CMS Proposes Three-Year Extension, Additional Outpatient Coverage for CJR Bundled Payment Model

The federal government on Thursday issued a proposed rule that would extend the Comprehensive Care for Joint Replacement (CJR) bundled-payment model for an additional three years — while also expanding its reach to include outpatient procedures.

Initially set to expire on December 31, CJR would remain active through the end of 2023 if the Centers for Medicare & Medicaid Services (CMS) finalizes the proposal as-is.

Currently in place in 67 markets across the country, CJR seeks to reduce overall Medicare spending on hip and knee replacements, the most common surgeries for those enrolled in the program. In essence, the model encourages operators along the spectrum — from the hospital to the skilled nursing facility to the home — to curb the entire episodic cost of each patient’s procedure by providing a single retroactive payment for all services incurred during that timeframe.


Under the current iteration of CJR, the episode begins when a patient is admitted to the hospital, though that would change under the proposed rule.

“The proposed rule also proposes to make changes to the definition of a CJR ‘episode’ to include outpatient knee and hip replacements,” CMS wrote in a fact sheet on the new rule. “We are proposing this episode definition change in order to address changes to the inpatient-only (IPO) list that now allow for total knee and total hip replacements to be treated in the outpatient setting.”

A CMS list of participating CJR skilled nursing facilities in the first quarter of 2020 features more than 9,300 individual buildings.


In practice, much of the savings achieved since the program was implemented in 2016 has come at the expense of skilled nursing facilities. A team of Harvard researchers in 2019 determined that CJR cut episodic spending by $1,084 per patient, a figure that “was nearly exclusively related to reductions in the use of post–acute care services in skilled nursing facilities and inpatient rehabilitation facilities.”

A second study from The Lewin Group, released last summer, determined that CJR reduced per-patient Medicare spending by almost $1,000 per episode, with $508 attributable to lower SNF utilization. Skilled nursing lengths of stay dropped by 2.3 days — all without notable changes in resident outcomes.

“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.”

Lewin was unable to determine if the program saved the overall Medicare program money due to ambiguities around bonus payments that operators receive for beating certain spending benchmarks.

But for some operators on the ground, CJR’s effects have been real and measurable. LindenGrove Communities, a non-profit senior living and care operator in Wisconsin, was forced to substantially scale back its long-term care services last spring in part because of CJR, according to CEO Linda Joel.

For years, the higher reimbursements for short-term Medicare rehab patients helped cover the losses that LindenGrove incurred on its Medicaid long-stay patients. But CJR, along with increased Medicare Advantage penetration, eventually made the balancing act too difficult to pull off.

“We’re a non-profit company. We don’t have deep pockets,” Joel told SNN last year. “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.”

The proposed rule would also bring a host of changes to the nuts and bolts of CMS’s payment calculations in CJR, reducing the number of reconciliation periods from two to one and basing target pricing for services on the most recent year instead of a three-year average.

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