80_FR_73499
80 FR 73273 - Medicare Program; Comprehensive Care for Joint Replacement Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services
80 FR 73273 - Medicare Program; Comprehensive Care for Joint Replacement Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services
DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services
Federal Register Volume 80, Issue 226 (November 24, 2015)
Page Range
73273-73554
FR Document
2015-29438
This final rule implements a new Medicare Part A and B payment model under section 1115A of the Social Security Act, called the Comprehensive Care for Joint Replacement (CJR) model, in which acute care hospitals in certain selected geographic areas will receive retrospective bundled payments for episodes of care for lower extremity joint replacement (LEJR) or reattachment of a lower extremity. All related care within 90 days of hospital discharge from the joint replacement procedure will be included in the episode of care. We believe this model will further our goals in improving the efficiency and quality of care for Medicare beneficiaries with these common medical procedures.
Federal Register, Volume 80 Issue 226 (Tuesday, November 24, 2015)
[Federal Register Volume 80, Number 226 (Tuesday, November 24, 2015)]
[Rules and Regulations]
[Pages 73273-73554]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-29438]
[[Page 73273]]
Vol. 80
Tuesday,
No. 226
November 24, 2015
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Part 510
Medicare Program; Comprehensive Care for Joint Replacement Payment
Model for Acute Care Hospitals Furnishing Lower Extremity Joint
Replacement Services; Final Rule
Federal Register / Vol. 80 , No. 226 / Tuesday, November 24, 2015 /
Rules and Regulations
[[Page 73274]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 510
[CMS-5516-F]
RIN 0938-AS64
Medicare Program; Comprehensive Care for Joint Replacement
Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint
Replacement Services
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule implements a new Medicare Part A and B payment
model under section 1115A of the Social Security Act, called the
Comprehensive Care for Joint Replacement (CJR) model, in which acute
care hospitals in certain selected geographic areas will receive
retrospective bundled payments for episodes of care for lower extremity
joint replacement (LEJR) or reattachment of a lower extremity. All
related care within 90 days of hospital discharge from the joint
replacement procedure will be included in the episode of care. We
believe this model will further our goals in improving the efficiency
and quality of care for Medicare beneficiaries with these common
medical procedures.
DATES: These regulations are effective on January 15, 2016, and
applicable on April 1, 2016 when the first model performance period
begins.
FOR FURTHER INFORMATION CONTACT: Claire Schreiber,
[email protected], 410 786 8939.
Gabriel Scott, [email protected], 410 786 3928.
SUPPLEMENTARY INFORMATION:
Electronic Access
This Federal Register document is also available from the Federal
Register online database through Federal Digital System (FDsys), a
service of the U.S. Government Printing Office. This database can be
accessed via the internet at http://www.thefederalregister.org/fdsys/.
Alphabetical List of Acronyms
Because of the many terms to which we refer by acronym,
abbreviation, or short form in this final rule, we are listing the
acronyms, abbreviations and short forms used and their corresponding
terms in alphabetical order.
[micro]SA Micropolitan Statistical Area
ACE Acute Care Episode
ACO Accountable Care Organization
APM Alternative Payment Model
ASC Ambulatory Surgical Center
ASPE Assistant Secretary for Planning and Evaluation
BPCI Bundled Payments for Care Improvement
CAH Critical Access Hospital
CBSA Core-Based Statistical Area
CCN CMS Certification Number
CFR Code of Federal Regulations
CJR Comprehensive Care for Joint Replacement
CMHC Community Mental Health Center
CMI Case Mix Index
CMMI Center for Medicare and Medicaid Innovation
CMP Civil Monetary Penalty
CMS Centers for Medicare & Medicaid Services
CoPs Conditions of Participation
CPCi Comprehensive Primary Care Initiative
CPT Current Procedural Terminology
CSA Combined Statistical Area
DME Durable Medical Equipment
DMEPOS Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies
eCQM Electronic Clinical Quality Measures
EFT Electronic funds transfer
ESRD End-Stage Renal Disease
FFS Fee-for-service
GAAP Generally Accepted Accounting Principles
GEM General Equivalence Mapping
GPCI Geographic Practice Cost Index
HAC Hospital-Acquired Condition
HACRP Hospital-Acquired Condition Reduction Program
HCAHPS Hospital Consumer Assessment of Healthcare Providers and
Systems
HCC Hierarchical Condition Category
HCPCS Healthcare Common Procedure Coding System
HHA Home health agency
HHPPS Home Health Prospective Payment System
HHRG Home Health Resource Group
HHVBP Home Health Value-Based Purchasing
HIT Health Information Technology
HIQR Hospital Inpatient Quality Reporting
HLMR HCAHPS Linear Mean Roll Up
HOOS Hip Dysfunction and Osteoarthritis Outcome Score
HOPD Hospital outpatient department
HRR Hospital Referral Region
HRRP Hospital Readmissions Reductions Program
HVBP Hospital Value Based Purchasing Program
ICD-9-CM International Classification of Diseases, 9th Revision,
Clinical Modification
ICD-10-CM International Classification of Diseases, 10th Revision,
Clinical Modification
IPPS Inpatient Prospective Payment System
IPF Inpatient psychiatric facility
IRF Inpatient rehabilitation facility
KOOS Knee Injury and Osteoarthritis Outcome Score
LEJR Lower extremity joint replacement
LOS Length of stay
LTCH Long term care hospital
LUPA Low Utilization Payment Adjustment
MAC Medicare Administrative Contractor
MACRA Medicare Access and Chip Reauthorization Act of 2015
MAPCP Multi-Payer Advanced Primary Care Practice model
MCC Major Complications or Comorbidities
MCCM Medicare Care Choices Model
MDH Medicare-Dependent Hospital
MedPAC Medicare Payment Advisory Commission
MIPS Merit-based Incentive Payment System
MP Malpractice
MPFS Medicare Physician Fee Schedule
MSA Metropolitan Statistical Area
MS-DRG Medical Severity Diagnosis-Related Group
NPI National Provider Identifier
NPP Nonphysician Practitioner
NPRA Net Payment Reconciliation Amount
NQF National Quality Forum
OCM Oncology Care Model
OPPS Outpatient Prospective Payment System
PAC Post-Acute Care
PBPM Per Beneficiary Per Month
PE Practice Expense
PGP Physician Group Practice
PHA Partial hip arthroplasty
PPS Prospective Payment System
PRO Patient-Reported Outcome
PROMIS Patient-Reported Outcomes Measurement Information Systems
PRO-PM Patient-Reported Outcome Performance Measure
QIO Quality Improvement Organization
RAC Recovery Audit Contractor
RRC Rural Referral Center
RSCR Risk-Standardized Complication Rate
RSRR Risk-Standardized Readmission Rate
RVU Relative Value Unit
SCH Sole Community Hospital
SNF Skilled nursing facility
THA Total hip arthroplasty
TIN Taxpayer identification number
TKA Total knee arthroplasty
TP Target price
VR-12 Veterans Rand 12 Item Health Survey
Table of Contents
I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
1. Model Overview: LEJR Episodes of Care
2. Model Scope
3. Payment
4. Similar, Previous, and Concurrent Models
5. Overlap With Ongoing CMS Efforts
6. Quality Measures and Reporting Requirements
7. Data Sharing Process
8. Beneficiary Protections
9. Financial Arrangements and Program Policy Waivers
C. Summary of Economic Effects
II. Background
A. General Background
B. Acronym of This Model
C. Public Comments Received in Response to the CJR Proposed Rule
III. Provisions of the Proposed Regulations and Analysis of and
Responses to Public Comments
[[Page 73275]]
A. Definition of the Episode Initiator and Selected Geographic
Areas
1. Background
2. Definition of Episode Initiator
3. Financial Responsibility for the Episode of Care
4. Geographic Unit of Selection and Exclusion of Selected
Hospitals
a. Overview and Options for Geographic Area Selection
b. MSA Selection Methodology
(1) Exclusion of Certain MSAs
(2) Selection Strata
(a) MSA Average Wage-Adjusted Historic LEJR Episode Payments
(b) MSA Population Size
(c) Analysis of Strata
(3) Factors Considered But Not Used in Creating Proposed Strata
(4) Sample Size Calculations and the Number of Selected MSAs
(5) Method of Selecting MSAs
B. Episode Definition for the CJR Model
1. Background
2. Clinical Dimension of Episodes of Care
a. Definition of the Clinical Conditions Included in the Episode
b. Definition of Related Services Included in the Episode
3. Duration of Episodes of Care
a. Beginning the Episode and Beneficiary Care Inclusion Criteria
b. Middle of the Episode
c. End of the Episode
C. Methodology for Setting Episode Prices and Paying Model
Participants Under the CJR Model
1. Background
2. Performance Years, Retrospective Episode Payment, and Two-
Sided Risk Model
a. Performance Period
b. Retrospective Payment Methodology
c. Two-Sided Risk Model
3. Adjustments to Payments Included in Episode
a. Treatment of Special Payment Provisions Under Existing
Medicare Payment Systems
b. Treatment of Payment for Services That Extend Beyond the
Episode
c. Pricing Adjustment for High Payment Episodes
4. Episode Price Setting Methodology
a. Overview
b. Pricing Features
(1) Different Target Prices for Episodes Anchored by MS-DRG 469
vs. MS-DRG 470
(2) Three Years of Historical Data
(3) Trending of Historical Data to the Most Recent Year of the
Three
(4) Update Historical Episode Payments for Ongoing Payment
System Updates
(a) Inpatient Acute Services Update Factor
(b) Physician Services Update Factor
(c) IRF Services Update Factor
(d) SNF Services Update Factor
(e) HHA Services Update Factor
(f) Other Services Update Factor
(5) Blend Hospital-Specific and Regional Historical Data
(6) Define Regions as U.S. Census Divisions
(7) Normalize for Provider-Specific Wage Adjustment Variations
(8) Combination of CJR Episodes Anchored by MS-DRGs 469 and 470
(9) Discount Factor
c. Approach To Combine Pricing Features
5. Use of Quality Performance in the Payment Methodology
a. Background
b. Implementation of Quality Measures for in the Payment
Methodology
(1) General Selection of Quality Measures
(2) Adjustment to the Payment Methodology for Voluntary
Submission of Data for Patient-Reported Outcome Measure
(3) Measure Risk-Adjustment and Calculations
(4) Applicable Time Period
(5) Criteria for Applicable Hospitals and Performance Scoring
(a) Identification of Applicable Hospitals for the CJR Model
(b) Methodology to Determine Performance on the Quality Measures
(c) Methodology to Link Quality and Payment
(i) Background
(ii) Alternatives Considered To Link Quality and Payment
(iii) Threshold Methodology and Final Policy to Link Quality and
Payment
6. Process for Reconciliation
a. Net Payment Reconciliation Amount
b. Payment Reconciliation
7. Adjustments for Overlaps With Other CMMI Models and CMS
Programs
a. Overview
b. CJR Beneficiary Overlap With BPCI Episodes
c. Accounting for CJR Reconciliation Payments and Repayments in
Other Models and Programs
d. Accounting for Per Beneficiary Per Month (PBPM) Payments in
the Episode Definition
e. Accounting for Overlap With Other Medicare Initiatives
Involving Shared Savings and Total Cost of Care Models
8. Limits or Adjustments to Hospital Financial Responsibility
a. Overview
b. Limit on Raw NPRA Contribution to Repayment Amounts and
Reconciliation Payments
(1) Limit on Raw NPRA Contribution to Repayment Amounts
(2) Limit on Raw NPRA Contribution To Reconciliation Payments
c. Policies for Certain Hospitals To Further Limit Repayment
Responsibility
d. Hospital Responsibility for Increased Post-Episode Payments
9. Appeal Procedures
a. Payment Processes
b. Calculation Error
c. Dispute Resolution
(1) Limitations on Review
(2) Matters Subject To Dispute Resolution
(3) Dispute Resolution Process
10. Financial Arrangements and Beneficiary Incentives
a. Financial Arrangements
(1) CJR Sharing Arrangement Requirements
(2) Participation Agreement Requirements
(3) Gainsharing Payment and Alignment Payment Conditions and
Restrictions
(4) Documentation and Maintenance of Records
b. Beneficiary Incentives Under the CJR Model
11. Waivers of Medicare Program Rules
a. Overview
b. Post-Discharge Home Visits
c. Billing and Payment for Telehealth Services
d. SNF 3-Day Rule
e. Waivers of Medicare Program Rules to Allow Reconciliation
Payment or Repayment Actions Resulting From the Net Payment
Reconciliation Amount
12. Enforcement Mechanisms
D. Quality Measures and Display of Quality Metrics Used in the
CJR Model
1. Background
a. Purpose of Quality Measures in the CJR Model
b. Public Display of Quality Measures in the CJR Model
2. Quality Measures for Performance Year 1 (CY 2016) and
Subsequent Years
a. Hospital-Level Risk-Standardized Complication Rate (RSCR)
Following Elective Primary Total Hip Arthroplasty (THA) and/or Total
Knee Arthroplasty (TKA) (NQF #1550)
(1) Background
(2) Data Sources
(3) Cohort
(4) Inclusion and Exclusion Criteria
(5) Risk-Adjustment
(6) Calculating the Risk-Standardized Complication Rate and
Performance Period
b. Hospital-Level 30-Day, All-Cause Risk-Standardized
Readmission Rate (RSRR) Following Elective Primary Total Hip
Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1551)
(1) Background
(2) Data Sources
(3) Cohort
(4) Inclusion and Exclusion Criteria
(5) Risk-Adjustment
(6) Calculating the Risk-Standardized Readmission Rate and
Performance Period
c. Hospital Consumer Assessment of Healthcare Providers and
Systems (HCAHPS) Survey
(1) Background
(2) Data Sources
(3) Cohort
(4) Inclusion and Exclusion Criteria
(5) Case-Mix-Adjustment
(6) HCAHPS Scoring
(7) Performance Period
d. Applicable Time Period
3. Possible New Outcomes for Future Measures
a. Hospital-Level Performance Measure(s) of Patient-Reported
Outcomes Following Elective Primary Total Hip and/or Total Knee
Arthroplasty
(1) Background
(2) Data Sources
(3) Cohort
(4) Inclusion and Exclusion Criteria
(5) Outcome
(6) Risk-Adjustment (If Applicable)
(7) Calculating the Risk-Standardized Rate
(8) Performance Period
(9) Requirements for Successful Submission of THA/TKA Voluntary
Data
b. Measure That Captures Shared Decision-Making Related to
Elective Primary Total Hip and/or Total Knee Arthroplasty
[[Page 73276]]
c. Future Measures Around Care Planning
d. Future Measures for Use of Health IT and Health Enforcement
Exchange
4. Form, Manner and Timing of Quality Measure Data Submission
5. Display of Quality Measures and Availability of Information
for the Public From the CJR Model
E. Data Sharing
1. Overview
2. Beneficiary Claims Data
3. Aggregate Regional Data
4. Timing and Period of Baseline Data
5. Frequency and Period of Claims Data Updates for Sharing
Beneficiary-Identifiable Claims Data During the Performance Period
6. Legal Permission To Share Beneficiary-Identifiable Data
F. Monitoring and Beneficiary Protection
1. Introduction and Summary
2. Beneficiary Choice and Beneficiary Notification
3. Monitoring for Access to Care
4. Monitoring for Quality of Care
5. Monitoring for Delayed Care
G. Coordination With Other Agencies
IV. Evaluation Approach
A. Background
B. Design and Evaluation Methods
C. Data Collection Methods
D. Key Evaluation Research Questions
E. Evaluation Period and Anticipated Reports
V. Collection of Information Requirements
VI. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Anticipated Effects
1. Overall Magnitude of the Model and Its Effects on the Market
2. Effects on the Medicare Program
a. Assumptions and Uncertainties
b. Analyses
c. Further Consideration
3. Effects on Beneficiaries
4. Effects on Small Entities
5. Effects on Small Rural Hospitals
6. Unfunded Mandates
D. Alternatives
E. Accounting Statement
F. Conclusion
Regulations Text
I. Executive Summary
A. Purpose
The purpose of this final rule is to implement a new payment model
called the Comprehensive Care for Joint Replacement (CJR) model under
the authority of the Center for Medicare and Medicaid Innovation
(CMMI). Section 1115A of the Social Security Act (the Act) authorizes
CMMI to test innovative payment and service delivery models to reduce
program expenditures while preserving or enhancing the quality of care
furnished to Medicare, Medicaid, and Children's Health Insurance
Program beneficiaries. The intent of the CJR model is to promote
quality and financial accountability for episodes of care surrounding a
lower-extremity joint replacement (LEJR) or reattachment of a lower
extremity procedure.\1\ CJR will test whether bundled payments to acute
care hospitals for LEJR episodes of care will reduce Medicare
expenditures while preserving or enhancing the quality of care for
Medicare beneficiaries. We anticipate the CJR model will benefit
Medicare beneficiaries by improving the coordination and transition of
care, improving the coordination of items and services paid for through
Medicare Fee-For-Service (FFS), encouraging more provider investment in
infrastructure and redesigned care processes for higher quality and
more efficient service delivery, and incentivizing higher value care
across the inpatient and post-acute care (PAC) spectrum spanning the
episode of care. We will test the CJR model for 5 performance periods,
beginning April 1, 2016, and ending December 31, 2020. Under FFS,
Medicare makes separate payments to providers and suppliers for the
items and services furnished to a beneficiary over the course of
treatment (an episode of care). With the amount of payments dependent
on the volume of services delivered, providers may not have incentives
to invest in quality improvement and care coordination activities. As a
result, care may be fragmented, unnecessary, or duplicative.
---------------------------------------------------------------------------
\1\ In this final rule, we use the term LEJR to refer to all
procedures within the Medicare Severity-Diagnosis Related Groups
(MS-DRGs) we selected for the model, including reattachment of a
lower extremity, as described in section III.B.2.a. of this final
rule.
---------------------------------------------------------------------------
We have previously used our statutory authority under section 1115A
of the Act to test bundled payment models such as the Bundled Payments
for Care Improvement (BPCI) initiative. Bundled payments, for multiple
services in an episode of care, hold participating organizations
financially accountable for an episode of care. They also allow
participants to receive payment, in part, based on the reduction in
expenditures for Medicare arising from their care redesign efforts.
We believe the CJR model will further the mission of CMMI and the
Secretary's goal of increasingly paying for value rather than for
volume,\2\ because it will promote the alignment of financial and other
incentives for all health care providers and suppliers caring for a
beneficiary during an LEJR episode. In the CJR model, the acute care
hospital that is the site of surgery will be held accountable for
spending during the episode of care. Participant hospitals will be
afforded the opportunity to earn performance-based payments by
appropriately reducing expenditures and meeting certain quality
metrics. They will also gain access to data and educational resources
to better understand LEJR patients' PAC needs and associated spending.
Payment approaches that reward providers that assume financial and
performance accountability for a particular episode of care create
incentives for the implementation and coordination of care redesign
between hospitals and other providers and suppliers.
---------------------------------------------------------------------------
\2\ Sylvia Mathews Burwell, HHS Secretary, Progress Towards
Achieving Better Care, Smarter Spending, Healthier People, http://www.hhs.gov/blog/2015/01/26/progress-towards-better-care-smarter-spending-healthier-people.html (January 26, 2015).
---------------------------------------------------------------------------
The CJR model requires the participation of hospitals in multiple
geographic areas that might not otherwise participate in the testing of
bundled payments for episodes of care for LEJR procedures. Other
episode-based, bundled payment models being tested by the Centers for
Medicare & Medicaid Services (CMS), such as the BPCI initiative, are
voluntary in nature. Interested participants must apply to such models
to participate. To date, we have not tested an episode payment model
with bundled payments in which providers are required to participate.
We recognize that realizing the full potential of new payment models
will require the engagement of an even broader set of providers than
have participated to date, providers who may only be reached when new
payment models are applied to an entire class of providers of a
service. As such, we are interested in testing and evaluating the
impact of a bundled payment approach for LEJR procedures in a variety
of circumstances, especially among those hospitals that may not
otherwise participate in such a test.
This model will allow CMS to gain experience with making bundled
payments to hospitals who have a variety of historic utilization
patterns; different roles within their local markets; various volumes
of services; different levels of access to financial, community, or
other resources; and various levels of population and health provider
density including local variations in the availability and use of
different categories of PAC providers. We believe that by requiring the
participation of a large number of hospitals with diverse
characteristics, the CJR model will result in a robust data set for
evaluation of this bundled payment approach, and will stimulate the
rapid development of new evidence-based knowledge. Testing the model in
this manner will also allow us to learn more about patterns of
inefficient utilization of health care services and how to incentivize
the improvement of
[[Page 73277]]
quality for common LEJR procedure episodes. This learning potentially
could inform future Medicare payment policy.
This final rule implements a model focused on episodes of care for
LEJR procedures. We chose LEJR episodes for the CJR model because as
discussed in depth in section III.C. of this final rule, these are
high-expenditure, high utilization procedures commonly furnished to
Medicare beneficiaries,\3\ where significant variation in spending for
procedures is currently observed. The high volume of episodes and
variation in spending for LEJR procedures create a significant
opportunity to test and evaluate the CJR model that specifically
focuses on a defined set of procedures. Moreover, there is substantial
regional variation in PAC referral patterns and the intensity of PAC
provided for LEJR patients, thus resulting in significant variation in
PAC expenditures across LEJR episodes initiated at different hospitals.
The CJR model will enable hospitals to consider the most appropriate
PAC for their LEJR patients. The CJR model additionally will offer
hospitals the opportunity to better understand their own processes with
regard to LEJR, as well as the processes of post-acute providers.
Finally, while many LEJR procedures are planned, the CJR model will
provide a useful opportunity to identify efficiencies both for when
providers can plan for LEJR procedures and for when the procedure must
be performed urgently.
---------------------------------------------------------------------------
\3\ For example, total hip arthroplasty and total knee
arthroplasty procedures are very high volume LEJR procedures that
together represent the largest payments for procedures under
Medicare. Suter L, Grady JL, Lin Z et al.: 2013 Measure Updates and
Specifications: Elective Primary Total Hip Arthroplasty (THA) And/Or
Total Knee Arthroplasty (TKA) All-Cause Unplanned 30-Day Risk-
Standardized Readmission Measure (Version 2.0). 2013. http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html; Bozic KJ,
Rubash HE, Sculco TP, Berry DJ., An analysis of Medicare payment
policy for total joint arthroplasty. J Arthroplasty. Sep 2008; 23(6
Suppl 1):133-138.
---------------------------------------------------------------------------
The following is a summary of the comments received on the proposed
model as a whole, including the authority for the model and general
comments on CMS' implementation of the CJR model at this time and our
responses.
Comment: A commenter stated that while the proposed rule emphasized
the learning CMS hoped to gain from implementing and testing the CJR
model, it made inadequate mention of the potential benefits to
beneficiaries, providers, hospitals, and other stakeholders. Other
commenters contended that bundled payment models encourage hospitals to
engage in care stinting and potentially stifle innovation.
Response: We appreciate the commenters' concerns. We refer readers
to section III.F. of this final rule for discussion of monitoring and
beneficiary protections under this model which we believe will address
the commenters' concerns about care stinting. We expect that the CJR
model will benefit not just CMS, but also beneficiaries, hospitals, and
other providers in the health care system. The goals of this model are
to improve the quality of care furnished to beneficiaries and reduce
spending during LEJR episodes. Beneficiaries would directly benefit
from improved care coordination and care redesign activities that
reduce readmissions and complications rates, for example, as well as
provide an improved care experience during the inpatient
hospitalization and post-discharge period. Hospitals also stand to
benefit from the CJR model, in the form of the opportunity to earn
reconciliation payments if successful under the model, and a structured
incentive to redesign care processes for beneficiaries receiving LEJR
procedures. For example, section III.C.11. of this final rule details
waivers of Medicare program rules that would allow hospitals to test
additional ways to introduce flexibility into care processes and
improve the quality of care for beneficiaries. In addition, providers
and suppliers across the spectrum of care provided during an LEJR
episode could also benefit from the care redesign strategies as well as
the financial arrangements as detailed in section III.C.10. of this
final rule. Finally, we disagree with commenters that the CJR model
will stifle innovation for care furnished during an LEJR episode. We
proposed, and are finalizing in this final rule, a payment methodology
that will account for changes in care patterns and utilization trends
for LEJR episodes by updating the historical performance periods used
throughout the model, as described in section III.C.4. of this final
rule. In addition, the CJR financial incentives would be consistent
with clinical practices that result in reductions of spending during
LEJR episodes, allowing hospitals that engage in such practices to earn
reconciliation payments and engage with other providers furnishing
services during the episode, as discussed in section III.C.10. of this
final rule.
Comment: Several commenters questioned CMS' legal authority to
require participation in a model. Commenters stated that CMS lacks the
legal authority to compel participation in a model, and that CMS
misreads section 1115A(a)(5) of the Act as the legal basis for
compelling providers in selected Metropolitan Statistical Area (MSAs)
to participate in the CJR model. A commenter stated that language in
the Act has never been interpreted to afford the Secretary the
authority to compel provider participation in a Medicare demonstration
project or model, and that the Congress intended for model tests to be
voluntary, not mandatory, when authorizing CMS to test new models. The
commenter noted that requiring providers to participate in a model that
would encompass a substantial proportion of a particular service would
render the statutory distinction between testing and expanding models
meaningless. The commenter also expressed concern about the model's
potential effect on beneficiaries' appeal rights. Several commenters
stated that CMS is sidestepping the legal safeguards designed to
prevent the Agency from imposing novel or haphazard models on providers
prior to adequate testing and evaluation. Commenters also claimed that
CMS had exceeded its statutory authority because under section 1115A of
the Act, providers are precluded from appealing their selection in a
model, raising further concern that CMS is overreaching by requiring
participation in the CJR model. Commenters also noted that there is no
precedent for a CMS demonstration or model that requires providers to
participate. Finally, several commenters stated that CMS has reversed
the intended sequence of testing and then expanding models.
Response: We disagree with commenters that we lack the legal
authority to test the CJR model as proposed and specifically, to
require the participation of selected hospitals. We note that although
CJR will be the first Innovation Center model in which acute care
hospitals are required to participate, we refer readers to the 2016
Home Health Prospective Payment System (HHPS) Final Rule, which
finalizes the Home Health Value-Based Purchasing (HHVBP) model. Home
health agencies in selected states will be required to participate in
the HHVBP model beginning in January 2016.
We believe that both section 1115A and the Secretary's existing
authority to operate the Medicare program authorize the CJR model as we
have proposed and are finalizing it. Section 1115A of the Act
authorizes the Secretary to test payment and service delivery models
intended to reduce Medicare costs while preserving quality. The statute
does not
[[Page 73278]]
require that models be voluntary, but rather gives the Secretary broad
discretion to design and test models that meet certain requirements as
to spending and quality. Although section 1115A(b) of the Act describes
a number of payment and service delivery models that the Secretary may
choose to test, the Secretary is not limited to those models. Rather,
models to be tested under section 1115A of the Act must address a
defined population for which there are either deficits in care leading
to poor clinical outcomes or potentially avoidable expenditures. Here,
the CJR model addresses a defined population (FFS Medicare
beneficiaries undergoing LEJR procedures) for which there are
potentially avoidable expenditures (arising from less than optimal care
coordination). For the reasons described elsewhere in this rule, we
have determined that it is necessary to test this model among varying
types of hospitals that have not chosen to voluntarily participate in
another episode payment model such as BPCI. As noted elsewhere in this
final rule, we are testing an episode approach for LEJR episodes
through the voluntary BPCI models. We have designed the CJR model to
require participation by hospitals in order to avoid the selection bias
inherent to any model in which providers may choose whether to
participate. Such a design will allow for testing of how a variety of
hospitals will fare under an episode payment approach, leading to a
more robust evaluation of the model's effect on all types of hospitals.
We believe this is the most prudent approach for the following reasons.
The information gained from testing of the CJR model will allow CMS to
more comprehensively assess whether LEJR episode payment models are
appropriate for any potential national expansion. We will have
evaluation information on results for providers who are participating
in such models voluntarily (under BPCI) as well as for hospitals that
are required to participate in CJR. Under CJR, we will have tested and
evaluated such a model across a wide range of hospitals representing
varying degrees of experience with episode payment. We believe it is
important to gain knowledge from a variety of perspectives in
considering whether and which models merit national expansion. Thus,
the CJR model meets the criteria required for initial model tests.
Moreover, the Secretary has the authority to establish regulations
to carry out the administration of Medicare. Specifically, the
Secretary has authority under both sections 1102 and 1871 of the Act to
implement regulations as necessary to administer Medicare, including
testing this Medicare payment and service delivery model. We note that
while CJR will be a model, and not a permanent feature of the Medicare
program, the model will test different methods for delivering and
paying for services covered under the Medicare program, which the
Secretary has clear legal authority to regulate. The proposed rule went
into great detail about the provisions of the proposed CJR model,
enabling the public to fully understand how the proposed model was
designed and could apply to affected providers. We acknowledge section
1115A(d)(2) of the Act, which states that there shall be no
administrative or judicial review of, among other things, ``the
selection of organizations, sites, or participants to test . . . models
selected,'' as well as the commenter's concern that this provision
would preclude a participant hospital from appealing its selection as a
participant in the CJR model. However, it is precisely because the
model will impose new requirements upon participant hospitals that we
undertook notice and comment rulemaking to implement it.
In response to the comment indicating that we misread section
1115A(a)(5) of the Act, we believe that the commenter misunderstood the
reference to that provision in the proposed rule. The reference to
section 1115A(a)(5) of the Act was made in the context of the
discussion of selecting certain MSAs within which we will test the
model. We do not rely on section 1115A(a)(5) of the Act specifically as
the authority for a model in which participation is not voluntary;
rather, as noted previously, we rely on section 1115A of the Act as a
whole, as well as the Secretary's existing authority to carry out her
duties and administer the Medicare program.
We disagree with commenters that implementing the CJR model will
negatively affect beneficiaries' appeal rights. We note that normal
claims processes will continue under this model, including beneficiary
and provider appeal rights. We also refer readers to section III.C.9.
of this final rule for discussion of hospital appeals procedures under
the CJR model.
With regard to the comment about CMS sidestepping safeguards
designed to prevent imposing haphazard models prior to appropriate
vetting and testing, we reiterate that we have undertaken rulemaking to
solicit comprehensive public input on all aspects of the CJR model. In
addition, as previously noted, the CJR model has been designed to limit
selection bias, which will allow for more robust evaluation results
across a variety of providers.
We note that this is a new model, not an expansion of an existing
model. We disagree with the commenters who believe that we have
reversed the order of testing and expansion of Innovation Center
models. As permitted by section 1115A of the Act, we are testing the
CJR model within specified limited geographic areas. The fact that the
model will require the participation of certain hospitals does not mean
it is not an initial model test. If the model is successful such that
it meets the statutory requirements for expansion, and the Secretary
determines that expansion is warranted, we would undertake rulemaking
to implement the expansion, as required by section 1115A(c) of the Act.
Comment: Several commenters questioned how the proposed CJR model
relates to the potential for expansion of BPCI. Commenters also noted
that CMS included language in the FY 2016 IPPS/LTCH PPS proposed rule
requesting public input on an eventual expansion of BPCI.
Response: CMMI's three major priorities include testing new payment
and service delivery models, evaluating results and advancing best
practices, and engaging stakeholders. Since 2011, we have been working
to develop and test models of bundling Medicare payments under the
authority of section 1115A of the Act. Consistent with its ongoing
commitment to develop new models and refine existing models based on
additional information and experience, we may modify existing models or
test additional models under our authority under section 1115A of the
Act. The CJR model is a new, additional episode payment model being
tested under the authority of section 1115A of the Act. As such, it is
not an expansion of the BPCI initiative, which needs further evaluation
to determine its impact on both Medicare cost and quality before the
Secretary can determine whether the findings from the evaluation of the
initiative demonstrate that it meets all criteria for expansion,
consistent with the requirements of section 1115A(c) of the Act, and
that, based on these findings and other pertinent factors, expansion is
warranted.
In the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24414 through
24418), we solicited public comments regarding policy and operational
issues related to a potential expansion of the BPCI initiative in the
future. We explained that as we initiated discussions about potential
expansion, we continued to value stakeholder
[[Page 73279]]
engagement within the framework of our three priorities. With respect
to expansion, section1115A(c) of the Act, as added by section 3021 of
the Affordable Care Act, provides the Secretary with the authority to
expand through rulemaking the duration and scope of a model that is
being tested under section 1115A(b) of the Act, such as the BPCI
initiative (including implementation on a nationwide basis), if the
following findings are made, taking into account the evaluation of the
model under section 1115A(b)(4) of the Act: (1) The Secretary
determines that the expansion is expected to either reduce Medicare
spending without reducing the quality of care or improve the quality of
patient care without increasing spending; (2) the CMS Chief Actuary
certifies that the expansion would reduce (or would not result in any
increase in) net Medicare program spending; and (3) the Secretary
determines that the expansion would not deny or limit the coverage or
provision of Medicare benefits. The decision of whether or not to
expand BPCI will be made by the Secretary in coordination with CMS and
the Office of the Chief Actuary based on whether findings about the
initiative meet the statutory criteria for expansion under section
1115A(c) of the Act. We did not propose an expansion of any of the BPCI
models or any policy changes associated with those models in the FY
2016 IPPS/LTCH PPS proposed rule.
Although BPCI and the CJR model both include testing episode
payment for LEJR episodes of care, CJR differs from BPCI in significant
ways, as detailed throughout this final rule. Providers elected to
participate in BPCI, and were given a choice of various design
features, such as the clinical episodes included and the episode
length. The CJR model was designed in part based on feedback and
experience from BPCI, and will provide additional information on the
impact of episode payment for LEJR episodes across a variety of
hospitals, including those who may not have elected to participate in
the model. As previously discussed in this section, it is necessary to
require participation in the CJR model in order to avoid the selection
bias inherent to any voluntary model. When the CJR model begins on
April 1, 2016, we will be testing both episode payment models
concurrently for a period of time, as well as many other payment and
service delivery models, in order to gain information about the most
successful strategies to improve the quality of care and reduce
spending. The different design features of BPCI and the CJR model will
aid us in evaluating the success of episode-based payment across a
range of provider types and in a range of geographic areas. As
evaluation results addressing the impact of each model on Medicare
quality and cost become available, the Secretary will review this
information to determine whether the findings from the evaluation of
the model demonstrate that it meets all criteria for expansion,
consistent with the requirements of section 1115A(c) of the Act, and
that, based on these findings and other pertinent factors, expansion is
warranted.
Comment: Many commenters requested changes to the BPCI model in
response to the proposed rule. Commenters also requested clarification
on how BPCI awardees would be transitioned into the CJR model; for
example, which performance year policies would apply to the new model
participants.
Response: We will not address comments about BPCI policies in this
final rule. We will address commenters' suggestions on BPCI through our
usual processes for informing BPCI participants and the public of any
changes to BPCI. As discussed in section III.A of this final rule, all
Inpatient Prospective Payment System (IPPS) hospitals in the selected
MSAs that are not participating in BPCI Model 1 or Phase II of Models 2
or 4 for LEJR episodes would be included in the CJR model. We intend
for the current performance year's policies to be in effect for any new
entrants in the CJR model. We also note that an acute care hospital
formerly participating in BPCI for the LEJR episode will have likely
established care coordination and redesign strategies for success. As
such, it would not be necessary to grant such hospitals additional time
to transition from BPCI into the CJR model.
Comment: Numerous commenters requested that physicians who enter
into sharing arrangements with CJR hospitals qualify as eligible
professionals under the Medicare Access and Chip Reauthorization Act of
2015 (MACRA) beginning in 2019. A commenter requested that all CJR
collaborators qualify as eligible professionals under MACRA. Several
commenters outlined wholly different structures for the proposed CJR
model, including provisions that would allow for the CJR model to
qualify as an alternative payment model (APM) under MACRA.
Response: We interpret commenters' requests as follows: That
collaborators under the CJR model would be able to meet the
requirements that would otherwise apply under the Merit-based Incentive
Payment System (MIPS) or, alternatively, qualify as APM participants
under section 1833(z)(2) of the Act (and therefore be excluded from
MIPS) through their participation in CJR. We further interpret
commenters' requests as follows: That CJR would include eligible
alternative payment entities, and therefore that eligible professionals
in CJR would potentially be qualifying APM participants. We note that
the statute specifies which types of individuals qualify as eligible
professionals (EPs) under section 1848(k)(3)(B) of the Act or as MIPS
EPs under section 1848(q)(1)(C) of the Act. We plan to develop
regulations under MACRA through notice and comment rulemaking. We will
be releasing further guidance on the implementation of MACRA, and
through such guidance, will be clarifying the parameters for
eligibility under MACRA.
Comment: Several commenters presented different episode payment
models for CMS' consideration to be tested in addition to or instead of
the CJR model, or suggested such major changes to the proposed CJR
model design elements that the result of their adoption would be a
wholly different test of episode payment than CMS proposed. A few
commenters recommended that CMS consider testing a model that
emphasizes the role of PAC providers in managing episode care for
beneficiaries, instead of just the hospital. Such a model would assign
financial responsibility during an episode to a PAC entity with
capabilities to coordinate care across a wide range of post-acute
settings. Other commenters suggested that CMS test a model that would
create physician-led organizations to manage financial risk for LEJR
episodes of care, instead of assigning risk to hospitals. These
organizations would receive prospective episodic payments and allocate
such payments among the providers and suppliers furnishing care to
beneficiaries during an LEJR episode. Several commenters recommended
CMS implement a population-based model similar to an Accountable Care
Organization (ACO) model, in lieu of an episode-based payment model.
Finally, a commenter requested that instead of including rural and low-
volume hospitals in the CJR model, CMS develop a model tailored to this
subset of providers.
Response: We appreciate the suggestions for alternatives to the CJR
model design that were recommended by the commenters, including the
details and rationale provided about many features of those models. We
are
[[Page 73280]]
not adopting these approaches to an episode payment model under this
final rule as we did not propose the design elements of such models for
public notice and comment nor did we propose the additional policies
that would be required to implement such features that do not rely on
existing Medicare definitions (for example, the definition of a
physician-led organization to manage risk). However, we note that we
are constantly considering modifications to existing models and
designing new models under our testing authority under section 1115A of
the Act, taking into consideration stakeholder input received through
many channels, including public comments on this proposed rule and the
FY 2016 IPPS/LTCH PPS proposed rule discussion item on potential BPCI
expansion considerations, as well as feedback from providers
participating in existing models. We note that potential modifications
to the CJR model would go through notice and comment rulemaking as
necessary. As we consider developing additional payment service and
delivery models, we will continue to engage with stakeholders and
review all of the information available to us about alternative
approaches to episode payment that could be tested.
B. Summary of the Major Provisions
1. Model Overview: LEJR Episodes of Care
LEJR procedures are currently paid under the IPPS (IPPS) through
one of two Medicare Severity-Diagnosis Related Groups (MS-DRGs): MS-DRG
469 (Major joint replacement or reattachment of lower extremity with
Major Complications or Comorbidities (MCC)) or MS-DRG 470 (Major joint
replacement or reattachment of lower extremity without MCC). Under the
CJR model, as described further in section III.B of this final rule,
episodes will begin with admission to an acute care hospital for an
LEJR procedure that is assigned to MS-DRG 469 or 470 upon beneficiary
discharge and paid under the IPPS and will end 90 days after the date
of discharge from the acute care hospital. This episode of care
definition offers operational simplicity for providers and CMS. The
episode will include the LEJR procedure, inpatient stay, and all
related care covered under Medicare Parts A and B within the 90 days
after discharge, including hospital care, PAC, and physician services.
2. Model Scope
We have finalized that participant hospitals will be the episode
initiators and bear financial risk under the CJR model. In comparison
to other health care facilities, hospitals are more likely to have
resources that will allow them to appropriately coordinate and manage
care throughout the episode, and hospital staff members are already
involved in hospital discharge planning and PAC recommendations for
recovery, key dimensions of high quality and efficient care for the
episode. We require all hospitals paid under the IPPS in selected
geographic areas to participate in the CJR model, with limited
exceptions. Eligible beneficiaries who elect to receive care at these
hospitals will automatically be included in the model. We have selected
geographic areas based on a stratified random sampling methodology
within strata using the following criteria: historical wage adjusted
episode payments and population size. Our geographic area selection
process is detailed further in section III.A of this final rule.
3. Payment
We will test the CJR model for 5 performance years. We have
finalized an alternative start date for the model from the timeline set
forth in the proposed rule. As discussed in further detail in section
III.C.2.a. of this final rule, the first performance year for the CJR
model will begin on April 1, 2016 and end on December 31, 2016. During
these performance years we will continue paying hospitals and other
providers and suppliers according to the usual Medicare FFS payment
systems. However, after the completion of a performance year, the
Medicare claims payments for services furnished to the beneficiary
during the episode, based on claims data, will be combined to calculate
an actual episode payment. The actual episode payment is defined as the
sum of related Medicare claims payments for items and services
furnished to a beneficiary during a CJR episode. The actual episode
payment will then be reconciled against an established CJR target price
that is stratified based on the beneficiary's fracture status, with
consideration of additional payment adjustments based on quality
performance, post-episode spending, and policies to limit hospital
financial responsibility. The amount of this calculation, if positive,
will be paid to the participant hospital. This payment will be called a
reconciliation payment. If negative, we will require repayment from the
participant hospital. Medicare will require repayment of the difference
between the actual episode payments and the CJR target price from a
participant hospital if the CJR target price is exceeded.
We will make reconciliation payments to participant hospitals that
achieve quality outcomes and cost efficiencies relative to the
established CJR target prices in all performance years of the model. We
will also phase in the requirement that participant hospitals whose
actual episode payments exceed the applicable CJR target price pay the
difference back to Medicare beginning in performance year 2. Under this
final rule, Medicare will not require repayment from hospitals for
performance year 1 for actual episode payments that exceed their target
price in performance year 1.
We will also limit how much a hospital can gain or lose based on
its actual episode payments relative to target prices. We have also put
in place additional policies to further limit the risk of high payment
cases for all participant hospitals and for special categories of
participant hospitals as described in section III.C. of this final
rule.
4. Similar, Previous, and Concurrent Models
The CJR model is informed by other models and demonstrations
currently and previously conducted by CMS and will explore additional
ways to enhance coordination of care and improve the quality of
services through bundled payments. We recently announced the Oncology
Care Model (OCM), a new voluntary payment model for physician practices
administering chemotherapy. Under OCM, practices will enter into
payment arrangements that include financial and performance
accountability for episodes of care surrounding chemotherapy
administration to cancer patients. We plan to coordinate with other
payers to align with OCM in order to facilitate enhanced services and
care at participating practices. More information on the OCM can be
found on CMMI's Web site at: http://innovation.cms.gov/initiatives/Oncology-Care/. Medicare tested innovative approaches to paying for
orthopedic services in the Medicare Acute Care Episode (ACE)
demonstration, a prior demonstration, and is currently testing
additional approaches under BPCI. Both of these models have also
informed the design of the CJR model.
Under the authority of section 1866C of the Act, we conducted a 3-
year demonstration, the ACE Demonstration. The demonstration used a
prospective global payment for a single episode of care as an
alternative approach to payment for service delivery under traditional
Medicare FFS. The episode
[[Page 73281]]
of care was defined as a combination of Part A and Part B services
furnished to Medicare FFS beneficiaries during an inpatient hospital
stay for any one of a specified set of cardiac and orthopedic MS-DRGs.
The MS-DRGs tested included 469 and 470, which are included in the CJR
model. The discounted bundled payments generated an average gross
savings to Medicare of $585 per episode for a total of $7.3 million
across all episodes (12,501 episodes) or 3.1 percent of the total
expected costs for these episodes. After accounting for increased PAC
costs that were observed at two sites, Medicare saved approximately $4
million, or 1.72 percent of the total expected Medicare spending. More
information on the ACE Demonstration can be found on CMMI's Web site
at: http://innovation.cms.gov/initiatives/ACE/.
We are currently testing the BPCI initiative. The BPCI initiative
is comprised of four related payment models, which link payments for
multiple services that Medicare beneficiaries receive during an episode
of care into a bundled payment. Under the initiative, entities enter
into payment arrangements with CMS that include financial and
performance accountability for episodes of care. Episodes of care under
the BPCI initiative begin with either--(1) An inpatient hospital stay;
or (2) PAC services following a qualifying inpatient hospital stay. The
BPCI initiative is evaluating the effects of episode-based payment
approaches on patient experience of care, outcomes, and cost of care
for Medicare FFS beneficiaries. Each of the four models tests LEJR
episodes of care. While final evaluation results for the models within
the BPCI initiative are not yet available, we believe that CMS'
experiences with BPCI support the design of the CJR model. Under
section 1115A(c) of the Act, the Secretary may, taking into
consideration an evaluation conducted under section 1115A (b)(4) of the
Act, ``through rulemaking, expand (including implementation on a
nationwide basis) the duration and the scope of a model that is being
tested under'' CMMI's authority. CJR is not an expansion of BPCI, and
BPCI may be expanded in the future. We published a discussion item
soliciting public comment on a potential future expansion of one or
more of the models within BPCI in the FY2016 IPPS rule, 80 FR 24414
through 24418. CJR will not be an expansion or modification of BPCI;
nor does it reflect comments received in response to the proposed rule
for the 2016 IPPS Rule. CJR is a unique model that tests a broader,
different group of hospitals than BPCI. It is necessary to provide CMS
with information about testing bundled payments to hospitals that are
required to participate in an APM. For a discussion of why we are
requiring hospitals to participate in the CJR model, see section III.A.
of this final rule.
