After Demonstrating Value, CJR Likely To Be Extended

By: Alyssa Dahl & John Kalamaras

DATE: March 31, 2020

CMS released a new proposed rule that would extend the life of its Comprehensive Care for Joint Replacement program. Riding on the success that CJR has demonstrated in helping lower costs for participants, the new rule would keep CJR running for three more years.

Under the new proposed rule, CJR would run through December 2023, creating three more year-long performance periods to evaluate — and generating an estimated $269 million in savings for the Medicare program. Part of the extension includes a goal to test MJRLE episodes in the outpatient setting and to incorporate some methodological advancements into the program.

Top changes to watch

For the first time, knee and hip replacement episodes could begin in an outpatient setting. These procedures were taken off Medicare’s inpatient-only procedure list effective Jan. 1, 2018, for knee replacements and Jan. 1, 2020, for hip replacements.

The proposed rule introduces several changes related to target price methodology:

  • Regional target prices would be based on one year of claims history, as opposed to the current program, which bases prices on three years of claims history. This could make target prices more difficult for some participants.
  • Inpatient and outpatient episode target prices would be site-neutral.
  • There would be additional risk adjustments for certain characteristics, such as the presence of comorbidities and age, based on national trends.
  • There would be simplified approach to account for payment trends following the baseline. This is especially important as lower market spending would also be captured, making target prices more competitive.

Additional proposed changes include a larger discount factor in the target price made available to providers with high quality, a simplified reconciliation process and the removal of some previous gainsharing limits.

Positive news for participants

This proposed rule is a good indicator that CMS recognizes the positive impact of CJR and sees the value it can generate in the future. It also indicates that CMS is accounting for the ways MJRLE care delivery has evolved, since these procedures can now be performed in outpatient settings for Medicare patients.

Another positive aspect of the proposal is that CMS is trying to more effectively operationalize the program in terms of episode definitions, target setting and the overall reconciliation process. These updates all point to a possible continuation of the program in the future.

Potential drawbacks of the proposed rule

Unfortunately, not all of the changes are good news for participants. The biggest disappointment is the exclusion of providers currently in CJR under voluntary status. This change would impact 86 providers across the country; these providers chose to stay as voluntary participants in the current program, demonstrating a strong commitment to CJR’s care transformation goals and the value-based care movement.

It is possible that these excluded providers could move to Bundled Payments for Care Improvement-Advanced to stay engaged with Medicare episodes, but we see a few challenges with that:

  • It may not be possible for providers who aren’t already enrolled in BPCI-A to get in, since CMS has not announced any future enrollment periods after BPCI-A’s model year 3.
  • BPCI-A participants who aren’t already in a MJRLE episode may not be able to opt in, as CMS hasn’t clearly stated if there will be additional periods to add or drop clinical episode categories in BPCI-A going forward.

Future considerations

Looking ahead, there are still a few things CMS may need to address to ensure the best financial and quality outlook for MJRLE procedure episodes. For example, CMS may need to establish a benchmark price that reflects the point at which efficient providers simply can’t reduce expenditures any further. This type of threshold can help prevent the possibility of participants entering a “race to the bottom” scenario with targets. In addition, CMS will eventually need to expand the program beyond its initial geographies to engage more eligible providers in MJRLE care transformation efforts on a larger scale.

Regardless, it’s good news that CMS is looking to evolve and extend the program. Cutting the program now after it has demonstrated success would be a loss.

The additional performance years should give the rest of the industry some strong indicators of what a bundled program operating at optimal efficiency can return to participating providers and their patients.

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