United States: New CMS Proposed Rule: Comprehensive Care For Joint Replacement

On July 9, 2015, the Centers for Medicare & Medicaid Services ("CMS") announced a proposed rule to test a new payment model, the Comprehensive Care for Joint Replacement ("CCJR"), for hip and knee replacements (also called lower extremity joint replacements or "LEJRs") (the "CCJR Proposed Rule"). The average Medicare expenditures for LEJRs, including surgery, hospitalization, and recovery, can range from $16,500 to $33,000. The CCJR Proposed Rule is designed to test bundled payment models and hold certain hospitals that do not otherwise participate in the Bundled Payment for Care Improvement ("BPCI") initiative financially accountable for the quality and cost of care provided to Medicare beneficiaries. BPCI is a demonstration project being conducted by the Centers for Medicare and Medicaid Innovation ("CMMI") to test the effects of episode-based payment.

Previously, on January 26, 2015, Health and Human Services ("HHS") Secretary Burwell announced an aggressive timeline to transition 30 percent of traditional Medicare fee-for-service payments to an alternative payment models by 2016. This CCJR Proposed Rule evidences the federal government's continued efforts toward its goal of meeting its ambitious timeline for risk-based payment model and to increase coordination among doctors, hospitals, health care professionals, and suppliers, while improving quality of care for and accountability to patients.

As discussed in more detail below, many elements of the CCJR model incorporate guidelines and requirements from the ongoing BPCI initiative.

Mandatory Participation and Proposed Timeframes

Unlike the voluntary, application-based BPCI initiative, the proposed CCJR model requires hospitals that are located in 75 specified geographic areas in 33 states to participate in this bundled payment reimbursement model. Each of the specified geographic areas, defined by Metropolitan Statistical Areas ("MSAs"), has a core urban population of 50,000 or more and had at least 400 eligible lower extremity joint replacement cases for Medicare beneficiaries between July 2013 and June 2014. All hospitals located in the selected MSAs that do not currently participate in Model 1 of the BPCI or in phase II of Model 2 or Model 4 of the BPCI for the MS-DRGs 469 and 470 (the lower extremity joint replacement clinical episodes) are mandatorily required to participate in the CCJR model. A list of proposed geographic regions is available on the CMS website. No application is required for participation within the identified geographic areas.

The CCJR model, a five-year payment model, is proposed to be implemented on January 1, 2016.

CCJR Model Design and Pricing

Like Model 2 of the BPCI initiative, CCJR is a "retrospective bundled payment model" designed to promote accountability for the cost and quality of patient care by reconciling the actual health care spend for an episode of care ("Episode of Care") against a predetermined target price. For CCJR, an Episode of Care is initiated by an inpatient admission billed under MS DRG 469 or 470 of an eligible Medicare fee-for-service beneficiary to the hospital and continues for 90 days following discharge. The Episode of Care would include all related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries, including physicians' services, inpatient hospital service, readmissions (subject to limited exceptions), skilled nursing facility services, durable medical equipment, and Part B drugs.

Prior to the start of each performance year, CMS will set a target price for each hospital for each of the two Episodes of Care. The target price generally will include a 2 percent discount over expected episode spending, and it incorporates a blend of hospital-specific and regional spending for knee and joint replacement episodes. Over time, regional Medicare costs will weigh more heavily in the target price mix.

During an Episode of Care, all providers and suppliers providing Medicare Part A and Part B services will continue to be paid under the current Medicare fee-for-service payment system. Following the completion of a CCJR performance year, hospitals that achieve actual spending below the target price per Episode of Care and meet certain quality performance thresholds will receive a reconciliation payment from CMS for the difference between the target price and actual episode spending, subject to a cap. Starting from the second CCJR performance year, participant hospitals that exceed their target price for the Episode of Care will be responsible for paying the difference to CMS. As noted above, to qualify for a reconciliation payment from CMS, hospitals must also meet the quality performance standards, which are based on the following measures: complications, readmissions, and patient experience surveys. For each CCJR performance year, the quality requirements will be adjusted to encourage and improve hospitals' performance.

Payment Waivers

Similar to the BPCI initiative, the proposed CCJR model includes waivers of certain existing payment system requirements to promote timely, cost-effective, and accessible care. These waivers include the requirement for a three-day inpatient hospital stay prior to admission for a covered skilled nursing facility admission (the three-day stay rule), allowing payment for physician-directed home visits for non-homebound beneficiaries without meeting certain direct supervision requirements and allowing payment for certain physician visits to a beneficiary in his or her home via telehealth.

Financial Arrangements

As part of the CCJR model, although hospitals are not required to do so, CMS anticipates that many hospitals may want to enter into certain financial arrangements with other providers and suppliers (generally referred in the CCJR Proposed Rule as "Collaborators") who are engaged in care redesign and provide services as part of the continuum of care. The CCJR Proposed Rule permits participating hospitals and Collaborators to enter into sharing arrangements for the following: a hospital's internal cost savings, net reconciliation payment amounts (shared savings) from CMS, and a hospital's responsibility to repay CMS. As proposed, these sharing arrangements permit Collaborators to receive "gainsharing" or "alignment" payments provided certain requirements are met. A "gainsharing" payment refers to an amount distributed from a hospital to a Collaborator. An "alignment" payment refers to an amount distributed from a Collaborator to a hospital (e.g., to help repay shared losses owed to CMS).

A gainsharing payment to a Collaborator must be distributed on an annual basis pursuant to an agreement that satisfies the required elements for a sharing arrangement. For instance, the calculation, distribution, and frequency of distribution of gainsharing payments must be identified in the agreement and administered in accordance with generally accepted accounting principles. Any internal cost savings distributed as a gainsharing payment must be based upon the measurable, actual, and verifiable hospital internal cost savings achieved through care redesign activities and "may not reflect 'paper' savings from accounting conventions or past investment in fixed costs." CCJR Proposed Rule at 41264. The aggregate amount of gainsharing payments distributed by hospitals to Collaborators cannot exceed the reconciliation amount received from CMS. As with the BPCI initiative, the total amount of an annual gainsharing payment paid to an individual physician or non-physician practitioner who is a Collaborator must not exceed 50 percent of the total Medicare-approved amounts under the Physician Fee Schedule for services furnished during an Episode of Care.

The CCJR Proposed Rule also sets forth limits on an alignment payment from Collaborators to a participant hospital for repayments to CMS. For instance, an alignment payment to be received from Collaborators during a performance year may not exceed 50 percent of a repayment amount due to CMS, while participant hospitals must remain responsible for at least 50 percent of such repayment amount.

Alternative Payment Program Overlap

The CCJR payment model is intended to build upon existing alternative payment programs (e.g., Medicare Shared Savings Program accountable care organizations and BPCI). To avoid overlap with ongoing CMS initiatives, hospitals participating in BPCI Model 1 or those participating in the risk-bearing phase of BPCI Models 2 and 4 for CCJR-related Episodes of Care will be excluded from participation in CCJR. In instances where overlap of Medicare beneficiaries does occur, CMS proposes that BPCI will take precedence over CCJR.

CMS will be accepting comments regarding the CCJR Proposed Rule until September 8, 2015. As such, stakeholders are best served by engaging in a careful and meaningful review of the CCJR Proposed Rule and pursuing opportunities to submit comments to CMS that might affect the ultimate course of the final rule.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions