United States: CMS Proposes Mandatory Hospital Participation In New Bundled Payment Program For Hip And Knee Replacements

On July 14th, 2015, the Centers for Medicare and Medicaid's (CMS) latest proposed rule (Rule) introduced a new alternative payment model. The Rule proposes CMS' latest alternative payment model known as the Comprehensive Care for Joint Replacement (CCJR) Model. The model is targeted at hospitals that do not currently participate in the CMS Bundled Payments for Care Improvement (BPCI) Initiative for BPCI episodes covering hip and knee replacements.1 Under the CCJR Model, select hospitals in 75 predetermined geographic areas across the United States would be mandated to participate. All participating hospitals would be held financially accountable for the quality and cost of an "episode" of care related to each hip or knee replacement performed for a Medicare Fee For Service (FFS) beneficiary.2 The proposed rule is the latest in a series of efforts by CMS to shift payment models away from fee-for-service to alternative payment models to advance quality and efficiency of care.3

How the CCJR Model Works

Starting January 1, 2016, prior to every year during the five performance years of this test model, CMS will set "target prices" for an "episode" of care related to hip and knee replacements. The "target price" would "bundle" payment at a two-percent discount compared to standard FFS rates for all related services received by eligible Medicare FFS beneficiaries who undergo a hip or knee replacement at the participating hospital.4,5 The related services, starting from admission to the participating hospital, including the actual surgery itself, to care provided during the first 90 days following hospital discharge, would all be included under this defined "episode" of care. All providers, including hospitals, and suppliers would be paid under the usual Medicare fee-for-service model through the year for services provided during the episode of care.

Notably, however, at the end of each performance year, actual expenditures for the episode under Medicare Parts A and B would be retrospectively compared to the target price for the participating hospital. If the hospital measures up to certain quality metrics and comes in under the target price, it would be eligible to earn what is known as a "reconciliation payment"—the difference between the target price and actual expenditure for the episode of care, up to a specified cap.

On the flipside, starting in performance year two, the hospital would also be financially responsible for the amount of actual expenditures that exceed the target price, up to a specific repayment limit. To continue to incentivize providers to meet and exceed certain quality metrics and maximize efficiency of care, the CCJR Model would further increase the repayment amount limit that the participating hospital could be potentially liable for in year three of the model.

"By focusing on episodes of care, rather than a piecemeal system," Health and Human Services Secretary Sylvia M. Burwell noted that "hospitals and physicians have an incentive to work together to deliver more effective and efficient care."6

Quality Metrics

To be eligible for the reconciliation payments, the participating hospital would need to meet targets based on three quality performance requirements. The three quality metrics are:

  • Complication rate following elective hip or knee replacement surgery;
  • Hospital readmission rate 30-days following the hip or knee replacement surgery; and
  • Patient assessment of the health providers and system.7

In addition to tying payment or repayment penalties to such quality metrics, CMS noted that the CCJR model also improves quality in two other ways. Namely, CMS noted: (i) quality performance requirements for reconciliation payment eligibility would increase over the lifetime of the model, incentivizing continuous improvement; and (ii) hospitals would avoid complications and readmissions since they increase episode spending and reduce the opportunity for reconciliation payments.

Tools to Help Hospitals and Providers

To help hospitals and providers improve the effectiveness of care coordination to meet quality metrics and expend less than target prices, CMS proposes to waive certain Medicare payment system requirements in connection with the CCJR model. The proposals are as follows:

  • Waive the requirement for a three-day inpatient hospital stay prior to admission for a covered skilled nursing facility stay under certain conditions;
  • Allow payment for certain physician visits to a beneficiary in his or her home via telehealth; and
  • Allow payment for certain types of physician-directed home visits for non-homebound beneficiaries.

Additionally, the Rule would allow participant hospitals to enter into certain financial arrangements with collaborating providers engaged in care redesign with the hospital and who furnish services to the beneficiary during a CCJR Model episode. Such financial arrangements could entail the hospital sharing reconciliation payments to incentivize continued provider collaboration subject to certain parameters. Moreover, participating hospitals could also share repayment or downside risk responsibilities with collaborating providers to mitigate its own risk.

Where Does this Leave Beneficiaries?

CMS has taken care to clarify that beneficiaries would retain the freedom to choose services and providers under the CCJR Model. CMS anticipates that the only change beneficiaries should experience is improved quality and efficiency of care.

How Should Providers Prepare?

Following on the expansion of the BPCI initiative last year, this latest signal from CMS indicates that the agency is pushing forward to meet its goals of tying payment to quality. Providers, who either could be required to participate in the proposed model or are weighing the CCJR Model vs. BPCI, should consider the impact the model would have on them from a financial, strategic planning and patient care perspective. Below, we have listed a few aspects of the CCJR Model which providers should specifically weigh and which they may want to submit comments to CMS on:

  • the mandatory nature of the proposed model for selected providers;
  • the one-year timeframe within which they must be ready to modify practices to meet model requirements;
  • if a hospital could be selected for the CCJR Model, whether the hospital should be allowed to partner with a BPCI Awardee Convener for relevant episodes covering hip and knee replacements instead;
  • for entities participating in BPCI, whether they should be allowed to elect to participate in the CCJR Model instead;
  • whether the financial proposals and methodologies CMS set for the CCJR Model are achievable (e.g. 2% discount factor) and how much risk providers should be subject to under the model; and
  • what steps hospitals, orthopedic surgeons and post-acute providers should take to collaborate in preparation for the model's January 1, 2016 launch.

CMS is soliciting public comment from all stakeholders to voice concerns and suggest possible modifications through September 8, 2015. Please feel free to reach out to us with any questions on the CCJR Model or for assistance in submitting comments to CMS.


[1] Hospitals currently participating in Model 1 or Phase II of Models 2 or 4 of the Bundled Payments for Care Improvement (BPCI) initiative for the lower extremity joint replacement clinical episode would be excluded from this CCJR Model. More information on proposed hospital participants can be found in the Proposed Rule.

[2] For a list of the 75 geographic areas, see here. The geographic areas were defined by metropolitan statistical areas (MSAs), or counties associated with a core urban population of at least 50,000. Eligible MSAs must have had at least 400 eligible hip or knee replacement cases between July 2013-July 2014, of which no more than 50% occurred in a Maryland hospital or a hospital participating in the Bundled Payment for Care Improvement (BPCI) initiative for hip or knee replacements.

[3] For more on CMS' goals, see here.

[4] The two-percent discount would be over the expected episode spending and incorporate a blend of historical hospital-specific spending and regional spending for hip and knee replacement episodes, with the regional component of the blend increasing over time.

[5] The episode would be for care related to MS-DRG 469 or 470.

[6] See July 9, 2015 CMS press release here.

[7] The specific quality indicators are also known as National Quality Forum # 1550, 1551, and 0166, respectively. More information on the quality metrics can be found in the Proposed 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.

Events from this Firm
30 Jan 2018, Webinar, Los Angeles, United States

Augmented by guest lecturers from government and the private sector, this webinar series will combine teaching of the key rules with war stories from the front lines and practical advice from experienced practitioners.

30 Jan 2018, Webinar, Los Angeles, United States

Liisa Thomas will present “Preparing for a Breach When It Happens” at the Data Privacy & Security Summit 2018 in Washington DC.

1 Feb 2018, Seminar, California, United States

The annual PIHRA Legal Update Seminars provides you with the latest California employment law related updates, compliance and regulatory issues, and the opportunity to network with legal practitioners and HR professionals.

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