The CJR model's design was informed to a large degree by our
experience with BPCI Model 2. BPCI's Model 2 is a voluntary episode
payment model in which a qualifying acute care hospitalization
initiates a 30, 60 or 90 day episode of care. The episode of care
includes the inpatient stay in an acute care hospital and all related
services covered under Medicare Parts A and B during the episode,
including PAC services. More information on BPCI Model 2 can be found
on CMMI's Web site at: http://innovation.cms.gov/initiatives/BPCI-Model-2/.
Further information of why elements of the OCM, the ACE
Demonstration, and BPCI Model 2 were incorporated into the design of
the CJR model appears later in this final rule.
5. Overlap With Ongoing CMS Efforts
We are excluding from participation in CJR certain hospitals
participating in the risk-bearing phase of BPCI Models 2 and 4 for LEJR
episodes, as well as acute care hospitals participating in BPCI Model
1. We are not excluding beneficiaries in CJR model episodes from being
included in other Innovation Center models or CMS programs, such as the
Medicare Shared Savings Program (Shared Savings Program), as detailed
later in this final rule. We will account for overlap, that is, where
CJR beneficiaries are also included in other models and programs, to
ensure the financial policies of CJR are maintained and results and
spending reductions are attributed to the correct model or program.
6. Quality Measures and Reporting Requirements
We are adopting two hospital-level quality of care measures for the
CJR model. Those measures include a complications measure and a patient
experience survey measure. We will use these measures in the model pay-
for-performance payment methodology, as well as to test the success of
the model in achieving its goals under section 1115A of the Act and to
monitor for beneficiary safety. We intend to publicly report this
information on the Hospital Compare Web site. Additionally, we will
encourage the voluntary submission of data to support the development
of a hospital-level measure of patient-reported outcomes following an
elective primary total hip (THA) or total knee arthroplasty (TKA)
through incorporation of the measure in the composite quality scoring
methodology described in III.C.5. of this final rule.
7. Data Sharing Process
We will share data with participant hospitals upon request
throughout the performance period of the CJR model to the extent
permitted by the HIPAA Privacy Rule and other applicable law. We will
share upon request both raw claims-level data and claims summary data
with participants. This approach will allow participant hospitals
without prior experience analyzing claims to use summary data to
receive useful information, while allowing those participant hospitals
who prefer raw claims-level data the opportunity to analyze claims. We
will provide hospitals with up to 3 years of retrospective claims data
upon request that will be used to develop their target price, as
described in section III.C. of this final rule. In accordance with the
HIPAA Privacy Rule, we will limit the content of this data set to the
minimum data necessary for the participant hospital to conduct quality
assessment and improvement activities and effectively coordinate care
of its patient population.
8. Beneficiary Protections
Under the CJR model, beneficiaries retain the right to obtain
health services from any individual or organization qualified to
participate in the Medicare program. Under the CJR model, eligible
beneficiaries who receive services from a participant hospital will not
have the option to opt out of inclusion in the model. We require
participant hospitals to supply beneficiaries with written information
regarding the design and implications of this model as well as their
rights under Medicare, including their right to use their provider of
choice. We will also make a robust effort to reach out to beneficiaries
and their advocates to help them understand the CJR model.
We also will use our existing authority, if necessary, to audit
participant hospitals if claims analysis indicates an inappropriate
change in delivered services. Beneficiary protections are discussed in
greater depth in section III.E. of this final rule.
9. Financial Arrangements and Program Policy Waivers
We will hold participant hospitals financially responsible for CJR
LEJR episodes as participants in the model as discussed in section
III.C.6. of this final
[[Page 73282]]
rule. Specifically, only these hospital participants will be directly
subject to the requirements of this final rule for the CJR model.
Participant hospitals will be responsible for ensuring that other
providers and suppliers collaborating with the hospital on LEJR episode
care redesign are in compliance with the terms and conditions of the
model, including any applicable program policy waivers.
Several of the Medicare program policy waivers outline the
conditions under which SNFs and physicians could furnish and bill for
certain services furnished to CJR beneficiaries where current Medicare
programs rules will not permit such billing. We draw the attention of
SNFs and physicians to these waivers, which are included in section
III.C.11.b.(5). of this final rule.
C. Summary of Economic Effects
As shown in our impact analysis, we expect the CJR model to result
in savings to Medicare of $343 million over the 5 performance years of
the model. We note that a composite quality score will be calculated
for each hospital in order to determine eligibility for a
reconciliation payment and whether the hospital qualifies for quality
incentive payments that will reduce the effective discount percentage
experience by the hospital at reconciliation for a given performance
year.
More specifically, in performance year 1 of the model, we estimate
a Medicare cost of approximately $11 million, as hospitals will not be
subject to downside risk in the first year of the model. As we
introduce downside risk beginning in performance year 2 of the model,
we estimate Medicare savings of approximately $36 million. In
performance year 3 of the model, we estimate Medicare savings of $71
million. In performance years 4 and 5 of the model, we will move from
target episode pricing that is based on a hospital's experience to
target pricing based on regional experience, we estimate Medicare
savings of $120 million and $127 million, respectively.
As a result, we estimate the net savings to Medicare to be $343
million over the 5 performance years of the model. We anticipate there
will be a broader focus on care coordination and quality improvement
for LEJR episodes among hospitals and other providers and suppliers
within the Medicare program that will lead to both increased efficiency
in the provision of care and improved quality of the care provided to
beneficiaries.
We note that under section 1115A(b)(3)(B) of the Act, the Secretary
is required to terminate or modify a model unless certain findings can
be made with respect to savings and quality after the model has begun.
If during the course of testing the model it is determined that
termination or modification is necessary, such actions will be
undertaken through rulemaking as necessary.
II. Background
A General Background
This final rule finalizes the implementation of a new innovative
health care payment model under the authority of section 1115A of the
Act. Under the model, called the CJR model, acute care hospitals in
certain selected geographic areas will receive bundled payments for
episodes of care where the diagnosis at discharge includes a lower
extremity joint replacement (LEJR) or reattachment of a lower extremity
that was furnished by the hospital. The bundled payment will be paid
retrospectively through a reconciliation process; hospitals and other
providers and suppliers will continue to submit claims and receive
payment via the usual Medicare FFS payment systems. All related care
covered under Medicare Part A and Part B within 90 days after the date
of hospital discharge from the joint replacement procedure will be
included in the episode of care. We believe this model will further our
goals of improving the efficiency and quality of care for Medicare
beneficiaries for these common medical procedures.
B. Acronym of This Model
We have changed the acronym of this model to ``CJR'' and have
updated all references in this rule and the regulations to reflect this
change.
C. Public Comments Received in Response to the CJR Proposed Rule
We received approximately 400 timely pieces of correspondence
containing multiple comments on the CJR proposed rule. We note that
some of these public comments were outside of the scope of the proposed
rule. These out-of-scope public comments are mentioned but not
addressed with the policy responses in this final rule. Summaries of
the public comments that are within the scope of the proposed rule and
our responses to those public comments are set forth in the various
sections of this final rule under the appropriate heading.
III. Provisions of the Proposed Regulations and Analysis of and
Responses to Public Comments
A. Definition of the Episode Initiator and Selected Geographic Areas
1. Background
The CJR model is different from BPCI because it would require
participation of all hospitals (with limited exceptions) throughout
selected geographic areas, which would result in a model that includes
varying hospital types. However, a discussion of BPCI is relevant
because its design informs and supports the proposed CJR model. The
BPCI model is voluntary, and under that model we pay a bundled payment
for an episode of care only to entities that have elected to
participate in the model. We are interested in testing and evaluating
the impact of an episode payment approach for LEJRs in a variety of
other circumstances, including among those hospitals that have not
chosen to voluntarily participate because we have not tested bundled
payments for these hospitals previously. This would allow CMS and
participants to gain experience testing and evaluating episode-based
payment for LEJR procedures furnished by hospitals with a variety of
historic utilization patterns; roles within their local markets; volume
of services provided; access to financial, community, or other
resources; and population and health care provider density. Most
importantly, participation of hospitals in selected geographic areas
will allow CMS to test bundled payments without introducing selection
bias such as the selection bias inherent in the BPCI model due to self-
selected participation.
2. Definition of Episode Initiator
Under the CJR model, as described further in section III.B. of this
final rule, episodes will begin with admission to an acute care
hospital for an LEJR procedure that is paid under the IPPS through
Medical Severity Diagnosis-Related Group (MS-DRG) 469 (Major joint
replacement or reattachment of lower extremity with MCC) or 470 (Major
joint replacement or reattachment of lower extremity without MCC) and
end 90 days after the date of discharge from the hospital. For the CJR
model, we proposed that hospitals would be the only episode initiators.
For purposes of CJR, the term ``hospital'' means a hospital as defined
in section 1886(d)(1)(B) of the Act. This statutory definition of
hospital includes only acute care hospitals paid under the IPPS. We
proposed that all acute care hospitals in Maryland would be
[[Page 73283]]
excluded from CJR. The state of Maryland entered into an agreement with
CMS, effective January 1, 2014, to participate in CMS' new Maryland
All-Payer Model. In order to implement the Maryland All-Payer Model,
CMS waived certain requirements of the Act, and the corresponding
implementing regulations, as set forth in the agreement between CMS and
Maryland. Specifically, under the Maryland All-Payer Model, Maryland
acute care hospitals are not paid under the IPPS or Outpatient
Prospective Payment System (OPPS) but rather are paid under rates set
by the state. Following the model's performance period, Maryland will
transition to a new model that incorporates the full spectrum of care,
not just hospital services. As such, with respect to Maryland
hospitals, CMS intends to test and develop new payment and delivery
approaches that can incorporate non-hospital services in a manner that
accounts for Maryland's unique hospital rate setting system and permit
Maryland to develop its own strategy to incentivize higher quality and
more efficient care across clinical situations within and beyond
hospitals, including but not limited to LEJR episodes of care. We
proposed that because Maryland hospitals are not paid under the IPPS or
OPPS, payments to Maryland hospitals will be excluded in the regional
pricing calculations as described in section III.C.4. of this final
rule. We sought comment on whether there were potential approaches for
including Maryland acute care hospitals in CJR. In addition, we sought
comment on whether Maryland hospitals should be included in CJR in the
future upon any termination of the Maryland All-Payer Model.
The following is a summary of the comments received and our
responses.
Comment: Several commenters commented on the proposed exclusion of
Maryland hospitals in the All-Payer model from the model. A commenter
requested that if we are considering approaches for including Maryland
acute care hospitals in the CJR model that we ensure that the inclusion
of such hospitals would not jeopardize the current all-payer system in
Maryland. If such an approach were to be developed, the commenter noted
that it would welcome the opportunity to participate in the CJR model
and further stated that it is confident that it would be successful
under the CJR model in helping to further to goals of providing high
quality care at lower costs to better patient outcomes and population
health. Another commenter noted that Maryland's All-Payer Model
Agreement is focused on holding hospitals accountable for improving
care, improving health, and reducing the total cost of hospital care
for all payers. Under the All-Payer model, Maryland has shifted its
long-standing hospital rate-setting system from a volume-based system,
focused on cost per case, to a global population-based system that
incorporates performance requirements for quality and outcomes. The
Maryland system will be held accountable for the total cost of care for
Medicare patients under its contract with CMS and thus already has two-
sided risk for hospital costs. The commenter stated that Maryland wants
to work with CMS to develop a unique approach to achieving the goals of
the model, but under the All-Payer model. Lastly, another commenter
expressed confusion if we were announcing a plan to have Maryland
transition to a new model that incorporates the full spectrum of care,
not just hospital services.
Response: Under the All-Payer model, Maryland has facilitated the
movement of regulated hospital revenue into population-based payment
reimbursement under a hospital global budget model. We appreciate the
state's efforts to move away from volume-based payments and to focus on
reducing total cost of care and improving quality of care, and we have
seen improvement on these areas in the first year of the All-Payer
model. However, we remain concerned that certain aspects of the All-
Payer Model make it challenging for Maryland to be included in other
payment and delivery innovations being launched by the CMS Innovation
Center. As we anticipate testing more models across the country, we do
not want Maryland to fall behind in payment and delivery innovation. We
are very interested in Maryland's strategy to be accountable for total
cost of care beyond hospital services, which we intend to implement
under the All-Payer model in 2019. We note that we are not announcing a
new model for Maryland in this rule, but rather the CMS Innovation
Center looks forward to working with Maryland on its total cost of care
model.
Comment: Several commenters agreed with CMS that Maryland hospitals
should not be included in our definition of ``hospital'' and, instead,
the state of Maryland should be allowed to develop its own strategy to
encourage higher quality care and efficiencies across clinical
settings.
Response: We agree that for the purposes of the CJR model, the term
``hospital'' should only encompass hospitals currently paid under the
IPPS and we are finalizing as proposed to exclude Maryland hospitals
from the CJR model.
Final Decision: After consideration of the public comments we
received, we are finalizing, for purposes of the CJR model, the term
``hospital'' to mean a hospital subject to the IPPS as defined in
section 1886(d)(1)(B) of the Act. This statutory definition of hospital
includes only acute care hospitals paid under the IPPS, thus excluding
Maryland hospitals from participating in CJR and excluding payments to
Maryland hospitals in regional pricing calculations described in
section III.C.4 of this final rule. This definition will be codified in
Sec. 510.2
We proposed to designate IPPS hospitals as the episode initiators
to ensure that all Medicare FFS LEJR services furnished by participant
hospitals in selected geographic areas to beneficiaries who do not meet
the exclusion criteria (specified in section III.B.3. and section
III.C.7. of this final rule) are included in the CJR model. Given that
our proposal that the LEJR episode begins with an admission to a
hospital paid under the IPPS that results in a discharge assigned to
MS-DRG 469 or 470, we further believed that utilizing the hospital as
the episode initiator is a straightforward approach for this model
because the hospital furnishes the LEJR procedure. In addition, we
noted our interest in testing a broad model in a number of hospitals
under the CJR model in order to examine results from a more generalized
payment model. Thus, we believed it is important that, in a model where
hospital participation is not voluntary, all Medicare FFS LEJR episodes
that begin at the participant hospital in a selected geographic area
should be included in the model for beneficiaries that do not meet the
exclusion criteria specified in section III.B.3. of this final rule and
are not LEJR BPCI episodes that we are excluding as outlined in this
section and also in section III.C.7 of this final rule. This is best
achieved if the hospital is the episode initiator. Finally, as
described in the following sections that present our proposed approach
to geographic area selection, this geographic area selection approach
relies upon our definition of hospitals as the entities that initiate
episodes. We sought comment on our proposal to define the episode
initiator as the hospital under CJR. However, commenters generally
commented on our proposal to define the episode initiator as the
hospital in tandem with comments regarding the proposal that the
hospital also be the entity financially responsible for the episode of
care under CJR. As such, comments regarding the proposed
[[Page 73284]]
episode initiator and the entity financially responsible for the
episode of care are summarized in section III.A.2. of this final rule.
3. Financial Responsibility for the Episode of Care
BPCI Model 2 participants that have entered into agreements with
CMS to bear financial responsibility for an episode of care include
acute care hospitals paid under the IPPS, health systems, physician-
hospital organizations, physician group practices (PGPs), and non-
provider business entities that act as conveners by coordinating
multiple health care providers' participation in the model. Thus, our
evaluation of BPCI Model 2 will yield information about how results for
LEJR episodes may differ based on differences in which party bears
financial responsibility for the episode of care. For the CJR model, we
proposed to make hospitals financially responsible for the episode of
care.
Although we proposed that hospitals would bear the financial
responsibility for LEJR episodes of care under CJR, because there are
LEJR episodes currently being tested in BPCI Model 1, 2, 3 or 4, we
believed that participation in CJR should not be required if it would
disrupt testing of LEJR episodes already underway in BPCI models.
Therefore, we proposed certain exceptions for instances where IPPS
hospitals located in an area selected for the model are active
participant hospitals or episode initiators for LEJR episodes as of
July 1, 2015, and exceptions for LEJR episodes initiated by other
providers or suppliers under certain BPCI models.
The following is a summary of the comments received and our
responses.
Comment: Most commenters expressed overall support for the CJR
model, with some commenters noting that the CJR model could help to
transform care delivery through improved care coordination and
financial accountability. Several commenters further expressed support
for our proposal to designate hospitals as the episode initiators and
the entity financially responsible for the episode of care under the
CJR model. These commenters agreed that hospitals should bear the
responsibility of implementing the CJR model and further agreed with
being able to share this responsibility with ``collaborators'' through
gainsharing agreements. The commenters noted that the themes
surrounding responsibility and cost in conjunction with quality as
presented in the proposed rule were encouraging and show a continued
focus on bettering outcomes and patient engagement while lowering
costs.
Response: We thank the commenters for their support. As noted in
the proposed rule, the intent of the CJR model is to promote quality
and financial accountability for episodes of care surrounding a lower-
extremity joint replacement (LEJR) or reattachment of a lower extremity
procedure. We anticipate the CJR model would benefit Medicare
beneficiaries by improving the coordination and transition of care,
improving the coordination of items and services paid for through
Medicare FFS, encouraging more provider investment in infrastructure
and redesigned care processes for higher quality and more efficient
service delivery, and incentivizing higher value care across the
inpatient and PAC spectrum spanning the episode of care (80 FR 41198).
Comment: Several commenters disagreed with the proposal for the CJR
model to limit financial responsibility for the episode of care to only
hospitals. Commenters advocated for PGPs or orthopedic surgeons to be
financially responsible, while other commenters advocated for PAC
entities to be financially responsibility for the episode of care.
Commenters listed a variety of reasons why orthopedic physician groups
and/or PAC providers should be financially responsible for the episode
of care. Some commenters stated that the episode initiator for the CJR
model should be a physician, as key clinical decisions about care
within the episode are made by physicians, including determining what
kind of follow-up care is needed. A few commenters stated that the
episode initiator should be the PAC provider, similar to BPCI Model 3,
since much of the reduction in CJR episode costs could occur through
changes in PAC utilization. A few commenters stated that CMS should
distribute program risk across all providers within the episode of care
and not delegate that function to the hospital because during a CJR
episode, ideal care and successful care coordination involve multiple
providers across the care continuum and is especially dependent on PAC
providers. Finally, several commenters stated that with gainsharing
there is greater opportunity for the physician to participate in
patient care redesign, but that unless the physician is also
financially responsible, physician involvement in the full care
redesign would be less than ideal.
Response: As noted in the proposed rule (80 FR 41204 through
41205), because the CJR model is testing a more generalizable model by
including providers that might not participate in a voluntary model, we
believe it is most appropriate to identify a single type of provider to
bear financial responsibility for making repayment to CMS under the CJR
model as one entity needs to be ultimately responsible for ensuring
that care for CJR model beneficiaries is appropriately furnished and
coordinated in order to avoid fragmented approaches that are often less
effective and more costly. Hospitals play a central role in
coordinating episode-related care and ensuring smooth transitions for
beneficiaries undergoing LEJR procedures. Most hospitals already have
some infrastructure in place related to patient and family education
and health information technology as hospitals receive incentive
payments for the adoption and meaningful use of interoperable health
information technology (HIT) and qualified electronic health records
(EHRs). In addition, hospitals are required by the hospital Conditions
of Participation (CoPs) to have in effect a discharge planning process
that applies to all patients (Sec. 482.43). As part of the discharge
planning process, hospitals are required to arrange for the initial
implementation of the discharge plan (Sec. 482.43(c)(3)), which
includes coordinating with PAC providers, a function usually performed
by hospital discharge planners or case managers. Thus hospitals can
build upon already established infrastructure, practices, and
procedures to achieve efficiencies under this episode payment model.
Many hospitals also have recently heightened their focus on aligning
their efforts with those of community providers to provide an improved
continuum of care due to the incentives under other CMS models and
programs, including ACO initiatives such as the Medicare Shared Savings
Program, and the Hospital Readmissions Reduction Program (HRRP),
establishing a base for augmenting these efforts under the CJR model.
Hospitals are also more likely than other providers and suppliers to
have an adequate number of episode cases to justify an investment in
episode management for this model, have access to resources that would
allow them to appropriately manage and coordinate care throughout the
LEJR episode, and hospital staff is already involved in discharge
planning and placement recommendations for Medicare beneficiaries, and
more efficient PAC service delivery provides substantial opportunities
for improving quality and reducing costs under CJR.
We considered requiring treating physicians (orthopedic surgeons or
[[Page 73285]]
others) or their associated PGPs, if applicable, to be financially
responsible for the episode of care under the CJR Model. However, the
services of providers and suppliers other than the hospital where the
acute care hospitalization for the LEJR procedure occurs would not
necessarily be furnished in every LEJR episode. For example, that
physicians of different specialties play varying roles in managing
patients during an acute care hospitalization for a surgical procedure
and during the recovery period, depending on the hospital and community
practice patterns and the clinical condition of the beneficiary and
could not be assumed to be included in every LEJR episode. This
variability would make requiring a particular physician or PGP to be
financially responsible for a given episode very challenging. If we
were to assign financial responsibility to the operating physician, it
is likely that there would be significant variation in the number of
relevant episodes that could be assigned to an individual person. Where
the physician was included in a PGP, episodes could be aggregated to
this group level but this would not be possible for all cases and would
likely still have multiple instances with physicians with a very low
volume of cases. We acknowledge that providers and suppliers with low
volumes of cases may not find it in their financial interests to make
systematic care redesigns or engage in an active way with the CJR
model. We expect that low volume hospitals may achieve less savings
compared to their target episode payments for the simple reason that
they would not find the financial incentive present in the CJR
sufficiently strong to cause them to shift their practice patterns.
While this concern is present in low volume hospitals, it is much more
likely to occur if physicians are financially responsible for episode
costs because physicians typically do not have the case volume to
justify an investment in the infrastructure needed to adequately
provide the care coordination services required under the CJR model
(such as dedicated support staff for case management), which leads us
to believe that as a result, the model would be less likely to succeed.
Although the BPCI initiative allows a PGP and PAC providers to have
financial responsibility for episodes of care, the physician groups and
PAC providers electing to participate in BPCI have done so because
their business structure supports care redesign and other
infrastructure necessary to bear financial responsibility for episodes
and is not necessarily representative of the typical group practice or
PAC provider. Most of the PGPs in BPCI are not bearing financial
responsibility, but are participating in BPCI as partners with convener
organizations, which enter into agreements with CMS on behalf of health
care providers, through which they accept financial responsibility for
the episode of care. The PAC providers in BPCI are not at risk for
episodes that include more than just the post-anchor hospital discharge
period. The incentive to invest in the infrastructure necessary to
accept financial responsibility for the entire CJR episode of care,
starting at admission to an acute care hospital for an LEJR procedure
that is paid under the IPPS MS-DRG 469 or 470 and ending 90 days after
the date of discharge from the hospital, would not be present across
all PGPs and PAC providers. Thus we do not believe it would be
appropriate to designate PGPs or PAC providers to bear the financial
responsibility for making repayments to CMS under the CJR model where
participation is mandatory, rather than voluntary in nature,
potentially causing this model to be less likely to succeed. We may
consider, through future rulemaking, other episode of care models in
which PGPs or PAC providers are financially responsible for the costs
of care.
Comment: Several commenters suggested that conveners--non-provider
business entities that coordinate multiple health care providers'
participation in the model--should also be allowed to bear financial
responsibility for episodes of care under the proposed CJR model. A
commenter suggested that instead of making hospitals responsible for
managing payments and costs, a management organization should be
designated or created to manage the costs and payments.
Response: In the BPCI initiative, participants have entered into a
variety of relationships with entities above the hospital level. Some
of these relationships are ones where the financial responsibility is
borne by an entity other than the hospital, such as a parent
organization (known as awardee conveners). Other relationships between
hospitals and other organizations (known as facilitator conveners) are
more managerial or consultative where financial responsibility remains
with the episode initiator (for example, the hospital). We acknowledge
the important role that conveners play in the BPCI initiative with
regard to providing infrastructure support to hospitals and other
entities initiating episodes in BPCI. The convener relationship (where
another entity assumes financial responsibility) may take numerous
forms, including contractual (such as a separate for-profit company
that agrees to take on a hospital's financial risk in the hopes of
achieving financial gain through better management of the episodes) and
through ownership (such as when financial responsibility is borne at a
corporate level within a hospital chain). However, we proposed that for
the CJR model we would hold only the participant hospitals financially
responsible for the episode of care. This is consistent with the goal
of evaluating the impact of bundled payment and care redesign across a
broad spectrum of hospitals with varying levels of infrastructure and
experience in entering into risk-based reimbursement arrangements. If
conveners were included as participants in CJR, we may not gain the
knowledge of how a variety of hospitals can succeed in relationship
with CMS in which they bear financial risk for the episode of care.
While we proposed that the participant hospital be financially
responsible for the episode of care under CJR, we agreed that effective
care redesign for LEJR episodes requires meaningful collaboration among
acute care hospitals, PAC providers, physicians, and other providers
and suppliers within communities to achieve the highest value care for
Medicare beneficiaries. We believe it may be essential for key
providers and suppliers to be aligned and engaged, financially and
otherwise, with the hospitals, with the potential to share financial
responsibility with those hospitals. As such, CJR participant hospitals
may enter into relationships with other entities in order to manage the
episode of care or distribute risk. We refer readers to section
III.C.10 of this final rule for further discussion of financial
arrangements between participant hospitals and other providers and
suppliers. Depending on a hospital's current degree of clinical
integration, new and different contractual relationships among
hospitals and other health care providers and suppliers may be
important, although not necessarily required, for CJR model success in
a community. We acknowledge that financial incentives for other
providers and suppliers may be important aspects of the model in order
for hospitals to partner with these providers and suppliers and
incentivize certain strategies to improve episode efficiency.
As noted in the proposed rule (80 FR 41261), in addition to
providers and
[[Page 73286]]
suppliers with which the participant hospital may want to enter into
financial arrangements to share risks and rewards, we expect that
participant hospitals may choose to engage with organizations that are
neither providers nor suppliers to assist with matters such as: Episode
data analysis; local provider and supplier engagement; care redesign
planning and implementation; beneficiary outreach; CJR beneficiary care
coordination and management; monitoring participant hospital compliance
with the terms and conditions of the CJR model; or other model-related
activities. These organizations may play important roles in a
hospital's plans to implement the CJR model based on the experience
these organizations may bring to the hospital's successful
participation in the model, such as prior experience with bundled
payment initiatives, care coordination expertise, familiarity with the
local community, and knowledge of Medicare claims data. All
relationships established between participant hospitals and these
organizations for purposes of the CJR model would only be those
permitted under existing law and regulation, meaning that gainsharing
agreements between hospitals and organizations that are neither
providers nor suppliers are not permitted. Hospital relationships with
organizations other than providers and suppliers would be based solely
on the ability of such organizations to directly support the
participant hospitals' CJR model implementation.
Comment: Numerous commenters urged CMS to implement the CJR model
on a voluntary basis, rather than requiring hospitals to participate.
Commenters observed that the CJR model was unprecedented, unjustified,
and risky for beneficiaries, because it was the first time CMS would
require participation of providers who may not have the interest,
experience, capability, or infrastructure to carry out what is
necessary for an experiment whose outcomes are unknown. Other
commenters claimed that some of the hospitals in the selected MSAs
would not be prepared for model participation due to a lack of
resources to better coordinate care, insufficient infrastructure, low
patient volumes, and lack of negotiating power in their communities,
among other reasons. A few commenters disagreed with designating
hospitals as financially responsible for the episode of care under CJR
if the hospital cannot withdraw its participation if it cannot thrive
under the model. The commenters stated that absent readmissions,
hospitals have limited influence over other, non-surgical costs
associated with joint replacements, such as PAC, rehabilitation, home
care, doctors' visits, and more. Conversely, a commenter wrote that
there may be some hospitals not in the selected MSAs that would like to
participate in CJR and would be precluded from doing so unless CMS
opens the model to other hospitals who volunteered to participate.
Several commenters requested that CMS continue to test voluntary
payment models so that providers can continue to tailor bundled payment
reforms to their particular patient populations, practice settings,
markets, infrastructure, and administrative resources. A commenter
stated that requiring participation in the CJR model may preclude
testing of alternative, potentially more effective, approaches. Another
commenter contended that requiring participation in this model for
providers who may also be participating in a voluntary payment model
could create confusion and competing incentives. Commenters further
questioned the appropriateness of requiring participation in CJR, given
that hospitals may not have contractual agreements with other providers
and suppliers furnishing services during an episode. Finally, several
commenters contended that the CJR model could result in beneficiary
harm; a commenter stated that because participation in the CJR model is
required, CMS should be held responsible for any harm to beneficiaries
as a result of the model.
Response: We appreciate the views of the commenters on our proposal
for required participation in the CJR model test of LEJR episode
payment. We recognize that the CJR model represents the first time the
Innovation Center will require hospital participation in a payment
model being tested under section 1115A of the Act, and we have engaged
in rulemaking to ensure robust opportunity for public notice and
comment on the model and its design. This model will allow CMS to gain
experience with making bundled payments to hospitals who have a variety
of historic utilization patterns; different roles within their local
markets; various volumes of services; different levels of access to
financial, community, or other resources; and various levels of
population and health provider density including local variations in
the availability and use of different categories of PAC providers. We
believe that by requiring the participation of a large number of
hospitals with diverse characteristics, the CJR model will result in a
robust data set for evaluation of this bundled payment approach, and
will stimulate the rapid development of new evidence-based knowledge.
Testing the model in this manner will also allow us to learn more about
patterns of inefficient utilization of health care services and how to
incentivize the improvement of quality for common LEJR procedure
episodes. Finally, requiring participation removes selection bias and
gives CMS a better, more accurate picture of the effects of the model
for consideration of any potential expansion on a national scale.
We have multiple years of experience with several types of large
voluntary episode payment models where we have successfully
collaborated with participants on implementation of episode payment in
a variety of settings for multiple clinical conditions. We believe the
relatively narrow scope of the model (LEJR episodes only), the phasing
in of full financial responsibility over multiple years of the model,
and our plan to engage with hospitals to help them succeed under this
model through the provision of claims data, will aid hospitals in
succeeding under the CJR model. As discussed in section III.C.2. of
this final rule, we are also finalizing that the model's first
performance period will begin April 1, 2016, instead of on January 1,
2016 as originally proposed. The longer notice of the final model
policies before implementation will provide hospitals with more time to
prepare for participation by identifying care redesign opportunities,
beginning to form financial and clinical partnerships with other
providers and suppliers, and using data to assess financial
opportunities under the model.
We acknowledge commenters' concern that some hospitals not in a
selected MSA may desire to participate in the CJR model. We also note
that CMS will continue to test voluntary bundled payment models,
including those already undergoing testing through the BPCI initiative,
which offered several open periods over the past few years where
interested hospitals and other organizations could join. We expect that
many providers will continue to engage in initiatives such as BPCI, and
may also participate in other emerging models in the coming years. The
coexistence of voluntary initiatives such as BPCI alongside new models
in which providers are required to participate will provide CMS,
providers, and beneficiaries with multiple opportunities to benefit
from various care redesign and payment reform initiatives. We will also
continue
[[Page 73287]]
to explore alternative approaches that may also prove effective in
improving care for beneficiaries while reducing spending.
We disagree that requiring participation in the CJR model could
create confusion and competing incentives for hospitals already
participating in voluntary initiatives. We note that simultaneous
testing of multiple bundled payment models is appropriate in many
situations, depending on the care targeted under each model. Section
III.C.7. of this final rule lays out our policies for accounting for
overlap between models and contains discussion of the potential
synergies and improved care coordination we expect will ensue through
allowing for hospitals and beneficiaries to be engaged in more than one
initiative simultaneously.
We appreciate that not all hospitals will have contractual
arrangements with providers and suppliers furnishing services to
beneficiaries during LEJR episodes. However, this final rule lays out
the various financial arrangements that will be permitted under the CJR
model, to allow hospitals the opportunity to engage with other
providers and suppliers and to form clinical and financial
partnerships. Section III.C.10. of this final rule details the
requirements for these financial arrangements. Although hospitals will
not be required to form financial relationships with other providers
and suppliers, we expect many will do so in order to help align the
clinical and financial incentives of key providers and suppliers caring
for CJR model beneficiaries.
Finally, we do not see how participation in the CJR model, in and
of itself, would lead to beneficiary harm and that if beneficiary harm
were to occur, that CMS would be responsible. First, and most
importantly, we note that under the model, providers and suppliers are
still required to provide all medically necessary services, and
beneficiaries are entitled to all benefits that they would receive in
the absence of the model. Second, we note that we have employed many
payment systems, such as IPPS, and payment models, such as BPCI and
ACOs, that include similar economic incentives to promote efficiency,
and we have not determined that beneficiaries have been harmed by those
systems and models. Third, we note that CMS has numerous tools and
monitoring plans which are both specific to this model and common to
all FFS Medicare. These include audits, monitoring of utilization and
outcomes within the model, and the availability of Quality Improvement
Organization (QIOs) and 1-800-MEDICARE for reporting beneficiary
concerns, among other protections. The CJR model includes monitoring to
ensure beneficiary access, choice, and quality of care is maintained
under the model. We refer readers to section III.F. of this final rule
for discussion of beneficiary protections and monitoring under the CJR
model. The model pricing structure, discussed in III.C. of this final
rule, also includes features to protect against such potential harm,
such as responsibility for post-episode spending increases, stop-gain
policies that set a maximum threshold a hospital can earn for savings
achieved during episodes, and other policies as detailed in that
section. In summary, we note that this payment model does not constrain
the practice of medicine and we do not expect clinical decisions to be
made on the basis of the payment amount.
Comment: Several commenters stated that all states selected to
participate in the proposed HHVBP should be exempted from having to
participate in the CJR model. Commenters stated that forcing HHAs to
participate in two mandatory models simultaneously is harsh and
punitive and would likely skew the results of both models in areas of
overlap.
Response: Only participant hospitals under the CJR model are
financially responsible to CMS for the episode of care. HHAs will
continue to be paid the FFS amount that they would otherwise receive
for beneficiaries included in the CJR model. Therefore, there is no
reason to exempt hospitals located in MSAs selected for participation
in CJR that are also located in states selected for participation in
the HHVBP model.
Comment: Many commenters expressed concern with the interaction
between BPCI and the proposed joint replacement model due to instances
where LEJR episodes excluded from CJR due to BPCI would cause a low
volume issue for certain hospitals. Other commenters stated that the
proposed CJR model penalizes providers that are voluntarily
participating in the BPCI initiative and suggested that CMS allow
hospitals in selected MSAs to be allowed to choose between
participation in BPCI and the joint replacement model.
Response: Because there are LEJR episodes currently being tested in
BPCI Models 1, 2, 3 and 4, we noted in the proposed rule that we
believed that participation in CJR should not be required if it would
disrupt testing of LEJR episodes already underway in BPCI models.
Therefore, we proposed that IPPS hospitals located in an area selected
for the model that are active Model 1 BPCI participant hospitals as of
July 1, 2015, or episode initiators for LEJR episodes in the risk-
bearing phase of Model 2 or 4 of BPCI as of July 1, 2015, would be
excluded from participating in CJR during the time that their
qualifying episodes are included in one of the BPCI models. We clarify
that we will utilize current information on BPCI participation to
determine whether a given hospital is included in CJR. For example, if
a hospital elected to participate in the LEJR episode under BPCI Model
2 in September 2015, that hospital would not be included in CJR during
the time that their qualifying episodes are included in BPCI. Likewise,
we proposed that if the participant hospital is not an episode
initiator for LEJR episodes under BPCI Model 2, then LEJR episodes
initiated by other providers or suppliers under BPCI Model 2 or 3
(where the surgery takes place at the participant hospital) would be
excluded from CJR. Otherwise qualifying LEJR episodes (that is, those
that are not part of a Model 3 BPCI LEJR episode or a Model 2 PGP-
initiated LEJR episode) at the participant hospital would be included
in CJR. We are testing a model where participation is not voluntary;
therefore, it would not be appropriate for hospitals in selected MSAs
to be allowed to choose between participation in BPCI and the joint
replacement model. If hospitals were allowed to voluntarily participate
in the CJR model, this would introduce selection bias and hamper CMS'
ability to analyze how such a payment model potentially would work on a
national scale. In addition, a hospital interested in participating in
a voluntary model had the opportunity under BPCI. In response to
concerns regarding the interaction between BPCI and CJR and potential
for too few LEJR episodes at a given hospital to remain under the CJR
model, low volume concerns are discussed and addressed in section
III.A.4.b of this final rule.
Comment: Some commenters requested CMS to allow hospitals
participating in ACOs that achieved shared savings in recent
performance periods, Shared Savings Program ACOs (Track 2 and Track 3),
and full-risk ACOs (such as Next Generation ACO), to opt-out of
participation in the CJR model.
Response: As we previously noted and in the proposed rule, many
hospitals have recently heightened their focus on aligning their
efforts with those of community providers to provide an improved
continuum of care due to the incentives under other CMS models and
programs. Therefore, hospitals that are already involved in ACO
initiatives and
[[Page 73288]]
the HRRP have already established a base for augmenting these efforts
under the CJR model (80 FR 41205). Therefore, we see no compelling
reason why hospitals participating in ACO initiatives and other efforts
cannot be participant hospitals in the CJR model. However, adjustments
to account for overlaps with other innovation center models and CMS
programs are discussed in section III.C.7. of this final rule.
Comment: A commenter stated that a CMS Certification Number (CCN)
can include multiple hospitals. The commenter inquired, if at least one
hospital under the CCN is in a selected MSA, would the entire CCN be
required to participate in the CJR model. The commenter also requested
if some of the hospitals in the CCN are not eligible for the CJR
program, would they be required to participate because they are under
the same CCN.
Response: The proposed approach indicated that CMS would base
selection on the physical location of the hospital. The manner in which
CMS tracks and identifies hospitals is through the CCN. In keeping with
this approach, the CJR model will administer model-related activities
at the CCN level including the determination of physical location. The
physical location associated with the CCN at the time of the model
start will be used to determine whether that CCN is located in a
selected MSA. For hospitals that share a CCN across various locations,
all hospitals under that CCN would be required to participate in the
CJR model if the physical address associated with the CCN is in the
MSA, unless otherwise excluded. Similarly, all hospitals under the same
CCN, even if some are physically located in the MSA selected for
participation, would not participate in in the CJR model if the
physical address associated with the CCN is not in the MSA. Our
analysis of the hospitals in the selected MSAs indicates that this
phenomenon is not present in the selected areas.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposal to designate IPPS hospitals as
the episode initiators. The initiation of an episode is described in
Sec. 510.100. We are also finalizing our proposal to require IPPS
hospitals physically located in an area selected for participation in
the CJR model, according to the address associated with the CCN, to
participate in the model and bear the financial responsibility for LEJR
episodes of care under the CJR model. Finally, we are finalizing our
proposal that hospitals selected for the model that are active Model 1
BPCI participant hospitals as of July 1, 2015, or episode initiators
for LEJR episodes in the risk-bearing phase of Model 2 or 4 of BPCI as
of October 1, 2015, are excluded from participating in CJR during the
time that their qualifying episodes are included in one of the BPCI
models. However, LEJR episodes initiated by other providers or
suppliers under BPCI Model 2 or 3 (where the surgery takes place at the
participant hospital) are excluded from CJR. Otherwise qualifying LEJR
episodes (that is, those that are not part of a Model 3 BPCI LEJR
episode or a Model 2 physician group practice-initiated LEJR episode)
at the participant hospital are included in CJR. The definition of a
``participant hospital'' and ``CJR-regional hospital'' will be codified
in Sec. 510.2, exclusions to episodes being tested due to BPCI overlap
will be codified in Sec. 510.100(b). The following chart illustrates
the inclusion of episodes in CJR relative to BPCI.
[GRAPHIC] [TIFF OMITTED] TR24NO15.000
4. Geographic Unit of Selection and Exclusion of Selected Hospitals
In determining which hospitals to include in the CJR model, we
considered whether the model should be limited to hospitals where a
high volume of LEJRs are performed, which would result in a more narrow
test on the effects of an episode-based payment, or whether to include
all hospitals in particular geographic areas, which would result in
testing the effects of an episode-based payment approach more broadly
across an accountable care community seeking to coordinate care
longitudinally across settings. Selecting certain hospitals where a
high volume of LEJRs are performed may allow for fewer hospitals to be
selected as model participants, but still result in a sufficient number
of CJR episodes to
[[Page 73289]]
evaluate the success of the model. However, there would be more
potential for behavioral changes that could include patient shifting
and steering between hospitals in a given geographic area that could
impact the test. Additionally, this approach would provide less
information on testing episode payments for LEJR procedures across a
wide variety of hospitals with different characteristics. Selecting
geographic areas and including all IPPS hospitals in those areas not
otherwise excluded due to BPCI overlap as previously described and in
section III.C.7. of the proposed rule as model participants would help
to minimize the risk of participant hospitals shifting higher cost
cases out of the CJR model. Moreover, in selecting geographic areas we
could choose certain characteristics, stratify geographic areas
according to these characteristics, and randomly select geographic
areas from within each stratum. Such a stratified random sampling
method based on geographic area would allow us to observe the
experiences of hospitals with various characteristics, such as
variations in size, profit status, and episode utilization patterns,
and examine whether these characteristics impact the effect of the
model on patient outcomes and Medicare expenditures within episodes of
care. Stratification would also substantially reduce the extent to
which the selected hospitals will differ from non-selected hospitals on
the characteristics used for stratification, which would improve the
statistical power of the subsequent model evaluation, improving our
ability to reach conclusions about the model's effects on episode costs
and the quality of patient care. Therefore, given the authority in
section 1115A(a)(5) of the Act, which allows the Secretary to elect to
limit testing of a model to certain geographic areas, we proposed to
use a stratified random sampling method to select geographic areas and
require all hospitals paid under the IPPS in those areas to participate
in the CJR model and be financially responsible for the cost of the
episode, with certain exceptions as previously discussed and in
sections III.B.3 and III.C.7. of the proposed rule.
a. Overview and Options for Geographic Area Selection
In determining the geographic unit for the geographic area
selection for this model, we considered using a stratified random
sampling methodology to select--(1) Certain counties based on their
Core-Based Statistical Area (CBSA) status, (2) certain zip codes based
on their Hospital Referral Regions (HRR) status; or (3) certain states.
We address each geographic unit in turn.
We considered selecting certain counties based on their CBSA
status. A CBSA is a core area containing a substantial population
nucleus, together with adjacent communities having a high degree of
economic and social integration within that core. Counties are
designated as part of a CBSA when the county or counties or equivalent
entities are associated with at least one core (urbanized area or urban
cluster) of at least 10,000 in population, plus adjacent counties
having a high degree of social and economic integration with the core
as measured through commuting ties with the counties associated with
the core. There are 929 CBSAs currently used for geographic wage
adjustment purposes across Medicare payment systems.\4\ The 929 CBSAs
include 388 MSAs, which have an urban core population of at least
50,000, and the 541 Micropolitan Statistical Areas ([mu]SA), which have
an urban core population of at least 10,000 but less than 50,000. CBSAs
may be further combined into a Combined Statistical Area (CSA) which
consists of two or more adjacent CBSAs (MSAs or [mu]SAs or both) with
substantial employment interchange. Counties not classified as a CBSA
are typically categorized and examined at a state level.
---------------------------------------------------------------------------
\4\ As stated in the FY 2014 IPPS/LTCH PPS proposed rule (78 FR
27552) and final rule (78 FR 50586), on February 28, 2013, OMB
issued OMB Bulletin No.13-01, which established revised delineations
for MSAs, [mu]SA s, and CSAs, and provided guidance on the use of
the delineations of these statistical areas. A copy of this bulletin
may be obtained at http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf.
---------------------------------------------------------------------------
The choice of a geographical unit based on CBSA status could mean
selection of a CBSA, an MSA, or a CSA. We proposed basing the selection
on an MSA, which we will discuss later in this section.
We proposed that counties not in an MSA would not be subject to the
selection process. These counties not subject to selection would
include the [mu]SA counties and the counties without a core urban area
of at least 10,000. These areas are largely rural areas and have a
limited number of qualifying LEJR cases. Relatively few of these areas
would be able to qualify for inclusion based on the minimum number of
LEJR episodes in year requirement discussed later in this section.
