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CJR: Playing the Waiting Game

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June 6th, 2017

On April 1, 2016, the Comprehensive Care for Joint Replacement (CJR) model program took effect, affecting roughly 800 hospitals across 67 markets.  Prior to the program becoming active, Leavitt Partners published a blog post stating, “Time will tell whether hospitals and providers will succeed with quality improvements and savings generation under this new program.” One year into the program, this post explores what we have learned from CJR and how the data generated by this model could affect decision-makers over the next several years.

CJR is a Centers for Medicare and Medicaid Services (CMS) five-year mandatory reimbursement model that reimburses hospitals under the usual fee-for-service payment system for any patient being discharged with a specific code (MS-DRG 469 or 470 (major joint replacement or reattachment of lower extremity, 469 is with major complications/comorbidities, 470 is without complications)). Participating hospitals are required to manage the patient for the entire 90-day episode of care. At the end of the performance year (PY), payment reconciliation occurs by comparing actual payments to benchmarks and making adjustments, including both shared savings and shared losses.

Bundled payment programs such as CJR have been increasing in number in both the public and commercial sector due to the relative simplicity in attribution and payment methodology.  However, it is also anticipated that mandatory bundles will face increased scrutiny from HHS Secretary Price as he guides the current administration’s health policy initiatives. Expansion has already been delayed from July 1 to Oct 1 through an interim rule and could be further delayed until Jan 1 to align payment and calendar years. This delay may signal the potential shift from a mandatory to voluntary model. Staying the course on CJR will allow additional data to be created and analyzed, giving the industry a better understanding of whether this program can effectively improve quality and reduce cost. Also, as CJR is the first mandatory bundle from CMS, there is the potential to learn a substantial amount regarding the administration of mandatory bundles that may be valuable in the transition to value-based care without the bias of voluntary participation selection.

The issue with analyzing early results of CJR is that much of the national-level data hasn’t been reported.  Some important early data in CJR is not going to CMS, but instead coming from them in the form of benchmark pricing. This knowledge allows hospital organizations to use their existing data and information to refine their treatment methods and advance standardized care pathways as required to meet or exceed these pricing goals, continually improving care and lowering cost in the process.

An area of growth for hospitals, spurred by CJR, is expanding outside their own walls to include quality, outcomes, and costs in the post-acute care (PAC) space. While some organizations may already have this infrastructure in place, many hospitals are in the process of expanding their PAC networks to contract and work more directly with skilled nursing facilities (SNFs), physical therapists, and other PAC providers to effectively manage these elements.

Early indications are that many hospitals appear to be continuing collaborations and expanding care coordination efforts with PAC providers, SNFs, and other key groups to meet their needs. They may find that merging with or acquiring these groups or capabilities into their hospital system will be beneficial, not only for meeting the CJR requirements but for other voluntary CMS initiatives like the Bundled Payments for Care Improvement (BPCI) program and the Medicare Shared Savings Program (MSSP).  Another option that may improve quality and reduce cost is for hospitals to refine their PAC networks to only those groups who evidence the best patient outcomes. Experience and the associated data will show which of these options provide the lowest cost and highest quality.

The amount of data generated by this mandatory bundle is vast. Hospitals and systems that embrace data-collection efforts will be well positioned to effectively engage the value-based health care market in the future.

Data collected via the CJR program, as well as other bundled payment programs, are essential to determining if such programs can effectively improve outcomes and reduce costs, and can aid researchers and policy makers as they improve existing health care quality and cost-saving programs and create new initiatives. Leavitt Partners sees value in hospital systems and researchers working together collaboratively, by using the data created in their hospitals, to publish early findings and experiences with bundles, which will help move the discussion surrounding CJR and other bundles forward toward best practices.

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