June 12, 2018
The Centers for Medicare and Medicaid Services (CMS) published a final rule to provide flexibility to hospital participating in the Comprehensive Care for Joint Replacement (CJR) Model (CJR) located in those areas impacted by extreme and uncontrollable circumstances. While CMS identified Hurricanes Harvey, Irma, Nate, and the California wildfires of August, September, October 2017 as the main events that triggered this policy, CMS indicated in the final rule that the policy could potentially also include other similar events that occur within a given performance year.
Under the CJR model, Medicare provides a bundled payment for hospitals treating patients for a hip or knee replacement episode. Participating hospitals can earn savings by keeping episode costs below a target price or incur a financial loss if episode costs exceed the target rate. Under the newly finalized extreme and uncontrollable circumstances policy, for performance years 2 through 5 (2017-2020), hospitals in the CJR program that are located in an emergency area during an emergency period, will have their actual episode payments capped at the target price determined for impacted episodes. CMS believes that costs may escalate for hospitals during these emergency periods, and such a policy will help mitigate these losses.
CMS indicated in the final rule that they considered and rejected a blanket cancellation of all episodes during the relevant period. CMS does not believe that a blanket cancellation would be in either beneficiaries’ or CJR participant hospitals’ best interests and that hospitals can manage costs and earn a reconciliation payment despite these extreme and uncontrollable circumstances.