We considered, but ultimately decided against, using CSA
designation instead of MSAs as a potential unit of selection. Under
this scenario, we would look at how OMB classifies counties. We would
first assess whether a county has been identified as belonging to a
CSA, a unit which consists of adjacent MSAs or [mu]SAs or both. If the
county was not in a CSA, we would determine if it was in an MSA that is
not part of a larger CSA. Counties not associated with a CSA or an MSA
would be unclassified and excluded from selection. These unclassified
areas would include the counties in a state that were either not a CBSA
(no core area of at least 10,000) or associated with a [mu]SA (core
area of between 10,000 and 50,000) but unaffiliated with a CSA.
Whether to select on the basis of CSA/MSAs or just on MSAs was
influenced by a number of factors. We considered the following factors:
CSAs, by definition, have a significantly lower degree of
interchange between component parts than the interchange experienced
within an MSA. Thus, we did not believe that using CSAs would be
necessary in order to capture referral patterns. A case study
examination of the geographic areas included in CSAs with respect to
the health care markets of those areas and their respective parts
helped to validate our conclusion.
We assessed the anticipated degree to which LEJR patients
would be willing to travel for their initial hospitalization.
We assessed the extent to which surgeons are expected to
have admitting privileges in multiple hospitals located in different
MSAs.
We considered the degree to which we desire to include
hospitals within [mu]SAs that are part of a larger CSA.
After examining these factors, we concluded that that the
anticipated risk for patient shifting and steering between MSAs within
a CSA was not severe enough to warrant selecting CSAs given CMS'
preference for smaller geographic units. However, because MSAs are
units with significant levels of social and commercial exchange and due
to the mobility of patients and providers within MSAs, we believed that
selecting complete MSAs is preferable to selecting metropolitan
divisions of MSAs for inclusion in the CJR model. We use the
metropolitan divisions to set wage indices for its prospective payment
systems (PPSs). Of the 388 MSAs, there are 11 MSAs that contain
multiple metropolitan divisions. For example, the Boston-Cambridge-
Newton, MA-NH MSA is divided into the following metropolitan divisions:
Boston, MA.
Cambridge-Newton-Framingham, MA.
Rockingham County-Strafford County, NH.
[[Page 73290]]
The Seattle-Tacoma-Bellevue, WA MSA is divided into the following
metropolitan divisions:
Seattle-Bellevue-Everett, WA.
Tacoma-Lakewood, WA.
We proposed selecting entire MSAs rather than sub-divisions within
an MSA.
We next considered selecting HRRs. HRRs represent regional health
care markets for tertiary medical care. There are 306 HRRs with at
least one city where both major cardiovascular surgical procedures and
neurosurgery are performed. HRRs are defined by determining where the
majority of patients were referred for major cardiovascular surgical
procedures and for neurosurgery.\5\ Compared to MSAs, HRRs are
classified based on where the majority of beneficiaries within a zip
code receive their hospital services for selected tertiary types of
care. The resulting HRRs represent the degree to which people travel
for tertiary care that generally requires the services of a major
referral center and not the size of the referral network for more
routine services, such as knee and hip arthroplasty procedures. In
addition, because HRRs are defined based on referrals for
cardiovascular surgical procedures and neurosurgery, they may not
reflect referrals for orthopedic procedures. Therefore, we believed
that MSAs as a geographic unit are preferable over HRRs for this model.
---------------------------------------------------------------------------
\5\ The Dartmouth Atlas of Healthcare, http://www.dartmouthatlas.org/data/region/. Accessed on April 9, 2015.
---------------------------------------------------------------------------
We also considered selecting states for the CJR model. However, we
concluded that MSAs as a geographic unit are preferable over states for
the CJR model. As stated in section III.A.4.b. of the proposed rule, we
anticipate that hospitals that would otherwise be required to
participate in the CJR model would be excluded from the model because
their relevant LEJR episodes are already being tested in BPCI. If we
were to select states as the geographic unit, there is a potential that
an entire state would need to be excluded because a large proportion of
hospitals in that state are episode initiators of LEJR episodes in
BPCI. In contrast, if we excluded a specific MSA due to BPCI
participation, as discussed in the next section, we could still select
another MSA within that same state. Likewise, if we chose states as the
geographic unit, we would automatically include hospitals in all rural
areas within the state selected. If MSAs are selected for the
geographic unit, we anticipate that fewer small rural hospitals would
be included in the model. Using a unit of selection smaller than a
state would allow for a more deliberate choice about the extent of
inclusion of rural or small population areas. Selecting states rather
than MSAs would also greatly reduce the number of independent
geographic areas subject to selection under the model, which would
decrease the statistical power of the model evaluation. Finally, MSAs
straddle state lines where providers and Medicare beneficiaries can
easily cross these boundaries for health care. Choosing states as the
geographic unit would potentially divide a hospital market and set up a
greater potential for patient shifting and steering to different
hospitals under the model. The decision that the MSA-level analysis was
more analytically appropriate was based on the specifics of this model
and is not meant to imply that other levels of selection would not be
appropriate in a different model such as the proposed HHVBP model.
For the reasons previously discussed, we proposed to require all
IPPS hospitals to participate in the CJR model (with limited exceptions
as previously discussed in section III.A.2. of the proposed rule) if
located in an MSA selected through a stratified random sampling
methodology (outlined in section III.A.3.b. of the proposed rule) to
test and evaluate the effects of an episode-based payment approach for
an LEJR episodes. We proposed to determine that a hospital is located
in an area selected if the hospital is physically located within the
boundary of any of the counties in that MSA where the counties are
determined by the definition of the MSA as of the date the selection is
made. In response to comments, we are clarifying that we will determine
physical location using the address associated with the CCN of the
hospital. Although MSAs are revised periodically, with additional
counties added or removed from certain MSAs, we proposed to maintain
the same cohort of selected hospitals throughout the 5 performance
years of the model with limited exceptions as described later in this
section. Thus, we proposed that, if after the start of the model, new
counties are added to one of the selected MSAs or counties are removed
from one of the selected MSAs, those re-assigned counties would retain
the same CJR status they had at the beginning of the initiative. We
believed that this approach will best maintain the consistency of the
participants in the model, which is crucial for our ability to evaluate
the results of the model. We retain the possibility of adding a
hospital that is opened or incorporated within one of the selected
counties after the selection is made and during the period of
performance. (See section III.C.4. of the proposed rule for discussion
of how target prices will be determined for such hospitals.) Hospitals
in selected counties that do not have any LEJR cases that qualify for
CJR, due to their participation in the BPCI initiative as a hospital
initiator in an LEJR episode, will become subject to CJR at the time
their participation in BPCI ends and their episodes become eligible for
CJR. Although we considered including hospitals in a given MSA based on
whether the hospitals were classified into the MSA for IPPS wage index
purposes, this process would be more complicated, and we could not find
any compelling reasons favoring this approach. For example, we assign
hospitals to metro divisions of MSAs when those divisions exist. See
our previous discussion of this issue. In addition, there is the IPPS
process of geographic reclassification by which a hospital's wage index
value or standardized payment amount is based on a county other than
the one where the hospital is located. For the purpose of this model,
it is simpler and more straightforward to use the hospital's physical
location as the basis of assignment to a geographic unit. This decision
would have no impact on a hospital's payment under the IPPS. We sought
comment on our proposal to include participant hospitals for the CJR
model based on the physical location of the hospital in one of the
counties included in a selected MSA.
The following is a summary of the comments received and our
responses.
Comment: Commenters generally supported MSAs as the unit of
geographic selection. However, several had concerns regarding the
particular circumstances of their MSAs. Some commenters stated that
MSAs were too large and preferred the use of metropolitan regions for
large urban areas such as New York City, while others expressed concern
with the inclusion of rural portions of the MSA counties. Commenters
addressing the rural providers within the selected MSAs questioned
whether the inclusion of rural hospitals in the model was deliberate or
whether CMS believed hospitals in rural areas should not be included in
the CJR model. Other commenters expressed concern that MSAs were a
smaller than ideal unit of selection and that selecting MSAs for the
model would encourage practices such as funneling patients to hospitals
outside a selected MSA for surgery in order to avoid inclusion in the
model. Conversely, a commenter asserted that
[[Page 73291]]
participation in the model would result in a competitive advantage for
hospitals in a selected MSA through the use of gainsharing to recruit
physicians to move referrals into a selected market. Some commenters
were also concerned about patient shifting in or out of a selected MSA
in areas where the MSA was part of a larger CSA, such as in the Atlanta
CSA in which some, but not all, component MSAs were selected for
participation in the CJR model.
Response: We first address the issue of the inclusion of the
entirety of an MSA as the unit of selection rather than just the core
urban area. This was a deliberate choice reflecting the fact that we
seek to examine the performance of hospitals under CJR that could be
considered rural, low volume, or outside the urban core. Inclusion of
such hospitals in the model will give us insight on how the model
functions in these areas and increase the potential generalizability of
the model. The proposed rule proposed additional protections to
selected classes of hospitals such as SCHs, Medicare-Dependent
Hospitals (MDHs), and RCHs because we wanted to further protect these
federally-recognized categories of vulnerable hospitals while including
them in the model.
We chose MSAs as the unit of selection to balance the following
considerations: The scope for shifting patients in or out of selected
areas, our ability to observe the impact of the model in a variety of
circumstances, and our preference to not use a geographic unit larger
than strictly necessary to evaluate the model. We acknowledge that
there are inevitably tradeoffs among these criteria. With respect to
the choice of CSA versus MSA, a far greater number of commenters were
concerned with the inclusion of rural providers than were concerned
with their or their competitor's markets crossing the borders of MSAs
within a CSA. By definition, CSAs have a lesser degree of the
employment interchange than an MSA and basing the geographic unit of
selection on a CSA would entail the possibility of selecting [micro]SAs
within CSAs. On balance, we believe it is appropriate to limit the
extent of rural participation in CJR by confining it to rural areas
within MSAs. We are sympathetic to concerns related to the experience
of hospitals that are located near the borders between MSAs, but
believed that those concerns did not outweigh these other
considerations. In contrast, the density of populations and providers
at the borders of these markets was one of the reasons that we decided
to not proceed with allowing selection to be done based on metropolitan
divisions for those 11 MSAs that were so sub-divided. Metropolitan
divisions are very likely to have hospitals whose referral markets
straddle divisions and their use as a unit would have had been
problematic. After weighing the comments we continue to believe that
MSAs are the most appropriate compromise position for the choice of
geographic unit of selection.
Finally, we note that separate commenters stated that a hospital in
a CJR selected county could be either at both a competitive advantage
(for example, by providing an opportunity to attract physicians through
gainsharing), or a competitive disadvantage (for example, by causing
physicians to shift patients to nearby hospitals). We believe that both
phenomena may occur and that the ability of a hospital to use the
opportunities presented to it under the CJR model to strengthen its
relationship with other providers and potentially achieve savings will
vary by the hospital's specific circumstances and capabilities. We do
not see a strong argument for why these types of effects necessitate a
change to the geographic unit used for this model.
Comment: Some commenters contended that the CJR model has
inadequate participation by small and rural providers due to the
elimination of non-CBSA and [micro]SAs from the possibility of
selection for this model. The commenters wrote that CMS should include
more rural providers in order to foster a model that is not overly
tailored to large providers and urban areas. A commenter stated that
inclusion in the model would result in rural providers being more
prepared to adapt to future payment and delivery reforms. Another
stated that it was important to include more small volume hospitals,
and urged CMS to reconsider the implications of this exclusion and to
broaden the definition of geographic areas.
Response: We appreciate commenters' input on how to incorporate
rural providers in the CJR model and acknowledge commenters' concerns
related to the ability of small and rural providers to effectively
participate and succeed in the model. Our proposed approach to
including low-volume and non-urban providers within the selected MSAs
but removing from the possibility of selection counties that are not in
an MSA or in an MSA with less than 400 qualifying LEJR cases is an
appropriate strategy that allows for inclusion of rural providers in
the model, while not oversampling such providers.
Comments related to requests for exclusion of particular hospitals
are addressed in the next section, MSA Selection Methodology. Financial
protections for hospitals are addressed later in section III.C.8. of
this final rule.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposal, without modification, to
utilize MSAs as the unit of selection for the model.
b. MSA Selection Methodology
We proposed to select the MSAs to include in the CJR model by
stratifying all of the MSAs nationwide according to certain
characteristics.
(1) Exclusion of Certain MSAs
Prior to assigning an MSA to a selection stratum, we examined
whether the MSA met specific proposed exclusion criteria. MSAs were
evaluated sequentially using the following 4 exclusion criteria: First,
MSAs in which fewer than 400 LEJR episodes (determined as discussed in
section III.B.2. of this final rule) occurred from July 1, 2013 through
June 30, 2014 were removed from possible selection. The use of the 400
LEJR cases in a year was based on a simple one-sided power calculation
to assess the number of episodes that would be needed to detect a 5
percent reduction in episode expenditures. Cases in hospitals paid
under either the critical access hospital (CAH) methodology or the
Maryland All-Payer Model are not included in the count of eligible
episodes. This criterion removed 156 MSAs from possible selection.
Second, MSAs were removed from possible selection if there were
fewer than 400 non-BPCI LEJR episodes in the MSA in the reference year.
For the purposes of this exclusion, the number of BPCI episodes was
estimated as the number of potentially eligible cases during the
reference year that occurred in acute care hospitals participating in
BPCI Model 1, or in phase 2 of BPCI Models 2 or 4 as of July 1, 2015
and the number of LEJRs in the reference year associated with these
hospitals was examined. This criterion removed an additional 24 MSAs
from potential selection.
Third, MSAs were also excluded from possible selection if the MSA
was dominated by BPCI Models 1, 2, 3, or 4 episodes to such a degree
that it would impair the ability of participants in either the CJR
model or the BPCI models to succeed in the objectives of the initiative
or impair the ability to set accurate and fair prices. We anticipate
that some degree of overlap in the two models will be mutually helpful
for both models. There are two steps to this exclusion. First, we
looked at the number of LEJR episodes at BPCI Model 1, 2 or 4
initiating hospitals and second,
[[Page 73292]]
the number of LEJR episodes among BPCI Model 3 SNF and Home Health
Agency (HHA) episode initiators. First, we excluded MSAs if more than
50 percent of otherwise qualifying proposed CJR episodes were in Phase
2 of BPCI Model 2 or 4 with hospital initiators. Second, we excluded
MSAs if either SNF or HHA BPCI Model 3 initiating providers accounted
for more than 50 percent of LEJR referrals to that provider type. As a
result of this third criterion, 4 additional MSAs were removed from
possible selection. No MSAs were excluded based on SNF or HHA
participation in Model 3.
Finally, MSAs were removed if, after applying the previous three
criteria they remained eligible for selection, but more than 50 percent
of estimated eligible episodes during the reference year were not paid
under the IPPS system. The purpose of this rule was to assess the
appropriateness of MSAs that contained both Maryland and non-Maryland
counties. No MSAs were eliminated on the basis of this rule. Please
refer to the appendix for this final rule for the status of each MSA
based on these exclusion criteria, available at http://innovation.cms.gov/initiatives/cjr/. After applying these four
exclusions, 196 MSAs remained to be stratified for purposes of our
proposed selection methodology.
The following is a summary of the comments received and our
responses.
Comment: Many commenters requested that we exclude additional MSAs
from the selection process. Commenters supported our exclusion of MSAs
with less than a minimum number of eligible LEJR episodes and a high
rate of BPCI LEJR penetration, but were concerned that the list of BPCI
participating providers used in making the exclusion determination did
not reflect providers entering BPCI as of October 1, 2015. Such
commenters recommended that CMS recalculate BPCI participation in LEJR
episodes in each MSA based on both hospital- and physician-led
participants and adjust the MSA selection accordingly. Commenters also
suggested adding additional selection criteria based on the overall
percent of LEJR episodes associated with a BPCI episode, the percent of
LEJR episodes associated with a PGP initiated BPCI episode, and the
percent of LEJR episodes associated with an ACO.
Response: In response to the comments, we re-examined the exclusion
rules based on an updated list of providers participating in the BPCI
initiative for LEJR episodes. We also examined the potential impact on
selection of MSAs that incorporating an updated list of BPCI
participants would have. For the purposes of the re-examination of
exclusion rule 2, which eliminates MSAs with less than 400 CJR
eligible, non-BPCI episodes, we estimated the BPCI LEJR episode count
as the number of potentially eligible cases during the reference year
that (1) occurred in an acute care hospital participating in BPCI Model
1 that would still be active as of April 1, 2016; (2) occurred in an
acute care hospital in a Phase 2 LEJR episode for BPCI Models 2 or 4 as
of October 1, 2015; or (3) were associated with an operating or
admitting physician on the hospital claim assigned to a PGP with an
LEJR episode in Phase 2 of BPCI Model 2 as of October 1, 2015. October
1, 2015 is the final quarter for which participants in Phase 1 of BPCI
could transition any episode into Phase 2. This represents a change to
the exclusion rule articulated in the proposed rule, in that it updates
the list of BPCI participants and also takes into account episodes
associated with Model 2 PGP episode initiators. As we did for exclusion
rule 2, we used the October 2015 list of BPCI participants to reassess
exclusion rule 3. Rule 3 removes an MSA if more than 50 percent of
patients were treated in a BPCI initiating hospital or if more than 50
percent of LEJR patients treated in a PAC setting of that type were
treated in a BPCI initiating HHA or SNF.
After we made the previously stated changes, some MSAs previously
eligible for selection would now be considered excluded. Additionally,
two of the MSAs previously excluded would now be eligible for selection
due to hospitals withdrawing from BPCI and the MSAs now having more
than 400 eligible cases. Eight MSAs that were selected in the proposed
rule would be classified as excluded on the basis of these updated
exclusion rules.
We considered a variety of alternative approaches to address the
changes in the eligibility of MSAs. First, we considered proceeding
with the list of 75 MSAs as initially selected and using the exclusion
rules as initially proposed. Second, we considered removing the 8
selected MSAs that would now be excluded on the basis of the updated
BPCI participation numbers. Third, we considered replacing the 8 MSAs
by randomly selecting new MSAs from the remaining MSAs in the relevant
strata. However, we believed that it would preferable, although not
required, to give the selected MSAs a consistent period of time between
selection and the start of the model. Fourth, we contemplated creating
a revised list of eligible MSAs and randomly selecting a new group of
75 MSAs. Given the concern of many commenters about the start date of
the model, we were reluctant to create a completely new list of
selected MSAs. We believe that making a new selection would be regarded
unfavorably by impacted MSAs and hospitals and should be avoided if
possible. In order to be responsive to concerns regarding the growth of
BPCI after the publication of the proposed rule and the increase in PGP
participation in BPCI, we are proceeding with the second option.
The function of the stratification approach was to ensure that our
selection of MSAs covered a range of efficiency levels and population
sizes and allowed us to target our sampling percentages so as to
oversample in the less efficient areas. Regarding the selected MSAs now
eliminated, they are distributed fairly evenly throughout the
distribution of average episode payments. From the least expensive to
the most expensive quartiles, the number selected and now eliminated
are, in order, 2/15 (13 percent), 2/19 (11 percent), 3/30 (15 percent),
and 1/22 (5 percent). We also believe that the removal of these 8 MSAs
from the model will not preclude us from undertaking a rigorous
statistical evaluation of the model.
Given the aforementioned information, we believe that the
relatively minor reduction in statistical power due to not re-selecting
MSAs is outweighed by the desire to give affected participant hospitals
equal time to prepare for the model. We are removing the 8 MSAs as
noted in Table 1.
Table 1--MSAs That Were Previously Selected That Are No Longer Included
in CJR
------------------------------------------------------------------------
Revised exclusion Revised exclusion
CBSA title rule 2 status rule 3 status
------------------------------------------------------------------------
Colorado Springs, CO............ Fail.............. Pass.
Evansville, IN-KY............... Fail.............. Pass.
Fort Collins, CO................ Fail.............. Pass.
Las Vegas-Henderson-Paradise, NV Fail.............. Fail.
[[Page 73293]]
Medford, OR..................... Fail.............. Pass.
Richmond, VA.................... Fail.............. Pass.
Rockford, IL.................... Fail.............. Pass.
Virginia Beach-Norfolk-Newport Pass.............. Fail.
News, VA-NC.
------------------------------------------------------------------------
We next contemplated whether to apply additional MSA-level
exclusion rules. We investigated a potential new rule whereby an MSA
would be excluded based on the percent of the MSA's qualifying LEJR
episodes associated with Phase 2 Model 2 PGP initiators. We did not
believe that there was as strong of an argument for excluding MSAs on
the basis of the percent of patients treated by a BPCI physician given
that the hospital is the financially accountable entity in CJR. We
examined two possible cut off points (>65 percent and >50 percent) to
assess which MSAs would be eliminated if we were to exclude MSAs where
a specific percent of an MSA's otherwise qualifying LEJR cases was
attributable to a BPCI PGP. At 65 percent, no selected MSAs not
otherwise excluded were impacted. 8 MSAs that were previously selected
had more than 50 percent of their LEJRs performed by BPCI PGPs. Five of
these 8 MSAs are already eliminated due to the revised exclusion rule
2. For markets with more than 400 non-BPCI cases but more than 50
percent BPCI PGP penetration, the number of the CJR eligible patients
was between 556 and 1834 indicating that there was a sizable number of
cases. Consequently, we did not find this new exclusion rule necessary.
Comment: Commenters requested modifications to the proposed
exclusions of specific categories of hospitals within an MSA. While
commenters stated a variety of concerns, many of them were related to
the request that CMS exclude low volume hospitals from the model.
Commenters made requests around specific categories of hospitals
including Medicare Dependent Hospitals (MDHs), Sole Community Hospitals
(SCHs), Rural Referral Centers (RRCs), hospitals that are reclassified
as rural, hospitals perceived of as rural or outside of a core urban
area, and larger hospitals with a low potential CJR LEJR volume due to
the exclusion of their patients because their LEJR episodes were
initiated by a PGP BPCI LEJR episode initiator.
Commenters provided a variety of rationales for why they believed
it was undesirable or unfair to include low volume providers in the
model. These reasons include, but are not limited to, observations
that--
Low-volume providers are less likely to be proficient at
taking care of these patients in an efficient cost-effective manner and
they will be less likely to achieve savings;
Low-volume hospitals will be disproportionately impacted
by outlier cases and will have less predictable cost and quality
outcomes making it difficult for them to manage the model effectively.
In addition, low volume providers are likely to see a greater
proportion of hip fractures and non-planned procedures;
Low-volume hospitals will have less control over and
ability to impact the behavior of other providers. The pool of
collaborating providers such as orthopedic surgeons in most rural
communities may be limited and small hospitals may not have the market
position to successfully influence others' behavior;
Hospitals with a limited number of Medicare hip and knee
procedures may not have sufficient incentive to invest the time and
resources necessary to develop the infrastructure and partnerships
required to effectively manage these episodes of care and may not find
the opportunity to improve patient outcomes significant enough to
engage referring physicians and PAC partners for redesign;
Low volume providers may be more financially vulnerable
and with fewer resources to design and carry out initiatives or make
effective responses to the financial incentives in the model. A
commenter noted concerns with hospital margins, and the possibility for
the reductions in revenue as a result of the loss of volume or loss of
margin under CJR could result in additional hospital closures.
Due to these concerns, commenters requested a variety of solutions
including (1) the exclusion of hospitals based on a volume cut off
variously defined by volume of eligible LEJR cases, LEJR cases within
specific MS-DRGs and total hospital volume, (2) making the model
voluntary for low volume providers, (3) extending the protections
afforded to SCH, MDH and RRC to additional categories of hospitals
including hospitals electing to be treated as rural under Sec.
412.103, and (4) the provision of additional protections or payment
adjustments beyond what was included in the proposed rule.
Response: We acknowledge the fact that hospitals, particularly low
volume hospitals, are concerned and would like to increase their
probability of receiving reconciliation payments under CJR while
minimizing the possibility of reduction in revenue. We refer readers to
the following sections of this final rule: Section III.C.8. for a
discussion of hospital financial protections, III.C.4. for a discussion
of how we will determine target prices for hospitals with low volume,
and section III.C.4. for a discussion of target prices for hip fracture
patients. We believe that the modification of the treatment of hip
fractures in the payment methodology should allay many concerns of
small and rural providers. This change may disproportionately impact
them since emergency surgeries, such as hip fractures, have a higher
probability of being performed in low volume settings.
As stated in relation to comments requesting that CJR operate as a
voluntary model, the inclusion of low volume hospitals in the CJR model
is consistent with the goal of evaluating the impact of bundled payment
and care redesign across a broad spectrum of hospitals with varying
levels of infrastructure, care redesign experience, market position,
and other considerations and circumstances. The design of the CJR model
and the inclusion of low volume providers within the model reflects our
interest in testing and evaluating the impact of a bundled payment
approach for LEJR procedures in a variety of circumstances, especially
among those hospitals that may not otherwise participate in such a
test. The inclusion of these providers allows CMS to better appreciate
and understand how the model operates as a general payment approach and
its impact on a wide range of hospitals. Many LEJR surgeries are
performed in low volume settings, thus, the impact of the CJR model on
low volume hospitals is of great interest to the evaluation of this
initiative.
We acknowledge that providers with low volumes of cases may not
find it in their financial interests to make
[[Page 73294]]
systematic care redesigns or engage in an active way with the CJR
model. We expect that low volume providers may decide that their
resources are better targeted to other efforts because they do not find
the financial incentive present in the CJR sufficiently strong to cause
them to shift their practice patterns. We acknowledge that low volume
hospitals may achieve less savings because they did not or could not
make the necessary changes to the treatment of their qualifying
beneficiary population. We believe this choice is similar in nature to
that made as hospitals decide their overall business strategies and
where to focus their attentions.
Comment: Many commenters requested that CMS exclude hospitals where
more than 50 percent of the eligible LEJRs performed at a hospital
would be attributed to a PGP initiated BPCI episode and would thus not
be in CJR. The majority of these commenters were concerned about low
volumes of patients, which is addressed in the previous comment and
response. Some were concerned about the operational complexity of
identifying, tracking, and managing patients treated in CJR versus
BPCI.
Response: We will not exclude IPPS hospitals in selected MSAs other
than as already specified or allow IPPS hospitals to opt out of
participation in CJR. As previously noted in the discussion on low
volume hospitals, we consider the inclusion of low volume providers a
core feature of the model that will aid us in understanding the impact
of a variety of providers in various circumstances. Similarly, we do
not believe it is necessary or appropriate to exclude hospitals on the
basis of some of the surgeons in their hospitals being associated with
a BPCI PGP. Like with more traditional low volume providers, the extent
to which a hospital alters its behavior in response to the CJR model
will likely be the result of a variety of factors including but not
limited to the anticipated number of cases. It should be noted that the
revised exclusion rule that resulted in the elimination of 8 MSAs was
based on failing to meet a minimum MSA number of LEJRs and not based on
either the number of LEJRs at a particular hospital or the portion of
PGPs at any level of analysis. If an IPPS hospital in a selected area
has some of their LEJR cases qualify as CJR episodes and some that do
not due to BPCI participation, Medicare Advantage status or any other
reason, the fact that CJR cases are not their full caseload will not be
considered a reason for exclusion of the hospital.
With respect to challenges that hospitals may experience related to
identifying eligible patients and following them over the course of
their episodes, we acknowledge that concern. However, we consider the
improved tracking and communication with other providers and suppliers
that is likely to occur as a result of hospital efforts in CJR to be a
benefit of the model that will improve the coordination of patient care
and possibly improve patient outcomes.
Comment: Two commenters raised the issue of hospital systems
spanning more than one MSA. They requested that CMS either allow all of
the hospitals in the system to be included in CJR or allow all of the
hospitals to be excluded. Commenters stated that the additional
administrative burden associated with two concurrent Medicare payment
methodologies would be unduly burdensome. Additionally, commenters
stated that CMS should develop criteria under which all providers in
health systems with a significant number of BPCI participants would be
excluded from the CJR model due to operational challenges to managing
the BPCI and CJR models simultaneously within a health care system.
Response: With respect to the request that all members within a
health system be allowed to have all of their hospitals participate in
BPCI because operating under two systems is too onerous, if a health
system made the choice to enter some but not all of their locations
into BPCI, they have already made the business decision to operate
partly under one incentive structure and partly under another. We do
not believe that the existence of CJR model as proposed should change
the timelines for transitioning to Phase 2 of BPCI. We will not exclude
hospitals from the model on the basis that some of the hospitals in its
health system are participating in BPCI or some of the hospitals in its
health system have CCNs with addresses located in a non-selected MSA.
The CJR model will require hospitals within selected geographic
areas to participate (unless otherwise excluded as set forth in this
final rule). The inclusion of additional voluntarily participating
hospitals outside of these selected areas would constitute a major
change to the model that was not considered in the proposed rule.
Providers who wished to participate in a voluntary episode model had
the opportunity under the BPCI initiative.
Final Decision: After consideration of the public comments we
received, we are modifying the MSA exclusion rules used in determining
which MSAs are eligible for selection. The following is a description
of the MSA exclusion criteria used in this final rule:
In determining if an MSA was eligible for selection, we first
examined whether the MSA met any of the four exclusion criteria as
formulated in the proposed rule. This process resulted in a pool of 196
MSA from which we then selected 75 for inclusion in CJR via stratified
random selection.
In this final rule, we revised the exclusion rules as defined later
in this section, with the purpose of assessing whether any of the 75
selected MSAs would be considered not eligible for selection based on
applying the new criteria.
Specifically, the second exclusion rule, which eliminates MSAs with
fewer than 400 non-BPCI CJR eligible cases, is modified with the
following additions (1) the determination of the count of patients
associated with a BPCI Phase 2 initiating hospital is based on the
participation in BPCI as of October 1, 2015 rather than July 1, 2015
and (2) the count of BPCI episodes to be removed from the count of
eligible episodes takes into consideration patients who would have been
attributed to a BPCI Model 2 initiating PGP in Phase 2 for an LEJR
episode as of October 1, 2015. The third exclusion rule, wherein MSAs
were excluded based on the percent of the MSA's LEJR population
associated with either a BPCI hospital, SNF or HHA in an MSA, was
changed to be based on episodes associated with participation in BPCI
as of October 1, 2015 rather than July 1, 2015.
As a result of updating the list of BPCI participants to those
entering the model in October 2015 and including Phase 2 PGPs in the
calculation of the number of cases in the MSA, 8 MSAs out of the 75
MSAs that were previously selected are now deemed not eligible for
selection and are consequently no longer required to participate in
CJR. These previously selected and now excluded MSAs are shown in Table
1. The remaining 67 MSAs selected in the proposed rule will be required
to participate in CJR.
(2) Selection Strata
Numerous variables were considered as potential strata for
classifying MSAs included in the model. However, our proposal was
intended to give priority to transparency and understandability of the
strata. We proposed creating selection strata based on the following
two dimensions: MSA average wage-adjusted historic LEJR episode
payments and MSA population size.
[[Page 73295]]
(a) MSA Average Wage-Adjusted Historic LEJR Episode Payments
We were interested in being able to classify and divide MSAs
according to their typical patterns of care associated with LEJR
episodes. As a straightforward measure of LEJR patterns of care, we
selected the mean MSA episode payment, as defined in the proposed rule.
MSAs vary in their average episode payments. The average episode
payments in an area may vary for a variety of reasons including--(1) In
response to the MS-DRG case mix and thus the presence of complicating
conditions; (2) readmission rates; (3) practice patterns associated
with type of PAC provider(s) treating beneficiaries; (4) variations of
payments within those PAC providers, and (5) the presence of any
outlier payments.
The measure of both mean episode payments and median episode
payments within the MSA was considered. We proposed to stratify by mean
because it would provide more information on the variation in episode
payments at the high end of the range of payments. We are interested in
the lower payment areas for the purpose of informing decisions about
potential future model expansion. However, the CJR model is expected to
have the greatest impact in areas with higher average episode payments.
The average episode payments used in this analysis were calculated
based on the proposed episode definition for CJR using Medicare claims
accessed through the Chronic Conditions Warehouse for 3 years with
admission dates from July 1, 2011 through June 30, 2014. Episode
payments were wage-adjusted using the FY 2014 hospital wage index
contained in the FY 2014 IPPS Final Rule, downloaded at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY-2014-IPPS-Final-Rule-Home-Page-Items/FY-2014-IPPS-Final-Rule-CMS-1599-F-Data-Files.html. The adjusted payment was
calculated by dividing the unadjusted payment by a factor equal to the
sum of 0.3 plus the multiplicative product of 0.7 and the wage index
value of the hospital where the LEJR was performed. We truncated the
episode payment at the 99.9th percentile of the distribution ($135,000)
to limit the impact of extreme outliers.
(b) MSA Population Size
The second dimension proposed for the CJR selection strata is the
number of persons in the MSA. In deciding how best to incorporate the
dimensions of urban density and availability of medical resources, a
variety of measures were considered, including overall population in
the included counties, overall population in the core area of the MSA,
population over the age of 65 in the MSA, the number of hospital beds
and the number of Medicare FFS LEJR procedures in a year. The reason we
decided to include this dimension in the strata definition is that
these factors are believed to be associated with the availability of
resources and variations in practice and referral patterns by the size
of the healthcare market. When examined, these alternative measures
were all very highly correlated with one another, which allowed the use
of one of these measures to be able to substitute for the others in the
definition of the stratum. From these alternative approaches, we choose
to use MSA population. In operationalizing this measure, MSAs were
classified according to their 2010 census population.
(c) Analysis of Strata
The two proposed domains, MSA population and MSA historic LEJR
episode spending, were examined using a K-Means factor analysis. The
purpose of this factor analysis was to inform the process of which cut
points most meaningfully classify MSAs. Factor analysis attempts to
identify and isolate the underlying factors that explain the data using
a matrix of associations. Factor analysis is an interdependence
technique. Essentially, variables are entered into the model and the
factors (or clusters) are identified based on how the input variables
correlate to one another. The resulting clusters of MSAs produced by
this methodology suggested natural cut points for average episode
payments at $25,000 and $28,500. While not intentional, these divisions
correspond roughly to the 25th and 75th percentiles of the MSA
distribution. Cut points based on these percentiles seemed reasonable
from statistical and face validity perspectives in the sense that they
created groups that included an adequate number of MSAs and a
meaningful range of costs.
As a result of this analysis, we classified MSAs according to their
average LEJR episode payment into four categories based the on the
25th, 50th and 75th percentiles of the distribution of the 196
potentially selectable MSAs as determined in the exclusion rules as
applied in the proposed rule (80 FR 41198). This approach ranks the
MSAs relative to one another and creates four equally sized groups of
49. The population distribution was divided at the median point for the
MSAs eligible for potential selection as determined and defined in the
proposed rule. This resulted in MSAs being divided into two equal
groups of 98. The characteristics of the resulting strata are shown in
Table 2.
Table 2--Summary Population and Episode Payment Statistics by MSA Group
----------------------------------------------------------------------------------------------------------------
Payment in
Payment in Payment in 2nd Payment in 3rd highest Total eligible
lowest quarter lowest quarter lowest quarter quarter
----------------------------------------------------------------------------------------------------------------
MSAs deemed eligible in the
proposed rule (80 FR 41198)
with population less than
median:
Number of Eligible MSAs..... 33 19 22 24 98
Average of Population....... 251,899 238,562 268,331 254,154 253,554
Minimum MSA Population...... 96,275 55,274 106,331 96,024 55,274
Maximum MSA Population...... 425,790 416,257 424,858 428,185 428,185
Average Episode Payments ($) $22,994 $25,723 $27,725 $30,444 $26,410
Minimum Episode Payments.... $18,440 $24,898 $26,764 $29,091 $18,440
Maximum Episode Payments.... $24,846 $26,505 $28,679 $32,544 $32,544
MSAs deemed eligible in the
proposed rule (80 FR 41198)
with population more than
median:
Number of Eligible MSAs..... 16 30 27 25 98
Average of Population....... 1,530,083 1,597,870 1,732,525 2,883,966 1,951,987
Minimum MSA Population...... 464,036 436,712 434,972 439,811 434,972
Maximum MSA Population...... 4,335,391 5,286,728 12,828,837 19,567,410 19,567,410
Average Episode Payments ($) $23,192 $25,933 $27,694 $30,291 $27,082
[[Page 73296]]
Minimum Episode Payments.... $16,504 $25,091 $26,880 $28,724 $16,504
Maximum Episode Payments.... $24,819 $26,754 $28,659 $33,072 $33,072
-------------------------------------------------------------------------------
Total Eligible MSAs..... 49 49 49 49 ..............
----------------------------------------------------------------------------------------------------------------
Note: Population and episode payment means are unweighted averages of the MSA values within each of the eight
MSA groups.
Please refer to the addenda for this final rule for information on
the non-excluded MSAs, their wage adjusted average LEJR episode
spending, their population and their resultant group assignment at:
http://innovation.cms.gov/initiatives/cjr/.
(3) Factors Considered But Not Used in Creating Proposed Strata
In addition to the two dimensions we proposed to use for the
selection groups previously discussed, a variety of possible
alternative measures and dimensions were considered. Many of these
variables are considered to be important but it was believed that it
was important to have a fairly straightforward and easily
understandable stratum definition. Simplicity, by definition, required
that only the most important variables would be used. If a market
characteristic under consideration was correlated with one of the
chosen dimensions or it was believed that variations in the
characteristic could be adequately captured by random selection within
the strata, is was not prioritized for inclusion.
Some of the factors considered that we did not propose as
dimensions are--
Measures associated with variation in practice patterns
associated with LEJR episodes. In considering how to operationalize
this measure, a number of alternatives were considered including total
PAC LEJR payments in an MSA, percent of LEJR episodes with a SNF claim
in an MSA, percent of LEJR episodes with an initial discharge to HHA,
percent of LEJR episodes with an Inpatient rehabilitation facility
(IRF) claim, and percent of LEJR episodes with claims for two or more
types of PAC providers;
Measures associated with relative market share of
providers with respect to LEJR episodes;
Healthcare supply measures of providers and suppliers in
the MSA including counts of IRF beds, SNF beds, hospital beds, and
number of orthopedic surgeons;
MSA level demographic measures such as; average income,
distributions of population by age, gender or race, percent dually
eligible, percent of population with specific health conditions or
other demographic composition measures; and
Measures associated with the degree to which a market
might be more capable or ready to implement care redesign activities.
Examples of market level characteristics that might be associated with
anticipated ease of implementation include the MSA-level EHR meaningful
use levels, managed care penetration, ACO penetration and experience
with other bundling efforts.
It should be noted that, while these measures were not proposed to
be part of the selection strata, we acknowledge that these and other
market-level factors may be important to the proper understanding of
the evaluation of the impact of CJR. It is the intention that these and
other measures will be considered in determining which MSAs are
appropriate comparison markets for the evaluation as well as considered
for possible subgroup analysis or risk adjustment purposes. The
evaluation will include beneficiary, provider, and market level
characteristics in how it examines the performance of this proposed
model.
(4) Sample Size Calculations and the Number of Selected MSAs
Analyses of the necessary sample size to facilitate a robust
statistical analysis of CJR's effects led us to conclude that we needed
to include between 50 and 100 MSAs of the 384 MSAs with eligible LEJR
episodes to participate in CJR and we proposed to select 75 MSAs. As
previously discussed, the proposed revision of the MSA exclusion rules
resulted in 8 of the previously selected MSAs now being considered
excluded, leading to their removal from the model. The resulting number
of selected MSAs, 67, is still within the acceptable range for an MSA
count as determined by our analysis. The number and method of selection
of these original 75 MSAs from the 8 proposed groups is addressed in
the following section. In finalizing this approach, we are undertaking
a test in as few markets as possible while still allowing us to be
confident in our results and to be able to generalize from the model to
the larger national context. We discuss the assumptions and modeling
that went into our proposal later in this section.
In calculating the necessary size of the model, a key consideration
was ensuring that the model would have sufficient power to be able to
detect the desired size impact. The larger the anticipated size of the
impact, the fewer MSAs we would have to sample in order to observe it.
However, a model sized to be able to only detect large impacts runs the
risk of not being able to draw conclusions if the size of the change is
less than anticipated. The measure of interest used in estimating
sample size requirements for the CJR model was wage-adjusted total
episode spending. To measure wage-adjusted total episode spending, we
used the 3 year data pull also used for the average regional episode
spending estimation that covers LEJR episodes with admission dates from
July 1, 2011 through June 30, 2014. For the purposes of the sample size
calculation the impact estimate assumed we wanted to be able to detect
a 2 percent reduction in wage adjusted episode spending after 1 year of
experience. This amount was chosen because it is the anticipated amount
of the discount we proposed to apply to target prices in CJR.
The next consideration in calculating the necessary sample size is
the degree of certainty we will need for the statistical tests that
will be performed. In selecting the right sample size, there are two
types of errors that need to be considered ``false negatives'' and
``false positives''. A false positive occurs if a statistical test
concludes that the model was successful when it was, in fact, not. A
false negative occurs if a statistical test fails to find statistically
significant evidence that the model was successful, but it was, in
fact, successful. In considering the minimum sample size needs of a
model, a standard guideline in the statistical literature suggests
calibrating statistical tests to generate no more than a 5 percent
chance of a false positive and selecting the sample size to ensure no
more than a 20 percent
[[Page 73297]]
chance of a false negative. In contrast, the proposed sample size for
this project was based on a 20 percent chance of a false positive and a
30 percent chance of a false negative after one year of episodes in
order to be as conservative as was practicable. A greater degree of
certainty will be available with additional years of data.
A third consideration in the sample size calculation was the
appropriate unit of selection and whether it is necessary to base the
calculation on the number of MSAs, the number of hospitals, or the
number of episodes. As discussed later in this section, we are
proposing to base the sample size calculation at the MSA level.
The CJR model is a nested comparative study, which has two key
features. First, the unit of assignment (to treatment and comparison
groups) is an identifiable group; such groups are not formed at random,
but rather through some physical, social, geographic, or other
connection among their members. Second, the units of observation are
members of those groups. In such designs, the major analytic problem is
that there is an expectation for a positive correlation (intra-class
correlation (ICC)) among observations of members of the same group
(MSA). The ICC reflects an extra component of variance attributable to
the group above and beyond the variance attributable to its members.
This extra variation will increase the variance of any aggregate
statistic beyond what would be expected with random assignment of
beneficiaries or hospitals to the treatment group.
In determining the necessary sample size, we need to take into
consideration the degrees of freedom. As part of this process, we
examined the number of beneficiaries, the number of hospitals, and the
number of MSAs and the level of correlation in episode payments between
each level. For example, while each beneficiary has their own episode
expenditure level, there are commonalities between those expenditure
amounts at the hospital level, based on hospital-specific practice and
referral patterns. The number of degrees of freedom needed for any
aggregate statistic is related to the number of groups (MSAs or
hospitals), not the number of observations (beneficiary episodes). If
we were to base the determination of the size of the model on
beneficiary episodes where correlation exists, we would have an
inflated false positive error rate and would overstate the impact of
the model. We empirically examined the level of correlation between
beneficiaries and hospitals and between hospitals and MSAs and
determined that the correlation was high enough to be of concern and
necessitate an MSA level unit of selection.
Using the previous assumptions, a power calculation was run which
indicated we would need between 50 and 150 treatment MSAs to be able to
reliably detect a 2 percent reduction in payments after 1 year. The
lower end of this range assumed that our evaluation approach could
substantially reduce variation through regression adjustment and other
types of statistical modeling. We anticipated that we would have
adequate statistical power based on prior research results, but wanted
to ensure that we did not have to achieve the ``best possible'' results
from such modeling in order to draw conclusions. In order to allow for
some degree of flexibility we proposed the selection of 75 MSAs. We
narrowed the acceptable range to between 50 and 100 MSAs rather than 50
to 150 MSAs, based on the assumption that we will be able to
substantially improve our estimates through modeling, and then chose a
number near the middle of this reduced range. Due to the revised
exclusion rules, we are proceeding with 67 MSAs, which we believe will
provide adequate statistical power.
In assessing to what degree regression adjustment and other
statistical adjustments could reduce the number of MSAs needed to
generate statistically reliable results, it should be noted that
calculations are based on the actual Medicare payments associated with
episodes. Thus, the variation in payments associated with MS-DRG case
mix, or other reasons are already captured in the methodology.
(5) Method of Selecting MSA
As previously discussed, we selected 75 MSAs from our proposed 8
selection groups and subsequently reduced this number to 67. In
performing the initial MSA selection, we examined and considered a
number of possible approaches including equal selection in each of the
eight groups, equal selection in the four payment groups, selection
proportionate to the number of MSAs in each group, and a number of
approaches that differentially weighted the payment categories.
After consideration, we proposed a methodology that proportionally
under-weighted more efficient MSAs and over-weighted more expensive
MSAs was the most appropriate approach to fulfilling the overall
priorities of this model to increase efficiencies and savings for LEJR
cases while maintaining or improving the overall quality of care. This
approach made MSAs in the lowest spending category less likely to be
selected for inclusion. We thought this appropriate because the MSAs in
the lowest expenditure areas have the least room for possible
improvement and are already performing relatively efficiently compared
to other geographic areas, which means that experience with the model
in these areas may be relatively less valuable for evaluation purposes.
