DataGen’s article was recently featured on www.ajmc.com.
CMS finalized its proposal to allow about half of the hospitals in the Comprehensive Care for Joint Replacement (CJR) program to discontinue participation beginning January 2018. Now hospitals in the voluntary Metropolitan Statistical Areas (MSAs) are scrambling to decide whether to leave the program or continue to participate. Many factors are involved in this decision, including investment in infrastructure, care management processes, and physician and leadership engagement. This article focuses on the financial results that may accrue to a participating hospital throughout the remainder of the CJR program as a result of the migration from historical baseline to regional target rates, and rebasing of the historical baseline.
Winners and Losers at Different Times
Financial success in the CJR program occurs in 2 ways, depending on the performance year. In the first 2 performance years, the episode financial targets are derived primarily from the hospital’s cost during the initial baseline period (2012-2014), while in the last 3 years of the program, the financial targets are derived primarily from the average episode costs of other hospitals in the same geographic region. Therefore, hospitals whose use of postacute services is generally inefficient (postacute cost exceeding 50% of the total episode cost) have high baseline costs and correspondingly high targets, and may have greater opportunities to reduce the postacute cost and achieve savings during those periods. However, during the last 3 years of the program, targets are increasingly or entirely derived from the regional average costs, which are often significantly lower than an inefficient hospital’s baseline cost. Unless inefficient hospitals have significantly reduced postacute cost during the early years of CJR, they may find the transition to regional targets will reverse any previous surpluses and will instead generate losses in the last 3 years of the program.