CMS Finalizes Mandatory Bundled Payment Model for Lower Extremity Joint Replacements

November 24, 2015

McDermott+Consulting

CMS’s final regulations implementing the Comprehensive Care for Joint Replacement Model open up a new frontier for Medicare payment and delivery system reform.

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On November 16, 2015, the Centers for Medicare & Medicaid Services (CMS) released final regulations implementing the Comprehensive Care for Joint Replacement Model, its five-year mandatory bundled payment program for hip and knee replacements (CJR Model or Model). All acute care hospitals in 67 designated metropolitan service areas (MSAs), with limited exceptions, will be required to participate in the Model. The bundled episode will consist of virtually all related care from a beneficiary’s admission to a participant hospital for a lower extremity joint replacement or reattachment of lower extremity (LEJR) procedure to 90 days following hospital discharge.

The Model offers further evidence of the expansive statutory authority of the Center for Medicare & Medicaid Innovation (CMMI) under section 1115A of the Social Security Act and provides a critical lens into one method available to the Secretary of the U.S. Department of Health and Human Services to achieve the Department’s ambitious goal to shift 50 percent of Medicare fee-for-service payments into value-based alternative payment models by the end of 2018.

Strategically, the Model underscores the imperative for hospitals to begin developing strategies outside the “four walls” of their institutions, particularly with post-acute care providers, in order to successfully respond to the new Medicare payment and service delivery expectations and perform under the attendant accountability requirements.

These regulations go into effect January 15, 2016, although the first performance period will begin on April 1, 2016.

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