At the same time, we believed it was important to include some MSAs in
this group in order to assess the performance of this model in this
type of circumstance. We also believed it was appropriate for higher
payment areas to be disproportionately included because they are most
likely to have significant room for improvement in creating
efficiencies. We expect more variation in practice patterns among the
more expensive areas. There are multiple ways an MSA can be more
relatively expensive, including through outlier cases, higher
readmission rates, greater utilization of physician services, or
through PAC referral patterns. A larger sample of MSAs within the
higher payment areas will allow for us to observe the impact of the CJR
model on areas with these various practice patterns in the baseline
period.
The method of disproportionate selection between the strata used
was to choose 30 percent of the MSAs in the two groups in the bottom
quarter percentile of the payment distribution, 35 percent of the MSAs
in the two groups in the second lowest quartile, 40 percent in the
third quartile, and 45 percent in the highest episode payment quartile.
This proportion resulted in the selection of the 75 originally selected
MSAs out of the 196 eligible. The number of MSAs originally chosen as
well as the final selection counts within the eight selection groups is
shown in Table 3.
[[Page 73298]]
Table 3--Number of MSAs To Be Chosen From the Eight Selection Groups
----------------------------------------------------------------------------------------------------------------
Payment in
Payment in Payment in 2nd Payment in 3rd highest Total eligible
lowest quarter lowest quarter lowest quarter quarter MSAs
----------------------------------------------------------------------------------------------------------------
Selection Proportion............ 30% 35% 40% 45% ..............
Less Than Median Population (1) (2) (3) (4) ..............
(Group #)......................
Number Eligible MSAs per 33 19 22 24 98
Proposed Rule (80 FR 41198)
Proportion x Number......... 9.9 6.65 8.8 10.8
Number initially selected 10 7 9 11 37
from group.................
Number finally selected from 8 6 8 11 33
group......................
More Than Median Population (5) (6) (7) (8)
(Group #)......................
Number Eligible MSAs per 16 30 27 25 98
NPRM.......................
Proportion x Number......... 4.8 10.5 10.8 11.25
Number initially selected 5 11 11 11 38
from group.................
Number finally selected from 5 10 9 10 34
group......................
Total Eligible MSAs per Proposed 49 49 49 49 196
Rule (80 FR 41198).............
Number initially selected... 15 18 20 22 75
Number finally selected from 13 16 17 21 67
group......................
----------------------------------------------------------------------------------------------------------------
We selected the proposed MSAs for the CJR model through random
selection. In the proposed method of selection, each MSA was assigned
to one of the eight selection groups previously identified. Based on
this sampling methodology, SAS Enterprise Guide 7.1 software was used
to run a computer algorithm designed to randomly select MSAs from each
strata. SAS Enterprise Guide 7.1 and the computer algorithm used to
conduct selection represents an industry standard for generating
advanced analytics and provides a rigorous, standardized tool by which
to satisfy the requirements of randomized selection. The key SAS
commands employed include a ``PROC SURVEYSELECT'' statement coupled
with the ``METHOD=SRS'' option used to specify simple random sampling
as the sample selection method. A random number seed was generated for
each of the eight strata by using eight number seeds corresponding to
birthdates and anniversary dates of parties present in the room. The
random seeds for stratum one through eight were as follows: 907, 414,
525, 621, 1223, 827, 428, 524. Note that no additional stratification
was used in any of the eight groupings so as to produce an equal
probability of selection within each of the eight groups. For more
information on this procedure and the underlying statistical
methodology, please reference SAS support documentation at: http://support.sas.com/documentation/cdl/en/statug/63033/HTML/default/viewer.htm#statug_surveyselect_sect003.htm/ We also considered a
potential alternative approach to this random selection in which we
would generate a starting number within SAS and then choose every third
MSA within a group starting at this point until the relevant number of
MSAs were chosen. We opted to not utilize this feature for simplicity's
sake and alignment with other randomization methodologies used for CMS
models.
The selection of an MSA means that all hospitals are included whose
address associated with their CCN is physically located anywhere within
the counties that make up the MSA. By definition, the entire county is
included in an MSA and hospitals that are in the relevant counties will
be impacted even if they are not part of the core urban area.
We stated in the proposed rule, should the methodology we propose
in this rule change as a result of comments received during the
rulemaking process, it could result in different areas being selected
for the model. In such an event, we would apply the final methodology
and announce the selected MSAs in the final rule. Therefore we sought
comment from all interested parties in every MSA on the randomized
selection methodology proposed in this section.
The following is a summary of the comments received and our
responses.
Comment: Two commenters raised concerns regarding the number of
MSAs selected for inclusion in the model. One noted that, given the
range between 50 and 150 treatment MSAs to be able to reliably detect a
2 percent reduction in payments, CMS could drop some of the 75 selected
MSAs without jeopardizing the ability to produce generalizable results
from the CJR model. Another commenter suggested that the approach to
the model should focus on an intense analysis within fewer markets
prior to expansion into a larger representative sample.
Response: As discussed in the proposed rule, a variety of
considerations were made in the determination of what would be an
appropriate sample size. The initially proposed 75 MSAs represented the
25 percentage points of the acceptable range of MSAs to be included as
determined by sample size calculations. We believe that using a number
near the bottom of the range would represent an unnecessary risk to our
ability to draw conclusions from the model in a timely manner. While we
would prefer to have 75 MSAs in the model in order to increase the
likelihood of being able to make definitive statements about the impact
of the model at an earlier date, we believe the loss of the 8 MSAs now
deemed not eligible for selection constitutes an acceptable risk.
With respect to the request to test the model in a limited pool of
MSAs prior to testing it in the full set of selected MSAs, we believe
that the testing of this model broadly is crucial to achieving the
model's desired objectives and does not believe that proceeding in a
few test MSAs prior to testing it in a broader set of MSAs would yield
the same degree of information in the same time period.
Comment: A commenter was concerned that the selection strata used
did not use MSA-level demographic measures in its selection process,
including distributions of population by age, gender, or race; percent
of population dually-eligible; percent of population with specific
health conditions or other demographic composition measures. They
believed these areas associated with more at-risk populations should be
represented less in the selection. Another commenter did not question
the selection strata but contended that the random selection happened
to choose fewer areas with lower income and minority Medicare
beneficiaries than they thought desirable. They specifically inquired
[[Page 73299]]
after the lack of inclusion of MSAs in Alabama and Georgia.
Response: We considered but ultimately decided against including
the dimension based on the demographic characteristics of an MSA
incorporated in the selection strata. If we were to have done so, the
purpose would have been to ensure an adequate representation along the
range of these demographic considerations rather than to eliminate them
from possible selection. While these factors are not explicitly part of
the selection strata used, the resulting selected MSAs provide an
adequate representation of a variety of circumstances including the
experiences of areas with a higher degree of non-white populations,
MSAs with a range in average income level, and other key
characteristics. With regards to the specific concerns regarding under-
representation in the MSAs selected from specific states, we note that
Alabama, which has relatively high episode costs, had three of its
seven eligible MSAs selected while Georgia, whose MSAs had episode
payments that indicated relatively more efficient patterns of care, had
two of its six eligible MSAs selected. As such, we believe that the
experiences of these states and MSAs that are similar in nature to them
are adequately represented in the selected MSAs.
Comment: A commenter requested clarification regarding how to
interpret which MSAs are included in the model.
Response: We refer readers to Table 4 for a final list of the MSAs
that are in the CJR model.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposal, with modification to include
67 of the originally selected 75 MSAs. We used updated BPCI
participation level information in the application of the MSA exclusion
rules for this final rule, resulting in the exclusion of an additional
8 MSAs that were previously selected. We note that we are posting the
list of the participant hospitals in the selected MSAs on the CJR Web
site at http://innovation.cms.gov/initiatives/CJR/. This list will be
updated throughout the model, to account for circumstances such as
hospital mergers, BPCI termination, and new hospitals within the
selected MSAs.
We set forth this final policy in Sec. 510.100 and Sec. 510.105.
Table 4--MSAs Included in the CJR Model
------------------------------------------------------------------------
MSA MSA Name
------------------------------------------------------------------------
10420.................. Akron, OH
10740.................. Albuquerque, NM
11700.................. Asheville, NC
12020.................. Athens-Clarke County, GA
12420.................. Austin-Round Rock, TX
13140.................. Beaumont-Port Arthur, TX
13900.................. Bismarck, ND
14500.................. Boulder, CO
15380.................. Buffalo-Cheektowaga-Niagara Falls, NY
16020.................. Cape Girardeau, MO-IL
16180.................. Carson City, NV
16740.................. Charlotte-Concord-Gastonia, NC-SC
17140.................. Cincinnati, OH-KY-IN
17860.................. Columbia, MO
18580.................. Corpus Christi, TX
19500.................. Decatur, IL
19740.................. Denver-Aurora-Lakewood, CO
20020.................. Dothan, AL
20500.................. Durham-Chapel Hill, NC
22420.................. Flint, MI
22500.................. Florence, SC
23540.................. Gainesville, FL
23580.................. Gainesville, GA
24780.................. Greenville, NC
25420.................. Harrisburg-Carlisle, PA
26300.................. Hot Springs, AR
26900.................. Indianapolis-Carmel-Anderson, IN
28140.................. Kansas City, MO-KS
28660.................. Killeen-Temple, TX
30700.................. Lincoln, NE
31080.................. Los Angeles-Long Beach-Anaheim, CA
31180.................. Lubbock, TX
31540.................. Madison, WI
32820.................. Memphis, TN-MS-AR
33100.................. Miami-Fort Lauderdale-West Palm Beach, FL
33340.................. Milwaukee-Waukesha-West Allis, WI
33700.................. Modesto, CA
33740.................. Monroe, LA
33860.................. Montgomery, AL
34940.................. Naples-Immokalee-Marco Island, FL
34980.................. Nashville-Davidson-Murfreesboro-Franklin, TN
35300.................. New Haven-Milford, CT
35380.................. New Orleans-Metairie, LA
35620.................. New York-Newark-Jersey City, NY-NJ-PA
35980.................. Norwich-New London, CT
36260.................. Ogden-Clearfield, UT
36420.................. Oklahoma City, OK
36740.................. Orlando-Kissimmee-Sanford, FL
37860.................. Pensacola-Ferry Pass-Brent, FL
38300.................. Pittsburgh, PA
38940.................. Port St. Lucie, FL
38900.................. Portland-Vancouver-Hillsboro, OR-WA
39340.................. Provo-Orem, UT
39740.................. Reading, PA
40980.................. Saginaw, MI
41860.................. San Francisco-Oakland-Hayward, CA
42660.................. Seattle-Tacoma-Bellevue, WA
42680.................. Sebastian-Vero Beach, FL
43780.................. South Bend-Mishawaka, IN-MI
41180.................. St. Louis, MO-IL
44420.................. Staunton-Waynesboro, VA
45300.................. Tampa-St. Petersburg-Clearwater, FL
45780.................. Toledo, OH
45820.................. Topeka, KS
46220.................. Tuscaloosa, AL
46340.................. Tyler, TX
48620.................. Wichita, KS
------------------------------------------------------------------------
B. Episode Definition for the CJR Model
1. Background
CJR model is an episode payment model, focused on incentivizing
health care providers to improve the efficiency and quality of care for
an episode of care as experienced by a Medicare beneficiary by bundling
payment for services furnished to the beneficiary for an episode of
care for a specific clinical condition over a defined period of time.
Key policies of such a model include the definition of episodes of
care. Episodes of care have two significant dimensions--(1) A clinical
dimension that describes what clinical conditions and associated
services comprise the episode; and (2) a time dimension that describes
the beginning, middle, and end of an episode. We present our proposals,
summarize public comments and provide our responses, and finalize the
policies for these two dimensions of CJR episodes in this section.
2. Clinical Dimension of Episodes of Care
a. Definition of the Clinical Conditions Included in the Episode
As discussed previously in section I.A. of this final rule, we
identified LEJR episodes, primarily hip and knee replacements, as the
focus of this model. In the proposed rule, we stated our belief that a
straightforward approach for hospitals and other providers to identify
Medicare beneficiaries in this payment model is important for the care
redesign that is required for model success, as well as to
operationalize the proposed payment and other model policies.
The vast majority of LEJRs are furnished in the inpatient hospital
setting, with a small fraction of partial knee replacements occurring
in the hospital outpatient department (HOPD) setting. Most of the
Current Procedural Terminology (CPT) codes that physicians report for
LEJR are on the hospital OPPS inpatient only list. The CY 2015 OPPS
inpatient only list is Addendum E of the CY 2015 Hospital Outpatient
Prospective Payment--Final Rule with Comment Period, which is available
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-
Service-Payment/ASCPayment/ASC-Regulations-and-Notices-Items/CMS-
[[Page 73300]]
1613-FC.html. Thus, under current FFS payment policy, Medicare pays
hospitals for the facility services required for most LEJR procedures
only when those procedures are furnished in the inpatient hospital
setting. Therefore, in our proposal we stated our belief that an
episode payment model most appropriately focuses around an inpatient
hospitalization for these major surgical procedures, as there is little
opportunity for shifting the procedures under this model to the
outpatient setting.
We noted further that LEJRs are paid for under the IPPS through the
following two Medicare Severity-Diagnosis Related Groups (MS-DRGs):
MS-DRG 469 (Major joint replacement or reattachment of
lower extremity with Major Complications or Comorbidities (MCC)).
MS-DRG 470 (Major joint replacement or reattachment of
lower extremity without MCC).
Multiple International Classification of Diseases, 9th Revision,
Clinical Modification (ICD-9-CM) procedure codes that describe LEJR
procedures and other less common lower extremity procedures group to
these MS-DRGs, with their percentage distribution within the IPPS MS-
DRGs 469 and 470 for the past 4 years outlined in Table 5.
Table 5--Distribution of Hospital Claims for ICD-9-CM Procedure Codes Mapping to MS-DRGs 469 and 470
----------------------------------------------------------------------------------------------------------------
ICD-9-CM procedure code Code descriptor FY 2014 (%) FY 2013 (%) FY 2012 (%) FY 2011 (%)
----------------------------------------------------------------------------------------------------------------
81.54............................... Total knee replacement 57 58 58 58
81.51............................... Total hip replacement. 30 29 29 28
81.52............................... Partial hip 12 13 13 14
replacement.
81.56............................... Total ankle 0 0 0 0
replacement.
00.85............................... Resurfacing hip, 0 0 0 0
total, acetabulum and
femoral head.
00.86............................... Resurfacing hip, 0 0 0 0
partial, femoral head.
00.87............................... Resurfacing hip, 0 0 0 0
partial, acetabulum.
84.27............................... Lower leg or ankle 0 N/A N/A N/A
reattachment.
84.28............................... Thigh reattachment.... N/A N/A N/A 0
----------------------------------------------------------------------------------------------------------------
Note: Percentages or claim counts with ``N/A'' had no claims. Percentages of 0% represent less than 0.5% of
total claims.
Additionally, we noted that there are various types of claims-based
information available to CMS, hospitals, and other providers, that
could be used to identify beneficiaries in the model who receive LEJRs,
including the MS-DRGs for the acute care hospitalization for the
procedure, the ICD-9-CM procedure code on the hospital claim, or the
CPT code(s) reported by the orthopedic surgeon who furnishes the
surgical procedure. While we could utilize ICD-9-CM procedure codes or
CPT codes to identify beneficiaries included in the model, over 85
percent of procedures that group to MS-DRGs 469 and 470 are hip or knee
replacements. Additionally, the hospitals that would be participating
in this model receive payment under the IPPS, which is not determined
by CPT codes and is based on clinical conditions and procedures that
group to MS-DRGs. Finally, our review of the other low volume
procedures that group to these same MS-DRGs, aside from total or
partial hip and knee replacements, did not suggest that there is
significant clinical or financial heterogeneity within these two MS-
DRGs such that we would need to define care for included beneficiaries
by ICD-9-CM procedure codes.
Therefore, we proposed that an episode of care in the CJR model
would be triggered by an admission to an acute care hospital stay
(hereinafter ``the anchor hospitalization'') paid under MS-DRG 469 or
470 under the IPPS during the model performance period. This approach
offers operational simplicity, for providers and CMS, and is consistent
with the approach taken by the BPCI initiative to identify
beneficiaries whose care is included in the LEJR episode for that
model. We sought public comments on this proposal to define the
clinical conditions that are the target of CJR.
The following is a summary of the comments received and our
responses.
Comment: Some commenters expressed support for CMS' proposal to
define the clinical conditions included in the CJR model episode by
discharge from an anchor hospitalization that is paid under MS-DRG 469
or 470 under the IPPS, although a commenter claimed that the cases
within each MS-DRG are too heterogeneous to form the basis of a single
target price as CMS proposed. The commenter added that risk adjustment
could take the form of case exclusions, stratifying cases within each
MS-DRG to create separate target prices, or adjusting the target prices
based on principal procedure and patient characteristics. Most
commenters recommended that CMS limit the model to a subset of
beneficiaries that were discharged from these two MS-DRGs, effectively
excluding certain cases as form of risk adjustment to reduce the
heterogeneity of the cases in the model. The commenters asserted that
CMS' proposal, which did not include risk adjustment beyond setting
different target prices for episodes based on discharges from the two
different MS-DRGs, failed to take into consideration the variability of
service needs of beneficiaries discharged from these two MS-DRGs
related to the specific procedure performed, the elective or urgent/
emergent nature of the procedure, and the beneficiary's clinical and
demographic characteristics, including underlying medical conditions
and age. Several commenters recommended that CMS define the clinical
conditions included in the model by discharges only from MS-DRG 470,
claiming that these beneficiaries represented a more homogeneous group
that had less complex health care needs. Some commenters urged CMS to
define the clinical conditions in the model based on specific MS-DRG
and ICD-9-CM procedure code combinations for hip and knee arthroplasty,
and stated that CMS should exclude low volume procedures that also map
to MS-DRGs 469 and 470 including ankle replacement; lower leg, ankle,
and thigh reattachment; and hip resurfacing procedures. The commenters
stated that these uncommon procedures display substantial heterogeneity
in the clinical characteristics and needs of the beneficiary, as well
as the associated Medicare payment for services throughout an episode.
They contended that the rationale for CMS' proposal addressed hip and
knee replacement in
[[Page 73301]]
detail but failed to consider the different PAC patterns of other
beneficiaries discharged from the same MS-DRGs but who had different
surgical procedures. A commenter recommended that CMS specifically
exclude episodes for conversion total joint arthroplasty procedures,
which require removal of previously placed hardware followed by THA or
TKA in the same operative session, arguing that these beneficiaries had
more complex needs.
Many commenters recommended that CMS define the clinical conditions
in the model as episodes specific to elective total hip arthroplasty
(THA) and total knee arthroplasty (TKA) procedures. The commenters
stated that this group of beneficiaries is more homogeneous than
beneficiaries undergoing emergent joint replacement procedures for hip
fractures or undergoing the other low volume procedures that map to the
MS-DRGs. Given that CMS did not propose risk adjustment under the model
based on procedure or patient characteristics, the commenters contended
that limiting the model to these clinical conditions, that represent
about 85 percent of beneficiaries discharged for the two MS-DRGs, would
provide a sufficient number of cases to test LEJR episode payment and
allow hospitals to create efficient, effective clinical pathways for
these beneficiaries. The commenters also observed that CMS' quality
measures, specifically the THA/TKA readmissions and complications
measures, as well as the voluntary data collection for patient-reported
outcomes, would represent only the quality of care for beneficiaries
undergoing elective THA and TKA procedures. Several commenters
recommended that CMS only include episodes in the model for
beneficiaries discharged from MS-DRG 469 or 470 whose data would be
used to determine the model's quality measures for the participant
hospital.
The commenters suggested several different approaches to defining
the clinical conditions included in the model as elective THA or TKA.
One approach would be to eliminate from the model beneficiaries with
reported ICD-9-CM procedure codes other than THA or TKA, and then
further exclude some remaining beneficiaries with ICD-9-CM codes for
hip fracture on their claim for the anchor hospitalization. Other
commenters asserted that CMS should exclude the beneficiaries receiving
the low volume procedures as well as those receiving partial hip
arthroplasty (PHA) procedures. The commenters pointed out that almost
all of the beneficiaries receiving PHA would have hip fractures and
observed that the average Medicare episode payment for beneficiaries
undergoing PHA was similar to beneficiaries discharged from MS-DRG 469
or 470 with hip fracture diagnoses, almost twice the payment for
beneficiaries undergoing elective THA and TKA. Several commenters
presented analyses that demonstrated that beneficiaries with hip
fracture, regardless of their discharge from MS-DRG 469 or 470, when
compared to beneficiaries with elective procedures, experience twice as
high readmissions and PAC utilization rates, as well as higher
morbidity and mortality.
The commenters in favor of excluding clinical conditions involving
hip fractures from the model stated that the number of hip fracture
cases treated by individual hospitals can vary significantly on an
annual basis, both due to random variation and practice or population
changes. Moreover, different hospitals provide care for different
percentages of beneficiaries with hip fracture and, according to some
commenters, academic medical centers and small hospitals care for
disproportionate percentages of these cases for reasons of medical
complexity and the urgent nature of the procedure, respectively,
because beneficiaries who fall and experience a hip fracture are
commonly transported to their local hospital for emergent treatment.
Furthermore, in addition to the variation a hospital itself may
experience regarding the percentage of hip fracture cases, which could
lead to the hospital-specific historical data used for a portion of the
target price to not be reflective of the health care needs of the
hospital's episode population in a given performance year, some
commenters observed that the increasing percentage of the target price
contributed by regional data exacerbated their concerns. Hospitals in a
region that care for a disproportionately high percentage of hip
fracture patients compared to the regional average would be
disadvantaged due to the more intense service needs of hip fracture
patients, whereas hospitals caring for a disproportionately low
percentage of hip fracture patients compared to the regional average
would be advantaged. The commenters contended that excluding clinical
conditions involving hip fractures from the CJR model would ensure
homogeneity in the beneficiaries in the model such that hospitals would
be treated fairly with respect to episode pricing based on the
hospital-specific and regional historical CJR episode data for only
those beneficiaries undergoing elective THA and TKA.
Response: We appreciate the analyses and suggestions provided by
the commenters regarding the most appropriate approach to defining the
clinical conditions included in the CJR model. As discussed in section
III.C.4.b. of this final rule, we have decided to risk stratify the
target price for each MS-DRG-anchored episode based on a beneficiary's
hip fracture status. This policy allows us to maintain beneficiaries
who receive LEJR procedures due to hip fractures in the CJR model,
while acknowledging their typically greater health care needs by
providing a target price that is based on payment for services
furnished in the historical CJR episode data for Medicare beneficiaries
with hip fractures in order to account for a significant amount of
beneficiary-driven episode expenditure variation. While beneficiaries
with hip fractures may present a more costly population due to greater
health care needs, and CJR participant hospitals may vary in their
percentages of such beneficiaries, we believe that beneficiaries with
hip fracture have the potential to benefit substantially from the care
pathways and improved care coordination among providers and suppliers
that is incentivized by an episode payment model. In addition, we
believe there are opportunities for increased efficiency in the care of
beneficiaries with hip fracture who receive LEJR procedures with
respect to appropriate PAC utilization and care coordination and
management of chronic conditions that may be affected by the LEJR
procedure or post-surgical care. Thus, we are finalizing our proposal
to include LEJR procedures that result from hip fracture treatment in
the clinical conditions that are part of the CJR model episodes, rather
than limiting the model conditions to only elective THA and TKA.
We are also finalizing our proposal to include clinical conditions
represented by discharge from both MS-DRG 469 and 470 in the CJR model.
We believe that providing separate prices for episodes anchored by the
two different MS-DRGs accounts for the differences in typical health
care needs of the two groups of beneficiaries, specifically the higher
IPPS payment for the anchor hospitalization for beneficiaries
discharged under MS-DRG 469, as well as the pattern of service
utilization for this group of beneficiaries in the 90 days following
discharge.
Additionally, we are finalizing our proposal to include any lower
extremity joint procedure that results in discharge from MS-DRG 469 or
470 in the CJR
[[Page 73302]]
model, including ankle replacement; lower leg, ankle, and thigh
reattachment; and hip resurfacing procedures. While the model
beneficiaries with these less common clinical conditions are likely to
be a small number at any specific participant hospital, they too may
benefit from care redesign resulting in improved care coordination and
quality that are goals of the CJR model. These beneficiaries share the
experience of undergoing major surgical procedures involving the lower
extremity with the majority of CJR model beneficiaries undergoing THA
or TKA, and they too are likely to require PAC services and care
coordination and management of chronic medical conditions to optimize
their return to function. We expect that the Medicare actual episode
payments for these clinical conditions may be highly variable given the
small numbers and variable clinical characteristics of these
beneficiaries such that historical episode data may have little
predictive power regarding the actual episode payment for the
beneficiaries in a model performance year. We do not believe this small
number of beneficiaries will put participant hospitals at undue
financial risk and further note that our payment policies as discussed
in section III.C.3.c. and III.C.8. of this final rule provide a pricing
adjustment for high payment episodes and limit hospital financial
responsibilities to provide participant hospitals with additional
protections.
We note that our final policy to include all clinical conditions
that result in a discharge from MS-DRGs 469 or 470 in the CJR model
allows us to continue to rely on MS-DRGs to define the clinical
conditions included in the LEJR episode being widely tested under the
CJR model, consistent with the BPCI methodology to define clinical
conditions included in 48 different episodes based on the MS-DRGs for
the anchor hospitalization. This approach provides greater certainty
from the perspective of participant hospitals or CMS regarding the
clinical conditions included in episodes, since the discharge MS-DRG is
the defining parameter, and includes the greatest number of
beneficiaries with similar clinical conditions in the CJR model test.
Comment: Several commenters urged CMS to include in the CJR model
LEJR procedures where the procedure that would result in a
beneficiary's discharge from MS-DRG 469 or 470 if furnished in the
inpatient hospital setting is furnished in the HOPD, ambulatory
surgical center (ASC), or other dedicated facility that is not an acute
care facility. The commenters explained that elective procedures are
commonly furnished in the HOPD, ASC, or other dedicated facilities that
are not acute care facilities for certain beneficiaries covered by
commercial insurance, while Medicare covers and pays for the procedures
only when they are furnished in the inpatient hospital settings. The
commenters disputed CMS' assertion in the proposed rule that there is
little opportunity for shifting these procedures to the outpatient
setting. They urged CMS to permit these LEJR procedures to be furnished
to Medicare beneficiaries in other settings under the CJR model to
improve episode efficiency. The commenters contended that physicians
should be able to select the most appropriate inpatient hospital or
outpatient setting based on the beneficiary's clinical condition.
Response: We appreciate the interest of the commenters in providing
LEJR procedures under the CJR model to Medicare beneficiaries in
alternative outpatient settings as a further opportunity to test
strategies to provide high quality, efficient episode care for
beneficiaries undergoing LEJR procedures. As we discussed in the
proposed rule, the vast majority of LEJR procedures are furnished to
Medicare beneficiaries in the inpatient hospital setting, with a small
fraction of partial knee replacements occurring in the hospital
outpatient department (HOPD). Most of the CPT codes that physicians
report for LEJR procedures are on the hospital OPPS inpatient only
list. Thus, under current Medicare program policy, Medicare generally
pays hospitals for the facility services required for LEJR only when
those procedures are furnished in the inpatient hospital setting. When
we stated our belief in the proposed rule that an episode payment model
such as the CJR model most appropriately focuses around an inpatient
hospitalization for these major surgical procedures, as there is little
opportunity for shifting the procedures under the model to the
outpatient setting, we meant that this would be true under current
Medicare policy. Because Medicare generally does not pay hospitals if
procedures that would be assigned to MS-DRG 469 or 470 when furnished
to inpatients are performed on hospital outpatients, these procedures
would not be able to be shifted under the CJR model to the outpatient
setting.
Because most LEJR procedures are on the OPPS inpatient list and CMS
has, therefore, determined that Medicare beneficiaries require an
inpatient hospitalization for payment of these procedures to hospitals,
we are not changing the current inpatient only list designation of
these LEJR procedures for the CJR model. CJR is an episode payment
model, not a model designed to test different sites of services for
procedures that CMS has thus far determined may not be safely performed
on Medicare beneficiaries in the outpatient setting. Therefore, we are
finalizing our proposal that the CJR model will continue to focus
around an inpatient hospitalization for these major surgical procedures
that result in a discharge from MS-DRG 469 or 470, and a procedure
furnished in the outpatient setting will not be included in the model.
Comment: Several commenters maintained that because the procedures
that result in discharge from MS-DRG 469 and 470 that define the
clinical conditions included in the CJR model are on the OPPS inpatient
only list, CMS should commit to keeping these procedures on the
inpatient only list for the 5-year performance period of the model. The
commenters pointed out that CMS has previously proposed, but not
finalized, the removal of TKA procedures from the inpatient only list.
The commenters stated that if any additional procedures that would
otherwise result in discharge from one of the two MS-DRGs in the CJR
model were to be removed from the inpatient only list during a year
when the CJR model is being tested, the beneficiaries who would be
included in the model performance year due to a procedure in the
inpatient hospital setting would be sicker and more complex than those
included in the historical CJR episodes used to set target prices.
Therefore, the commenters reasoned that in order to establish target
prices that reflect the health care needs and medical complexity of the
CJR model beneficiaries in a model performance year, CMS should not
remove any LEJR procedures from the OPPS inpatient only list until
after the CJR model ends.
Response: We share the commenters' interest in ensuring that the
historical CJR episodes that are used to set the target prices for CJR
model episodes during a performance year reflect the health care needs
and medical complexity of beneficiaries who are comparable to those
actually included in the CJR model. If we were to remove an LEJR
procedure from the OPPS inpatient only list at any point during the 5-
year model test, we agree with the commenters that we would need to
consider the effects of such a change on the CJR model pricing
methodology, taking into consideration the characteristics of the
beneficiaries expected to be in the model due to a
[[Page 73303]]
procedure furnished in the inpatient hospital setting after the change
to the inpatient only list. If we concluded that changes in our pricing
methodology were necessary because the beneficiaries in the historical
CJR episodes used to set target prices would no longer be similar to
those in the model performance year, we would propose such changes
through notice and comment rulemaking.
Comment: Several commenters claimed that different states were
testing different LEJR episode payment models. A commenter provided the
example of Tennessee mandatory Medicaid bundles that utilize a
different episode definition than proposed for the CJR model. The
commenters encouraged CMS to move toward standard episode definitions
for mandatory models, noting that each of the inconsistent mandatory
models is being tested under the Innovation Center's statutory
authority. The commenters contended that different episode payment
models lead to excessive burden and greater cost for health care
providers.
Response: We appreciate the perspective of the commenters on the
challenges related to testing mandatory bundled payments with different
episode definitions in the same community. We note, however, that the
CJR model and various state episode payment models are all in various
stages of testing and have used different strategies to arrive at the
episode definitions for each model. By definition, models being tested
have not yet produced evidence of improved quality and/or cost savings,
so we lack the necessary evaluation results from various approaches to
consider standardizing episode definitions. We believe there is value
in testing different episode definitions given the current state of
knowledge about bundled payment. We also believe that, regardless of
the specific definitions for episodes that address the same clinical
conditions in various different payment models, episode payment models
share a common focus on improving the quality of care and increasing
the efficiency of care through a variety of well-established
strategies, such as increased communication among health care providers
along the continuum of acute and PAC and improved care coordination and
care management to promote beneficiary engagement that leads to
adherence to treatment plans and, correspondingly, reductions in
hospital readmissions and complications. As we gain more experience
with episode payment models and examine their results, we will consider
the potential benefits of standardizing episode definitions to the
extent possible.
Summary of Final Decisions: After consideration of the public
comments we received, we are finalizing our proposal to define the
clinical conditions included in the CJR model by admission to an IPPS
hospital that results in a discharge from MS-DRG 469 or 470.
The final policies for defining the clinical conditions are set
forth in Sec. 510.100 and Sec. 510.200.
b. Definition of Related Services Included in the Episode
For purposes of this model, as in BPCI, given the frequent
comorbidities experienced by Medicare beneficiaries and the generally
elective nature of LEJR, we are interested in testing inclusive
episodes to incentivize comprehensive, coordinated patient-centered
care for the beneficiary throughout the episode. We proposed to exclude
only those Medicare items and services furnished during the episode
that are unrelated to LEJR procedures based on clinical justification.
During our experience with BPCI implementation, we reviewed a number of
narrow episode definitions for LEJR episodes that were recommended by
BPCI participants and other interested parties during the design phase
for this project. We concluded that these narrow definitions commonly
exclude many services that may be linked to the LEJR, as LEJR
beneficiaries, on average, are at higher risk for more clinical
problems than Medicare beneficiaries who have not recently undergone
such procedures.
Therefore, we proposed that all CJR episodes, beginning with the
admission for the anchor hospitalization under MS-DRG 469 or 470
through the end of the proposed episode, include all items and services
paid under Medicare Part A or Part B with the exception of certain
exclusions that would be excluded because they are unrelated to the
episode. The items and services ultimately included in the episode
after the exclusions are applied are called related items and services.
As discussed in sections III.C.4. and III.C.6. of this final rule,
Medicare spending for related items and services would be included in
the historical data used to set target prices, as well as in the
calculation of actual episode spending that would be compared against
the target price to assess the performance of participant hospitals. In
contrast, Medicare spending for unrelated items and services (excluded
from the episode definition) would not be included in the historical
data used to set target prices or in the calculation of actual episode
spending.
We proposed that related items and services included in CJR
episodes would be the following items and services paid under Medicare
Part A or Part B, after the exclusions are applied:
Physicians' services.
Inpatient hospital services (including readmissions), with
certain exceptions discussed later in this section.
Inpatient psychiatric facility (IPF) services.
Long Term Care Hospital (LTCH) services.
IRF services.
SNF services.
HHA services.
Hospital outpatient services.
Independent outpatient therapy services.
Clinical laboratory services.
Durable medical equipment (DME).
Part B drugs.
Hospice.
We noted that under our proposed definition of related services
included in the episode, the episode could include certain per-member-
per-month model payments, as discussed in section III.C.7.d. of this
final rule.
We proposed to exclude from CJR drugs that are paid outside of the
MS-DRG, specifically hemophilia clotting factors (Sec. 412.115),
identified through HCPCS code, diagnosis code, and revenue center on
IPPS claims. Hemophilia clotting factors, in contrast to other drugs
that are administered during an inpatient hospitalization and paid
through the MS-DRG, are paid separately by Medicare in recognition that
clotting factors are costly and essential to appropriate care for
certain beneficiaries. Thus, in the proposed rule we stated our belief
that there are no efficiencies to be gained in the variable use of
these high cost drugs when particular beneficiaries receive LEJR
procedures who have significantly different medical needs for clotting
factors under an episode payment model, so we proposed to exclude these
high cost drugs from the actual historical episode expenditure data
used to set target prices and from the hospital's actual episode
spending that is reconciled to the target price. Similarly, we proposed
to exclude IPPS new technology add-on payments for drugs, technologies,
and services from CJR episodes, excluding them from both the actual
historical episode expenditure data used to set target prices and from
the hospital's actual episode spending that is reconciled to the target
price. This proposal would apply to both the anchor hospitalization
[[Page 73304]]
and any related readmissions during the episode. New technology add-on
payments are made separately and in addition to the MS-DRG payment
under the IPPS for specific new drugs, technologies, and services that
substantially improve the diagnosis or treatment of Medicare
beneficiaries and would be inadequately paid otherwise under the MS-DRG
system. Medicare pays a marginal cost factor of 50 percent for the
costs to hospitals of the new drugs, technologies, or services. We did
not believe it would be appropriate for the CJR model to potentially
hamper beneficiaries' access to new technologies that are receiving new
technology add-on payments or to burden hospitals who choose to use
these new drugs, technologies, or services with concern about these
payments counting toward actual episode expenditures. In addition,
because new drugs, technologies, or services approved for the add-on
payments vary unpredictably over time in their application to specific
clinical conditions, in the proposed rule we stated our belief that we
should exclude IPPS new technology add-on payments from CJR episodes.
We followed a number of general principles in determining other
proposed excluded services from the CJR episodes in order to promote
coordinated, high-quality, patient-centered care. Based on the broad
nature of these episodes, we proposed to identify excluded (unrelated)
services rather than included (related) services based on the rationale
that all Part A and Part B services furnished during the episode are
related to the episode, unless they are unrelated based on clinical
justification as described in more detail later in this section. In
developing our proposals for exclusions for this model, we stated our
belief that no Part A services, other than certain excluded hospital
readmissions during the episode as described in this section, furnished
post-hospital discharge during the episode should be excluded, as post-
hospital discharge Part A services are typically intended to be
comprehensive in nature. We also stated our belief that no claims for
services with diagnosis codes that are directly related to the LEJR
procedure itself (for example, loosening of the joint prosthesis) based
on clinical judgment, and taking into consideration coding guidelines,
should be excluded. Furthermore, we stated our belief that no claims
for diagnoses that are related to the quality and safety of care
furnished during the episode, especially the anchor hospitalization
under MS-DRG 469 or 470, should be excluded, such as direct
complications of post-surgical care during the anchor hospitalization.
Examples of diagnoses that would not be excluded on this basis include
surgical site infection and venous thromboembolism. Finally, in the
proposed rule we stated our belief that no claims for services for
diagnoses that are related to preexisting chronic conditions such as
diabetes, which may be affected by care furnished during the episode,
should be excluded. However, severe exacerbations of chronic conditions
(for example, some surgical readmissions) that are unlikely to be
affected by care furnished during the episode should be excluded; thus,
when a beneficiary is admitted to the hospital during the episode for
these circumstances, we would not consider it to be a related
readmission for purposes of CJR. We also stated our belief that
services for clinical conditions that represent acute clinical
conditions not arising from an existing chronic clinical condition or
complication of LEJR surgery occurring during an episode of care, which
would not be covered by the previous principles about included
services, should be excluded.
To operationalize these principles for CJR, we proposed to exclude
unrelated inpatient hospital admissions during the episode by
identifying MS-DRGs for exclusion. We proposed to exclude unrelated
Part B services based on the ICD-9-CM diagnosis code (or their
International Classification of Diseases, 10th Revision, Clinical
Modification (ICD-10-CM) equivalents when ICD-10-CM codes are
implemented) that is the principal diagnosis code reported on claims
for services furnished during the episode. More specifically, we
proposed to exclude specific inpatient hospital admissions and services
consistent with the LEJR episode definition (also triggered by MS-DRGs
469 and 470) that is currently used in BPCI Model 2. We note that the
list of exclusions was initially developed over 2 years ago for BPCI
through a collaborative effort of CMS staff, including physicians from
medical and surgical specialties, coding experts, claims processing
experts, and health services researchers. The list has been shared with
thousands of entities and individuals participating in one or more
phases of BPCI, and has undergone refinement over that time in response
to stakeholder input about specific diagnoses or MS-DRGs for exclusion,
resulting in only minimal changes over the last 2 years. Thus, the BPCI
list of exclusions for LEJR procedures has been vetted broadly in the
health care community; refined based on input from a wide variety of
providers, researchers and other stakeholders; and successfully
operationalized in the BPCI models. We proposed its use in CJR based on
our confidence related to our several of years of experience that this
definition is reasonable and workable for LEJR episodes, for both
providers and CMS.
With respect to the proposed inpatient hospital admission
exclusions for this model, we proposed that all medical MS-DRGs for
readmissions be included in CJR episodes as related services, with the
exception of oncology and trauma medical MS-DRGs. We proposed that
admissions for oncology and trauma medical MS-DRGs be excluded from CJR
episodes. Readmissions for medical MS-DRGs are generally linked to the
hospitalization for the LEJR procedure as a complication of the illness
that led to the surgery, a complication of treatment or interactions
with the health care system, or a chronic illness that may have been
affected by the course of care. We refer readers to section III.D. of
this final rule for background and discussion of the complication rate
measure proposed for CJR that includes common medical complications
resulting from the previously stated circumstances following LEJR
procedures and that may result in related hospital readmissions. For
readmissions for medical MS-DRGs, the selection of the primary
diagnosis code is not clear-cut, so in the proposed rule we stated our
belief that all should be included because providers should focus on
comprehensive care for beneficiaries during episodes. We proposed to
include all disease-related surgical MS-DRGs for readmissions, such as
hip/knee revision, in CJR episodes. We also proposed to include
readmissions for all body system-related surgical MS-DRGs as they are
generally related to complications of the LEJR procedures. An example
of a readmission of this type would be for an inferior vena cava filter
placement for treatment of thromboembolic complications of the LEJR. We
proposed to exclude hospital admissions for chronic disease surgical
MS-DRGs, such as prostatectomy (removal of the prostate gland), as they
are unrelated to the clinical condition that led to the LEJR and they
would not have been precipitated by the LEJR. Finally, we proposed that
hospital admissions for acute disease surgical MS-DRGs, such as
appendectomy, be excluded because they are highly unlikely to be
related to, or precipitated by, LEJR procedures and would not be
affected by LEJR episode care redesign.
[[Page 73305]]
With respect to the LEJR proposed diagnosis code exclusions for
Part B services for this model, we proposed that ICD-9-CM codes be
excluded or included as a category and as identified by code ranges. We
proposed that disease-related diagnoses, such as osteoarthritis of the
hip or knee, are included. We also proposed that body system-related
diagnoses are included because they relate to complications that may
arise from interactions with the health care system. An example of this
would be pressure pre-ulcer skin changes. Additionally, we proposed
that all common symptom diagnoses are included because providers have
significant discretion to select these as principal diagnosis codes. We
proposed that acute disease diagnoses, such as severe head injury, are
excluded. Finally, we proposed that chronic disease diagnoses be
included or excluded based on specific clinical and coding judgment as
described previously with respect to the original development of the
exclusions for LEJR episodes under BPCI, taking into consideration
whether the condition was likely to have been affected by the LEJR
procedure and recovery period and whether substantial services were
likely to have been provided for the chronic condition during the
episode. Thus, chronic kidney disease and cirrhosis would be included
in the episode, but glaucoma and chemotherapy would be excluded.
Proposed exclusions from CJR episodes were based on care for
unrelated clinical conditions represented by MS-DRGs for readmissions
during the episode and ICD-9 CM codes for Part B services furnished
during the episode after discharge from the anchor hospitalization. The
complete lists of proposed excluded MS-DRGs for readmissions and
proposed excluded ICD-9-CM codes for Part B services are posted on the
CMS Web site at http://innovation.cms.gov/initiatives/cjr/.
In the proposed rule, we noted that as CMS moves to implement ICD-
10-CM we would make the CJR exclusions that would map to the final ICD-
9-CM exclusions for CJR available in the ICD-10-CM format as well. We
proposed that all Part A and B-covered items and services that would
not be excluded based on the exclusions list are included in the
episode. Furthermore, we proposed to update the exclusions list without
rulemaking on an annual basis, at a minimum, to reflect annual changes
to ICD-CM coding and annual changes to the MS-DRGs under the IPPS, as
well as to address any other issues that are brought to our attention
by the public throughout the course of the model test.
We would first develop potential exclusions list revisions of MS-
DRGs for readmissions and ICD-9-CM (or ICD-10-CM, as applicable)
diagnosis codes for Part B services based on our assessment against the
following standards:
We would not exclude any items or services that are--
++ Directly related to the LEJR procedure itself (such as loosening
of the joint prosthesis) or the quality or safety of LEJR care (such as
post-surgical wound infection or venous thromboembolism); and
++ For chronic conditions that may be affected by the LEJR
procedure or post-surgical care (such as diabetes). By this we mean
that where a beneficiary's underlying chronic condition would be
affected by the LEJR procedure, or where the beneficiary's LEJR or
post-LEJR care must be managed differently as a result of the chronic
condition, then those items and services would be related and would be
included in the episode.
We would exclude items and services for--
++ Chronic conditions that are generally not affected by the LEJR
procedure or post-surgical care (such as removal of the prostate). By
this we mean that where a beneficiary's underlying chronic condition
would not be affected by the LEJR procedure, or where the beneficiary's
LEJR or post-LEJR care need not be managed differently as a result of
the chronic condition, then those items and services would not be
related and would not be included in the episode; and
++ Acute clinical conditions not arising from existing episode-
related chronic clinical conditions or complications of LEJR surgery
from the episode (such as appendectomy).
We proposed to post the potential revised exclusions, which could
include additions to or deletions from the exclusions list, to the CMS
Web site to allow for public input on our planned application of these
standards, and then adopt changes to the exclusions list with posting
to the CMS Web site of the final revised exclusions list after our
consideration of the public input.
We sought comment on our proposals for identifying excluded
readmissions and Part B-covered items and services, as well as our
proposed process for updating the exclusions list.
The following is a summary of the comments received and our
responses.
