Comprehensive Care for Joint Replacement (CJR) is a new CMS program announced in July, 2015 that creates the first mandatory bundled payment program. CJR puts hospitals at risk for the total cost of an episode of care for Total Joint replacement (DRGs 469 and 470), which includes the 90-day post-acute period.
While many were surprised by CMS’s announcement of this program, in retrospect, we all should have seen this coming. Why? Because CJR is the continuation of a trend towards value-based care that has accelerated over time and CMS has very publicly committed to pushing it forward. CMS has been leading the charge (followed by commercial payers) in shifting risk to providers and making payments based on quality and outcomes as opposed to volume. CMS’ creation of the DRG system of payment for inpatient hospital stays was an early form of shifting some risk to the hospital. CMS pays a fixed amount and the hospital will either make or lose money on each hospital stay depending on whether its costs are above or below that DRG payment. New in the recent bundled payment programs is that the costs for which hospitals are at risk generally includes a period of post-acute care in addition to the inpatient stay.
CMS has launched two bundled payment programs leading up to CJR. The first was the Acute Care Episode (ACE) demonstration program announced in 2009, which was a limited bundled payment program in 4 states covering the inpatient stay for certain cardiovascular and orthopedic episodes. Eligible organizations needed to be an affiliation between at least one physician group and at least one hospital that routinely provided the procedures. In 2013 CMS launched the Bundled Payment for Care Improvement (BPCI) Program, a voluntary national program. Participants in BPCI could choose from 48 episodes of care and could choose between a 30 and 90 day post-acute period for the episodes. Physician groups, hospitals and non-providers were permitted to take the economic risk on the episode of care.
CJR is a direct offshoot of these prior programs. It is largely based on BPCI model 2 (the most popular of the 4 models available) but is limited to the Total Joint Replacement episode of care with a 90 day post-acute period. The primary and most important difference is that CJR is mandatory. The hospital is put at risk by CMS for every episode that originates with a surgery at the hospital.
The answer to the question “Why should you have seen this mandatory shift coming?” is the same as the answer to the question “Where is all this going?” On January 26, 2015 CMS announced that by 2016, 30% of its payments to providers will be through alternative payment models--particularly accountable care organizations (ACOs) and bundled payments-- and this will rise to 50% of all payments by 2018. The Health Care Transformation Task Force (several of the nation's largest health systems and insurers) also announced in January 2015 the goal of shifting 75% of their business to contracts with incentives for quality and lower-cost healthcare by 2020.
CMS will not achieve these goals unless it makes these risk shifting programs mandatory. CMS has made it clear that it will not stop at the 50% target it has set for 2018 and will continue to shift more payments to risk based contracts. It is critical in this environment to: understand your costs and have the ability to collect and analyze your claims data; redesign and coordinate care across all providers; and design incentives so that providers and the hospital are aligned. Stryker Performance Solutions is uniquely positioned to assist you in developing all of these needed capabilities.
Paul Jawin, JD
Vice President, Stryker Performance Solutions
Paul.Jawin@stryker.com
Paul brings more than 30 years of legal, business, financial and capital markets experience to his role in developing physician alignment and payment reform programs. A co-founder of Comprehensive Care Solutions—acquired by Stryker in 2012—he has helped physician organizations and health systems align and turn reform into opportunity by utilizing new payment and delivery structures, including Accountable Care Organizations (ACO) and bundled payments.
Paul is a regular speaker at industry conferences and events, including the American Academy of Orthopaedic Surgeons Hospital-Physician Alignment Symposium. He co-founded and served as Senior Vice President and General Counsel of Secured Independence, Inc., and has held senior executive positions with public and private companies involved in real estate and senior housing. Paul has a Bachelor of Arts degree in History from Ithaca College, and practiced corporate, securities and real estate law in New York City for more than 10 years after graduating from Syracuse University School of Law with a Juris Doctor degree.