CJR Reduced Spending $1K Per Episode by Cutting Out SNFs, But Overall Savings Picture Murky

One of the federal government’s key bundled payment programs has resulted in per-episode spending reductions of nearly $1,000, primarily by cutting lengths of stay in nursing homes and other institutional sites of care — but researchers still aren’t sure if the program saves Medicare money on the whole.

During the first two years of the mandatory Comprehensive Care for Joint Replacement (CJR) model, Medicare outlays for each patient dropped by $998 from 2016 to 2017, a new study from analytics and consulting firm Lewin Group determined.

Becker’s Hospital Review initially reported on the report — the Lewin Group’s second annual CJR analysis — late last week.


As with previous studies, the Lewin Group team determined that the savings came primarily through reductions in post-acute care: Skilled nursing stays declined by an average of 2.3 days, leading to a drop of $508 in spending on the setting; payments to higher-acuity inpatient rehabilitation facilities (IRFs) dropped by $357.

At the same time, the team from the Lewin Group found no evidence that resident care was affected.

“Quality of care, as measured by the unplanned readmission rate, emergency department visits, and mortality, was maintained under the CJR model,” Lewin concluded. “Further, by the end of the episode, CJR and comparison patient survey respondents reported similar functional status gains and pain levels from before their hospitalization to after the end of the episode.”


In fact, fewer residents discharged to the post-acute setting saw increases in their functional status from their time in institutional care.

“Orthopedic surgeons and other clinicians we interviewed and consulted were consistent in their view that home was the best place for most patients to recover,” the company noted.

First rolled out in 2016, the CJR seeks to reduce overall spending on hip and knee replacement surgeries, common procedures that typically form the backbone of most SNFs’ Medicare-reimbursed business. The Lewin Group’s research reinforces other analyses showing that the model achieves savings by slashing SNF usage; a team from Harvard University earlier this year determined that per-episode spending dropped $1,084, an outcome that was “exclusively related to reductions in the use of post–acute care services in skilled nursing facilities and inpatient rehabilitation facilities”

But the CJR model also includes reconciliation payments awarded to operators that beat predetermined spending benchmarks for the procedures. Once these bonuses were factored in, the Harvard team’s estimated savings fell to $212 per episode.

And on a more macro level, it was difficult for Lewin to make a definitive estimate on the program’s relative success or failure.

“After accounting for reconciliation payments paid to participant hospitals, Medicare savings from the CJR model was estimated to be $17.4 million, although estimated savings ranged from a net loss of $41.2 million to savings of up to $75.9 million because of uncertainty around the estimated reduction in episode payments,” the company concluded.

On the ground level, the CJR has largely been a headache for nursing home operators. In Wisconsin, for instance, non-profit provider LindenGrove Communities was forced to drastically scale back its long-term Medicare offerings because the once-steady Medicare reimbursements for joint replacements were no longer helping to offset the $5 million to $7 million that it was losing on the Medicaid business.

“We’re a non-profit company. We don’t have deep pockets,” Joel told SNN. “We don’t have a slush fund to cover those $5 to $7 million now that all of the CMS changes have occurred with short-term rehab.”

Gregory Burke, a researcher at the United Hospital Fund, was more blunt, saying that “bundling is not your friend” in a recent interview with SNN.

“The economics of a nursing home pivots off of those Medicare admissions, and if they start to dry up, that’s a really scary item,” he said. “People ought to be looking very seriously at their hips and knees and cardiac and other things that are being pushed to bundles.”

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