Comment: Several commenters recommended that CMS clarify the
proposal that named ``independent outpatient therapy services'' in the
episode definition list of related Part A and Part B services included
in the episode. The commenters pointed out that while this list
specified ``independent outpatient therapy services,'' which would
appear to only represent services furnished by therapists in private
practices included in CMS data under certain supplier specialty codes,
the commenters believe that CMS should refer to the services as
outpatient therapy services in order to include all outpatient physical
therapy, occupational therapy, and speech-language pathology therapy
services in the definition of related Part A and Part B services
included in the episode. The commenters noted that in the proposed rule
discussion of CJR collaborators CMS referred to financial arrangements
with outpatient therapy providers, a category of providers that was not
defined in the proposed rule and has not otherwise been previously
defined in the Medicare program. Therefore, the commenters recommended
that CMS define outpatient therapy providers in regulation in the CJR
final rule as a physician, supplier, or provider furnishing outpatient
physician therapy services, outpatient occupational therapy services,
or outpatient speech-language pathology services. The commenters
suggested that CMS should then clarify that services furnished by these
outpatient therapy providers (outpatient therapy services) would be
included in the episode definition, thereby including these payments in
the CJR historical episode data used to set target prices and in the
calculation of actual episode spending that would be compared against
the target price.
Response: We agree with the commenters' suggestion that we define
outpatient therapy providers in regulation to ensure consistent and
accurate reference to certain providers and services under the CJR
model, and that we should include services furnished by outpatient
therapy providers as related services in the CJR model after the
exclusions are applied. Therefore, we are adding the following new
definition to Sec. 510.2: Provider of outpatient therapy services
means a provider or supplier furnishing--(1) Outpatient physical
therapy services as defined in 410.60 of this chapter, or (2)
outpatient occupational therapy services as defined in 410.59 of this
chapter, or (3) outpatient speech-language pathology services as
defined in 410.62 of this chapter. We are also revising Sec.
510.200(b)(10) to remove the word ``independent'' preceding outpatient
therapy services.
[[Page 73306]]
Comment: Several commenters recommended that CMS add to the list of
related services included in CJR model episodes drugs covered under
Medicare Part D. The commenters asserted that Part D-covered drugs make
important contributions to beneficiary health, especially for
beneficiaries with chronic medical conditions and, therefore, should be
included in a broadly defined episode payment model such as the CJR
model to provide opportunities for improved quality and efficiency of
care for beneficiaries.
Response: We appreciate the interest expressed by the commenters in
including drugs covered under Part D in the LEJR episode definition
used for the CJR model. However, while we agree with the commenters
that the appropriate use of Part D-covered drugs can play an important
role in improving a beneficiary's health, we will not be expanding our
list of Part A and Part B items and services related to the episode to
add Part D-covered drugs. We proposed to require all beneficiaries
included in the CJR model to have both Part A and Part B coverage
throughout the duration of the episode in order to ensure we had
comprehensive episode payment data to calculate actual episode spending
to be compared against the target price. However, enrollment in Part D
is voluntary and a substantial percentage of Medicare beneficiaries do
not have Part D coverage, so we would lack comprehensive payment
information for all beneficiaries in the model in order to determine an
episode target price and calculate actual episode spending. In
addition, beneficiary-specific information about Part D drug spending
that could be attributed to episodes would not be available in a
timeframe consistent with the time periods for claims used to set
target prices and the timeline for reconciliation where actual episode
spending is aggregated and compared against the target price. Finally,
given that the CJR model is testing LEJR episodes, we believe there is
limited opportunity to shift spending from Part B to Part D to reduce
actual episode spending, even though we have not included Part D
payments in the episode definition. Most beneficiaries with chronic
conditions would be taking similar drugs before and during the episode,
and, other than pain medications, Part D-covered drugs are not commonly
used to manage the direct post-surgical and PAC rehabilitation needs of
most LEJR beneficiaries, who rarely experience significant
complications from the surgery. Therefore, we are finalizing our
proposal to not include all Part D-covered drugs from the list of
related items and services included in CJR episodes.
Comment: Several commenters recommended that CMS exclude Inpatient
Psychiatric Facility (IPF) services from CJR episodes because they
would be unlikely to be related to the LEJR procedure. The commenters
suggested that the services are always medically necessary with no
opportunities for efficiency and would be more likely to be associated
with injury that led to the need for LEJR procedure, rather than
related to the surgical procedure or recovery. Several commenters
stated that CMS should exclude these services from the episode
definition because they were excluded under LEJR episodes in BPCI.
Another commenter suggested that CMS exclude IPF services furnished
more than 14 days after surgery because after than point, the commenter
believes these services would be unlikely to be related to the surgery
or recovery.
Response: We are clarifying that under BPCI, IPF services furnished
following discharge from the LEJR episode anchor hospitalization but
during the episode are included in the LEJR episode definition, unless
they fall into one of the excluded MS-DRGs. Thus, we include inpatient
psychiatric services whether paid under the IPPS or the IPF PPS in LEJR
episodes under BPCI according to the same policy that would exclude
readmissions paid under either payment system based on the same
exclusion list. We see no reason under the CJR model not to apply the
standard we proposed to define related and unrelated Part A and Part B
services with respect to CJR episodes. Therefore, we believe the list
of excluded MS-DRGs identifies those IPF admissions during the episode
that would be clinically unrelated to the LEJR episode so we exclude
them from the episode definition, whereas IPF services any time during
a CJR episode that result in discharge from an MS-DRG that is not
excluded would be related and included in the CJR model episode
definition. We disagree with the commenter that all IPF services
furnished more than 14 days after surgery are unlikely to be related to
the LEJR procedure or complications of the procedure or to a chronic
condition that must be managed differently as a result of the
procedure. Regardless of the time IPF services are furnished following
discharge from the anchor hospitalization, we believe the MS-DRG
exclusions identify those circumstances when IPF services are unrelated
to the CJR model episode. Therefore, consistent with the BPCI policy,
we are finalizing our proposal to include IPF services in the CJR model
episode definition when they are assigned to an MS-DRG that is not
excluded from episode definition.
Comment: Several commenters commended CMS for proposing to include
hospice services in the episode definition for the CJR model, which
provides recognition of hospice services as an essential element of the
health care continuum. They stated that they looked forward to CMS
sharing data resulting from the model that provides insight into the
impact of incorporating hospice as part of a bundled care model and
coordinated approach to post-hospital care. However, the commenters
asserted that generally hospice services would be unrelated to the LEJR
episode because they would most commonly address a serious and
unanticipated complication of surgery or the hospitalization, discovery
during or immediately after the surgery of a previously undetected
terminal prognosis, or an unrelated accident following the procedure.
While acknowledging that some hospice services would be related to the
LEJR episode under uncommon circumstances, the commenters encouraged
CMS to include in the final rule the process that would be used to
identify included and excluded hospice services from CJR episodes. The
commenters urged CMS to further describe its rationale for including
hospice services in the episode definition, and supply data that
relates to hospice services and the CJR model. Finally the commenters
recommended that CMS establish a data acquisition system on hospice use
in the final model. Some commenters expressed confusion about CMS'
proposal to include hospice services in the episode definition and
inquired about whether CMS intended to include all hospice services or
to exclude certain hospice services as unrelated to the LEJR episode
according to the beneficiary's diagnosis.
A number of other commenters recommended that CMS exclude all
hospice services from the CJR episode definition, except for the post-
episode spending calculation that analyzes all Part A and Part B
spending for model beneficiaries, both for consistency with BPCI and to
ensure no incentives for underutilization of the hospice benefit were
created by the CJR model. The commenters asserted that all hospice
services were unrelated to the LEJR episode, and encouraged CMS to
exclude hospice services in order to ensure timely access to hospice
for CJR model beneficiaries.
[[Page 73307]]
Response: We appreciate the interest of the commenters in ensuring
continuing beneficiary access to hospice services under the CJR model.
We note that while we exclude all hospice services under BPCI, our
proposal for the CJR model would exclude no hospice services.
Specifically, we proposed no exclusions of Part A services furnished
during the 90 day period after discharge from the anchor
hospitalization other than certain hospital readmissions identified by
excluded MS-DRGs. We understand that CJR model beneficiaries could
receive hospice services during an episode under several different
types of clinical circumstances. For example, the beneficiary could be
enrolled in hospice prior to the LEJR episode, experience a pathologic
hip fracture, and require THA to stabilize the beneficiary's hip.
Alternatively, the beneficiary could have an LEJR procedure and enter
into hospice at some point during the episode in the 90 days following
discharge from the anchor hospitalization, either after experiencing a
surgical complication leading to a terminal prognosis or based on a new
diagnosis of a terminal stage of an illness. We note that given the
pre-surgical screening that patients must undergo before an LEJR
procedure, it would be rare for a new diagnosis that would render the
patient terminally ill to occur within 3 months after the LEJR
procedure that was not already identified during the pre-surgical
screening process.
Medicare hospice care is palliative care for individuals with a
prognosis of living 6 months or less if the terminal illness runs its
normal course. As referenced in Sec. 418.22(b)(1), to be eligible for
Medicare hospice services, the patient's attending physician (if any)
and the hospice medical director must certify that the individual is
``terminally ill,'' as defined in section 1861(dd)(3)(A) of the Act and
our regulations at Sec. 418.3 that is, the individual's prognosis is
for a life expectancy of 6 months or less if the terminal illness runs
its normal course. When an individual is terminally ill, many health
problems are brought on by underlying condition(s), as bodily systems
are interdependent. Section 1861(dd)(1) of the Act establishes the
services that are to be rendered by a Medicare certified hospice
program and those services include: nursing care; physical therapy;
occupational therapy; speech-language pathology therapy; medical social
services; home health aide services (now called hospice aide services);
physician services; homemaker services; medical supplies (including
drugs and biologics); medical appliances; counseling services
(including dietary counseling); short-term inpatient care (including
both respite care and care necessary for pain control and acute or
chronic symptom management) in a hospital, nursing facility, or hospice
inpatient facility; continuous home care during periods of crisis and
only as necessary to maintain the terminally ill individual at home;
and any other item or service which is specified in the plan of care
and for which payment may otherwise be made under Medicare, in
accordance with Title XVIII of the Act. The services offered under the
Medicare hospice benefit must be available, as needed, to beneficiaries
24 hours a day, 7 days a week (section 1861(dd)(2)(A)(i) of the Act).
The regulations at Sec. 418.54(c) stipulate that the comprehensive
hospice assessment must identify the patient's physical, psychosocial,
emotional, and spiritual needs related to the terminal illness and
related conditions, and address those needs in order to promote the
hospice patient's well-being, comfort, and dignity. The comprehensive
assessment must take into consideration the following factors: The
nature and condition causing admission (including the presence or lack
of objective data and subjective complaints); complications and risk
factors that affect care planning; functional status; imminence of
death; and severity of symptoms (Sec. 418.54(c)). Additionally, the
hospice CoPs at Sec. 418.56(c) require that the hospice must provide
all reasonable and necessary services for the palliation and management
of the terminal illness, related conditions and interventions to manage
pain and symptoms. Therapy and interventions must be assessed and
managed in terms of providing palliation and comfort without undue
symptom burden for the hospice patient or family. In the December 16,
1983 Hospice final rule (48 FR 56010 through 56011), regarding what is
related versus unrelated to the terminal illness, we stated: ``. . . we
believe that the unique physical condition of each terminally ill
individual makes it necessary for these decisions to be made on a case-
by-case basis. It is our general view that hospices are required to
provide virtually all the care that is needed by terminally ill
patients.''
Thus, hospice services furnished to CJR model beneficiaries should
be included in the episode definition for the CJR model, regardless of
the specific diagnosis of the beneficiary, because hospices are to
provide virtually all care that is needed by terminally ill patients.
If a CJR beneficiary was receiving hospice services during an episode,
either because the beneficiary was enrolled in hospice prior to surgery
and continued in hospice following surgery or the beneficiary enrolled
in hospice following surgery that initiated the CJR model episode, we
believe that hospice services would encompass care related to the LEJR
episode and should, therefore, be included in the episode definition.
As previously noted, given the comprehensive nature of the hospice
benefit and the fact that body systems are interdependent at end of
life, virtually all care needed by the terminally-ill individual would
be related to the terminal prognosis and thus the responsibility of the
hospice. As previously noted, hospices are required, per the Hospice
CoPs at Sec. 418.56(c), to provide all reasonable and necessary
services for the palliation and management of the terminal illness,
related conditions, and interventions to manage pain and symptoms. For
patients that underwent LEJR procedures as part of the CJR model that
have also elected the Medicare hospice benefit, hospice services would
need to adapt and respond to the care needs of the CJR beneficiary
following surgery. As in the case of other medically necessary services
that would improve a beneficiary's quality of care and quality of life,
we expect that CJR model beneficiaries will receive clinically
appropriate referrals to hospice in a timely manner. Furthermore, we
also believe hospice services could contribute to episode efficiency
through improved comprehensive care coordination and management for CJR
model beneficiaries that have a terminal prognosis. As previously
stated, hospices are required to provide comprehensive care
coordination and management per the hospice CoPs at 418.56. As
discussed in sections III.F.3. and 5. of this final rule, we will be
monitoring for access to care and delayed care and will take actions as
described if problems are found. Therefore, we are finalizing our
proposal to include hospice services in the CJR model episode
definition.
With regard to the commenters' request for data regarding hospice
use and the CJR model, we note that the evaluation approach described
in IV.D. of this final rule will yield utilization information on CJR
beneficiaries' episodes for specific types of providers and services.
As discussed in section IV.E. of this final rule, we plan to evaluate
the CJR model on an annual basis and release internal periodic
summaries to offer useful insight, with
[[Page 73308]]
a final analysis after the end of the 5-year performance period.
Finally, we plan to make available to participant hospitals upon their
request periodic summary claims data reports or raw claims data,
including payment information, using type of service categories that
including hospice. We refer readers to section III.E.2. of this final
rule for a more detailed discussion of the plans for sharing data under
the CJR model.
Comment: Several commenters requested that CMS exclude prosthetic
limbs, orthopedic braces, and customized durable medical equipment
(DME) from the related services included in CJR model episodes. The
commenters stated that these uncommonly furnished items were at risk of
not being provided to CJR model beneficiaries, and provided historical
example of access problems during implementation of the SNF PPS that
eventually resulted in some HCPCS codes for these items being exempted
from SNF consolidated billing. Another commenter requested
clarification about included services with respect to the definition of
DME. The commenter expressed its belief that there would be no need for
verification by CMS or its contractors about coverage of DME as CMS
would be making a single episode payment to hospitals. The commenter
sought clarification that devices that would usually be paid for under
the MS-DRG payment should be able to be used in the CJR beneficiary's
home.
Response: While some commenters recommended that we exclude
altogether certain prosthetics, braces, and customized DME from the
episode definition under the CJR model, we believe that our Part B ICD-
9-CM (or equivalent ICD-10-CM) diagnosis code exclusions will allow
these items to be excluded when they are unrelated to the episode.,
both in determining historical CJR episode payments used to set the
target price and in calculating actual episode spending during the
model performance years Just as for other Part B services, when the
primary ICD-9-CM (or equivalent ICD-10-CM) diagnosis code on the claim
for the item is not excluded, the prosthetics, orthopedic braces, and
customized DME will be included in the CJR episode. Because we will
identify unrelated items when they are furnished, and the Medicare
payment for those items will not be included in calculating the actual
episode spending, we believe that CJR model beneficiaries will continue
to have access to these items when they are furnished for unrelated
diagnoses on the Part B ICD-10-CM diagnosis code exclusions list. With
regard to the commenter who discussed a single payment by CMS to
hospitals for the episode, we want to emphasize that this is a
retrospective payment model and, thus, payments for all covered items
and services will continue to be made under the usual Medicare program
rules to all providers and suppliers furnishing services to CJR model
beneficiaries, unless we have specifically waived certain Medicare
program rules under the CJR model. We refer readers to section
III.C.11. of this final rule for further discussion of waivers of
Medicare program rules, but note that we have waived no existing
requirements or conditions about DME. All existing program rules for
coverage and payment of DME continue to apply. Therefore, we are
finalizing our proposal to include DME in the CJR model episode
definition, after application of the exclusions.
Comment: A number of commenters commended CMS on the proposal to
exclude IPPS new technology add-on payments from the CJR model episode
definition, as well as hemophilia clotting agents furnished to hospital
inpatients. The commenters believe these policies will ensure access to
these important treatments for CJR model beneficiaries who would
benefit from them. Several commenters suggested that CMS also exclude
from the CJR model episode definition OPPS transitional pass-through
payments for devices, which are paid separately for a limited period of
time based on their increased cost over existing technologies and
evidence that they are a substantial clinical improvement, for
consistency with CMS' proposed treatment of IPPS new technology add-on
payments which accomplish the same objective for hospital inpatients.
Other commenters recommended that CMS exclude other innovative
technologies from the episode definition by establishing a review
process to see if their cost should be removed from CJR episode
spending to ensure that the financial incentives under the CJR episode
payment model did not discourage appropriate use of new technologies
for CJR model beneficiaries who would benefit from them. These
commenters stated that such a policy would ensure that beneficiaries in
the CJR model have access to beneficial new technologies that otherwise
might be limited because of participant hospitals' concerns over
providing items and services that would increase actual episode
spending. A commenter, arguing in support of CMS' proposal to exclude
IPPS new technology add-on payments from the episode definition,
suggested that CMS analyze Hospital Consumer Assessment of Healthcare
Providers and Systems (HCAHPS) data to see if customized joints
correlated with HCAHPS scores under the model.
Response: We agree with the commenters that CJR model beneficiaries
should have access to beneficial new technologies while they are in CJR
episodes. We do not believe it would be appropriate for the CJR model
to potentially hamper beneficiaries' access to new technologies that
are receiving IPPS new technology add-on payments or to burden
hospitals who choose to use these new drugs, technologies, or services
with concern about these payments counting toward actual episode
expenditures. We also agree with the commenters' recommendation that we
should exclude OPPS pass-through payments for medical devices from the
episode definition for the same reasons we proposed to exclude IPPS new
technology add-on payments. In both of these cases, through the
established OPPS and IPPS review processes, we have determined that
these technologies have a substantial cost but also lead to substantial
clinical improvement for beneficiaries. Therefore, we are finalizing
our proposal to exclude from the CJR episode definition IPPS new
technology add-on payments and hemophilia clotting factors paid
separately during an inpatient hospitalization. In addition, we are
modifying our proposal and will exclude OPPS transitional pass-through
payments for medical devices from the CJR model episode definition and
price determinations.
We will not establish a new process to review innovative
technologies and make individual determinations regarding their
exclusion from the CJR model episode definition, as recommended by some
commenters. Because the CJR model is a retrospective reconciliation
model that pays all providers and suppliers under the regular Medicare
program throughout the episode of care, we believe it is more
appropriate to rely on the existing processes under the Medicare
program to make determinations about separate payment for new
technology items and services. If those existing processes identify new
technologies that would qualify for add-on payments under the IPPS or
transitional pass-through payment under the OPPS, we will exclude them
from the CJR model episode definition to ensure that access to new
technology items and services for beneficiaries is not influenced by
their care being include in the CJR model. We note that the evaluation
[[Page 73309]]
approach for the model as discussed in section IV. of this final rule
will analyze a variety of information about the model to draw
conclusions about its effects on quality and cost but is not designed
to examine patient experience as related to specific items or services
furnished during the episode.
Comment: Most commenters expressed support for CMS' proposed
episode definition that would exclude certain readmissions based on a
list of MS-DRGs, as well as certain Part B services based on the
principal diagnosis on the claim, consistent with the episode
definition for LEJR episodes under BPCI that has been used for several
years. The commenters acknowledged that most services would be included
in the episode definition under the proposal, thus creating broadly
defined episodes that should lead to comprehensive care for
beneficiaries following LEJR procedures. A number of commenters
characterized the proposed episode definition as clinically reasonable
and agreed with the proposed lists of services that would be excluded.
A commenter claimed that the proposed episode definition would
encourage the integration of post-fracture care coordination, such as
could be provided through a fracture liaison service, with acute care
for CJR model beneficiaries with hip fractures, leading to improved
outcomes. However, some commenters expressed general concern about CMS'
proposal to hold participant hospitals financially accountable for
these broadly defined episodes, especially as CMS did not propose to
risk adjust target prices for the episodes to reflect beneficiaries'
chronic conditions.
Several commenters suggested that CMS adopt an episode definition
for the CJR model that is flexible and condition-specific. A commenter
questioned the role of the beneficiary's health care provider in
evaluating relatedness to the episode under the proposal and
recommended that CMS permit the beneficiary's health care provider to
make determinations of relatedness of services to the episode on a
case-by case basis specific to a beneficiary's unique clinical
condition. A few commenters suggested that CMS' proposed episode
definition was more consistent with a total cost of care model by
including beneficiaries with chronic conditions and excluding so few
services. These commenters stated that if CMS finalizes such a broad
definition, risk adjustment would be necessary in order to ensure fair
payment to participant hospitals. Some commenters contended that CMS
should include in the episode definition only services that are
directly related to the procedure and complications for which the
hospital could be held accountable. In the view of some commenters, CMS
should exclude all chronic conditions from the episode definition,
especially when the LEJR episode is unavoidable, such as in trauma
cases. Examples provided by commenters of chronic conditions that
should be excluded include diabetes and renal failure. Other commenters
recommended that CMS only exclude care for unrelated chronic conditions
and acute medical conditions such as urinary tract infection and
dehydration occurring later than 30 days following discharge from the
anchor hospitalization or otherwise shorten the episode duration of the
model to 30 days. They claimed that holding the participant hospital
accountable through the episode definition for chronic conditions two
months after surgery is unfair. A commenter recommended that CMS
include all readmissions for the first 30 days following discharge from
the anchor hospitalization and thereafter only those hospital
readmissions for the subsequent 60 days that are directly related to
the LEJR procedures. Overall, a number of commenters expressed concern
that unless CMS narrowed the proposed CJR model episode definition to
exclude more services or diagnoses or shortened the episode duration,
hospitals may be more cautious about treating patients with complex
medical status, especially if CMS also does not risk adjust the target
prices for the episode based on beneficiary characteristics and
specific procedures.
A commenter stated that the proposed episode definition was not
sufficiently broad for frail patients, especially those with multiple
illnesses who may have had a hip fracture. The commenter contended that
providers should be paid to provide comprehensive care and treat the
whole person, who can have many different types of interrelated health
care needs when he or she is acutely ill due to a hip fracture in the
face of serious underlying chronic conditions. The commenter stated
that the CJR model would contribute to the fracturing of comprehensive
care for vulnerable beneficiaries by excluding some services from the
episode definition, even if those services are for clinical conditions
that appear to be clinically unrelated to the LEJR episode, and claimed
that the solution to this challenge is moving people with complex
medical needs into a patient-centered medical home or comprehensive
ACO. The commenter stressed that any existing medical home or ACO
arrangements that apply to CJR model beneficiaries should be respected
by the participant hospital managing the CJR episode, so as to not
disrupt or otherwise interfere with comprehensive care for
beneficiaries with complex medical needs.
Response: We appreciate the support of many commenters for our
proposed overall approach of identifying excluded services by MS-DRGs
for hospital readmissions and ICD-9-CM (or equivalent ICD-10-CM)
diagnosis codes for Part B services for LEJR episodes that are broadly
inclusive of related services. Because the methodology for setting
episode prices as discussed in section III.C. of this final rule
requires the construction of historical CJR episodes upon which to base
target prices that are then compared with actual episode payment during
each performance year of the model, we must use a standard episode
definition for the CJR model to ensure comparability of services
included in the episode in the historical CJR episode data and the
model performance year. Thus, we are unable to adopt the suggestions of
commenters that the CJR model episode definition be flexible or that
health care providers make service-by-service determinations of
relatedness for individual beneficiaries.
As discussed in the proposed rule and confirmed by the commenters,
beneficiaries undergoing LEJR procedures have frequent comorbidities
where their management may be affected by the surgery and post-
operative recovery period. We do not believe it would be appropriate
given the frequent comorbidities experienced by Medicare beneficiaries
and the generally elective nature of LEJR to utilize a narrow episode
definition for CJR that includes only those services directly related
to the LEJR procedure or the quality or safety of the LEJR care, as we
are interested in testing inclusive episodes to incentivize
comprehensive, coordinated patient-centered care for the beneficiary
throughout the episode. The care for many chronic conditions and the
development of acute medical conditions may be affected by the LEJR
procedure or post-surgical care throughout the post-surgical recovery
period that extends significantly beyond 30 days following hospital
discharge, a point in time where beneficiaries are usually still
receiving PAC services, often including SNF services, and have not
returned to their level of presurgical function. Therefore, we do not
believe it would be appropriate to define services for chronic
conditions and acute medical conditions as related to the CJR
[[Page 73310]]
model episode for 30 days post-discharge from the anchor
hospitalization, and unrelated for the remaining 60 days in the
episode. We believe that care for chronic medical conditions affected
by the LEJR procedure or post-surgical care is related to the episode
for the full episode duration because the care for these conditions is
likely to be affected by the procedure and associated recovery for 90
days post-hospital discharge or even longer as the beneficiary recovers
function over the course of the episode and returns to the community.
We note that we have finalized several waivers of Medicare program
rules as discussed in section III.C.11. of this final rule specifically
to assist participant hospitals in efficient and effective care
coordination and care management for CJR beneficiaries with
significant, ongoing health needs, including chronic medical conditions
whose care may be affected by the LEJR procedure and post-surgical
recovery. Thus, we will exclude only those Medicare Part A and B-
covered items and services furnished during the episode that are
unrelated to LEJR procedures based on clinical justification, and the
exclusions will apply throughout the episode duration. Finally, we
believe that the payment policies of the model as described in sections
III.C.3.c. and III.C.8. of this final rule to adjust pricing for high
payment episodes and to provide stop-loss limits provide sufficient
protections for participant hospitals from excessive financial
responsibility for high payment cases that may result from the broad
episode definition adopted for the model. We expect that participant
hospitals, with responsibility for the quality and cost performance of
CJR model episodes, will work closely with all providers, suppliers,
and organizations engaged in the care of model beneficiaries, in order
to ensure that efficient, coordinated care is furnished to the
beneficiary.
We appreciate the concerns expressed by commenters about holding
participant hospitals financially responsible for broad LEJR episodes
extending 90 days post-discharge from the anchor hospitalization. We
note that we are finalizing 90 days post-discharge from the anchor
hospitalization as we proposed for the reasons discussed later in this
section. Additionally, we refer readers to section III.C.4.b. of this
final rule for the final policy that will risk stratify the target
prices based on the presence or absence of a hip fracture for CJR model
beneficiaries. We believe that this risk stratification policy
addresses the commenters' concerns that beneficiaries with chronic
conditions are likely to need more costly care throughout the CJR model
episode that would have been inadequately paid under our proposal
because these beneficiaries are those most likely to be present in the
population receiving LEJR procedures emergently due to a hip fracture.
Beneficiaries with chronic conditions are more likely to initiate CJR
episodes due to hip fracture than beneficiaries without chronic
condition who more likely undergo elective THA or TKA, so the typically
higher historical spending for chronically ill beneficiaries will be
reflected in the historical CJR episodes used to risk stratify target
prices for hip fracture patients. In contrast, beneficiaries undergoing
elective THA or TKA are less likely to have chronic conditions, so
their typically lower historical spending will be reflected in the
historical CJR episodes used to risk stratify target prices for LEJR
patients without hip fracture. Thus, risk stratification of target
prices based on a beneficiary's hip fracture status should account for
patient-specific expenditure variation both directly resulting from
more intense care due to the hip fracture itself, as well as indirectly
resulting from the higher prevalence of chronic conditions that must be
treated and managed in beneficiaries with hip fracture. We also believe
that risk stratification based on a model beneficiary's hip fracture
status will help to ensure that participant hospitals continue to treat
these medically complex patients because target prices for these
episodes will reflect the more costly care that these beneficiaries are
likely to require based on historical experience.
Additionally, while we agree with the commenter that the ongoing
and acute health care needs of medically complex beneficiaries may be
addressed through a patient-centered medical home or ACO, many of these
vulnerable beneficiaries currently are not included in such models or
programs. In the case of other beneficiaries who are included in
medical home or ACO models or programs, they may have specific, new
care management needs arising from an LEJR procedure that may be best
managed by the participant hospital that has substantial expertise in
coordinating and managing care throughout LEJR episodes because of the
hospital's participation in the CJR model, while the ACO or patient-
centered medical home may have less specific expertise in managing
beneficiaries recovering from major orthopedic surgery. We expect that
participant hospitals, accountable for LEJR episode quality and cost
performance under this model, will work closely with all providers and
other organizations with which a model beneficiary has established
relationships, toward the mutual goal of high quality, well-coordinated
care that maximizes the rate of a beneficiary's return of function
following surgery.
We are finalizing our proposal to include all Medicare Part A and B
items and services in the CJR model episode definition, except for
excluded services identified by the CJR model exclusions list, with
modification to additionally exclude OPPS transitional pass-through
payments for devices.
Comment: Many commenters expressed support for CMS' proposed
approach to identifying excluded services by MS-DRGs for readmissions
and ICD-9-CM diagnosis codes on Part B claims. Some commenters
suggested that CMS consider additional coding sources beyond ICD-9-CM
diagnosis codes to identify exclusions by adding ICD-9-CM procedure
codes and HCPCS and/or CPT codes to the list of Part B exclusions.
Response: We appreciate the commenters' support for our proposal.
We note that we have successfully used our current approach to identify
excluded services for 48 clinical episodes under BPCI Models 2, 3, and
4 for several years. We will consider whether supplementing our current
approach to identifying excluded services with additional coding
strategies could help us more accurately identify unrelated services as
we review future stakeholder input about the CJR model episode
definition. We would need to also take into consideration the current
coding requirements for different Part A and Part B services in
assessing the potential benefit of supplementing our existing
approaches to identifying excluded services. We would address any
changes to the current CJR model approach to identifying excluded
services through rulemaking. Therefore, we are finalizing our proposal
to identify CJR model excluded services by MS-DRGs for readmissions and
ICD-9-CM (or equivalent ICD-10-CM) diagnosis codes for Part B services.
Comment: A number of commenters provided their perspective on
certain specific proposed related services and exclusion. Several
commenters expressed support for CMS' proposal to exclude readmissions
for trauma medical and oncology MS-DRGs from the CJR episode
definition. The commenters agreed with CMS that readmissions during
LEJR episodes for
[[Page 73311]]
the clinical conditions that would result in discharge from trauma
medical or oncology MS-DRGs would be clinically unrelated to the LEJR
episode. A commenter recommended that CMS exclude rheumatoid arthritis
care from the LEJR episode definition. While the commenter pointed out
that rheumatoid arthritis can result in the need for LEJR procedures,
the commenter observed that including treatment for rheumatoid
arthritis in the episode would result in the accompanying high payments
for this care being included in actual episode spending. The commenter
stated that the high costs of treatment could either affect a
beneficiary's treatment for rheumatoid arthritis during the CJR model
episode or reduce the beneficiary's access to a medically necessary
joint replacement. Several commenters recommended that CMS exclude
services for which beneficiary claims data are not made available,
specifically those subject to the regulations governing the
confidentiality of alcohol and drug abuse patient records (42 Code of
Federal Regulations (CFR) part 2). Other commenters suggested that CMS
exclude elective surgery during the CJR model episode, providing
examples of cataract surgery, hernia repair, gallbladder procedures,
and transurethral resection of the prostate. A commenter requested that
CMS add the ICD-9-CM procedure code for chemotherapy administration to
the Part B exclusions list, because CMS proposed to consider
chemotherapy to be unrelated and, therefore, excluded from the CJR
episode definition.
Several commenters requested further justification of CMS's
proposals to include all body system-related surgical MS-DRGs and
medical MS-DRGs except oncology and trauma medical MS-DRGs in the CJR
episode definition. Several commenters requested further rationale for
CMS' proposal to include all PAC services in the episode following an
excluded readmission. Another commenter requested clarification on the
inclusion of communication, cognitive, and swallowing-related diagnoses
in the LEJR episode and CMS' intent in bundling services the commenter
believes to be unrelated. The commenter also requested information
about how providers could submit clinical justification when an
exclusion of therapy services from the CJR model episode is needed.
Finally, several commenters expressed support for excluding patients
from the model with acute disease diagnoses such as head injury, based
on their conclusion that CMS proposed to exclude these beneficiaries
due to CMS' proposed exclusion of Part B claims reporting acute disease
diagnoses, such as severe head injury.
Response: We appreciate the specific requests by the commenters for
clarification and modification of our proposed list of exclusions from
the CJR model episode definition. We agree with the commenters who
supported our proposal to exclude readmissions resulting in discharges
from oncology and trauma medical MS-DRGs. While we believe that
readmissions for medical MS-DRGs are generally linked to the
hospitalization for the LEJR procedure as a complication of the illness
that led to the surgery, a complication of treatment or interactions
with the health care system, or a chronic illness that may have been
affected by the course of care, we agree with the commenters that
hospitalizations resulting in discharge from oncology and trauma
medical MS-DRGs are not related to the hospitalization for the LEJR
procedure.
We do not believe that Part B claims including ICD-9-CM diagnosis
codes for rheumatoid arthritis should be excluded from CJR model
episodes. This chronic condition is likely to be affected by care
during the procedure and recovery period and, therefore, we would
consider claims reporting these diagnoses codes to be related to the
LEJR episode. With regard to the commenter's concerns about delays in
timely treatment as a result of high treatment costs and reduced access
to joint replacement procedures for beneficiaries with rheumatoid
arthritis, we refer readers to sections III.F.3. and 5. of this final
rule for discussion of our plans to monitor for access to care and
delayed care due to the potential of the CJR model to direct patients
away from more expensive services at the expense of outcomes and
quality. We will also not exclude claims for substance abuse and mental
health services that are not available in beneficiary claims data
because these services are clinically related to LEJR episodes. Claims
for substance abuse and mental health services include care for
clinical conditions that are related to the CJR episode because these
conditions may be affected by the LEJR procedure or post-surgical care.
With regard to the commenters' requests that we exclude elective
procedures such as cataract surgery, hernia repair, gallbladder
procedures, and transurethral resection of the prostate from the CJR
model episode definition, while we believe these procedures will be
uncommon during the post-surgical recovery period for CJR model
beneficiaries that extends 90 days following discharge from the anchor
hospitalization, we will not exclude them as unrelated because all of
the procedures may be related to care furnished during the post-
surgical recovery period. Our exclusion methodology does not allow us
to identify those procedures that are truly elective; that is, the
condition was present and surgery was planned prior to the LEJR
procedure and scheduled during the 90-cay post-hospital discharge
period.
While we agree with the commenter that chemotherapy services should
be excluded from the CJR model episode, our exclusion methodology for
Part B services does not rely upon ICD-9-CM procedure codes but instead
upon ICD-9-CM (or equivalent ICD-10-CM) diagnosis codes reported on
Part B claims. We note that the Part B payment systems, including those
for physicians' services, Part B drugs, and institutional services,
reject claims that do not report valid ICD-9-CM diagnosis codes.
Therefore, we believe that our proposal to base Part B exclusions only
on ICD-9 diagnosis codes and not additionally upon ICD-9 procedure
codes should allow us to identify and exclude from the CJR episodes all
Part B claims for chemotherapy administration services. Providers and
suppliers do not report ICD-9-CM (or equivalent ICD-10-CM) procedure
codes on Part B claims because they are paid for their chemotherapy and
other services on the basis of the CPT or HCPCS codes that describe
those services. However, these Part B claims must also include ICD-9-CM
(or equivalent ICD-10-CM) diagnosis codes. CMS requires ICD-9-CM (or
equivalent ICD-10-CM) procedure codes to be reported only on Part A
claims, which are excluded from the CJR model on the basis of
readmission MS-DRG rather than ICD-9 (or equivalent ICD-10) codes, so
adding ICD-9-CM (or equivalent ICD-10-CM) procedure codes to the Part B
exclusions list is not necessary.
As we stated in the proposed rule, for readmissions to medical MS-
DRGs the selection of the primary diagnosis code is not clear-cut so we
believe they should all be included in the episode definition so that
providers focus on comprehensive care to beneficiaries in episodes. We
reiterate our belief that readmissions to medical MS-DRGs are generally
linked to the hospitalization for the procedure as a complication of
the illness that led to the surgery, a complication of treatment or
interactions with the health care system, or a chronic illness that may
have been affected by the course of care. Moreover,
[[Page 73312]]
we believe that all body-system related surgical MS-DRGs for
readmissions are also related to the LEJR episode because these
readmissions are generally related to complications of the LEJR
procedure. Such surgeries result from the treatment of systemic
conditions that arise from the LEJR procedure or its complications.
Examples include placement of an inferior vena cava filer or a
percutaneous coronary intervention for treatment of thromboembolic
complications of the LEJR procedure.
We did not propose to exclude any PAC services in the 90-day post-
hospital discharge period, even when those PAC services follow an
excluded readmission. As Part A services are generally intended to be
comprehensive in nature and because the beneficiary in a CJR model
episode would still be in the post-operative recovery period following
LEJR surgery, we believe any PAC services provided during the episode
would be related to the LEJR procedure. Regardless of the reason for
the hospitalization immediately preceding the initiation of PAC
services, the PAC provider would need to address the beneficiary's
post-surgical recovery from the LEJR procedure, even if the PAC
services immediately followed an unrelated readmission to the hospital.
We did not propose to exclude claims for Part B services for
communication, cognitive, or swallowing-related diagnoses from the CJR
model episode definition because we believe these diagnoses are due
either to chronic conditions whose care may be affected by the LEJR
procedure or post-surgical care or to complications of the procedure,
such as stroke, that result in these diagnoses. Therefore, we consider
all Part B claims reporting these diagnoses in the principal diagnosis
field to be related to the CJR episode. Providers are unable to submit
clinical justification or other special requests for services to be
designated as unrelated to the episode if one of these diagnoses is in
the principal diagnosis field on claims. The CJR model is testing LEJR
episode payment and we need consistency in the scope of the episode for
the model. We will include all related Part A and Part B services as
identified in this final rule in the calculation of episode target
prices based on historical CJR episode data and in the calculation of
actual episode spending for a model performance year.
Finally, in response to the commenters who supported the exclusion
of beneficiaries with acute disease diagnoses, such as head injury,
from the CJR model, we want to clarify that we did not propose to
exclude these beneficiaries from the model. Instead, we proposed to
exclude Part B claims reporting acute disease diagnoses from the
episode because we consider these services to be unrelated under the
episode definition. Therefore, we will not include claims for Part B
services reporting excluded acute disease ICD-9-CM (or equivalent ICD-
10-CM) diagnosis codes in calculating target prices based on historical
CJR episodes or in calculating actual episode spending that will be
compared to the episode's target price in the CJR model.
We are finalizing our proposal to exclude the specific list of MS-
DRGs for readmissions and ICD-9-CM (or equivalent ICD-10-CM) diagnosis
codes that is posted on the CMS Web site at: http://innovation.cms.gov/initiatives/cjr/.
Comment: A commenter requested that CMS clarify how it will address
hospital-acquired conditions that should never occur, when these
conditions are part of CMS' Hospital-Acquired Condition Reduction
Program and experienced by CJR model beneficiaries. The commenter
explained that under current Medicare program policy, Medicare will not
pay the higher MS-DRG arising from a specified list of non-reimbursable
hospital-acquired conditions. The commenter pointed out that CMS
proposed to not exclude claims for diagnoses related to the quality and
safety of care furnished during the episode in the CJR model episode
definition, but CMS' list of non-reimbursable hospital-acquired
conditions includes surgical site infections after certain orthopedic
procedures. In addition to clarifying how never events will be
addressed in setting payments under the CJR model, the commenter
recommended that CMS incorporate an analysis of never events and their
incidence into the reconciliation process and review whether to expand
the list of never events for elective surgeries.
Another commenter recommended that the CJR episode include a
warranty for complications associated with surgery and other treatment,
that is, if complications occur, they should be treated at no
additional cost to the patient or Medicare.
Response: We appreciate the commenter's request for clarification
about treatment of IPPS claims that include hospital-acquired
conditions under the CJR model. Our model policy as discussed in
section III.C.4. of this final rule bases the CJR target prices on
historical CJR episodes that reflect discharge MS-DRGs and paid claim
amounts for those beneficiaries who would have begun episodes by
admission to an IPPS hospital that resulted in a discharge from MS-DRG
469 and 470. To the extent that Medicare does not pay the higher MS-DRG
amount due to a hospital-acquired condition that was not present on
admission, the lower payment for the hospitalization due to the
hospital-acquired condition would be used in setting the episode target
price for the MS-DRG that anchored the episode. This same would hold
true for related readmissions during the episode. When calculating
actual episode spending during a performance year, we would use, once
again, the paid claim amount that, in the case of a hospital-acquired
condition that was not present on admission, would be at the level of
the lower paying MS-DRG for the anchor hospitalization or related
readmission, as applicable. We further note that if a CJR beneficiary
experiences a hospital-acquired condition that was not present on
admission during an anchor hospitalization and has no other comorbid
conditions other than the HAC that would result in assignment of MS-DRG
469, the beneficiary's episode would be considered an MS-DRG 470-
anchored episode (initiated by the MS-DRG for LEJR procedures without
complications). Therefore, the hospital-acquired condition penalty
would not itself inflate the target price such that CMS would pay back
the hospital-acquired condition penalty through a reconciliation
payment.
Our proposal not to exclude claims for diagnoses related to the
quality and safety of care during the episode is the basis for our
excluded list of MS-DRGs for readmissions and ICD-9-CM (or equivalent
ICD-10-CM) diagnosis codes for Part B services and, therefore, this
list would not apply to the anchor hospitalization itself where
hospital-acquired conditions that were not present on admission could
be reported.
As discussed in sections III.C.5. and 6. of this final rule, the
model evaluation will examine changes in utilization, as well as
outcomes and quality, in order to assess the impact of the CJR model on
the aims of improved care quality and efficiency as well as well as
reduced health care costs. We refer readers to section IV. of this
final rule for further information on the planned evaluation. We have
an ongoing process to review claims data regarding potential candidates
for additions to the list of hospital-acquired conditions, so we do not
believe there is a need to specifically identify CJR episodes for
analysis because the IPPS claims included in CJR episodes would already
be considered in the ongoing process used by CMS in the Hospital-
Acquired Condition Reduction Program.
[[Page 73313]]
In response to the commenter who recommended for the CJR model that
if complications due the LEJR procedure occur, they should be treated
at no additional cost to the patient or Medicare, we note that because
the CJR model uses a retrospective payment approach, we will rely on
the existing Medicare program policies under the Hospital-Acquired
Condition Reduction Program that define the specific circumstances in
which Medicare will not make additional payment for a condition
occurring after surgery. When these circumstances occur for CJR model
beneficiaries in episodes, the existing Medicare program policies apply
and Medicare would not provide additional payment. We do not believe it
would be appropriate to establish policies specific to the CJR model
regarding Medicare nonpayment for other complications, and we further
note that some complications may not be preventable. The final pay-for-
performance methodology for the CJR model as discussed in section
III.C.5. of this final rule provides strong financial incentives for
participant hospitals to coordinate and manage care to reduce
complications, as the THA/TKA Complications measure (NQF #1550)
contributes half of the available points for the hospital's composite
quality score that determines the hospital's eligibility for
reconciliation payments and quality incentive payments.
Comment: Several commenters opposed CMS' proposal to make changes
to CJR model exclusions through an annual, at a minimum, update outside
of rulemaking. Most commenters recommended that CMS update the
exclusions annually through rulemaking, at least for routine annual
updates. Other commenters stated that they did see value in CMS making
possible additions and deletion to the exclusions list on a quarterly
basis, especially early in the model. If following a quarterly process
outside of rulemaking, these commenters urged CMS to seek stakeholder
comment and input on candidate revisions through the CMS Web site and
list serves to ensure broad input. The commenters encouraged CMS to
adopt a transparent process for revisions to the episode definition in
considering other exclusions. A number of commenters recommended that
CMS explore other exclusions for the future, such as those inpatient
hospital admissions or outpatient procedures planned for the
beneficiary prior to the episode, ongoing care for patients' chronic
conditions, and PAC following an excluded hospital readmission.
Response: We appreciate the interest of the commenters' in ensuring
that any changes to the CJR model episode definition involve a
transparent process with opportunity for broad stakeholder input. We
continue to believe that updating the exclusions annually, at a
minimum, outside of rulemaking, is most appropriate for this 5-year
model, allowing for more frequent updates than through rulemaking as
necessary to accommodate timely ICD-CM annual coding changes and the
transition to ICD-10-CM and annual IPPS MS-DRG changes, as well as to
address significant issues raised by participant hospitals and other
stakeholders.
Commenters who supported an exclusions list update process outside
of rulemaking did not suggest specific revisions to our proposed
criteria for updating the exclusions, namely that:
We would not exclude any items or services that are--
++ Directly related to the LEJR procedure itself (such as loosening
of the joint prosthesis) or the quality or safety of LEJR care (such as
post-surgical wound infection or venous thromboembolism); and
++ For chronic conditions that may be affected by the LEJR
procedure or post-surgical care (such as diabetes). By this we mean
that where a beneficiary's underlying chronic condition would be
affected by the LEJR procedure, or where the beneficiary's LEJR or
post-LEJR care must be managed differently as a result of the chronic
condition, then those items and services would be related and would be
included in the episode.
