPS) hospitals in 67 Metropolitan Statistical Areas (MSAs). In 2017, CMS scaled the model back to 34 MSAs. See table. Hospitals in the remaining 33 MSAs were allowed a one-time option to voluntarily opt-in to the model. Low-volume, rural hospitals were exempted from the model. Episodes are triggered by an anchor hospitalization and span 90 days post-acute. Hospitals are held financially accountable for the cost of an entire episode.
Proposed CJR Model
On February 20, CMS released a proposed rule that would extend the model another three years (through 2023). The model would remain mandatory in the current 34 MSAs. CMS would terminate all voluntary participation after 2020.
One of the larger changes in the proposed rule is the inclusion of outpatient (OP) knee and hip replacements into the model. The original CJR bundle began when THA and TKA were only done in the inpatient settings. For 2018, CMS moved TKA off the inpatient only list (IPO) and then THA off IPO for 2020.
CMS Continues Site Neutral Approach
In the proposed rule CMS states that in 2018, the first year TKA was no longer on the IPO list, 25% of TKAs occurred in the outpatient setting. Additionally, CMS specifically refers to various site neutral polices it has already finalized, and states, “we do not want to create separate prices for inpatient and outpatient CJR episodes.”
With this in mind and based on various analyses, CMS proposes to map the OP procedures to MS-DRG 470 either with or without a hip fracture. There will continue to be four possible MS-DRGs:
- MS-DRG 470 with hip fracture (which would include OP THA episodes with hip fracture).
- MS-DRG 470 without hip fracture (which would include OP TKA episodes and OP THA episodes without hip fracture).
- MS-DRG 469 with hip fracture.
- MS-DRG 469 without hip fracture.
In determining a hospital’s target price, CMS also proposes some larger changes, such as:
- Using the most recent year of claims data instead of three years of standardized historical episode spending;
- Removing national trend factors;
- Removing regional and hospital anchor weights; and,
- Changing the cap for high cost episodes from two standard deviations to the 99th percentile.
CMS also proposes adjustments to the reconciliation process, including risk adjusting the target price for age and CMS-HCC condition count. CMS would then apply a national normalization factor and a national market trend factor. Finally, the quality score adjusted discount factor is applied. CMS proposes changes to the discount factor to better recognize “good” and “excellent” quality.
CMS makes other policy changes, such as eliminating the cap on gainsharing and downstream distribution payments, and extending waivers.
Watch for a more detailed look at bundles, including CJR, in a forthcoming CLA article. If you have questions or need assistance in the interim, please feel free to reach out.
Jennifer Boese is the Director of Health Care Policy at CLA. She is a highly successful public policy, legislative, advocacy and political affairs leader, including working in both the state and federal government as well as the private sector. She brings over 20 years of government relations and public policy knowledge with her to CLA. Well over half of her career has been spent dedicated to health care policy and the health care industry, affording her a deep understanding of the health care market and environment, health care organizations and health care stakeholders. Her role at CLA is to provide thought leadership, policy analysis and strategic insights to health care providers across the continuum related to the industry's ongoing transformation towards value. A key focus of that work is on market innovations and emerging payment models. Her goal is to help CLA clients navigate and thrive in an increasingly dynamic health care environment.
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