CMS Announces New CJR Bundled Payment Model

Hip and Knee Joint Replacement surgeries are among the most common surgeries Medicare beneficiaries receive. In 2013, there were more than 400,000 procedures, costing Medicare over $7 billion for hospitalizations alone. To make matters worse, the average episode price for such procedures varies greatly across the United States, from $16,500 upwards to $33,000.


For these reasons, the Center for Medicare and Medicaid Services (CMS) developed the new Comprehensive Care for Joint Replacement (CJR) payment model. The goals of this new bundled payment model are to minimize the discrepancy in episode price for hip and knee joint replacement surgeries. Over the five years of the model, CMS expects to save $343 million.

CMS intends the CJR model to encourage collaboration among providers and others involved in the care continuum to improve the quality and coordination for episodes of care involving Major Joint Replacement (MS-DRG 469/470). An episode of care is defined as the admission of a patient through 90-day post-discharge. Participating hospitals will be incentivized to deliver a high-standard of quality of care at the lowest cost.

CMS intends to mandate bundled payments for 25% of orthopedic hip and knee replacements in the upcoming year. As a part of this initiative, the CJR payment model will be implemented in 67 Metropolitan Statistical Areas (MSAs), totaling about 800 hospitals. All acute care hospitals paid under the Inpatient Prospective Payment Systems (IPPS) within these MSAs, except for those participating in Model 1, 2, or 4 of the Bundled Payment Care Initiative for LEJR episodes, are required to participate.

CJR Payments and Target Prices

The CJR is a retrospective bundled payment, meaning participating hospitals will be reimbursed at the end of each performance year. Reimbursement amounts are dependent on a hospital’s ability to achieve an actual episode spending below the target prices and a minimum quality score. All providers and suppliers will continue to be paid under existing fee-for-service Medicare payment models.

Target prices for both MS-DRG 469 & 470 will be set by CMS at the beginning of each performance year, based on a blend of hospital-specific and regional data. Hospitals that spend below this price point, and maintain a standard of quality, will be eligible for reimbursements for the difference. However, these reimbursements are capped at a percentage. The repayment policy for hospitals spending above target prices is currently being finalized, but this will not be required during the first performance year.


CMS intends to mandate bundled payment models for 25% of hip and knee joint replacements in 2016. Is your organization set up to meet these requirements?

CJR Quality Measures

As mentioned above, all participating hospitals in the CJR model must reach a minimum quality score in order to receive reimbursements from CMS. This quality score is composed of three measures:

  • Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA);
  • Hospital-Level 30-day, All-Cause Risk-Standardized Readmission Rate (RSRR) Following Elective Primary THA and/or TKA; and
  • Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS Survey

Hospitals are given the opportunity to have reimbursements adjusted annually if they submit complete data (80%) on a patient-reported functional outcomes – Hospital-Level Performance Measure(s) of Patient-Reported Outcomes Following Elective Primary THA and/or TKA.

Hospitals in these 67 MSAs will need to redefine the value of care they deliver to patients undergoing hip and knee replacement surgeries. In order to improve outcomes and achieve reimbursement, they will need to figure out how to deliver the right care at the right time. Successful hospitals will develop a well-coordinated process, incorporating systematic measurement of PROs, patient management systems, faster modes of communication, and content delivery. In short, providers will need to learn how to collaborate with other in the care continuum, as well as technology. Are you ready for CJR?

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