We would exclude items and services for--
++ Chronic conditions that are generally not affected by the LEJR
procedure or post-surgical care (such as removal of the prostate). By
this we mean that where a beneficiary's underlying chronic condition
would not be affected by the LEJR procedure, or where the beneficiary's
LEJR or post-LEJR care need not be managed differently as a result of
the chronic condition, then those items and services would not be
related and would not be included in the episode; and
++ Acute clinical conditions not arising from existing episode-
related chronic clinical conditions or complications of LEJR surgery
from the episode (such as appendectomy).
Thus, we continue to believe these criteria provide the appropriate
clinical review framework for updates to the CJR model exclusions.
Finally, we believe that our proposed process to post the potential
revised exclusions, which could include additions to or deletions from
the exclusions list, to the CMS Web site to allow for public input on
our planned application of these standards, and then adopt changes to
the exclusions list with posting to the CMS Web site of the final
revised exclusions list after our consideration of the public input, is
consistent with the recommendation of commenters that we use a
transparent process reflective of robust opportunity for public input.
Conducting this update process outside of rulemaking based on the
criteria set forth in this final rule will allow us the greatest
flexibility to update the exclusions as changes to the MS-DRGs and ICD
diagnosis codes, upon which our exclusions rely, are released. This
process will also allow us to respond quickly to any episode definition
issues that arise during implementation of the model across the broad
array of participant hospitals in the selected MSAs. We would widely
publicize the opportunity for review and public input through the CMS
Web site and listservs. We also note that any changes to our overall
approach to identifying excluded services or to our criteria for
evaluating services for exclusion would be addressed through
rulemaking. Therefore, we are finalizing our proposal to update the
exclusions list annually, at a minimum, using the process as described.
Comment: Several commenters referred to the impending change from
ICD-9-CM to ICD-10-CM coding on claims and identified that this change
would have implications for the Part B exclusions list. A commenters
stated that CMS would need to define the excluded ICD-10-CM codes prior
to implementation of the CJR model and recommended that CMS also
provide the ICD-10-CM diagnosis code list that would identify included
Part B services.
Response: We appreciate the commenters' interest in the list of CJR
model exclusions that are identified based on ICD-10-CM codes. In the
proposed rule, we stated that as we move to implement ICD-10-CM we
would develop the CJR exclusions that would map to the final ICD-9-CM
exclusions for CJR available in the ICD-10-CM format as well.
With ICD-10-CM implementation beginning in October 2015, we are
making available the final CJR model Part B exclusions list in ICD-10-
CM format as additional worksheet tabs to the final exclusions list
posted on the CMS Web site at: http://innovation.cms.gov/initiatives/cjr/. This is the same list of exclusions that will be used for LEJR
episodes under BPCI. This list will be applied to claims for services
furnished on or after October 1, 2015 and that
[[Page 73314]]
report ICD-10-CM codes. For ease of understanding by the public, our
objective was to present the ICD-10-CM excluded codes as ranges of
excluded ICD-10-CM categories, just as we present the ICD-9-CM excluded
codes as ICD-9-CM ranges.
To develop the ICD-10-CM exclusions list, we began with the list of
final CJR ICD-9-CM code ranges. From that list of ranges, we generated
an expanded list of all excluded ICD-9-CM codes. We then compared the
list of excluded ICD-9-CM codes against both the ICD-9-CM-to-ICD-10-CM
and ICD-10-CM-to-ICD-9-CM General Equivalence Mappings (GEMs) available
at: https://www.cms.gov/Medicare/Coding/ICD10/2015-ICD-10-CM-and-GEMs.html. Comparing against both GEM files was necessary because there
were matches in the ICD-9-CM-to-ICD-10-CM GEM that did not appear in
the ICD-10-CM-to-ICD-9-CM GEM and vice versa. For example --
In the ICD-9-CM-to-ICD-10-CM GEM file, ICD-9-CM code 85110
(Cortex (cerebral) contusion with open intracranial wound, unspecified
state of consciousness) maps to ICD-10-CM code S0190XA (Unspecified
open wound of unspecified part of head, initial encounter), but there
is not a corresponding map from S019XA to 85110 in the ICD-10-CM-to-
ICD-9-CM GEM.
In the ICD-10-CM-to-ICD-9-CM GEM file, ICD-10-CM code
A0101 (Typhoid meningitis) maps to ICD-9-CM code 020 (Typhoid), but
there is not a corresponding map from 020 to A0101 in the ICD-9-CM to-
ICD-10-CM GEM.
After compiling the results from both GEM files, we created a list
of every billable ICD-10-CM code and whether each billable ICD-10-CM
code matched to an excluded ICD-9-CM code. We then moved from the list
of individual codes to a list of ICD-10-CM three-digit categories (for
example, ICD-10-CM code A0101 (Typhoid meningitis) is in ICD-10-CM
category A01 (Typhoid and paratyphoid fevers)) to present the final CJR
exclusions. We excluded ICD-10-CM categories in which 100 percent of
billable ICD-10-CM codes matched to an excluded ICD-9-CM code. There
are 574 such categories, and we consider these CD-10-CM categories
excluded based on a direct mapping from ICD-9-CM (see the ``Excluded
Part B ICD10 Direct'' worksheet tab in the final exclusions list file).
We did not exclude ICD-10-CM categories in which no billable ICD-10-CM
codes matched to an excluded ICD-9-CM code. There are 1,258 categories,
and we consider these categories not excluded based on a direct mapping
from ICD-9-CM. For those 71 categories in which only some billable ICD-
10-CM codes in the category matched to an excluded ICD-9-CM code after
mapping, we excluded 48 ICD-10-CM categories where all of the ICD-10-CM
codes in the category met one or more of our two final criteria for
updating the excluded codes on the exclusions list as described
previously in this section (see the ``Excluded Part B ICD10 Medical''
worksheet tab in the final exclusions list file). Specifically, the 48
ICD-10-CM categories that are excluded on this basis include ICD-10-CM
codes that meet one or more of the following two criteria:
Chronic conditions that are generally not affected by the
LEJR procedure or post-surgical care (such as removal of the prostate).
By this we mean that where a beneficiary's underlying chronic condition
would not be affected by the LEJR procedure, or where the beneficiary's
LEJR or post-LEJR care need not be managed differently as a result of
the chronic condition, then those items and services would not be
related and would not be included in the episode.
Acute clinical conditions not arising from existing
episode-related chronic clinical conditions or complications of LEJR
surgery from the episode (such as appendectomy).
We did not exclude the 23 other ICD-10-CM categories in which only
some billable ICD-10-CM codes in the category matched to an excluded
ICD-9-CM code after mapping because the ICD-10-CM codes in these
categories met one or more of the following criteria:
Directly related to the LEJR procedure itself (such as
loosening of the joint prosthesis) or the quality or safety of LEJR
care (such as post-surgical wound infection or venous thromboembolism).
For chronic conditions that may be affected by the LEJR
procedure or post-surgical care (such as diabetes). By this we mean
that where a beneficiary's underlying chronic condition would be
affected by the LEJR procedure, or where the beneficiary's LEJR or
post-LEJR care must be managed differently as a result of the chronic
condition, then those items and services would be related and would be
included in the episode.
When constructing prices for CJR, we will exclude Part B services
from target prices and from performance year episodes based on the
final excluded ICD-9-CM code ranges and final excluded ICD-10-CM code
categories as appropriate, based on the applicable version of ICD
diagnosis coding at the time the services was furnished.
In addition, we have addressed changes to the CJR model exclusion
list that result from revisions for the FY 2016 IPPS. From FY 2015 to
FY 2016, there were few changes to IPPS MS-DRGs that appear on the MS-
DRG excluded readmissions list for the CJR model. Specifically, the FY
2016 IPPS update contains changes to existing MS-DRGs 237 and 238,
Major Cardiovascular Procedures with MCC and without MCC, respectively,
which are on the exclusions list for CJR episodes. For discharges after
October 1, 2015, inpatient stays that previously would have been
assigned to MS-DRG 237 or 238 will be assigned to one of the following
MS-DRGs:
268 Aortic and Heart Assist Procedures Except Pulsation
Balloon with MCC.
269 Aortic and Heart Assist Procedures Except Pulsation
Balloon without MCC.
270 Other Major Cardiovascular Procedures with MCC.
271 Other Major Cardiovascular Procedures with CC.
272 Other Major Cardiovascular Procedures without CC/MCC.
We also note that the list of excluded readmissions posted with the
proposed rule inadvertently omitted MS-DRGs 490 and 491, which were
eliminated in the FY 2015 IPPS Final Rule and from which MS-DRGs 518,
519, and 520 were created in FY 2015. We are adding MS-DRGs 490 and 491
to the list of excluded readmissions posted with this final rule as we
will exclude readmissions in MS-DRGs 490 and 491 for the purposes of
calculating CJR target prices.
Additional information on the new MS-DRGs is provided in the FY
2016 IPPS final rule (80 FR 49371 through 49390, available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page.html). When
constructing prices for CJR, we will exclude readmissions for MS-DRGs
237 and 238 in historical data. We will also exclude readmissions for
MS-DRGs 268, 269, 270, 271, and 272 from performance year episodes.
Summary of Final Decisions: After consideration of the public
comments we received, we are adding the following new definition for
the CJR model: ``Provider of outpatient therapy services'' means a
provider or supplier furnishing--(1) Outpatient physical therapy
services as defined in Sec. 410.60 of this chapter, or (2) outpatient
occupational therapy services as defined in Sec. 410.59 of this
chapter, or (3) outpatient speech-language pathology
[[Page 73315]]
services as defined in Sec. 410.62 of this chapter.
We are finalizing our proposal, with modification to remove the
term ``independent'' preceding outpatient therapy services, that
related items and services included in CJR episodes, defined by all of
the clinical conditions requiring an admission to an IPPS hospital that
results in a discharge from MS-DRG 469 or 470 would be the following
items and services paid under Medicare Part A or Part B, after the
final exclusions are applied:
Physicians' services.
Inpatient hospital services (including readmissions), with
certain exceptions, as discussed later in this section.
IPF services.
LTCH services.
IRF services.
SNF services.
HHA services.
Hospital outpatient services.
Outpatient therapy services.
Clinical laboratory services.
DME.
Part B drugs.
Hospice.
Medicare spending for related items and services will be included
in the historical data used to set episode target prices, as well as in
the calculation of actual episode spending that would be compared
against the target price to assess the performance of participant
hospitals. In contrast, Medicare spending for unrelated items and
services (excluded from the episode definition) will not be included in
the historical data used to set target prices or in the calculation of
actual episode spending.
Additionally, we are finalizing our proposal to exclude inpatient
hospital readmissions based on the list of excluded MS-DRGs and Part B
services that report an excluded ICD-9-CM (or equivalent ICD-10-CM)
diagnosis code as the principal diagnosis based on the list posted on
the CMS Web site at: http://innovation.cms.gov/initiatives/cjr/. As we
proposed, we will exclude IPPS new technology add-on payments for
drugs, technology, and services and hemophilia clotting factors paid
separately during an inpatient hospitalization from the CJR model
episode definition. We are modifying our proposal and, under our final
policy, we will also exclude OPPS transitional pass-through payments
for devices. We are also finalizing our proposal to update the
exclusions list without rulemaking on an annual basis, at a minimum, to
reflect annual changes to ICD-CM coding and annual changes to the MS-
DRGs under the IPPS, as well as to address any other issues that are
brought to our attention by the public throughout the course of the
model test.
We will first develop potential exclusions list revisions of MS-
DRGs for readmissions and ICD-9-CM (or equivalent ICD-10-CM) diagnosis
codes for Part B services based on our assessment against the following
standards:
We would not exclude any items or services that are--
++ Directly related to the LEJR procedure itself (such as loosening
of the joint prosthesis) or the quality or safety of LEJR care (such as
post-surgical wound infection or venous thromboembolism); and
++ For chronic conditions that may be affected by the LEJR
procedure or post-surgical care (such as diabetes). By this we mean
that where a beneficiary's underlying chronic condition would be
affected by the LEJR procedure, or where the beneficiary's LEJR or
post-LEJR care must be managed differently as a result of the chronic
condition, then those items and services would be related and would be
included in the episode.
We would exclude items and services for--
++ Chronic conditions that are generally not affected by the LEJR
procedure or post-surgical care (such as removal of the prostate). By
this we mean that where a beneficiary's underlying chronic condition
would not be affected by the LEJR procedure, or where the beneficiary's
LEJR or post-LEJR care need not be managed differently as a result of
the chronic condition, then those items and services would not be
related and would not be included in the episode; and
++ Acute clinical conditions not arising from existing episode-
related chronic clinical conditions or complications of LEJR surgery
from the episode (such as appendectomy).
We will post the potential revised exclusions, which could include
additions to or deletions from the exclusions list, to the CMS Web site
to allow for public input on our planned application of these
standards, and then adopt changes to the exclusions list with posting
to the CMS Web site of the final revised exclusions list after our
consideration of the public input. Through the process for public input
on potential revised exclusions and then posting of the final revised
exclusions, we will also provide information to the public about when
the revisions would take effect and to which episodes they would apply.
These parameters could vary, depending on the relationship of exclusion
list changes to annual ICD-CM or MS-DRG changes or to other issues
brought to our attention by the public. While these revised exclusions
may correspond to the time when we provide new target prices for a
performance year, depending on the timing of when they would take
effect and to which episodes they would apply, we would recalculate
target prices as necessary.
The final definitions are set forth in Sec. 510.2 which has been
revised to remove proposed (b)(3) for inpatient hospital readmission
services because hospital readmissions are already referenced in
(b)(2). The remaining provisions under Sec. 510.2(b) have been
renumbered accordingly. The final policies for included services,
excluded services, and updating the lists of excluded services are set
forth in Sec. 510.200(b), (d), and (e). We note that Sec.
510.200(d)(3) has been renumbered to Sec. 510.200(d)(4) and Sec.
510.200(d)(3) added to state, ``Transitional pass-through payments for
medical devices as defined in Sec. 419.66 of this chapter.'' In
addition, Sec. 510.200(b)(10) has been modified to read ``Outpatient
therapy services.''
3. Duration of Episodes of Care
a. Beginning the Episode and Beneficiary Care Inclusion Criteria
While we proposed to identify LEJR episodes by an acute care
hospitalization for MS-DRG 469 and 470, we recognize that the
beneficiary's care for an underlying chronic condition, such as
osteoarthritis, which ultimately leads to the surgical procedure,
typically begins months to years prior to the surgical procedure.
Because of the clinical variability leading up to the joint replacement
surgery and the challenge of identifying unrelated services given the
multiple chronic conditions experienced by many beneficiaries, we did
not propose to begin the episode prior to the anchor hospitalization
(that is, the admission that results in a discharge under MS-DRG 469 or
470). In the proposed rule, we stated our belief that the opportunities
for care redesign and improved efficiency prior to the inpatient
hospitalization are limited for an episode payment model of this type
that focuses on a surgical procedure and the associated recovery once
the decision to pursue surgery has been made, rather than an episode
model that focuses on decision-making and management of a clinical
condition itself (such as osteoarthritis).
We proposed to begin the episode with an inpatient anchor
hospitalization for MS-DRG 469 or MS-DRG 470 in
[[Page 73316]]
accordance with the methodology described. This proposal to begin the
episode upon admission for the anchor hospitalization is consistent
with LEJR episode initiation under Model 2 of BPCI. While we did not
propose to begin the episode prior to the inpatient hospital admission,
we noted that our proposed episode definition includes all services
that are already included in the IPPS payment based on established
Medicare policies, such as diagnostic services (including clinical
diagnostic laboratory tests) and nondiagnostic outpatient services
related to a beneficiary's hospital admission provided to a beneficiary
by the admitting hospital, or by an entity wholly owned or wholly
operated by the admitting hospital (or by another entity under
arrangements with the admitting hospital), within 3 days prior to and
including the date of the beneficiary's admission. For more information
on the 3-Day Payment Window payment policies, see CMS Pub. 100-04,
Chapter 3, section 40.3 and Chapter 4, section 10.12.
We proposed that the defined population of Medicare beneficiaries
whose care will be included in CJR meet the following criteria upon
admission to the anchor hospitalization. We noted that these criteria
are also consistent with Model 2 of BPCI, as well as most other
Innovation Center models that do not target a specific subpopulation of
beneficiaries. We proposed that the LEJR episodes for all beneficiaries
in the defined population will be included in CJR (although we proposed
that certain episodes may be canceled for purposes of determining
actual episode payments for reasons discussed later in this final
rule), and we refer readers to section III.F.2. of this final rule for
further discussion of beneficiary notification and a beneficiary's
ongoing right under CJR to obtain health services from any individual
or organization qualified to participate in the Medicare program.
The beneficiary is enrolled in Medicare Part A and Part B
throughout the duration of the episode.
The beneficiary's eligibility for Medicare is not on the
basis of End Stage Renal Disease (ESRD).
The beneficiary must not be enrolled in any managed care
plan (for example, Medicare Advantage, Health Care Prepayment Plans,
cost-based health maintenance organizations).
The beneficiary must not be covered under a United Mine
Workers of America health plan, which provides healthcare benefits for
retired mine workers.
Medicare must be the primary payer.
Our proposal for inclusion of beneficiaries in CJR is as broad as
feasible, representing all those LEJR episodes for which we believe we
have comprehensive historical Medicare payment data that allow us to
appropriately include Medicare payment for all related services during
the episode in order to set appropriate episode target prices. For
beneficiaries whose care we proposed to exclude from the model, we are
unable to capture or appropriately attribute to the episode the related
Medicare payments because of Medicare's payment methodology. For
example, if a beneficiary is enrolled in a Medicare Advantage plan,
Medicare makes capitated payments (and providers do not submit complete
claims data to CMS), so we would not have a way to identify and
attribute the portion of those payments related to an LEJR episode.
More information on setting bundled payment target prices for episodes
under CJR is available in section III.C.4.b. of this final rule.
Including the broadest feasible array of Medicare beneficiaries'
admissions in the model would provide CMS with the most robust
information about the effects of this model on expenditures and quality
for beneficiaries of the widest variety of ages and comorbidities, and
allow the participant hospitals the greatest opportunity to benefit
financially from systematic episode care redesign because most Medicare
beneficiaries undergoing an LEJR procedure will be included in the
model and, therefore, subject to the policies we proposed.
We sought comment on our proposal on when to begin the CJR episode,
as well as to identify the care included for beneficiaries.
The following is a summary of the comments received and our
responses.
Comment: Most commenters agreed that the episode should begin with
the hospital admission for the LEJR procedure. Some of these commenters
noted that it would not be appropriate to include the period prior to
the hospital admission as it could include unrelated care and introduce
variability.
Several orthopedic surgeons commented that physician treatment and
care management begin prior to surgery, with the physician continuing
to manage care during surgery, following surgery, and throughout the
entire PAC period. These commenters were concerned that beginning the
episode with the hospital admission would result in beneficiaries
choosing and initiating care plans designed with their treating
physicians and later, when hospitalized, the beneficiaries would
receive conflicting care plans and, ultimately, experience adverse
outcomes.
Many commenters recommended starting the episode earlier than the
hospital admission. Some commenters recommended starting the episode
once the decision to pursue surgery is made, and some recommended
specific timeframes that ranged between four to eight weeks prior to
the surgery. Some commenters provided examples of presurgical services
that they have found improve patient outcome and satisfaction, improve
care quality, and reduce costs, such as comprehensive patient
evaluations to assess a beneficiary's overall condition and chronic
comorbid conditions; pre[hyphen]surgical counseling for
non[hyphen]medical pain management; home safety reviews;
post[hyphen]discharge planning; patient and caregiver education; weight
loss programs; and physical therapy. Some commenters requested that CMS
consider additional program rule waivers for the CJR model, beyond
those specifically proposed, to facilitate the provision of various
preoperative services and incentives that are not allowed or payable
under current Medicare rules.
A few commenters were concerned that starting the episode with the
hospital admission may lead to participants shifting costs to just
prior to the start of the episode to receive payments for those
services in addition to the bundle. To minimize gaming, they
recommended starting the episode once the surgery has been elected and
prior to the hospital admission, which is consistent with many private
sector models.
Response: We appreciate the interest expressed by the commenters in
starting comprehensive care coordination prior to the hospital
admission, and we recognize that the beneficiary's care which
ultimately leads to the LEJR surgery, including the physician-patient
relationship, often begins long before the surgical procedure. We also
appreciate concerns about providers unbundling services and shifting
costs to just prior to the episode, between the time the surgery has
been elected and the hospital admission. However, beginning the episode
too far in advance of the LEJR surgery would make it difficult to avoid
bundling unrelated items, and starting the episode prior to the
hospital admission is more likely to encompass costs that vary widely
among beneficiaries, which would make the episode more difficult to
price appropriately.
We appreciate commenters' suggestions of pre-surgical services and
[[Page 73317]]
programs that could support the continuum of care for CJR
beneficiaries. However, identifying a specific set of related
presurgical services to include in the episode, as recommended by some
commenters, would be of little value in the model because many of the
services that are typically necessary or the standard of care prior to
surgery are often included in the IPPS payment under the three day
payment window payment policies and are therefore already included in
the CJR episode. We note that some of the related services suggested by
commenters that are not typically included in the three-day payment
window are intended to more broadly manage the clinical condition(s)
that may have led to the LEJR, and as discussed previously in this
section, the CJR model is designed to focus on the surgical procedure
and the associated recovery. We also note that some of these suggested
services would be applicable to a subset of CJR beneficiaries and,
therefore, do not present a significant opportunity for improving
efficiency and redesigning care management for the typical beneficiary
receiving an LEJR.
We believe that using the date of admission as the start of the
episode is appropriate as hospitals are unlikely to shift related
services earlier than when is clinically indicated. With respect to
expanding the waivers to presurgical services that are not currently
covered or payable, we have finalized several waivers of Medicare
program rules as discussed in section III.C.11. of this final rule
specifically to assist participant hospitals in efficient and effective
care coordination and care management for CJR beneficiaries, and we do
not believe it would be consistent with the model design or otherwise
necessary for the model test to implement waivers for the preoperative
period. While we appreciate commenters' interest in providing
additional presurgical services that may enhance care coordination and
care management, the waivers of Medicare program rules are only
available if the beneficiary is in the episode at the time a service
under the waiver is furnished. We believe that allowing waivers in the
preoperative period prior to the anchor hospitalization, based on an
expectation that a beneficiary will be in a CJR Model episode, would
not be appropriate as there is no guarantee that the beneficiary will
actually initiate a CJR Model episode and qualify for services
furnished under a waiver.
For purposes of the CJR model, we continue to believe that
beginning the episode with the anchor hospitalization is most
appropriate due to the clinical variability leading up to the joint
replacement surgery and the challenge of distinguishing between related
and unrelated services. We also believe that beginning the episode with
the anchor hospitalization, and not prior to admission, would be easier
to administer and provide more consistent episodes for testing the CJR
Model. Therefore, we are finalizing our proposal to begin the episode
with admission to an inpatient anchor hospitalization for MS-DRG 469 or
MS-DRG 470 in accordance with the methodology described.
Comment: Commenters generally supported the proposed beneficiary
inclusion criteria as reasonable and consistent with other programs.
Some commenters suggested we exclude additional populations from CJR,
namely beneficiaries with serious conditions or acute diseases, such as
traumatic brain injury, spinal cord injuries, multiple-limb trauma,
amputations, moderate to severe strokes, severe neuromuscular and
musculoskeletal conditions, HIV infection, and cancer. A commenter
recommended that we design a separate model to address the needs of
patients with chronic conditions. A few commenters recommended
excluding all patients on hospice.
Many commenters recommended that if we did not exclude high risk
cases, we must develop more robust risk adjustment to account for
socioeconomic, clinical, or other risk factors that are out of the
hospital's control and impact patients' health and recovery. Some
commenters were concerned that without accurate risk adjustment,
hospitals will have an incentive to avoid higher-risk LEJR candidates.
A commenter cited a study that found significant differences in
Medicare spending per beneficiary during the 90-day episode based on
various patient characteristics, such as type of LEJR surgery;
emergency versus scheduled surgery; hip fractures versus degenerative
conditions; patients age 85 or older; patients with multiple
comorbidities, and patients who were dual eligible. The commenter
asserted that robust risk adjustment based on the risk profile of each
hospital's patients is essential for the CJR model because individual
hospitals will not have enough enrollment to spread their risk. A few
commenters recommended that at least the initial implementation of the
Model should exclude vulnerable populations with complicated or
intensive care needs until the CJR model demonstrates sufficient
quality outcomes and has developed accurate risk adjustments and
patient safeguards to ensure high-quality care for populations that the
commenters believe could face serious care disadvantages in the CJR
model.
Response: Many beneficiaries undergoing procedures that result in
discharge from MS-DRG 469 and 470 have underlying conditions that may
affect care throughout the episode or that may be influenced by the
surgical procedure that initiates the episode. We believe it is
important to include these beneficiaries in the model so that they can
benefit from care coordination and management throughout the episode,
and including the broadest feasible array of Medicare beneficiaries in
the CJR model provides participant hospitals with greater incentive to
redesign episode care. We also believe that patients in hospice would
benefit from the improved comprehensive care coordination incentivized
by the CJR model, and we refer readers to the related discussion in
section III.B.2. of this final rule regarding our policy to include
hospice claims in the episode.
We refer readers to section III.C.4.b. of this final rule for the
final policy that will risk stratify the target prices based on the
presence or absence of a hip fracture for CJR model beneficiaries. We
believe that this risk stratification policy addresses many of the
commenters' concerns that beneficiaries with serious conditions, acute
diseases, and chronic conditions are likely to need more costly care
throughout the CJR model episode that would have been inadequately paid
under our proposal because these beneficiaries are those most likely to
be present in the population receiving LEJR procedures emergently due
to a hip fracture.
Comment: Several commenters recommended that CMS exclude
beneficiaries who opted out of data sharing. These commenters asserted
that it would be virtually impossible to manage risk and improve
outcomes without claims data.
Response: As discussed in section III.E. of this final rule, we
have decided not to finalize our proposal to allow beneficiaries the
opportunity to decline having their data shared. We refer readers to
section III.E. of this final rule for additional discussion of data
sharing.
Comment: Some commenters suggested that CMS limit the CJR model to
beneficiaries that live within a limited distance from participant
hospitals so that the hospital would not be penalized for inadequately
managing the PAC of medically complex patients from remote or distant
locations.
Response: We expect that in some limited circumstances, participant
[[Page 73318]]
hospitals will have limited ability to coordinate care. However,
following the care coordination that takes place in the hospital, we
believe that much of the subsequent coordination for PAC can be
accomplished through telecommunications that do not require the patient
to remain within geographic proximity of the hospital. Moreover, the
design of the model does not preclude hospitals from coordinating care
with local providers outside of their immediate referral area. We also
note that we have finalized several waivers of Medicare program rules,
as discussed in section III.C.11. of this final rule, to facilitate
efficient and effective care coordination for beneficiaries in remote
or distant locations outside the immediate community. Therefore, we
will not exclude beneficiaries who are referred to participant
hospitals from other areas.
Comment: A commenter requested CMS to consider including
beneficiaries enrolled in MA plans in the model as they are likely to
be healthier and their inclusion will help hospitals maintain costs
within their targets. The commenter recognizes that the CJR payment
methodology makes it difficult to identify and attribute payment
related to the LEJR episode. However, the commenter asserts that
participant hospitals in states with a high percentage of beneficiaries
enrolled in MA plans are more likely to care for CJR patients with a
higher than average risk profile, which could make it more difficult
for a hospital to maintain costs within the target rate.
Response: We appreciate the commenter's interest in increasing the
population of beneficiaries included in the CJR model, and we recognize
that participant hospitals with higher risk CJR beneficiaries may find
it more challenging to maintain actual aggregate episode payments
within their target price. However, as discussed previously in this
section, Medicare makes capitated payments for beneficiaries enrolled
in MA plans, and providers do not submit complete claims data to CMS.
Therefore, we are finalizing our proposal not to include beneficiaries
enrolled in MA plans because we are unable to capture or appropriately
attribute to the episode the related Medicare payments.
Comment: A couple of commenters requested that CMS exclude episodes
where the LEJR surgery was furnished either by an opt-out physician,
because the principal procedure is not paid by Medicare, or by a non-
participating physician who does not accept assignment. They requested
that if such episodes are to be included, CMS should establish policies
under which participant hospitals can provide reconciliation payments
to and receive alignment payments from opt-out physicians as well as
non-participating physicians.
Response: Consistent with the BPCI policy, we do not believe it
would be appropriate to exclude beneficiaries from the CJR model if a
physician who opted out of Medicare pursuant to Sec. 405.420 or a non-
participating physician performs the LEJR surgery during the anchor
hospitalization. We would expect that beneficiaries undergoing LEJR
procedures, regardless of the Medicare participation or opt-out status
of the operating surgeon, would have similar needs for care
coordination and management throughout the episode period that extends
90 days post-hospital discharge, and we see no reason that hospitals
should not have the same quality and cost performance responsibility
for these episodes. We note that less than 15 percent of episode
spending, on average, would be expected to be paid for physicians'
services, with more than 80 percent of the episode payment made for
inpatient hospital and PAC services. Thus, for a beneficiary who
otherwise meets the CJR model's inclusion criteria, a CJR model episode
would begin at the time of the beneficiary's admission for the anchor
hospitalization, regardless of whether an opt-out physician or non-
participating physician performs the LEJR surgery during that stay.
We refer readers to section III.C.3. of this final rule for
discussion of the effect on reconciliation payments on services
furnished by non-participating and opt-out physicians and to section
III.C.10.a. of this final rule for discussion of issues related to
gainsharing payments and alignment payments.
Summary of Final Decisions: After consideration of the public
comments we received, we are finalizing our proposal to begin the
episode with admission for an inpatient anchor hospitalization for MS-
DRG 469 or MS-DRG 470 in accordance with the methodology described. We
also are finalizing our proposal as to the criteria for beneficiary
inclusion in the model as follows:
The beneficiary is enrolled in Medicare Part A and Part B
throughout the duration of the episode.
The beneficiary's eligibility for Medicare is not on the
basis of ESRD.
The beneficiary must not be enrolled in any managed care
plan (for example, Medicare Advantage, Health Care Prepayment Plans,
cost based health maintenance organizations).
The beneficiary must not be covered under a United Mine
Workers of America health plan, which provides healthcare benefits for
retired mine workers.
Medicare must be the primary payer.
The final policies for beginning an episode are set forth in Sec.
510.210(a). The final policies for beneficiary inclusion are set forth
in Sec. 510.205.
b. Middle of the Episode
We proposed that once the episode begins for a beneficiary whose
care is included, the episode continues until the end as described in
the next section of this final rule, unless the episode is canceled
because the beneficiary no longer meets the same inclusion criteria
proposed for the beginning of the episode at any point during the
episode. When an episode is canceled, we proposed that the services
furnished to beneficiaries prior to and following the episode
cancellation will continue to be paid by Medicare as usual but we will
not calculate actual episode spending that would otherwise under CJR be
reconciled against the target price for the beneficiary's care (see
section III.C.6. of the proposed rule). As discussed in section
III.C.11.a. of the proposed rule, if the beneficiary is in the episode
at the time the service under the waiver is furnished, the waiver is
available, even if the episode is later canceled.
In the proposed rule, we stated our belief that it would be
appropriate to cancel the episode when a beneficiary's status changes
during the episode such that they no longer meet the criteria for
inclusion because the episode target price reflects full payment for
the episode, yet we would not have full Medicare episode payment data
for the beneficiary to reconcile against the target price.
In addition, we proposed that the following circumstances would
also cancel the episode:
The beneficiary is readmitted to an acute care hospital
during the episode and discharged under MS-DRG 469 or 470 (in this
case, the first episode would be canceled and a new LEJR episode would
begin for the beneficiary).
The beneficiary dies during the anchor hospitalization.
The beneficiary initiates an LEJR episode under BPCI
Models 1, 2, 3 or 4.
In the case of beneficiary death during the anchor hospitalization,
we stated our belief that it would be appropriate to cancel the episode
as there are limited efficiencies that could be expected during the
anchor hospitalization itself. In the case of beneficiary readmission
during the first
[[Page 73319]]
CJR episode for another LEJR (typically a planned staged second
procedure), we stated our belief that it would not be appropriate to
include two episodes in the model with some time periods overlapping,
as that could result in attribution of the Medicare payment for 2
periods of PAC to a single procedure.
We sought comment on our proposals to cancel episodes once they
have begun but prior to their end.
The following is a summary of the comments received and our
responses.
Comment: Commenters were generally supportive of our proposals for
canceling the episode, though many recommended additional circumstances
for canceling the episode, such as adverse events which are beyond the
hospital's control. Many commenters, including MedPAC, recommended that
CMS cancel the episode if the beneficiary dies at any time during the
episode, arguing that such cases could be extremely low or high cost
and spending is, therefore, not typical. These commenters recommended
that all episodes that end in patient death should be excluded from the
calculations of the target price and reconciliation amounts, not just
those episodes where patients die during the initial hospitalization as
CMS proposed, as this type of episode of care could skew the data.
Given that hospitals are held financially responsible for the entire
90-day episode, a few commenters suggested excluding all episodes with
death for consistency and administrative simplicity. A commenter
observed that a deceased beneficiary no longer meets all of the
beneficiary inclusion criteria, and on that basis recommended that CMS
cancel the episode when the patient dies. A commenter suggested also
canceling episodes for any beneficiaries that die during the 30 day
post-episode monitoring period. Some commenters suggested that other
circumstances should cancel an episode, such as a beneficiary
geographic move, change in beneficiary residence from a home to a
facility, and loss of the beneficiary to follow up care.
Response: While beneficiary deaths during LEJR episodes are
uncommon, we expect them to vary unpredictably across hospitals and,
therefore, we agree that it would be appropriate to cancel episodes
under these circumstances. We also agree that canceling all episodes
during which a beneficiary dies is consistent with the otherwise
applicable episode duration as the episode would not extend to 90 days
hospital post-discharge. However, we would include episodes where the
patient dies during the 30 days post-episode as this would not affect
the variability of episode spending, and it would be appropriate to
monitor for beneficiary death during the immediate post-episode period.
We expect some limited circumstances where participant hospitals
will have limited ability to coordinate care. However, we believe that
participant hospitals will be incentivized to seek creative solutions
that do not rely on in-person services, and we are finalizing our
proposal that all other beneficiary episodes would remain in the CJR
model, regardless of where the beneficiary is located. Payment for
beneficiaries in these circumstances will be reflected in the target
prices based on historical utilization.
Comment: Commenters urged CMS to hold beneficiaries and providers
financially harmless for care received as part of a CJR episode if the
episode is later canceled. A few commenters supported the continued
application of Medicare program waivers if an episode is canceled when
a beneficiary's status changes, and a few commenters were unclear if
waivers apply to beneficiaries who are retrospectively identified as
ineligible for CJR program waivers due to changes in coverage status.
Response: As discussed previously in this section, we proposed that
if the beneficiary is in the episode at the time the service under the
program rule waiver is furnished, the waiver is available, even if the
episode is later canceled. If the beneficiary is not in the episode at
the time the service under the waiver is furnished, financial liability
for these services would be determined in accordance with the policies
outlined in the Medicare Claims Processing Manual (Pub. L. 100-04),
Chapter 30. As we gain experience with CJR, we may revisit this issue
in future rulemaking. We refer readers to section III.C.11. of this
final rule for additional discussion and our finalized policy to apply
waivers of programs rules if the beneficiary is in the episode at the
time the service under the waiver is furnished, even if the episode is
later canceled.
Comment: A commenter was concerned that initiation of a BPCI
episode would cancel a CJR episode, when the CJR episode begins first.
The commenter also requested clarification whether a BPCI episode for a
different clinical condition, such as cardiac procedures, would cancel
a CJR LEJR episode.
Response: We proposed and are finalizing our policy that a CJR
episode would be canceled when a beneficiary initiates an LEJR episode
under BPCI Models 1, 2, 3, or 4. A CJR beneficiary initiating a
different clinical episode under BPCI Models 1, 2, 3, or 4 would remain
in a CJR episode. We refer readers to section III.C.7.b. of this final
rule for additional discussion of CJR beneficiary overlap with BPCI
episodes.
Summary of Final Decisions: After consideration of the public
comments we received, we are finalizing our proposal to cancel episodes
once they have begun but prior to their end if the beneficiary no
longer meets the same inclusion criteria proposed for the beginning of
the episode at any point during the episode. We also are finalizing our
proposal that the following circumstances would also cancel an episode:
The beneficiary is readmitted to a participant hospital
during the episode and discharged under MS-DRG 469 or 470.
The beneficiary initiates an LEJR episode under BPCI
Models 1, 2, 3 or 4.
We are modifying our proposal for canceling an episode when a
beneficiary dies during an anchor hospitalization. Under our final
policy, the following circumstance would also cancel an episode:
The beneficiary dies at any time during the episode.
The final policies for cancellation of an episode are set forth in
Sec. 510.210(b). We note that Sec. 510.210(b)(4) has been revised to
state that an episode is canceled if the beneficiary dies during the
episode.
c. End of the Episode
LEJR procedures are typically major inpatient surgical procedures
with significant associated morbidity and a prolonged recovery period
that often is marked by significant PAC needs, potential complications
of surgery, and more intense management of chronic conditions that may
be destabilized by the surgery. In light of the course of recovery from
LEJRs for Medicare beneficiaries, we proposed that an episode in the
CJR model end 90 days after discharge from the acute care hospital in
which the anchor hospitalization (for MS-DRG 469 or 470) took place.
Hereinafter, we refer to the proposed CJR model episode duration as the
``90-day post-discharge'' episode. To the extent that a Medicare
payment for included services spans a period of care that extends
beyond the episode duration, we proposed that these payments would be
prorated so that only the portion attributable to care during the fixed
duration of the episode is attributed to the episode spending.
We noted that for the vast majority of beneficiaries undergoing a
hip or knee joint replacement, a 90-day post-
[[Page 73320]]
discharge episode duration encompasses the full transition from acute
care and PAC to recovery and return to activities. We stated our belief
that the 90-day post-discharge episode duration encourages acute care
hospitals, physicians, and PAC providers to promote coordinated,
quality care as the patient transitions from the inpatient to
outpatient settings and the community.
In proposing the 90-day post-discharge duration for LEJR episodes
in CJR, we took into consideration the literature regarding the
clinical experiences of patients who have undergone THA or TKA
procedures. In 2007-2008, the 30-day all-cause readmission rate for
primary THA among Medicare beneficiaries was 8.5 percent, while the 90-
day all-cause readmission rate was 11.9 percent, indicating that while
the rate of readmission begins to taper after 30 days, readmissions
continue to accrue throughout this 90 day window.\6\ In single center
studies, Schairer et al found unplanned 30-day hospital readmission
rates were 3.5 percent and 3.4 percent and unplanned 90-day hospital
admission rates were 4.5 percent and 6 percent for primary THA and TKA,
respectively, demonstrating that the risk of readmission remains
significantly elevated from 30 through 90 days post-hospital
discharge.\7\ \8\ Further exploring the reasons for unplanned admission
for TKAs within 90 days of a knee replacement procedure, Schairer et al
found that 75 percent were caused by surgical causes such as
arthrofibrosis and surgical site infection. Additional information on
the common reasons for hospital readmission following TKA or THA can be
obtained from The American College of Surgeons National Surgical
Quality Improvement Program.\9\ These data identified the top 10
reasons for readmission within 30 days of a hip or knee arthroplasty:
---------------------------------------------------------------------------
\6\ Cram P, Lu X, Kates SL, Singh JA, Li Y, Wolf BR. Total Knee
Arthroplasty Volume, Utilization, and Outcomes Among Medicare
Beneficiaries, 1 991-2010. JAMA. 2012;308(12):1227-1236.
doi:10.1001/2012.jama.11153.
\7\ Schairer WW, et al. Causes and frequency of unplanned
hospital readmission after total hip arthroplasty. Clin Orthop Relat
Res. 2014 Feb;472(2):464-70. doi: 1 0.1007/s11999-013-3121-5.
\8\ Schairer WW, et al. What are the rates and causes of
hospital readmission after total knee arthroplasty? Clin Orthop
Relat Res. 2014 Jan;472(1):181-7. doi: 1 0.1007/s11999-013-3030-7.
\9\ Merkow RP, Ju MH, Chung JW, et al. Underlying Reasons
Associated With Hospital Readmission Following Surgery in the United
States. JAMA. 2015;313(5):483-495. doi:10.1001/jama.2014.18614.
---------------------------------------------------------------------------
Surgical site infections (18.8 percent).
Prosthesis issues (7.5 percent).
Venous thromboembolism (6.3 percent).
Bleeding (6.3 percent).
Orthopedic related (5.1 percent).
Pulmonary (3.2 percent).
Cardiac (2.4 percent).
CNS or CVA (2.4 percent).
Ileus or Obstruction (2.3 percent).
Sepsis (2.1 percent).
In addition, the authors concluded that ``readmissions after
surgery were associated with new post-discharge complications related
to the procedure and not exacerbation of prior index hospitalization
complications, suggesting that readmissions after surgery are a measure
of post-discharge complications.'' Finally, with regard to the
potential for readmission for joint replacement revision within a 90-
day post-discharge episode, in a twelve-year study on Medicare patients
conducted by Katz, et al., the risk of revision after THA remained
elevated at approximately 2 percent per year for the first eighteen
months and then 1 percent per year for the remainder of the follow-up
period.\10\ This study suggests that a longer episode, as opposed to a
shorter episode, is more likely to simulate the increased risk of
revision LEJR patients face.
---------------------------------------------------------------------------
\10\ Katz JN, et al. Twelve-Year Risk of Revision After Primary
Total Hip Replacement in the U.S. Medicare Population. J Bone Joint
Surg Am. 2012 Oct 1 7; 94(20): 1 825-1832. doi: 1 0.2106/
JBJS.K.00569.
---------------------------------------------------------------------------
In order to address the complication rates associated with elective
primary total hip or knee arthroplasty, we developed an administrative
claims-based measure (for a detailed description of the measure see
section III.D. of the proposed rule). During the development of the
Hospital-level Risk-Standardized Complication Rate (RSCR) following
elective primary THA or TKA or both, complications of elective primary
total hip or knee replacement were identified to occur within specific
timeframes.\11\ For example, analyses done during the development of
the measure as well as Technical Expert Panel opinion found that--(1)
Mechanical complications and periprosthetic joint infection/wound
infection are still attributable to the procedure for the 90 days
following admission for surgery; (2) death, surgical site bleeding, and
pulmonary embolism are still likely attributable to the hospital
performing the procedure for up to 30 days; and (3) medical
complications of acute myocardial infarction (AMI), pneumonia, and
sepsis/septicemia/shock are more likely to be attributable to the
procedure for up to 7 days.
---------------------------------------------------------------------------
\11\ Hospital Quality Initiatives. Measure Methodology.
Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. See Hip and Knee Arthroplasty Complications zip
file under downloads. Accessed on April 10, 2015.
---------------------------------------------------------------------------
Other factors further supporting a 90-day post-discharge episode
duration are the elevated risk of readmission throughout this time
period, as well as the fact that treatment for pneumonia is considered
by American Thoracic Society guidelines to be ``health care-
associated'' if it occurs up to 90 days following an acute care
hospitalization of at least 2 days.\12\ According to the American
Academy of Orthopedic Surgeons, patients undergoing total hip
replacement should be able to resume most normal light activities of
daily living within 3 to 6 weeks following surgery.\13\ In a small
randomized controlled trial of two approaches to hip arthroplasty,
average time to ambulation without any assistive device was 22-28
days.\14\ According to a 2011 systematic review of studies evaluating
physical functioning following THA, patients have recovered to about 80
percent of the levels of controls by 8 months after surgery.\15\
---------------------------------------------------------------------------
\12\ Guidelines for the management of adults with hospital-
acquired, ventilator-associated, and healthcare-associated
pneumonia. American Thoracic Society, Infectious Diseases Society of
America. Am J Respir Crit Care Med. 2005;171(4):388.
\13\ http://orthoinfo.aaos.org/topic.cfm?topic=A00377.
\14\ Taunton MJ, et al. Direct Anterior Total Hip Arthroplasty
Yields More Rapid Voluntary Cessation of All Walking Aids: A
Prospective, Randomized Clinical Trial The Journal of Arthroplasty.
Volume 29, Issue 9, Supplement, September 2014, Pages 169-172.
\15\ Vissers MM, et al. Recovery of Physical Functioning After
Total Hip Arthroplasty: Systematic Review and Meta-Analysis of the
Literature. Physical Therapy May 2011 vol. 91 no. 5 615-629.
---------------------------------------------------------------------------
We also refer readers to a study by the Assistant Secretary for
Planning and Evaluation (ASPE) in the U.S. Department of Health and
Human Services that assessed the mean payments for acute care, PAC, and
physician services grouped in the MS-DRG 470.\16\ In this study, CMS
payment for services following an MS-DRG 470 hospitalization were
concentrated within the first 30 days following discharge, with
plateauing of payments between 60- or 90-days post-discharge.
---------------------------------------------------------------------------
\16\ Post-Acute Care Episodes Expanded Analytic File. Assistant
Secretary for Planning and Evaluation. U.S. Department of Health and
Human Services. April 2011.
