There a lot of hot topics in health care right now. Among top trending terms like “Affordable Care Act,” “pay-for-performance,” and “value-based care,” you’ve also probably heard “Medicare bundled payments”—specifically, “CJR” (or Comprehensive Care for Joint Replacement). It’s a new bundled payment model from CMS, and it is of particular importance to outpatient rehab providers.

As this article explains, “CJR will support better care for patients who are undergoing elective hip and knee replacement surgeries—the two most common inpatient surgeries for Medicare beneficiaries.” In a nutshell, hospitals participating in CJR are “financially responsible for the quality and cost” of an elective joint replacement episode of care. CMS will award incentives for “greater coordination of care across hospitals, physicians, and post-acute care providers,” including physical therapists.

This summary sounds simple enough, but in reality, CJR is fairly complex. And in order to address whether you, as an outpatient rehab provider, should participate, we must first address that complexity.

Who must participate?

CMS implemented the CJR model in 67 geographic areas, which are defined by metropolitan statistical areas (MSAs). As this CMS resource explains, “MSAs are counties associated with a core urban area that has a population of at least 50,000.” Non-MSA counties (i.e., those with no urban core area or an urban core area of fewer than 50,000 people) were not eligible for selection. (You can view the 67 geographic areas here.)

Within those 67 areas, hospitals that (1) are not participating in “Model 1 or Models 2 or 4 of the Bundled Payments for Care Improvement (BPCI) initiative for LEJR episodes” and (2) are “paid under the Inpatient Prospective Payment System (IPPS)” must participate in the CJR model. That amounts to about 800 hospitals.

From a patient participation perspective, beneficiaries must:

  • Have Medicare (Part A or B) as their primary insurance.
  • Not be eligible for Medicare based solely on an end-stage renal disease benefit.
  • Not be enrolled in any managed care plan.
  • Not be covered under a United Mine Workers of America health plan.

How does CJR work?

Per CMS, the episode of care begins when an eligible beneficiary is admitted to a participating hospital. Eligible patients are then ultimately discharged under either:

  • MS-DRG 469: Major joint replacement or reattachment of lower extremity with major complications or comorbidities, or
  • MS-DRG 470: Major joint replacement or reattachment of lower extremity without major complications or comorbidities.

The episode concludes 90 days post-discharge and includes “all related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries,” with the exception of certain exclusions. As you may have guessed, independent outpatient therapy services are part of the related services included in the episode.

Everyone receives payment as they normally do per the Medicare Fee Schedule. However, “every year during the approximate five performance years of this model, CJR hospitals will receive separate episode target prices for MS-DRGs 469 and 470,” states CMS. As Heidi Jannenga points out in her Triumph in the Triple Aim guide, “at the completion of the performance year, the cost of each eligible episode of care is compared to the target price for that hospital. Target prices are determined based on a mix of historical data from the hospital and the region and are updated every two years. Medicare will then apply a payment adjustment—either positive or negative—based on the difference between those two amounts as well as performance quality (i.e., patient outcomes).” A positive calculation means the hospital will receive a reconciliation or incentive payment; a negative one means that “the hospital must pay back some or all of the difference.”

As for the episode target prices, CMS will determine those using a ratio of two-thirds performance to one-third regional comparison in 2016 and 2017. In 2018, that ratio will flip, and for 2019 and 2020, CMS will determine a hospital’s pricing target based entirely on how it ranks in its geographic area—the power of benchmarking, folks.

For a deeper dive into target pricing, Medicare’s payment adjustments, and quality composite scoring, check out this resource (jump to page four).

So, should rehab providers participate in CJR?

According to compliance expert Rick Gawenda’s 2016 Ascend presentation, CJR and Rehab Therapy—How Do We Coexist, CJR allows participating hospitals “to enter into financial arrangements with certain types of providers and suppliers,” including outpatient therapy providers. Those arrangements enable hospitals to share “with these third-party providers and entities (called ‘Collaborators’) the following: reconciliation payments, internal cost savings, and the responsibility for repayment to Medicare.” Of course, these arrangements are subject to limitations outlined in the CJR Final Rule; for example, there’s a limit on how much financial risk a hospital can share with a collaborator. Specifically, the hospital must retain at least 50% of its total risk. Furthermore, the hospital cannot share more than 25% of its responsibility with any single CJR collaborator.

So, as an outpatient rehab provider participating in CJR, you have the opportunity to share in the reward—as well as the risk. That has many therapists in the included geographic areas (yes, you need to be in one of the areas) wondering: should I participate? In his Ascend presentation, Gawenda proposed that pondering providers ask themselves these questions:

  • Do I receive referrals for Medicare beneficiaries who have had THAs or TKRs at a CJR hospital?
    • If yes, how many referrals per month or per year do I receive?
    • And how many visits does that translate into over the course of a calendar year?
  • What is the CJR Hospital CMS Star Rating?
  • Do I know my cost per episode for a THA and TKR patient?
  • Do I collect outcomes data on my THA and TKR patients?
  • Do I know—or am I at least aware of—the other collaborators involved in the care of my participating CJR beneficiaries?
  • Do I know the star ratings of those other collaborators?
  • Do I understand how the total cost of care per beneficiary is calculated?
  • Do I understand how quality measures and quality scores impact target pricing?
  • Do I know if the CJR hospital will perform the optional quality measures?
  • Do I have a healthcare attorney who understands CJR bundling and has my best interests in mind?

Upon answering these questions, you should feel much more confident about your decision to participate—or not. I also recommend checking out the APTA’s contracting checklist. Ultimately, what will prove most influential to your decision are the stories from those outpatient rehabilitation providers already participating. And as that feedback becomes available, we will certainly share it. On that note, if you’re currently participating in CJR, we want to hear from you! Hit us up in the comments section below.