CJR Background

On August 15, 2017, CMS announced a proposed rule to reduce the number of mandatory geographic areas participating in the Center for Medicare and Medicaid Innovation’s (Innovation Center) Comprehensive Care for Joint Replacement (CJR) model from 67 to 34.

In addition, CMS proposes to allow CJR participants in the 33 remaining areas to participate on a voluntary basis. In this rule, CMS also proposes to make participation in the CJR model voluntary for all low volume and rural hospitals in all of the CJR geographic areas.

CMS also is proposing through this rule to cancel the Episode Payment Models (EPMs) and the Cardiac Rehabilitation (CR) incentive payment model, which were scheduled to begin on January 1, 2018. Eliminating these models would give CMS greater flexibility to design and test innovations that will improve quality and care coordination across the in-patient and post-acute-care spectrum.

Moving forward, CMS expects to increase opportunities for providers to participate in voluntary initiatives rather than large mandatory episode payment model efforts. The changes in the proposed rule would allow the agency to engage providers in future voluntary efforts, including additional voluntary episode-based payment models.

The EPMs and the CR incentive models were designed as mandatory payment models and implemented via notice and comment rulemaking to test the effects of bundling cardiac and orthopedic care beginning in 2018. They were established by the Innovation Center under the authority of section 1115A of the Social Security Act (the Act).


why hip and knee replacement?

Department of Health and Human Services reported that hip and knee replacements are among the most common surgeries undergone by Medicare beneficiaries. Currently the cost and quality of these surgeries varies greatly across providers, facilities, and regions. To improve quality across the board, the Comprehensive Care for Joint Replacements payment model continues to pay providers under existing payment systems, but holds hospitals responsible for the quality and costs from the initial procedure through 90 days after the patient is discharged. CMS believes that this strategy will motivate hospitals to work more closely with other members of the patient’s care team, such as physicians, nursing facilities and home health agencies. Increased coordination could reduce avoidable complications after surgery and decrease the risk of additional hospitalization.


What is a bundled payment?

Often hospitals and providers are paid by insurance agencies for each service that they provide. Every piece of the process is billed separately, including treatment for complications that arise after a surgery. Under the Comprehensive Care for Joint Replacement initiative, the hospital where the surgery is performed would be responsible for the entire episode of care. This means that depending on the quality and cost of performance, the hospital would either repay a portion of the cost to Medicare or earn a financial reward based on the actual cost of the episode. The hospitals would consequently have a financial incentive to provide high-quality, value-based care for their patients from the initial surgery to 90 days after they are discharged.


how will the initiative improve patient outcomes?

CMS believes that giving hospitals financial incentives for helping patients recover and stay healthy following a procedure will increase accountability in patient care and improve the quality of care during the transition from surgery to recovery.

This could boost patient outcomes by making successful surgery and recovery the hospital’s top priority. Having a care team that works closely together and engages the patient in their own care could reduce avoidable post-surgery complications, creating a better patient experience and increasing quality and resulting in a better economic value.

How does this mandatory payment model work?

  • Calculation of payment begins after conclusion of a performance year where the actual episode payment is based on MSA claims data and is risk-adjusted. A hospital’s payment will be calculated based on the target price (set at the end of 2016) and adjusted based on quality and post-episode spending. If the actual cost is greater than the target price, the hospital would be required to make a reconciliation payment to CMS.
  • Quality measure and reporting requirements include surgical complications, patient experience, voluntary submission of patient reported outcomes, and incentives for year-over-year improvement. Minimum quality thresholds must be met before any gain sharing can be earned.
  • Eligible beneficiaries include Medicare FFS only, not Medicare Advantage.
  • This is the first time that CMS implemented a bundled payment model in which providers are required to participate.
  • The accountable entity bearing financial risk is the acute care hospital where the surgery is performed.
  • The responsible episode period starts on the date of admission to the acute care facility and ends 90 days after discharge.
  • Downside risk reconciliation began in FY2017.

quality measure methodology

Hospitals have the opportunity to cut the episode discount by 50% if they can achieve high levels of quality performance. For example, the discount can be decreased from 3.0% to 1.5% in years 4 and 5 by scoring well in areas including surgical complication rates and HCAHPS. These measures are combined into a composite quality score. CMS also provides an additional bonus for voluntary submission of PROs.

Based on relative rankings of surgical complication rates and HCAHPS, CJR hospitals will earn ‘points’ towards the composite quality score. Hospitals can earn 2 bonus points for voluntary submission of PROs and up to 1.8 bonus points if they achieve a 3% improvement in HCAHPS and/or surgical complication rates from the prior year.

Based on their composite quality scores, hospitals would be given one of four grades: “Excellent”, “Good”, “Acceptable” or “Below Acceptable”. These grades affect the hospital’s target prices for lower extremity joint replacements. Target prices increase as scores improve.

What does this mean?

Annually, a hospital will get a series of points that convert into a composite quality score:


Voluntary submission of THA/TKA patient-reported outcome measures is the easiest thing that hospitals can do to get started on the road to gain sharing. Submission of PROs offers a 2 point bonus on quality scores and is the first step towards measuring and improving outcomes.

Hospitals will need to report 50% of their patients’ PRO data or at least 50 patients to earn two additional bonus points on their composite quality score.

PRO measures that CMS is accepting include VR-12 OR PROMIS-Global, Knee injury and Osteoarthritis Outcome Score (KOOS) or Hip injury and Osteoarthritis Outcome Score (HOOS), Total painful joint count, Quantified spinal pain, Single Item Health Literacy Screening (SILS2) questionnaire, and a few basic clinical measures.


While capturing PROs is a nice start, hospitals will need to engage their patients to drive HCAHPS, reduce unnecessary utilization, and optimize for cost reduction. CMS has waived certain anti-kickback statutes in an effort to align hospitals and physicians to collaborate for better quality and lower costs.

The provision will provide hospitals the ability to donate up to $1,000 for patient engagement technologies and services provided the in-kind donation supports the beneficiaries adherence to a care plan and is utilized during the episode period.

Learn more about CJR with our easily understood kit, “What You Really Need to Know About CJR”


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