---------------------------------------------------------------------------
[[Page 73321]]
[GRAPHIC] [TIFF OMITTED] TR24NO15.001
Finally, payment and length of stay analyses found the average
length of stay in PAC during a 90-day post-discharge episode for MS-DRG
470 to be 47.3 days, indicating that a longer period post-discharge of
90 days is reasonable as a proposal to end the episode of care.\17\ We
noted that these analyses did not include any time between hospital
discharge and the start of PAC.
---------------------------------------------------------------------------
\17\ Analysis of Post-Acute Care Episode Definitions File.
http://innovation.cms.gov/initiatives/bundled-payments/learning-area.html.
Table 6--Cost and Length of Stay Statistics for MS-DRG 470 for Various Episode Durations
----------------------------------------------------------------------------------------------------------------
Statistics for DRG 470 (2006 data) 30-day episode 60-day episode 90-day episode
----------------------------------------------------------------------------------------------------------------
Mean Medicare spending per hospital discharge................... $18,838 $20,343 $21,125
(acute+PAC+physician)...........................................
Mean payment for anchor hospitalization......................... $10,463 $10,463 $10,463
Mean payment for PAC............................................ $6,835 $8,339 $9,122
Mean payment for physicians (during anchor hospitalization)..... $1,540 $1,540 $1,540
Mean payment for readmission (includes all PAC users, even if no $550 $929 $1,242
readmission occurs during the episode).........................
Mean length of stay (LOS) for PAC............................... 25.5 days 39.6 days 47.3 days
----------------------------------------------------------------------------------------------------------------
Note: Data are per PAC user (88% of beneficiaries hospitalized under MS-DRG 470 are discharged to PAC). PAC
users are defined as beneficiaries discharged to SNF, IRF, or LTCH within 5 days of discharge from the index
acute hospitalization, or discharged to HHA or hospital outpatient therapy within 14 days of discharge from
the index acute hospitalization. Mean LOS for PAC does not include any gap between hospital discharge date and
start of PAC.
Other tests of bundled payment models for hip and knee replacement
have used 90-day post-discharge episodes.\18\ We also noted that
despite BPCI Model 2 allowing participants a choice between 30-, 60-,
or 90-day post-discharge episodes, over 86 percent of participants have
chosen the 90-day post-discharge episode duration for the
[[Page 73322]]
LEJR episode. Furthermore, a 90-day post-discharge episode duration
aligns with the 90-day global period included in the Medicare Physician
Fee Schedule (MPFS) payment for the surgical procedure.
---------------------------------------------------------------------------
\18\ Ridgely MS, et al. Bundled Payment Fails To Gain A Foothold
In California: The Experience Of The IHA Bundled Payment
Demonstration. Health Affairs, 33, no.8 (2014):1345-1352.
---------------------------------------------------------------------------
We also considered proposing a 60-day post-discharge episode
duration, but the full transition of care following LEJR would exceed
this window for some beneficiaries, especially those who are discharged
to an institutional PAC provider initially and then transition to home
health or outpatient therapy services for continued rehabilitation.
According to a report from ASPE on Medicare beneficiaries receiving PAC
following major joint replacement in 2006, 13 percent first receive SNF
services and then receive HHA services--with a total mean episode
duration of 56.8 days.\19\ An additional 9.2 percent receive HHA
services first and then receive outpatient therapy services--with a
total mean episode duration of 78.7 days. Finally, 6.7 percent receive
IRF services first and then HHA services (total mean length of stay
55.3 days), and 4.8 percent receive SNF services first and then
outpatient therapy services (total mean length of stay 71.5 days). The
remainder only receives one type of PAC.
---------------------------------------------------------------------------
\19\ Examining Post-Acute Care Relationships in an Integrated
Hospital. Assistant Secretary for Planning and Evaluation. U.S.
Department of Health and Human Services. February 2009
---------------------------------------------------------------------------
Therefore, in order to be inclusive of most possible durations of
recovery, and services furnished to reach recovery, we proposed the 90-
day post-discharge episode duration for CJR. We stated our belief that
beneficiaries will benefit from aggressive management and care
coordination throughout this episode duration, and hospitals will have
opportunities under CJR to achieve efficiencies from care redesign
during the 90-day post-discharge episode period.
We sought comment on our proposal to end the episode 90 days after
the date of discharge from the anchor hospitalization, as well as on
the alternative we considered of ending the CJR episode 60 days after
the date of discharge.
The following is a summary of the comments received and our
responses.
Comment: Most commenters supported the 90-day post-discharge
episode duration. Many of these commenters provided rationales for
supporting the 90-day duration (as compared to 60 days or other shorter
durations), such as: It is a clinically appropriate length to manage an
LEJR to recovery; it creates strong incentives for collaboration for
multiple providers across the care continuum that improves care
transitions and care coordination; it will promote better long-term
results; it aligns with quality measures; and it is the most popular
timeframe selected for BPCI Model 2. Some of these commenters asserted
that a shorter duration is not sufficiently long to capture the vast
majority of issues arising directly from LEJR procedures and could put
beneficiary care at risk by encouraging providers to reduce utilization
inappropriately or shift utilization outside of an episode.
A few commenters supported a 90-day episode duration, but
recommended that we revise the 90-day post-discharge episode duration
to begin from the date of surgery instead of discharge, thereby
aligning the episode with the MPFS global surgical period and billing
policies. A commenter who appeared to believe that CMS proposed to
begin the CJR episode immediately after discharge from the anchor
hospitalization and extend the episode 90 days post-hospital discharge,
rather than upon admission for the anchor hospitalization as CMS
actually proposed, asserted that beginning the episode after hospital
discharge would make it difficult to understand and account for patient
acuity changes within the episode in the post-discharge period as the
hospital length-of-stay is related to the PAC acuity of the beneficiary
following hospital discharge, especially if the beneficiary has
comorbidities. In other words, the commenter believed that
beneficiaries with comorbidities would be more likely to have longer
anchor hospitalizations and associated higher intensity of PAC
services, yet CMS would not understand these relationships if the
anchor hospitalization was not included in the episode.
Several commenters supported a 60-day post-discharge episode
duration because LEJR patients are nearly fully recovered within 60
days. Some commenters asserted that PAC services associated with LEJR
rarely occur after 60 days post-discharge; some commenters cited data
that the majority of services for patients with LEJR surgery occur
within two months of discharge with only a 6.2 percent change in the
total cost of an episode between a 60-day episode and a 90-day episode.
Some of these commenters asserted that a 60-day episode would be
sufficient to evaluate quality and cost, and a longer duration would
increase the financial risk for hospitals without providing significant
value to CMS. Some commenters asserted that a 90-day duration increases
the risk that unrelated random events that occur well after surgery
will disadvantage the hospitals by unfairly impacting participants'
performance.
Some commenters recommended a hybrid approach, with every service
within the first 30 days post-discharge assumed to be related unless
specifically excluded, and services in days 31-90 included only if they
meet specified criteria for relatedness.
Some commenters recommended that the episode end prior to 60 days
post-discharge. A commenter recommended an episode length of 45 to 60
days, asserting that hospital admissions past the 45 to 60 day window
would be for chronic medical admissions that are unrelated to the LEJR
procedure. A few commenters recommended that we limit the episode to 30
days citing various rationales, such as: A SNF stay must commence
within 30 days of a hospitalization; 30 days better aligns with other
quality improvement initiatives such as readmissions; analyses by
Medicare Payment Advisory Commission (MedPAC) and the Congressional
Budget Office that found that the majority of a bundled payment's
episode costs are incurred during the first 30 days; and hospitals may
find it difficult to manage follow-up care after 30 days if patients
have more than one residence. Several commenters asserted that multiple
factors can exacerbate comorbidities in the period beyond 30 days post-
operatively, and a model of longer duration that broadly defines
related services could result in participant hospitals being more
cautious about selecting patients for LEJR and complex patients being
discouraged from seeking LEJR procedures in a participant hospital. A
few of these commenters noted that Tennessee and Arkansas only include
30 days post-discharge for unrelated chronic conditions in their
bundled payment episodes. A commenter shared its experience that, while
nearly all patients are diligent about keeping 14-day and 30-day post-
operative appointments, those with good outcomes are less likely to
return for appointments at 90 days and beyond, resulting in potentially
skewed outcomes as patients with complications are much more likely to
keep a follow-up appointment at 90 days.
Some commenters recommended giving participant hospitals the
flexibility to define the episode duration, either as a duration for
all of a participant hospital's LEJR episodes, or to choose a duration
based on a patient's clinical condition and comorbidities. A couple of
commenters
[[Page 73323]]
recommended that if CMS offers participants the option to choose the
duration, consistent with BPCI, CMS should lower the discount
percentage for those willing to take the longer episodes. A commenter
disagreed with CMS' cited rationale of the operational simplicity of a
single duration for all LEJR episodes by noting that BPCI Model 2
operationalized a variety of different bundles and gave participants
the choice of three durations for 48 different clinical episodes.
Other commenters suggested even longer episode durations. A
commenter recommended increasing the episode duration to 150 days post-
discharge to promote better long-term results and reduce the likelihood
of delaying care beyond the end of the episode, specifically urging CMS
to adopt a longer episode period for certain clinically-complex
subpopulations with predictably longer recovery timeframes. For outcome
and quality measurement purposes, some commenters recommended that
participant hospitals be held accountable for a longer period, with
suggestions of six months, a year, and even two to three years. A
commenter recommended increasing the episode duration to two years to
better manage the improvements for the entirety of the treatment. A
commenter recommended increasing the episode duration to five years to
account for the late effects of sub-optimal implant selection.
Response: We appreciate the support of many commenters for the
proposed 90-day post-hospital discharge CJR model episode duration. We
agree with the commenters that this relatively long episode duration
should capture the great majority of health care services that are
related to the episode, as well as the beneficiary's return to function
and short- and medium-term health outcomes. We believe this episode
duration provides participant hospitals with a substantial period of
time in which to work to improve the quality and efficiency of LEJR
episode performance for beneficiaries who undergo LEJR surgery at their
hospital. We have substantial BPCI Model 2 experience with Awardees
engaged in testing 90-day LEJR episodes, and note that the vast
majority of Awardees have selected the 90-day episode duration,
compared to the 30-day and 60-day alternative durations that are
available in the model. Our goal is to incentivize efficient high
quality care that returns people to the community, and we believe that
a 90-day post-discharge duration reflects a full continuum of clinical
services and transition of care following LEJR procedures for the
average beneficiary, at which time the patient's functional recovery is
relatively complete and the patient is able to resume most normal
activities of daily living.
Due to the concentration of Medicare spending in the earlier part
of the episode, we also believe that a 90-day episode duration only
nominally increases the hospital's financial risk when compared to 30
or 60 days. While we understand that uncommon events during the 90-day
episode may occur for an individual beneficiary, resulting in an
unanticipated or unavoidable need for costly health care services, we
believe that our episode definition that excludes unrelated items and
services and our payment policies, namely the adjustment for high
payment episodes and stop-loss policies discussed in sections III.C.3.
and III.C.8. of this final rule, provide sufficient protections for
participant hospitals from undue financial responsibility for the care
of unrelated clinical conditions as well as for unusual circumstances.
We also believe that shorter episode durations may incur a higher
clinical risk for beneficiaries if participants delay services beyond
the episode, and the risk to beneficiaries of this response by
providers to episode payment that can be minimized by the longer 90-day
episode duration that we proposed. We refer readers to sections
III.F.3. and 5. of this final rule for discussion of our plans to
monitor for access to care and delayed care.
In response to those commenters requesting a hybrid approach where
CMS would include a broader set of related services in the 30 days
following discharge from the anchor hospitalization and a more limited
set of related services from days 31 to 90 because of the closer
clinical link of a beneficiary's clinical conditions in the first 30
days to the events during the anchor hospitalization itself, we
emphasize that the CJR model is an episode payment model where many
Medicare beneficiaries who receive PAC services as part of their post-
operative recovery from surgery will also have underlying health
conditions that may be affected by the surgery itself and care
throughout the recovery period and that require attentive, flexible
management if good health outcomes are to be achieved. Because PAC
services are designed to be comprehensive in nature, we believe that
the same Part A and Part B services should be included throughout the
episode duration because PAC providers should broadly address the
beneficiary's health care needs in high quality, efficient episodes,
even though the anchor hospitalization itself may be more remote from
the beneficiary's health needs as the time from hospital-discharge
increases. As discussed in section III.A.3. of this final rule, we have
identified hospitals as the financially responsible organization for
the episode, although episode quality and cost performance will clearly
be related in part to the quality and efficiency of care furnished by
other providers and suppliers treating the beneficiary throughout the
episode. We expect that participant hospitals will develop the care
pathways and partnerships with other providers and suppliers necessary
for the hospital to be successful in this responsibility, and this
model provides a variety of tools that should be helpful to participant
hospitals, such as waivers of Medicare program rules, the opportunity
to engage in certain financial arrangements, and the ability to offer
certain beneficiary incentives (as discussed in sections III.C.11. and
III.C.10. of this final rule, respectively).
We appreciate the interest of some commenters in significantly
longer episodes than the 90 days post-hospital discharge period we
proposed, in order to include the longer recovery period that some
beneficiaries may require as well as to account for longer term health
outcomes, because the timing or frequency of joint replacement
revisions may be related to implant selection, surgical technique, or
other aspects of the primary joint replacement procedure. However, as
previously noted, we believe that a 90-day post-discharge duration
reflects a full continuum of clinical services and transition of care
following LEJR procedures for the average CJR beneficiary, and we do
not believe it would be an appropriate test of the model to extend the
CJR episode duration beyond 90 days post-hospital discharge to reflect
the longer recovery needed by some beneficiaries. Moreover, as noted
previously in this section, the CJR model focuses on the surgical
procedure and the associated recovery, and at this time, we are not
testing a model of longer term outcomes. Therefore, we are not going to
incorporate a longer time period in the episode, and will not include
periods beyond then, other than to monitor the 30-day post-episode
period. The 30-day post-episode period is discussed in section
III.C.8.d. of this final rule, where we describe the CJR model policy
that holds participant hospitals financially responsible for
significantly increased Medicare Parts A and B spending in the 30 days
immediately following the end of the episode. We note that the
[[Page 73324]]
evaluation described in section IV. of this final rule will focus on a
variety of key topics including potential unintended consequences such
as cost shifting beyond the CJR model episode period and stinting on
medically necessary and appropriate care. As such, CMS anticipates the
examination of claims submitted beyond the 90-day episode will be
incorporated in the evaluation strategy. Finally, we maintain that
allowing for multiple durations would be administratively complex for a
model of this scope as it would be akin to implementing multiple models
concurrently, each with its own customized payment calculations, risk
adjustments, and other elements. We do not believe a variable approach
such as is used in BPCI, which is a voluntary model, is appropriate for
this large test of LEJR episode payment for all IPPS hospitals in the
selected MSAs, as it would greatly increase the administrative
complexity of the CJR model. We also believe that a standard duration
for all episodes is important for this test of LEJR episode payment in
providing us with a larger sample of episodes of the same duration from
which we can learn.
Regarding the request to align the CJR model episode duration with
the MPFS by beginning the 90-day duration on the date of surgery,
rather than on the date of discharge from the hospital, we do not agree
with this suggestion. We believe that the 90-day global surgical period
for LEJR procedures under the MPFS lends support for an episode
duration under the CJR model that is similar, because beneficiaries
have a significant post-operative recovery period throughout which
close care coordination and management among treating providers is
important to beneficiary return to function. The MPFS global payment
policy sets an expectation that the operating surgeon plays a
significant role in caring for beneficiaries in the typical case that
extends up to 90 days following surgery. However, using this same 90-
day accounting methodology under the CJR episode would lead to model
episodes including variable post-discharge lengths because the duration
of the anchor hospitalization, which can vary substantially, would
count toward the 90 days. We are interested in testing under the CJR
model an episode duration that is most likely to cover the time for the
beneficiary's full recovery and return to the community so we believe
that including a standard length of 90 days post-hospital discharge is
the best way to ensure that each CJR beneficiary's episode includes the
same length of post-hospital discharge recovery in the episode. We do
not believe the minor 90-day definitional differences between this
model and the MPFS global billing policies for LEJR procedures should
create significant problems for physicians collaborating with
participant hospitals in the episode care of CJR model beneficiaries.
In response to the commenter concerned that starting the bundle
after hospital discharge would make it difficult to account for patient
acuity changes post-discharge under the CJR model, we want to emphasize
that the CJR model episode actually begins on the day of admission for
the anchor hospitalization and extends 90 days post-hospital discharge,
with the day of hospital discharge counting as the first day in the 90-
day post-hospital discharge period. Thus, the episode includes the full
anchor hospital length-of-stay that may affect changes in patient
acuity in the post-discharge period. We note that according to this
episode duration definition, episodes for individual beneficiaries will
have a variable total length that depends on the length of the anchor
hospitalization. For example, the average length-of-stay for MS-DRG 470
is 3 days, so the average CJR model episode length for an individual
beneficiary would be 92 days. The average length-of-stay for MS-DRG 569
is 6 days, so the average CJR model episode length for an individual
beneficiary would be 95 days. Despite their variable total length, all
CJR model episodes will include the complete anchor hospitalization and
90 days post-hospital discharge and, therefore, will include all
related items and services furnished to the beneficiary throughout the
episode, including those provided to address beneficiary acuity changes
during the hospitalization and post-discharge period.
Summary of Final Decisions: After consideration of the public
comments we received, we are finalizing our proposal to end the episode
90 days after discharge from the anchor hospitalization. We are
revising the definition of Episode of care to clarify that the day of
discharge itself counts as the first day of the post-discharge period
and adding the same clarification to Sec. 510.210(a)
The final definitions policies for ending an episode are set forth
in Sec. 510.2 and
Sec. 510.210(a).
C. Methodology for Setting Episode Prices and Paying Model Participants
Under the CJR Model
1. Background
As described in section II.B. of the proposed rule, we proposed to
use the CJR episode payment model to incentivize participant hospitals
to work with other health care providers and suppliers to improve
quality of care for Medicare beneficiaries undergoing LEJR procedures
and post-operative recovery, while enhancing the efficiency with which
that care is provided. We proposed to apply this incentive by paying
participant hospitals or holding them responsible for repaying Medicare
based on their CJR episode quality and Medicare expenditure
performance. The following sections describe our final decisions for
the--
Performance years covered by the model, the retrospective
methodology that will be applied, and the application of two-sided risk
beginning in the second year of the model;
Adjustments that will be made to payments included in the
episode;
Episode price setting methodology;
Use of quality performance in the payment methodology;
Process for reconciliation;
Adjustments for overlaps with other CMMI models and CMS
programs;
Limits and adjustments on hospitals' financial
responsibility;
Appeal procedures for reconciliation;
Financial arrangements and beneficiary incentives; and
Waivers of Medicare program rules.
2. Performance Years, Retrospective Episode Payment, and Two-Sided Risk
Model
a. Performance Period
We proposed that the CJR model would have 5 performance years. The
performance years would align with calendar years, beginning January 1,
2016. Table 7 includes details on which episodes would be included in
each of the 5 performance years.
[[Page 73325]]
Table 7--Proposed Performance Years for CJR Model
------------------------------------------------------------------------
Episodes included in
Performance year Calendar year performance year
------------------------------------------------------------------------
1........................... 2016........... Episodes that start on or
after January 1, 2016,
and end on or before
December 31, 2016.
2........................... 2017........... Episodes that end between
January 1, 2017, and
December 31, 2017,
inclusive.
3........................... 2018........... Episodes that end between
January 1, 2018, and
December 31, 2018,
inclusive.
4........................... 2019........... Episodes that end between
January 1, 2019, and
December 31, 2019,
inclusive.
5........................... 2020........... Episodes that end between
January 1, 2020, and
December 31, 2020,
inclusive.
------------------------------------------------------------------------
Under our proposal, all episodes tested in this model would have
begun on or after January 1, 2016 and ended on or before December 31,
2020. We noted that this definition would result in performance year 1
being shorter than the later performance years in terms of the length
of time over which an anchor hospitalization could occur under the
model. We also noted that some episodes that began in a given calendar
year may be captured in the following performance year due to the
episodes ending after December 31st (for example, episode beginning in
December 2016 and ending in March 2017 would be part of performance
year 2). We stated our belief that 5 years would be sufficient time to
test the CJR model and gather sufficient data to evaluate whether it
improves the efficiency and quality of care for an LEJR episode of
care. Further, having fewer than 5 performance years may not provide
sufficient time or data for evaluation. The 5-year performance period
is consistent with the performance period used for other CMMI models
(for example, the Pioneer Accountable Care Organization (ACO) Model).
The following is a summary of the comments received and our
responses.
Comment: Several commenters supported our proposal for a 5-year
performance period as well as our proposed start date of January 1,
2016. However, a substantial number of commenters expressed concerns
over the proposed start date and requested that we delay implementation
of the model. Most of these commenters expressed concerns about the
ability of participants to successfully participate in the model, given
the proposed timeframes. Commenters noted that participants would need
additional time for activities such as developing a new infrastructure
with respect to provider networks, which would include identifying and
establishing contracts with collaborators as well as determining
appropriate incentives and gainsharing structures; identifying and
developing new care pathways and performance metrics; and developing as
well as modifying accounting and IT systems. In particular, a number of
commenters expressed concern with the proposed start date in light of
the requirement that hospitals begin to assume risk in the second year
of the model, which is discussed further later in this section.
Moreover, given variation in hospital preparedness, these kinds of
issues could be particularly acute for certain kinds of hospitals, for
example, smaller hospitals or those with more limited resources. Also,
as discussed in section III.E of this final rule, commenters noted that
their ability to implement the previously stated changes would be
impeded by not having received baseline and episode-level data from CMS
until after the proposed start date. Commenters indicated that these
data would be essential to identifying opportunities and strategies for
quality and efficiency improvement, and that the model should be
delayed until after they have had a chance to review and understand
their own episode data.
We also received comments suggesting that implementation of the
model is premature and that it should be delayed until certain actions
or events have occurred, for example, until certain quality measures
have been developed, data required under the Improving Medicare Post
Acute Care Transformation Act of 2014 (Pub. L. 113-185, enacted October
6, 2014) (IMPACT Act) have been collected or analyzed, or CMS has
considered the results of other bundled payment models such as BPCI.
For example, several commenters requested a phased implementation of
the CJR model, due to the limited evaluation results that have been
publicly released to date for BPCI, and to allow for testing and
monitoring of the CJR model prior to full implementation. Another
commenter asserted that a phased-in approach to implementing CJR is
appropriate, given that while episode-based payment models have shown
potential to reduce cost, rigorous studies and evaluation data on
episode-based payment models are limited. Some commenters expressed the
view that CMS' timeline ignores multiple competing mandates that
hospitals and other providers have, for example, ICD-10-CM
implementation as well as EHR Meaningful Use and other quality-related
programs.
In addition, we received a comment urging a delayed start date due
to concerns on how requirements with respect to the civil monetary
penalty (CMP) law (sections 1128A(a)(5), (b)(1) and (b)(2) of the Act),
the Federal Anti-kickback statute (section 1128B(b)(1) and (2) of the
Act), or the physician self-referral prohibition (section 1877 of the
Act) would apply under the model. For example, a commenter noted that
the proposed rule offered insufficient protection from certain
statutory and regulatory risks associated with developing coordinated
care arrangements among providers and that significant ambiguity and
challenges existed with respect to compliance with these requirements.
Commenters also stated that in contrast to our proposed start date
for the CJR model, CMS allowed voluntary BPCI participants, who were
more likely to be well positioned to participate in an episode-based
payment model, at least one year to consider their episode data, yet
many of them likely found the program and timing demands challenging.
Further, mandating the program, especially for unprepared participants,
could result in even greater challenges, and increase the chance of
failure and disruption of health care services for Medicare
beneficiaries.
Some commenters offered examples of how, in their view,
implementing the model by the proposed start date could result in
unintended consequences such as reduced access for beneficiaries or
lower care quality. For example, commenters suggested that the proposed
timeframe could cause hospitals to make care redesign choices that
reduced access for beneficiaries or certain kinds of beneficiaries such
as those who posed greater risk or that care quality could be
compromised because participants would have had insufficient time to
implement new care practices.
Given these concerns, commenters generally requested that we delay
the start date by a specific period of time, for example, by three
months, six months, nine months or a year, with most commenters
requesting a delay of nine months to a year. Some
[[Page 73326]]
commenters recommended delay periods of two years or more. In some
cases, commenters tied their proposed delay period to an event, for
example, some period of time subsequent to having received baseline and
episode-level data from CMS. Some commenters requested that only the
mandatory aspect of the model be delayed, allowing providers willing to
participate the opportunity to do so or, in the event of a delayed
start date, providers be permitted to voluntarily opt-in to the model
prior to the date of implementation. As such, providers who had begun
to prepare for the model could begin to generate cost savings while
driving improvements in quality and patient experience for LEJR
patients.
Response: We appreciate the comments we received in support of our
proposed performance period and start date. We also appreciate and are
persuaded by comments expressing concerns that our proposed start date
does not provide sufficient time for participants to implement the
kinds of changes needed to successfully participate in the model,
particularly given that baseline data would not be available until
after our proposed start date of January 1, 2016. Accordingly, this
final rule will delay the start date of the model to April 1, 2016.
Also, as indicated in section III.E.4 of this rule, we intend to make
participating hospitals' baseline data available upon request in
advance of the April 1, 2016 start date, which will allow participants
the opportunity to assess their baseline data as they consider changes
to their care practices in advance of the model's start date. Also, as
discussed in section III.C.8. of this final rule, we are reducing the
potential risk to participants in Year 2 by lowering the stop-loss
limit from 10 percent to 5 percent (and from 20 percent to 10 percent
in Year 3). We believe that these changes will both facilitate
participants' abilities to be successful under this model and allow for
a more gradual transition to full financial responsibility under the
model.
Table 8 includes details on which episodes would be included in
each of the 5 performance years under this delay.
Table 8--Performance Years for CJR Model
------------------------------------------------------------------------
Episodes included in
Performance year Calendar year performance year
------------------------------------------------------------------------
1........................... 2016........... Episodes that start on or
after April 1, 2016, and
end on or before
December 31, 2016.
2........................... 2017........... Episodes that end between
January 1, 2017, and
December 31, 2017,
inclusive.
3........................... 2018........... Episodes that end between
January 1, 2018, and
December 31, 2018,
inclusive.
4........................... 2019........... Episodes that end between
January 1, 2019, and
December 31, 2019,
inclusive.
5........................... 2020........... Episodes that end between
January 1, 2020, and
December 31, 2020,
inclusive.
------------------------------------------------------------------------
Under this revised schedule, all episodes tested in this model will
have begun on or after April 1, 2016 and ended on or before December
31, 2020. Additional discussion on how this revised performance year
schedule affects the use of quality measures for the model and the
timeline for the reconciliation process is included in sections
III.C.5. and III.C.6. of this final rule.
We do not agree that a longer delay is needed. Hospital
participants will not be financially responsible for repayment to
Medicare until the second performance year of the model. In addition,
as discussed in section III.C.8. of this final rule, we have further
limited financial risk to hospitals in performance years 2 and 3 by
lowering stop-loss limits; specifically, from 10 percent to 5 percent
in Year 2, and from 20 percent to 10 percent in Year 3. Finally, while
we note that commenters are correct that voluntary BPCI participants
received claims data prior to taking on risk under the BPCI model, and
in some cases had more than a year to prepare for participation in
BPCI, we believe that providing claims data to CJR participants in
early 2016 and beginning the model April 1, 2016 is appropriate for
several reasons. First, we note that under BPCI, voluntary participants
in Phase I had the option of receiving claims data for multiple
episodes, up to the 48 clinical episodes included in the BPCI
initiative. The CJR model will only include one type of episode, and as
such we believe it is reasonable for hospitals to begin to analyze data
and identify care patterns and opportunities for care redesign for this
episode in our stated implementation timeline. We also note that due to
the gradual implementation of downside risk, we expect that hospitals
would spend the first performance year of the model analyzing data,
identifying care pathways, forming clinical and financial relationships
with other providers and suppliers, and assessing opportunities for
savings under the model, utilizing the quarterly claims data we provide
to them. This is similar to the approach we took to allow hospitals to
participate in Phase I of BPCI prior to entering Phase II (the risk-
bearing phase). As noted in this section, participant hospitals would
also be eligible to receive reconciliation payments for performance
year 1 if actual spending is below the target price. We believe that
our implementation timeline is reasonable, given the financial
opportunity for hospitals to earn reconciliation payments for
performance year 1 and the gradual transition to financial
responsibility.
We are also not persuaded by commenters that implementation of the
model is premature or that it should be delayed until results for BPCI
or other episode-based payment models are available. While we
anticipate that the BPCI model will offer valuable information that
should assist CMS in developing bundling payment models, the CJR model
will offer additional insights that are not available under the BPCI
model; in particular, insights with respect to bundling payment models
on a mandatory rather than voluntary basis. Thus, we will be able to
observe how a bundling payment model might work with participants that
would otherwise not participate in such a model. As such, we expect the
results from this model should produce data that are more broadly
representative than what might be achieved under a voluntary model.
Also, this model tests a different target pricing approach than the one
used in BPCI. BPCI uses a purely participant-specific pricing approach,
rewarding participants for improving based on their historical
performance. While this may incentivize historically less efficient
participants to improve, there may not be as much incentive for already
efficient participants. The regional target pricing approach for this
model, though, would consider a participant hospital's performance
relative to its regional peers. As part of this test, we will learn
whether our alternative pricing approach in this model will better
incentivize participants who are already delivering high quality and
efficient care while
[[Page 73327]]
still incentivizing historically less efficient providers to improve.
We would not be able to test such a regional pricing approach under a
purely voluntary model because it is likely that only the already high
quality and efficient providers would sign up.
We would note that we have released final evaluation results from
the ACE demonstration, which determined that the demonstration led to
reduced episode spending with no adverse impact on quality of care.
Further, we note that the significant level of voluntary participation
in BPCI, as well as high participation in LEJR episodes in particular
in all BPCI models, signify the potential for financial opportunity for
both hospitals and CMS to achieve savings and improve quality of care
through an episode-based payment model targeting LEJR procedures. As
further evaluation results for BPCI and other models are available, we
will make such information available to the public, and if necessary,
could incorporate lessons learned into the CJR model. In addition, in
section III.F. of this final rule, we detail our plans to monitor care
to ensure beneficiaries' access to quality and timely health care is
maintained under the CJR model.
While we acknowledge the benefits of having more rigorous evidence
to support the success of episode-based payment models, we believe that
the aforementioned findings and encouraging preliminary evaluation data
from our prior and current bundled payment models and demonstrations
support our plan to more broadly test the model's effectiveness at this
time. Moreover, the mission of the Innovation Center is to test models
of care that reduce spending while maintaining or improving the quality
of care furnished to Medicare, Medicaid and CHIP beneficiaries. Testing
this model will provide additional information for CMS and providers on
successful payment structures and care redesign strategies.
We also disagree that the model should be delayed simply because
other similar efforts are currently ongoing. Rather, we would note that
it is not uncommon for CMS to test multiple similar models concurrently
rather than sequentially. For example, CMS currently has multiple
primary care-focused models in testing, the Comprehensive Primary Care
Initiative (CPCI) and the Multi-Payer Advanced Primary Care Practice
(MAPCP) models. In addition, CMS has a permanent ACO program (the
Medicare Shared Savings Program), as well as multiple other ACO models
in the testing phase. We believe our decision to test the CJR model at
this time is consistent with the approach taken for other models and
programs to test payment models that may be similar in design but are
targeted at different groups of providers. Such an approach provides
CMS with additional information on the potential success of various
model and program aspects and design features.
Likewise, we do not agree that the model should be delayed until
certain other actions have occurred (for example, after additional
quality measures have been developed or data required under the IMPACT
Act have been analyzed) or because of the multiple competing mandates
faced by hospitals and other providers. Since the Medicare program's
inception, providers have and will continue to contend with constantly
evolving statutory and administrative requirements that often require
them to make concurrent changes in their practices and procedures. We
do not believe the CJR model is dissimilar to those requirements.
As stated previously, some commenters urged a delayed start date
due to concerns on how requirements with respect to the CMP law
(sections 1128A(a)(5), (b)(1) and (b)(2) of the Act), the Federal Anti-
kickback statute (section 1128B(b)(1) and (2) of the Act), or the
physician self-referral prohibition (section 1877 of the Act) would
apply under the model. In response, we would note that for programmatic
reasons discussed elsewhere in this final rule and to give providers
additional time to ensure compliance with applicable laws, we are
delaying the start date of the model to April 1, 2016.
Also as discussed earlier in this section, some commenters pointed
to the potential for unintended consequences that could result from our
proposed start date, including impediments to beneficiary access and
reduced quality of care. As discussed in section III.D of this final
rule, we are including quality measures for purposes of evaluating
hospitals' performance both individually and in aggregate across the
model. Also, as discussed in section III.F of this final rule, we are
making final policies and actions to monitor both care access and
quality. We believe these features will help ensure that beneficiary
access to high quality care is not compromised under the model.
Final Decision: We are modifying our proposed policy on the model
performance years and establishing April 1, 2016 as the start date for
the model. Accordingly, we are replacing ``January 1, 2016'' in Sec.
510.200(a) with ``April 1, 2016.''
b. Retrospective Payment Methodology
As described in section III.B. of the proposed rule, we proposed
that an episode in the CJR model begins with the admission for an
anchor hospitalization and ends 90 days post-discharge from the anchor
hospitalization, including all related services covered under Medicare
Parts A and B during this timeframe, with limited exclusions and
adjustments, as described in sections III.B., III.C.3., and III.C.7. of
the proposed rule. The episodes would be attributed to the participant
hospital where the anchor hospitalization occurred.
We proposed to apply the CJR episode payment methodology
retrospectively. Under this proposal, all providers and suppliers
caring for Medicare beneficiaries in CJR episodes would continue to
bill and be paid as usual under the applicable Medicare payment system.
After the completion of a CJR performance year, Medicare claims for
services furnished to beneficiaries in that year that were included in
the model would be grouped into episodes and aggregated, and
participant hospitals' CJR episode quality and actual payment
performance would be assessed and compared against episode quality
thresholds and target prices, as described in sections III.C.5. and
III.C.4. of the proposed rule, respectively. After the participant
hospitals' actual episode performance in quality and spending are
compared against the previous episode quality thresholds and target
prices, we would determine if Medicare would make a payment to the
hospital (reconciliation payment), or if the hospital owes money to
Medicare (resulting in Medicare repayment). The possibility for
hospitals to receive reconciliation payments or be subject to repayment
(note: participant hospitals would not be subject to repayment for
performance year 1) was further discussed in section III.C.2.c. of the
proposed rule.
We considered an alternative option of paying for episodes
prospectively by paying one lump sum amount to the hospital for the
expected costs of the 90-day episode. However, we believed such an
option would be challenging to implement at this time given the payment
infrastructure changes for both hospitals and Medicare that would need
to be developed to pay and manage prospective CJR episode payments. We
noted that a retrospective episode payment approach is currently being
utilized under BPCI Model 2. Also, we expressed our belief that a
retrospective payment approach can accomplish the objective of testing
episode payment in
[[Page 73328]]
a broad group of hospitals, including financial incentives to
streamline care delivery around that episode, without requiring core
billing and payment changes by providers and suppliers, which would
create substantial administrative burden. However, we sought comment on
potential ways to implement a prospective payment approach for CJR in
future performance years of the model.
The following is a summary of the comments received and our
responses.
Comment: Commenters submitted mixed responses on our proposed
retrospective payment methodology. Many comments we received expressed
support for our proposed retrospective model. Some of these commenters
indicated that, since it would build upon existing payment system
infrastructures and processes, a retrospective model would be most
administratively feasible and straightforward as well as involve fewer
infrastructure changes and logistical challenges than would be required
under a prospective model. A commenter noted that a retrospective model
would allow providers to gain experience with a bundling payment model
without altering existing revenue cycle practices. Further, the
availability of fee-for-service payments under a retrospective model
would maintain a predictable cash flow for participants in the model.
Some commenters expressed support for the proposed retrospective
methodology provided that certain conditions existed. For example, a
commenter expressed support for this methodology provided that payment
reconciliation could be available on a quarterly basis. Another
commenter supported the retrospective methodology provided that
beneficiaries had access to any provider they chose and were not
limited to those with whom a hospital had a contractual arrangement.
Response: We appreciate the comments we received that were in
support of our proposed retrospective payment methodology, and concur
with commenters' views on some of the benefits of this model. As
discussed further in section III.C.6. of this final rule, we are making
final our proposed reconciliation on an annual basis. Also, as further
discussed in section III.F.2. of this final rule, because hospitals in
selected geographic areas will be required to participate in the model,
individual beneficiaries will not be able to opt out of the CJR model.
However, the payment model does not limit a beneficiary's ability to
choose among Medicare providers and suppliers or the range of services
that are available to them. Beneficiaries may continue to choose any
Medicare enrolled provider or supplier, or any physician or
practitioner who has opted out of Medicare, with the same costs,
copayments and responsibilities as they have with other Medicare
services. Also, although the proposed model would allow participant
hospitals to enter into sharing arrangements with certain providers and
suppliers and these preferred providers and suppliers may be
recommended to beneficiaries as long as those recommendations are made
within the constraints of current law, hospitals may not restrict
beneficiaries to any list of preferred or recommended providers and
suppliers that surpass any restrictions that already exist under
current statutes and regulations.
Comment: In addition to the many commenters supporting our proposed
retrospective methodology, we received many other comments that opposed
our proposal and expressed support for some type of prospective payment
model. Some commenters expressed the view that our proposed model was
complex, complicated by variation in payment policies across Medicare
FFS payment models, and needed further refinement. Others stated that
as compared to a prospective payment model, a retrospective model is
less effective at holding providers accountable or in stimulating the
kinds of behavior changes that are needed to achieve the goals of the
program. For example, because providers are expected to change their
behavior in anticipation of a reward that might occur several months
later, the model diminishes the incentive for providers to change their
behavior. Moreover, bonuses and penalties are not sufficiently
correlated with performance. Further, a retrospective model could limit
the availability of resources for providers to invest in the changes
needed to support and sustain behavior change and high-quality care.
Some of the criticisms we received focused on the potential effects
of a retrospective model on beneficiaries' costs. For example, some
commenters expressed concerns on whether beneficiaries would or even
could see cost-sharing reductions when a provider achieves savings
under a retrospective model. Another comment suggested that as compared
to a prospective model, payments under a retrospective model are more
difficult to be incorporated into tools designed to help consumers shop
for facilities and providers and reduced pricing predictability for the
consumer.
In light of these concerns, many commenters proposed that CMS adopt
or eventually transition to some kind of prospective payment model or
hybrid model. Commenters suggested that doing so would improve
accountability for costs and quality, strengthen risk/reward
relationships, better support efforts to transition away from FFS,
encourage providers to adhere to evidence-based clinical guidelines,
reduce unnecessary or duplicative care, and help participants invest
early in supportive resources, such as health information technology,
care coordination tools, and infrastructure development to support
accountability for quality and costs. A commenter offered the view that
information technology solutions are now available that support
prospective payment models with minimal burden and disruption to
hospitals--concerns that have discouraged the adoption of prospective
models.
Some examples of prospective models that were suggested would be
for CMS to--
Establish an extended DRG that includes hospital,
physician, and PAC services for some period of time (for example, 30,
60, 90 days);
Make a prospective payment to hospitals that are then
distributed to their partners based on volume, acuity, quality, and
efficiency;
Withhold some percentage of the total payment that would
be intended for downstream partners. Hospitals would subsequently
distribute these payments to partners based on their ability to meet
quality and efficiency targets;
Move toward a prospectively negotiated case rate to foster
collaboration among all clinicians involved in patient care and provide
predictable pricing. For example, give facilities a financial incentive
to assume the greater risk and uncertainty inherent in a prospective
bundle by reducing or eliminating the two percent discount from the
payment benchmark or narrowing the definition of ``related care'' in
the 90-day post-discharge; and
Allow physicians to lead a team where the participating
physician and their patient decide which other providers and suppliers
would be involved in and what the treatment plan would be for the
episode. The team would designate or create a jointly governed
management organization that would be paid through new prospective
episode codes. Other providers, including the hospital, could be paid
by that same organization or through existing Medicare payment systems.
Medicare would pay a single bundled
[[Page 73329]]
payment amount to cover the costs of all of the services in that
episode. The hospital and other providers and suppliers on the team
could be paid either through the management organization or through
traditional Medicare payment systems, but only by one of these sources.
Amounts paid through traditional payment systems would be deducted from
the amount paid to the management organization.
In addition to comments supporting a prospective payment model, we
received comments explicitly expressing concern about adopting such a
model. For example, a commenter expressed the view that non-hospital
providers and suppliers, including physicians and PAC providers, would
likely be concerned with a policy that would allow hospitals complete
authority to allocate payments among participating providers and
suppliers or to be empowered with functions and authorities typically
associated with Medicare Administrative Contractors (MACs). Moreover, a
prospective payment methodology would exacerbate anti-competitive
concerns with respect to the proposed model in general.
Response: We appreciate the comments we received in opposition to
our proposed retrospective model. While we believe that our proposed
retrospective payment model would be effective in encouraging providers
to improve care quality while better controlling the costs of the care,
we also share commenters' optimism on the potential benefits and
effectiveness of prospective models with respect to improving
accountability for costs and quality, strengthening risk/reward
relationships, better supporting efforts to transition away from FFS,
and encouraging providers to adhere to evidence-based clinical
guidelines while reducing unnecessary or duplicative care. We also are
pleased that information technology solutions are being developed to
support prospective payment models.
We agree with commenters that there are complexities and potential
complications associated with a retrospective model and anticipate that
further refinements will likely be needed with whatever kind of
bundling model that is implemented. Therefore, we do not believe that
the complexities and potential complications with our proposed model
are significantly different than what occurs with other Medicare
payment models, particularly any of the more novel ones. Likewise, we
do not believe that such complexities or complications would be
mitigated simply by adopting a prospective model. Moreover, both CMS
and some of the commenters have noted that adoption of a prospective
model could result in potentially significant complexities and
logistical issues as well.
We also do not agree with the view suggesting that adoption of a
retrospective model could limit the availability of resources for
providers to invest in the changes needed to improve care quality and
costs. Under our retrospective model, participant hospitals and other
providers and suppliers will continue to bill and be paid under FFS
Medicare as they would in the absence of the model that should result
in a revenue stream comparable to what they would be absent the model,
all else equal.
While we agree with the comment stating that beneficiaries will not
see a reduction in their cost-sharing for joint replacement services
under this model, we do not see this as being unique to the CJR model
or a reason to not test it. To the contrary, if successful, our model
will improve the quality of care and outcomes for these beneficiaries
as well as better control costs of care. For example, if successful, we
believe the model could help to limit or mitigate avoidable costs
incurred by these beneficiaries such as costs associated with avoidable
hospital readmissions. Last, we also do not see the potential
challenges of integrating a retrospective payment methodology into
sites designed to compare health care options as a reason to not test
our proposed model or as being an insurmountable problem.
Based on the comments that we received, we believe there is support
for both prospective and retrospective payment models. We also continue
to believe that a retrospective payment model can accomplish the
objective of testing episode payments with a broad group of hospitals,
by including financial incentives that will streamline care delivery
while producing less administrative burden for providers than would be
possible with a prospective model. Accordingly, we will be implementing
a retrospective payment model at this time as we had proposed. We
appreciate the various examples of prospective models that commenters
suggested for CMS' consideration, and will consider these examples
along with other options to potentially be tested in the future.
Final Decision: After considering the public comments we received,
we are finalizing our proposal to implement a retrospective payment
model.
c. Two-Sided Risk Model
We proposed to establish a two-sided risk model for hospitals
participating in the CJR model. We proposed to provide episode
reconciliation payments to hospitals that meet or exceed quality
performance thresholds and achieve cost efficiencies relative to CJR
target prices established for them, as was defined later in sections
III.C.4. and III.C.5. of the proposed rule. Similarly, we proposed to
hold hospitals responsible for repaying Medicare when actual episode
payments exceed their CJR target prices in each of performance years 2
through 5, subject to certain proposed limitations discussed in section
III.C.8. of the proposed rule. Target prices would be established for
each participant hospital for each performance year.
We proposed that hospitals will be eligible to receive
reconciliation payments from Medicare based on their quality and actual
episode spending performance under the CJR model in each of CJR
performance years 1 through 5. Additionally, we proposed to phase in
the responsibility for hospital repayment of episode actual spending if
episode actual spending exceeds their target price starting in
performance year 2 and continuing through performance year 5. Under
this proposal in performance year 1, participant hospitals would not be
required to pay Medicare back if episode actual spending is greater
than the target price.
We considered an episode payment structure in which, for all 5
performance years of the model, participant hospitals would qualify for
reconciliation payments if episode actual spending was less than the
episode target price, but would not be required to make repayments to
Medicare if episode actual spending was greater than the episode target
price. However, we noted our belief that not holding hospitals
responsible for repaying excess episode spending would reduce the
incentives for hospitals to improve quality and efficiency. We also
considered starting the CJR payment model with hospital responsibility
for repaying excess episode spending in performance year 1 to more
strongly align participant hospital incentives with care quality and
efficiency. However, we stated our view that hospitals may need to make
infrastructure, care coordination and delivery, and financial
preparations for the CJR episode model, and that those changes can take
several months or longer to implement. With this consideration in mind,
we proposed to begin hospitals' responsibility for repayment of excess
episode spending
[[Page 73330]]
beginning in performance year 2 to afford hospitals time to prepare,
while still beginning some incentives earlier (that is, reconciliation
payments in year 1) to improve quality and efficiency of care for
Medicare beneficiaries. We solicited comment on the proposed incentive
structure for CJR.
In an effort to further ensure hospital readiness to assume
responsibility for circumstances that could lead to a hospital repaying
to Medicare actual episode payments that exceed the episode target
price, we proposed to begin to phase in this responsibility for
performance year 2, with full responsibility for excess episode
spending (as proposed in the proposed rule) applied for performance
year 3 through performance year 5. To carry out this ``phase in''
approach, we proposed during the first year of any hospital financial
responsibility for repayment (performance year 2) to set an episode
target price that partly mitigates the amount that hospitals would be
required to repay (see section III.C.4.b. of the proposed rule), as
well as more greatly limits (as compared to performance years 3 through
5) the maximum amount a hospital would be required to repay Medicare
across all of its episodes (see section III.C.8. of the proposed rule).
Comment: Several commenters expressed support for our proposal to
establish downside risk for participants as well as our proposal to
gradually phase-in risk beginning in year 2. We received very few
comments requesting the elimination of risk from the model. A commenter
suggested that it was unfair to require hospitals to bear risk given
that there were no limitations on beneficiary choices. Also, some
commenters suggested that CMS consider excluding specific kinds of
hospitals from the model, for example small hospitals or hospitals with
low volume.
Most of the comments we received, however, requested that CMS ease
the glide path to downside risk by either delaying the requirement for
two to three years or by incorporating features to better limit risk,
for example, by adjusting stop-loss caps. Some commenters requested
that we modify the CJR model to be more like a shared savings model as
is used in Shared Savings Program or the Pioneer ACO model. In their
view, this option would be particularly attractive to smaller
organizations with lower episode volumes that face a higher risk of
random episode cost variation or those with limited financial
resources.
Some commenters requested these changes because of concerns that
hospitals have little or no experience bearing risk and thus need
additional time to be ready to do so. Other commenters stated that our
proposed timeframe for implementing the model and requiring hospitals
to assume risk was simply too aggressive and offered too little time
for hospitals to put in place the care procedures and infrastructure
needed to be successful in the model and in a position to bear risk. In
recommending that CMS delay downside risk, a commenter observed that
payment features of other Medicare efforts such as BPCI and the Pioneer
ACO model have been refined more than once since their implementation,
which suggested that more can be learned about the appropriate
framework for a risk model, particularly given that the CJR model is
untested.
Response: We appreciate the comments we received in support of our
proposal to phase-in downside risk to CJR participants beginning in
Year 2 of the model. We are also encouraged that very few commenters
opposed a requirement for participants to assume downside risk at some
point in the model.
We disagree with the view that it is unfair to require hospitals to
bear risk while beneficiaries retain the ability to choose among
providers. As is the case with other new payment models such as the
Shared Savings Program, the CJR model is intended to identify ways to
improve care quality and better control costs in the Medicare FFS
program. While Medicare beneficiaries may choose between Medicare FFS
and Medicare Advantage, the majority of beneficiaries--roughly two-
thirds in 2015--continue to choose the former. Accordingly, it is in
the interest of the Medicare program and its beneficiaries for CMS to
identify new models that both maintain beneficiary choice while
improving care quality and costs. Also, while we appreciate suggestions
to exclude certain kinds of hospitals, for example, small hospitals or
hospitals with a low-volume of cases, we believe our methodology for
selecting geographic units, as discussed in section III.A.4.of this
final rule, as well as additional protections for certain kinds of
these hospitals, as discussed in section III.C.8.c. of this final rule
sufficiently address these concerns.
We also understand that commenters would like a more gradual
transition to downside risk, and in response to the commenters'
concerns, CMS has taken steps for hospitals to do so. As discussed in
section III.C.8. of this final rule, we are reducing the potential risk
to participants in Year 2 by lowering the stop-loss limit from 10
percent to 5 percent (and from 20 percent to 10 percent in Year 3). We
believe these actions should assist participants both with respect to
preparing for the assumption of risk as well as reducing the level of
risk they must initially bear. We do not support the proposal to change
the CJR model to a shared savings model as it is inconsistent with our
intent of testing whether a bundled payments model will promote quality
and financial accountability for episodes of care surrounding an LEJR
or reattachment of a lower extremity procedure. Last, we recognize that
our model, as would any model or program, will evolve and may require
some adjustments over time. To the extent that this occurs with the CJR
model, we would make adjustments that were deemed necessary, as we
would do with any of these other models and programs; however, we do
not believe the potential for model adjustments is a reason to delay
the requirement for hospitals to bear risk in the absence of data
suggesting that a problem actually exists.
Final Decision: After considering the public comments we received,
we are finalizing our proposal to phase-in risk beginning in Year 2 of
the model.
3. Adjustments to Payments Included in Episode
We proposed to calculate the actual episode payment amount by
summing together Medicare payments for each non-cancelled CJR episode
during the model's performance year for Parts A and B claims for
services included in the episode definition, as discussed in section
III.B. of this final rule. We proposed three adjustments to this
general approach for--(1) Special payment provisions under existing
Medicare payment systems; (2) payment for services that straddle the
end of the episode; and (3) high payment episodes. We noted there would
be further adjustments to account for overlaps with other Innovation
Center models and CMS programs; we refer readers to section III.C.7. of
the proposed rule.
We did not propose to adjust hospital-specific or regional
components of target prices for any Medicare repayment or
reconciliation payments made under the CJR model; CJR repayment and
reconciliation payments would be not be included per the episode
definition in section III.B. of this final rule. We stated in the
proposed rule our belief that including reconciliation payments and
Medicare repayments in target price calculations would perpetuate the
initial set of target prices once CJR performance years are captured in
the 3-historical-years of data used to set target
[[Page 73331]]
prices, as described in section III.C.4. of this final rule, beginning
with performance year 3 when performance year 1 would be part of the 3-
historical-years. Including any prior performance years'
reconciliations or repayments in target price calculations would
approximately have the effect of Medicare paying hospitals the target
price, regardless of whether the hospital went below, above, or met the
target price in the prior performance years before accounting for the
reconciliation payments or repayments. We stated in the proposed rule
our intent for target prices to be based on historical patterns of
service actually provided, so we did not propose to include
reconciliation payments or repayments for prior performance years in
target price calculations.
a. Treatment of Special Payment Provisions Under Existing Medicare
Payment Systems
Many of the existing Medicare payment systems have special payment
provisions that have been created by regulation or statute to improve
quality and efficiency in service delivery. IPPS hospitals are subject
to incentives under the HRRP, the Hospital Value-Based Purchasing
(HVBP) Program, the Hospital-Acquired Condition (HAC) Reduction
Program, and the Hospital Inpatient Quality Reporting Program (HIQR)
and Outpatient Quality Reporting Program (OQR). IPPS hospitals and CAHs
are subject to the Medicare EHR Incentive Program. Additionally, the
majority of IPPS hospitals receive additional payments for Medicare
Disproportionate Share Hospital (DSH) and Uncompensated Care, and IPPS
teaching hospitals can receive additional payments for Indirect Medical
Education (IME). IPPS hospitals that meet a certain requirements
related to low volume Medicare discharges and distance from another
hospital receive a low volume add-on payment. As previously stated in
section III.B.2.b. of this final rule, acute care hospitals may receive
new technology add-on payments to support specific new technologies or
services that substantially improve the diagnosis or treatment of
Medicare beneficiaries and would be inadequately paid otherwise under
the MS-DRG system. Also, some IPPS hospitals qualify to be sole
community hospitals (SCHs) or MDHs, and they may receive enhanced
payments based on cost-based hospital-specific rates for services;
whether a SCH or MDH receives enhanced payments may vary year to year,
in accordance with Sec. 419.43(g) and Sec. 412.108(g), respectively.
Medicare payments to providers of PAC services, including IRFs,
SNFs, IPFs, HHAs, LTCHs, and hospice facilities, are conditioned, in
part, on whether the provider satisfactorily reports certain specified
data to CMS: The Inpatient Rehabilitation Facility Quality Reporting
Program (IRF QRP), the Skilled Nursing Facility Quality Reporting
Program (SNF QRP), the Inpatient Psychiatric Facility Quality Reporting
Program (IPF QRP), the Home Health Quality Reporting Program (HH QRP),
the Long-Term Care Hospital Quality Reporting Program (LTCH QRP), and
the Hospice Quality Reporting Program. Additionally, IRFs located in
rural areas receive rural add-on payments, IRFs serving higher
proportions of low-income beneficiaries receive increased payments
according to their low-income percentage (LIP), and IRFs with teaching
programs receive increased payments to reflect their teaching status.
SNFs receive higher payments for treating beneficiaries with human
immunodeficiency virus (HIV). HHAs located in rural areas also receive
rural add-on payments.
ASCs have their own Quality Reporting Program (ASC QRP). Physicians
also have a set of special payment provisions based on quality and
reporting: The Medicare EHR Incentive Program for Eligible
Professionals, the Physician Quality Reporting System (PQRS), and the
Physician Value-based Modifier Program.
In the proposed rule we stated our intent with the CJR model is not
to replace the various existing incentive programs or add-on payments,
but instead to test further episode payment incentives towards
improvements in quality and efficiency beyond Medicare's existing
policies. Therefore, we proposed that the hospital performance and
potential reconciliation payment or Medicare repayment be independent
of, and not affect, these other special payment provisions.
We proposed to exclude the special payment provisions as discussed
previously when calculating actual episode payments, setting episode
target prices, comparing actual episode payments with target prices,
and determining whether a reconciliation payment should be made to the
hospital or funds should be repaid by the hospital.
Not excluding these special payment provisions would create
incentives that are not aligned with the intent of the CJR model. Not
excluding the quality and reporting-related special payment provisions
could create situations where a high-quality or reporting compliant
hospital or both receiving incentive payments, or those hospitals that
discharge patients to PAC providers that receive incentives for being
reporting compliant, may appear to be ``high episode payment'' under
CJR. Conversely, lower quality or hospitals not complying with
reporting programs or both that incur payment reduction penalties, or
hospitals that discharge to PAC providers that are not reporting
compliant, may appear to be ``low episode payment'' under CJR. Such
outcomes would run counter to CJR's goal of improving quality. Also,
not excluding add-on payments for serving more indigent patients,
having low Medicare hospital volume, being located in a rural area,
supporting greater levels of provider training, choosing to use new
technologies, and having a greater proportion of CJR beneficiaries with
HIV from CJR actual episode payment calculations may inappropriately
result in hospitals having worse episode payment performance.
Additionally, not excluding enhanced payments for MDHs and SCHs may
result in higher or lower target prices just because these hospitals
received their enhanced payments in one historical year but not the
other, regardless of actual utilization. In the proposed rule we stated
our belief that excluding special payment provisions would ensure a
participant hospital's actual episode payment performance is not
artificially improved or worsened because of payment reduction
penalties or incentives or enhanced or add-on payments, the effects of
which we are not intending to test with CJR.
In addition to the various incentive, enhanced and add on payments,
sequestration came into effect for Medicare payments for discharges on
or after April 1, 2013, per the Budget Control Act of 2011 and delayed
by the American Taxpayer Relief Act of 2012. Sequestration applies a 2
percent reduction to Medicare payment for most Medicare FFS services.
In order to operationalize the exclusion of the various special
payment provisions in calculating episode expenditures, we proposed to
apply the CMS Price (Payment) Standardization Detailed Methodology
described on the QualityNet Web site at http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228772057350. This pricing standardization approach is the same as used for
the HVBP program's Medicare spending per beneficiary metric.
We sought comment on this proposed approach to treating special
payment
[[Page 73332]]
provisions in the various Medicare payment systems.
Comment: Several commenters supported the exclusion of the various
special payment provisions in calculating episode expenditures. They
agreed that doing so would help isolate the effect of utilization and
quality of delivered care differences and remove any distortions due to
Medicare payment policies outside the control of providers.
A few commenters expressed concern about how hospitals would be
paid the special payment adjustments that are removed in calculating
episode expenditures. A commenter inquired whether CMS would account
for vendor rebates for hip and knee implants and medical devices,
because rebates are not uncommon and can impact the cost of an LEJR
procedure to a hospital.
Response: We appreciate commenters' support to exclude the various
special payment provisions in calculating episode expenditures.
As discussed in section III.C.2.b. of this final rule, we are
finalizing our proposal such that all providers and suppliers caring
for Medicare beneficiaries in CJR episodes will continue to bill and be
paid as usual under the applicable Medicare payment system, and
determination of any reconciliation payments or repayments to Medicare
will be made retrospectively after the end of each performance year.
Therefore, special payment adjustments will continue to be paid as
usual under the applicable Medicare payment systems, but their effects
will be excluded when reconciliation payment and repayment to Medicare
determinations are made retrospectively. This final rule will not
affect how hospitals are currently paid special payment adjustments.
Payments for hip and knee implants and medical devices will also
continue as usual under the applicable Medicare payment systems. For
inpatient admissions paid under IPPS, in particular, implants and
medical devices not categorized as new technology add-on payment would
be included in the MS-DRG payment and would not be reimbursed
separately. To mirror the IPPS approach, we will not separately account
for vendor rebates in the LEJR episode.
We note that as previously stated, we plan to utilize the CMS Price
(Payment) Standardization approach in order to remove the effects of
special payment provisions from calculations of historical and
performance period episode spending. We will follow the methodology,
with modifications as necessary to be consistent with our episode
definition in section III.B. of this final rule and to ensure timely
reporting of reconciliation results, for the performance year
reconciliations, which begin 2 months after the conclusion of a
performance year. We will account for the information available at the
time due to claims runout, payment system updates, and the calculations
necessary to fully implement the standardization methodology. We will
utilize the methodology, consistent with our episode definition, for
the target price calculations and subsequent reconciliation
calculations 14 months after the conclusion of the performance year, in
which we incorporate full claims runout and further account for overlap
with other models. This approach will provide feedback and
reconciliation payments, as available, to hospitals in a timely manner
and as accurately as feasible, while ensuring the standardization
approach is utilized for the subsequent calculation, which represents
the final calculation for a given performance period.
Comment: Many commenters requested that CJR reconciliation payments
made to participant hospitals be included when updating the set of 3-
historical-years used for calculating CJR episode target prices. They
stated that the participant hospitals would be providing care
coordination services that may not be directly reimbursed under
applicable Medicare FFS payment systems. These services would then,
instead, be funded by reconciliation payments. While historical
Medicare FFS claim payments would account for hospitals' costs for
providing services reimbursed under Medicare FFS, they would not
account for hospitals' costs for care coordination services not
reimbursed under Medicare FFS. Commenters contended that if we do not
include reconciliation payments when calculating target prices using
the updated set of historical years, we may underestimate hospital
costs and target prices.
Response: We agree that participant hospitals may undertake
activities that promote care coordination and improved quality of care
but are not directly reimbursed under applicable Medicare FFS payment
systems. We appreciate commenters' suggestions to include
reconciliation payments when updating the set of historical years used
to calculate target prices. We also believe this logic could be
extended to include repayments to Medicare to mirror the inclusion of
reconciliation payments. However, in the proposed rule we did not
propose an alternative to include reconciliation payments and
repayments when updating the set of historical years used to calculate
target prices, and because the first time this policy would take effect
would be for performance year 3 (2018), we may revisit this policy in
future rulemaking and allow for public comment on the aforementioned
alternative. At this time we are not modifying our proposal to exclude
CJR reconciliation payments and repayments to Medicare when updating
the set of historical years used to set target prices.
Comment: A few commenters inquired whether claims from non-
participating physicians or payments to physicians who have opted out
of Medicare would be included for purposes of setting target prices and
calculating actual episode spending for reconciliation and repayment
amount calculations. Commenters contended that if claims from non-
participating providers or payments to physicians who have opted out of
Medicare are not included, target prices and actual episode spending
may be underestimated.
Response: With the exception of those physicians and practitioners
who have complied with our opt-out procedures (see 42 CFR 405.400
through 405.455), when a physician or supplier furnishes a service that
is covered by Medicare, the physician or supplier is subject to the
mandatory claim submission provisions of section 1848(g)(4) of the
Social Security Act (the Act). Therefore, if a physician or supplier
charges or attempts to charge a beneficiary for a service that is
covered by Medicare, then the physician or supplier must submit a claim
to Medicare. As a result, claims from both participating and non-
participating physicians would be included in our target price and
actual episode spending calculations.
Opt-out physicians are prohibited from billing and receiving
payment (either directly or indirectly) from Medicare except for
emergency and urgent care services provided the physician has not
previously entered into a private contract with the beneficiary.
Therefore, we agree that payments for services furnished by physicians
who have opted out of Medicare would not be included in target price
and actual episode expenditure calculations. However, we estimate only
a small portion of physicians furnishing services to beneficiaries
captured in the CJR model will have opted out of Medicare, and we
estimate that physician services comprise less than 15 percent of the
average CJR episode expenditure, and therefore we believe the impact of
not capturing expenditures from physicians
[[Page 73333]]
who have opted out of Medicare will be small.
Additionally, there may be some participant hospitals with a
disproportionately higher share of episodes for which services were
furnished by physicians who have opted out of Medicare. Such
participant hospitals would experience lower actual episode
expenditures because payments for physicians who have opted out of
Medicare would not be included. These hospitals' lower actual episode
expenditures would be balanced by lower target prices because the
payments for physicians who have opted out of Medicare would also be
excluded in the historical episode expenditures, though this argument
is primarily relevant in the early years of the CJR model before we
move to 100 percent regional pricing as discussed in section
III.C.4.b.(5) of this final rule. In the later years of this model,
participant hospitals with disproportionately greater share of episodes
for which services were furnished by Medicare opt-out physicians may
unfairly benefit from regional target prices that are primarily based
on the inclusion of expenditures for physician services. However, we
believe this advantage to be small because physician expenditures
comprise only a small portion of the average episode, and we expect
very few physicians to opt out of Medicare.
Comment: A commenter inquired whether CMS would include IPPS
capital payments in calculating target prices and actual episode
expenditures, and if CMS' plan was to include them, they requested that
such payments be excluded. The commenter stated that capital payments
may vary by hospitals, and excluding capital payments would be
consistent with the pricing standardization approach we proposed to
reduce variations due to Medicare payment policies. The commenter also
noted that excluding capital payments would be consistent with the
approach taken in BPCI.
Response: In response to comments, we clarify that we will include
IPPS capital payments in target price and actual episode expenditure
calculations. IPPS capital payments are included in Medicare FFS
payments, which we proposed to use to calculate target prices and
actual episode expenditures. Consistent with our proposed treatment of
special payment provisions, we do not intend to distort incentives
based on IPPS capital payments that may vary across hospitals due to
Medicare payment policies, as opposed to practice pattern and quality
differences. By using the claims standardization approach previously
described in this section, though, we will be able to remove the effect
of variations due to Medicare payment policies (including wage index
differences). We recognize that this approach of including IPPS capital
payments would be different than the approach taken in BPCI. However,
we note that other Medicare FFS payment systems, such as those for SNF
and IRF, also are intended to cover providers' capital costs. Carving
out the capital portion for IPPS payments would not be consistent with
the inclusion of the capital portion for other Medicare FFS payment
systems. Lastly, including IPPS capital payments affords participant
hospitals an opportunity to achieve greater reconciliation payments if
they are able to achieve efficiencies for the costs that the capital
portion of IPPS payments would cover, which may or may not actually be
capital costs.
Comment: Several commenters expressed concern about the regions
that were selected for both the CJR model and the proposed HHVBP model.
Response: We refer readers to comments and responses to comments in
section III.A.3 of this final rule for further discussion on the
inclusion of regions selected for both the CJR model and the proposed
HHVBP model, and we reference it here because the proposed HHVBP model
would be another special payment provision that could affect Medicare
payment amounts. We reemphasize that the intent of the CJR model is not
to replace the various existing incentive programs or add on payments,
and the claims standardization approach previously described in this
section will remove the effect of any special payment provision,
whether they currently exist or may be introduced in the future.
Therefore, we do not believe any special payment provisions due to the
proposed HHVBP model or other potential future special payment
provisions to have an impact on the payments included in the CJR model
target price and reconciliation calculations.
Comment: A commenter requested clarification on how the CJR model
would interact with Medicare beneficiaries who have exhausted their
benefits, and recommended that we modify Medicare beneficiaries'
benefits so as to not allow their benefits to be exhausted while part
of a CJR episode.
Response: We appreciate the commenter's suggestion. However, we did
not propose any changes to Medicare beneficiaries' benefits, and we
will not finalize any such changes in this final rule.
Final Decision: We are finalizing our proposal, without
modification, to exclude special payment provisions from episode
calculations. We clarify that we will include IPPS capital payments in
target price and actual episode expenditure calculations. We also
clarify that we will utilize the CMS Price Standardization approach
previously referenced to remove the effect of any current and potential
future special payment provisions. We may revisit in future rulemaking
any modification to our policy to exclude reconciliation and recoupment
payments when updating the historical data used to set target prices.
b. Treatment of Payment for Services That Extend Beyond the Episode
As we proposed a fixed 90-day post-discharge episode as discussed
in section III.B. of the proposed rule, we stated our belief that there
would be some instances where a service included in the episode begins
during the episode but concludes after the end of the episode and for
which Medicare makes a single payment under an existing payment system.
An example would be a beneficiary in a CJR episode who is admitted to a
SNF for 15 days, beginning on Day 86 post-discharge from the anchor CJR
hospitalization. The first 5 days of the admission would fall within
the episode, while the subsequent 10 days would fall outside of the
episode.
We proposed that, to the extent that a Medicare payment for
included episode services spans a period of care that extends beyond
the episode, these payments would be prorated so that only the portion
attributable to care during the episode is attributed to the episode
payment when calculating actual Medicare payment for the episode. For
non-IPPS inpatient hospital (for example, CAH) and inpatient PAC (for
example, SNF, IRF, LTCH, IPF) services, we proposed to prorate payments
based on the percentage of actual length of stay (in days) that falls
within the episode window. Prorated payments would also be similarly
allocated to the 30-day post-episode payment calculation in section
III.C.8.d. of this final rule. In the prior example, one-third of the
days in the 15-day length of stay would fall within the episode window,
so under the proposed approach, one-third of the SNF payment would be
included in the episode payment calculation, and the remaining two-
thirds (because the entirety of the remaining payments fall within the
30 days after the episode ended) would be included in the post-episode
payment calculation.
For HHA services that extend beyond the episode, we proposed that
the
[[Page 73334]]
payment proration be based on the percentage of days, starting with the
first billable service date (``start of care date'') and through and
including the last billable service date, that fall within the CJR
episode. Prorated payments would also be similarly allocated to the 30-
day post-episode payment calculation in section III.C.8.d. of the
proposed rule. For example, if the patient started receiving services
from an HHA on day 86 after discharge from the anchor CJR
hospitalization and the last billable home health service date was 55
days from the start of home health care date, the HHA claim payment
amount would be divided by 55 and then multiplied by the days (5) that
fell within the CJR episode. The resulting, prorated HHA claim payment
amount would be considered part of the CJR episode. Services for the
prorated HHA service would also span the entirety of the 30 days after
the CJR episode spends, so the result of the following calculation
would be included in the 30-day post-episode payment calculation: HHA
claim payment amount divided by 55 and then multiplied by 30 days (the
number of days in the 30-day post-episode period that fall within the
prorated HHA service dates).
There may also be instances where home health services begin prior
to the CJR episode start date, but end during the CJR episode. In such
instances, we also proposed to prorate HHA payments based on the
percentage of days that fell within the episode. Because these services
end during the CJR episode, prorated payments for these services would
not be included in the 30-day post-episode payment calculation
discussed in section III.C.8.d. of the proposed rule. For example, if
the patient's start of care date for a home health 60-day claim was
February 1, the anchor hospitalization was March 1 through March 4
(with the CJR episode continuing for 90 days after March 4), and the
patient resumed home care on March 5 with the 60-day home health claim
ending on April 1 (that is, April 1 was the last billable service
date), we would divide the 60-day home health claim payment amount by
60 and then multiply that amount by the days from the CJR admission
through April 1 (32 days) to prorate the HHA payment. This proposed
prorating method for HHA claims is consistent with how partial episode
payments (PEP) are paid for on home health claims.
For IPPS services that extend beyond the episode (for example,
readmissions included in the episode definition), we proposed to
separately prorate the IPPS claim amount from episode target price and
actual episode payment calculations as proposed in section III.C.8. of
the proposed rule, called the normal MS-DRG payment amount for purposes
of this final rule. The normal MS-DRG payment amount would be pro-rated
based on the geometric mean length of stay, comparable to the
calculation under the IPPS PAC transfer policy at Sec. 412.4(f) and as
published on an annual basis in Table 5 of the IPPS/LTCH PPS Final
Rules. Consistent with the IPPS PAC transfer policy, the first day for
a subset of MS-DRGs (indicated in Table 5 of the IPPS/LTCH PPS Final
Rules) would be doubly weighted to count as 2 days to account for
likely higher hospital costs incurred at the beginning of an admission.
If the actual length of stay that occurred during the episode is equal
to or greater than the MS-DRG geometric mean, the normal MS-DRG payment
would be fully allocated to the episode. If the actual length of stay
that occurred during the episode is less than the geometric mean, the
normal MS-DRG payment amount would be allocated to the episode based on
the number of inpatient days that fall within the episode. If the full
amount is not allocated to the episode, any remainder amount would be
allocated to the 30 day post-episode payment calculation discussed in
section III.C.8.d. of the proposed rule. The proposed approach for
prorating the normal MS-DRG payment amount is consistent with the IPPS
transfer per diem methodology.
The following is an example of prorating for IPPS services that
extend beyond the episode. If beneficiary has a readmission for MS-DRG
493--lower extremity and humerus procedures except hip, foot, and
femur, with complications--into an IPPS hospital on the 89th day after
discharge from a CJR anchor hospitalization, and is subsequently
discharged after a length of stay of 5 days, Medicare payment for this
readmission would be prorated for inclusion in the episode. Based on
Table 5 of the IPPS/LTCH PPS Final Rule for FY 2015, the geometric mean
for MS-DRG 493 is 4 days, and this MS-DRG is indicated for double-
weighting the first day for proration. This readmission has only 2 days
that falls within the episode, which is less than the MS-DRG 493
geometric mean of 4 days. Therefore, the normal MS-DRG payment amount
associated with this readmission would be divided by 4 (the geometric
mean) and multiplied by 3 (the first day is counted as 2 days, and the
second day contributes the third day), and the resulting amount is
attributed to the episode. The remainder one-fourth would be captured
in the post-episode spending calculation discussed in section III.C.8.
of the proposed rule. If the readmission occurred on the 85th day after
discharge from the CJR anchor hospitalization, and the length of stay
was 7 days, the normal MS-DRG payment amount for the admission would be
included in the episode without proration because length of stay for
the readmission falling within the episode (6 days) is greater than or
equal to the geometric mean (4 days) for the MS-DRG.
We considered an alternative option of including the full Medicare
payment for all services that start during the episode, even if those
services did not conclude until after the episode ended, in calculating
episode target prices and actual payments. Previous research on bundled
payments for episodes of PAC services noted that including the full
payment for any claim initiated during the fixed episode period of time
will capture continued service use. However, prorating only captures a
portion of actual service use (and payments) within the bundle.\20\ As
discussed in section III.B. of this final rule, the CJR model proposed
an episode length that extends 90 days post-discharge, and Table 5 in
section III.B.3.c. of the proposed rule demonstrates that the average
length of stay in PAC during a 90-day episode with a MS-DRG 470 anchor
hospitalization is 47.3 days. Therefore, the length of the episode
under CJR (90 days) should be sufficient to capture the vast majority
of service use within the episode, even if payments for some services
that extend beyond the episode duration are prorated and only partly
attributed to the episode.
---------------------------------------------------------------------------
\20\ http://aspe.hhs.gov/health/reports/09/pacepifinal/report.pdf.
---------------------------------------------------------------------------
The following is a summary of comments received and our responses.
Comment: Several commenters supported the pro-rating of payments
for services that extend beyond the episode. They agreed that pro-
rating would help ensure target prices and actual episode payments
reflect services that were furnished during the episode. A commenter
requested clarification on how payments for IRFs would be pro-rated.
Another commenter stated that the first day for pro-rated surgical MS-
DRGs paid under IPPS should be weighted by more than the two-times
weight proposed; the commenter believed that a multiplier of up to 4.5
would more accurately describe hospitals' costs for the first day of
surgical inpatient admissions reimbursed under Medicare IPPS.
[[Page 73335]]
Response: We appreciate commenters' support for pro-rating payments
for services that extend beyond the episode. As described in section
III.C.3.b of this final, IRF payments will be pro-rated based on the
percentage of actual length of stay (in days) that falls within the
episode window. Prorated IRF payments would also be similarly allocated
to the 30 day post episode payment calculation in section III.C.8.d. of
this final rule.
We agree that costs for inpatient stays may not be equal for each
day of an inpatient admission, and the distribution of costs may differ
between surgical and non-surgical inpatient stays. We acknowledge there
may be different methodologies to calculate how much more costs are
incurred on the first day of a stay. However, we will maintain
consistency with the IPPS per diem transfer policy that uses a two-
times weight for the first day for a subset of MS-DRGs as described in
Sec. 412.4(f) and published on an annual basis in Table 5 of the IPPS/
LTCH PPS Final Rules. We also note that many surgical readmissions are
excluded from the episode definition described in section III.B. of
this final rule, which should mitigate the impact of this prorating
approach on surgical readmissions that extend beyond the episode.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposal to prorate payments for
services that extend beyond the episode when calculating actual episode
payments, setting episode target prices, and calculating reconciliation
and repayment amounts.
c. Pricing Adjustment for High Payment Episodes
Given the broad proposed LEJR episode definition and 90-day post-
discharge episode duration proposed for CJR, we want to ensure that
hospitals have some protection from the variable repayment risk for
especially high payment episodes, where the clinical scenarios for
these cases each year may differ significantly and unpredictably. We
did not believe the opportunity for a hospital's systematic care
redesign of LEJR episodes has significant potential to impact the
clinical course of these extremely disparate high payment cases.
The BPCI Model 2 uses a generally similar episode definition as
proposed for CJR and the vast majority of BPCI episodes being tested
for LEJR are 90 days in duration following discharge from the anchor
hospitalization. Similarly in the proposed rule, we stated our belief
that the distribution of 90-day LEJR episode payment amounts utilizing
the BPCI Model 2 episode definition as displayed in Figure 2 provides
information that is relevant to policy development regarding CJR
episodes.
[GRAPHIC] [TIFF OMITTED] TR24NO15.002
[[Page 73336]]
As displayed, the mean episode payment amount is approximately
$26,000. Five percent of all episodes are paid at two standard
deviations above the mean payment or greater, an amount that is
slightly more than 2 times the mean episode payment amount. While these
high payment cases are relatively uncommon, we stated in the proposed
rule our belief that incorporation of the full Medicare payment amount
for such high payment episodes in setting the target price and
correspondingly in Medicare's aggregate actual episode payment that is
compared to the target price for the episode may lead in some cases to
excessive hospital responsibility for these episode expenditures. This
may be especially true when hospital responsibility for repayment of
excess episode spending is introduced in performance year 2. The
hospital may have limited ability to moderate spending for these high
payment cases. Our proposal to exclude IPPS new technology add-on
payments and separate payment for clotting factors for the anchor
hospitalization from the episode definition limits excessive financial
responsibility under this model of extremely high inpatient payment
cases that could result from costly hospital care furnished during the
anchor hospitalization. However, in the proposed rule we stated our
belief that an additional pricing adjustment in setting episode target
prices and calculating actual episode payments is necessary to mitigate
the hospital responsibility for the actual episode payments for high
episode payment cases resulting from very high Medicare spending within
the episode during the period after discharge from the anchor
hospitalization, including for PAC, related hospital readmissions, and
other items and services related to the LEJR episode.
Thus, in order to limit the hospital's responsibility for the
previously stated high episode payment cases, we proposed to utilize a
pricing adjustment for high payment episodes that would incorporate a
high payment ceiling at two standard deviations above the mean episode
payment amount in calculating the target price and in comparing actual
episode payments during the performance year to the target prices.
Specifically, when setting target prices, we would first identify
for each anchor MS-DRG in each region (discussed further in section
III.C.4. of this final rule) the episode payment amount that is two
standard deviations above the mean payment in the historical dataset
used (discussed further in section III.C.4. of the proposed rule). Any
such identified episode would have its payment capped at the MS-DRG
anchor and region-specific value that is two standard deviations above
the mean, which would be the ceiling for purposes for calculating
target prices. We note that the calculation of the historical episode
high payment ceiling for each region and MS-DRG anchor would be
performed after other steps, including removal of effects of special
payment provisions and others described in section III.C.4.c. of this
final rule.
When comparing actual episode payments during the performance year
to the target prices, episode payments for episodes in the performance
year would also be capped at two standard deviations above the mean.
The high episode payment ceiling for episodes in a given performance
year would be calculated based on MS-DRG anchor-specific episodes in
each region. We discuss further how the high episode payment ceiling
would be applied when comparing episode payments during the performance
year to target prices in section III.C.6. of this final rule.
While this approach generally lowers the target price slightly, it
provides a basis for reducing the hospital's responsibility for actual
episode spending for high episode payment cases during the model
performance years. When performing the reconciliation for a given
performance year of the model, we would array the actual episode
payment amounts for all episodes being tested within a single region,
and identify the regional actual episode payment ceiling at two
standard deviations above the regional mean actual episode payment
amount. If the actual payment for a hospital's episode exceeds this
regional ceiling, we would set the actual episode payment amount to
equal the regional ceiling amount, rather than the actual amount paid
by Medicare, when comparing a hospital's episode spending to the target
price. Thus, a hospital would not be responsible for any actual episode
payment that is greater than the regional ceiling amount for that
performance year. We proposed to adopt this policy for all years of the
model, regardless of the reconciliation payment opportunity or
repayment responsibility in a given performance year, to achieve
stability and consistency in the pricing methodology. We stated in the
proposed rule our belief that this proposal provides reasonable
protection for hospitals from undue financial responsibility for
Medicare episode spending related to the variable and unpredictable
course of care of some Medicare beneficiaries in CJR episodes, while
still fully incentivizing increased efficiencies for approximately the
95 percent of episodes for which we estimate actual episode payments to
fall below this ceiling.\21\ We sought comment on our proposal to apply
a pricing adjustment in setting target prices and reconciling actual
episode payments for high payment episodes.
---------------------------------------------------------------------------
\21\ Medicare FFS Parts A and B claims, CJR episodes as
proposed, between October 1, 2013 and September 30, 2014.
---------------------------------------------------------------------------
The following is a summary of the comments received and our
responses.
Comment: Many commenters supported the proposal for a high episode
payment ceiling at two standard deviations above the mean episode
payment amount in calculating the target price and in comparing actual
episode payments during the performance year to the target prices. They
agreed that such a ceiling would help limit financial exposure to
participant hospitals from outlier episodes. Some commenters requested
the option of choosing specific risk tracks as provided under BPCI (for
example, high episode payment ceiling at 75th, 95th, or 99th
percentile).
Response: We appreciate commenters' support for a high episode
payment ceiling. We acknowledge that BPCI offers different risk tracks
with different outlier protection features from which participants can
choose, and that we did not propose to provide CJR participant
hospitals with choice of risk tracks or outlier protection policy.
However, with the blending of regional and hospital-specific historical
episode expenditure data that we are finalizing in section
III.C.4.b.(5) of this final rule to calculate target prices, applying
different risk tracks or outlier protection policies to different
hospitals would distort target price calculations; this is not an issue
in BPCI because target prices are calculated using only hospital-
specific historical episode expenditure data. Additionally, we continue
to believe that setting a high episode payment ceiling at two standard
deviations above the mean episode payment amount, along with the
phasing in of responsibility for hospital repayment in performance year
1 as discussed in section III.C.2 of this final rule, will be
sufficient to limit financial exposure due to outlier episodes. We will
finalize our proposal to use a common outlier policy for all
participant hospitals.
Comment: Many commenters requested that CMS risk adjust episode
spending based on patients' hip fracture status, among other clinical
and demographic dimensions.
Response: We refer readers to comments and responses to comments
[[Page 73337]]
in section III.C.4.b.(1) of this final rule for further discussion on
risk stratification for hip fracture status, and we reference it here
because changes to risk stratification would impact how a high payment
episode ceiling would function. As discussed in the responses to
comments in section III.C.4.b.(1) of this final rule, we will modify
our policy in this final rule so as to set different target prices both
for episodes anchored by MS-DRG 469 vs. MS-DRG 470 and for episodes
with hip fractures vs. without hip fractures. Given this change, we
will also modify the proposed approach to apply the high payment
episode ceiling. Specifically, instead of calculating and applying high
payment episode ceilings for each region and anchor MS-DRG combination,
we will now calculate and apply high payment episode ceilings for each
region, anchor MS-DRG, and hip fracture status combination.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposal to apply high episode payment
ceilings when calculating actual episode payments, setting episode
target prices, and calculating reconciliation and repayment amounts.
However, we do note that the approach to calculate and apply the high
episode payment ceilings will be adapted to account for the risk
stratification based on hip fracture status discussed in section
III.C.4.b. of this final rule.
4. Episode Price Setting Methodology
a. Overview
Whether a participant hospital receives reconciliation payments or
is made responsible to repay Medicare for the CJR model will depend on
the hospital's quality and actual payment performance relative to
episode quality and target prices. Quality performance and its tie to
payments is further discussed in section III.C.5. of this final rule,
and the remainder of this section will discuss the proposed approach to
establishing target prices.
We proposed to establish CJR target prices for each participant
hospital. For episodes beginning in performance years 1, 3, 4, and 5, a
participant hospital would have eight target prices, one for each of
the following:
MS-DRG 469 anchored episodes that were initiated between
January 1 and September 30 of the performance year, if the participant
hospital successfully submits data on the voluntary patient-reported
outcome measure proposed in section III.C.5. of the proposed rule.
MS-DRG 470 anchored episodes that were initiated between
January 1 and September 30 of the performance year, if the participant
hospital successfully submits data on the proposed voluntary patient-
reported outcome measure.
MS-DRG 469 anchored episodes that were initiated between
October 1 and December 31 of the performance year, if the participant
hospital successfully submits data on the proposed voluntary patient-
reported outcome measure.
MS-DRG 470 anchored episodes that were initiated between
October 1 and December 31 of the performance year, if the participant
hospital successfully submits data on the proposed voluntary patient-
reported outcome measure.
MS-DRG 469 anchored episodes that were initiated between
January 1 and September 30 of the performance year, if the participant
hospital does not successfully submit data on the voluntary patient-
reported outcome measure.
MS-DRG 470 anchored episodes that were initiated between
January 1 and September 30 of the performance year, if the participant
hospital does not successfully submit data on the proposed voluntary
patient-reported outcome measure.
MS-DRG 469 anchored episodes that were initiated between
October 1 and December 31 of the performance year, if the participant
hospital does not successfully submit data on the proposed voluntary
patient-reported outcome measure.
MS-DRG 470 anchored episodes that were initiated between
October 1 and December 31 of the performance year, if the participant
hospital does not successfully submit data on the proposed voluntary
patient-reported outcome measure.
For episodes beginning in performance year 2, a participant
hospital would have 16 target prices. These would include the same
combinations as for the other 4 performance years, but one set for
determining potential reconciliation payments, and the other for
determining potential Medicare repayment amounts, as part of the
phasing in of two-sided risk discussed later in this section. Further
discussion on our proposals for different target prices for MS-DRG 469
versus MS-DRG 470 anchored episodes, for episodes initiated between
January 1 and September 30 versus October 1 and December 31, and for
participant hospitals that do and do not successfully submit data on
the proposed patient-reported outcome measure can be found in sections
III.C.4.b. and III.C.5. of the proposed rule.
We intend to calculate and communicate episode target prices to
participant hospitals prior to the performance period in which they
apply (that is, prior to January 1, 2017, for target prices covering
episodes initiated between January 1 and September 30, 2017; prior to
October 1, 2017 for target prices covering episodes initiated between
October 1 and December 31, 2017). We stated in the proposed rule our
belief that prospectively communicating prices to hospitals will help
them make any infrastructure, care coordination and delivery, and
financial refinements they may deem appropriate to prepare for the new
episode target prices.
The proposed approach to setting target prices incorporated the
following features:
Set different target prices for episodes anchored by MS-
DRG 469 versus MS-DRG 470 to account for patient and clinical
variations that impact hospitals' cost of providing care.
Use 3 years of historical Medicare payment data grouped
into episodes of care according to the episode definition in section
III.B. of the proposed rule, hereinafter termed historical CJR
episodes. The specific set of 3-historical-years used would be updated
every other performance year.
Apply Medicare payment system (for example, IPPS, OPPS,
IRF PPS, SNF, MPFS, etc.) updates to the historical episode data to
ensure we incentivize hospitals based on historical utilization and
practice patterns, not Medicare payment system rate changes that are
beyond hospitals' control. Because different Medicare payment system
updates become effective at two different times of the year, we would
calculate separate target prices for episodes initiated between January
1 and September 30 versus October 1 and December 31.
Blend together hospital-specific and regional historical
CJR episode payments, transitioning from primarily provider-specific to
completely regional pricing over the course of the 5 performance years,
to incentivize both historically efficient and less efficient hospitals
to furnish high quality, efficient care in all years of the model.
Regions would be defined as each of the nine U.S. Census divisions.
Normalize for provider-specific wage adjustment variations
in Medicare payment systems when combining provider-specific and
regional historical CJR episodes. Wage adjustments would
[[Page 73338]]
be reapplied when determining hospital-specific target prices.
Pool together CJR episodes anchored by MS DRGs 469 and 470
to use a greater historical CJR episode volume and set more stable
prices.
Apply a discount factor to serve as Medicare's portion of
reduced expenditures from the CJR episode, with any remaining portion
of reduced Medicare spending below the target price potentially
available as reconciliation payments to the participant hospital where
the anchor hospitalization occurred.
Further discussion on each of the individual features can be found
in section III.C.4.b. of this final rule. In section III.C.4.c. of this
final rule, we also provide further details on the proposed sequential
steps to calculate target prices and how each of the pricing features
would fit together.
The following is a summary of the comments received and our
responses.
Comment: Commenters responded on several of the proposed pricing
features, including how quality performance would affect payment, and
we refer readers to comments and responses to comments in sections
III.C.4.b and III.C.5 for further discussion on changes to how quality
would be tied to payment as described in the proposed rule. We
reference these comments here because any changes to the proposed
episode price setting methodology and link between quality performance
and payment would impact the number of target prices for each
participant hospital.
Response: As further discussed in section III.C.4.b.(1) of this
final rule, we are modifying the proposed rule to risk stratify (and
set different prices) based on not just different anchor MS-DRGs but
also patients' hip fracture status. As discussed in section
III.C.4.b.(9) of this final rule, we are modifying our policy in this
final rule so as to use lower discount factors for purposes of
determining the hospital's responsibility for excess episode spending
not only in performance year 2, but also in performance year 3.
Additionally, as discussed in section III.C.5 of this final rule, we
are modifying the proposed rule so as to provide different levels of
quality incentive payments that would modulate participant hospitals'
effective target price discount factor based on their quality
performance. Because of these changes, each participant hospital in
performance years 1, 4, and 5 will have 8 potential target prices for
each combination of anchor MS-DRG (469 vs. 470), hip fracture status
(with hip fracture vs. no hip fracture), and episode initiation date
(between April 1 and September 30 vs. between October 1 and December 31
for performance year 1, and between January 1 and September 30 vs.
between October 1 and December 31 for performance years 2 through 5).
Each participant hospital in performance years 2 and 3 will have 16
target prices for the same combinations in performance years 1, 4, and
5, but with one group of 8 potential target prices for purposes of
calculating reconciliation payments and another group of 8 potential
target prices for purposes of determining hospital's responsibility for
excess episode spending.
b. Pricing Features
(1) Different Target Prices for Episodes Anchored by MS-DRG 469 Versus
MS-DRG 470
For each participant hospital we proposed to establish different
target prices for CJR episodes initiated by MS-DRG 469 versus MS-DRG
470. MS-DRGs under the IPPS account for some of the clinical and
resource variations that exist and that impact hospitals' cost of
providing care. Specifically, MS-DRG 469 is defined to identify, and
provide hospitals a higher Medicare payment to reflect the higher
hospital costs for, hip and knee procedures with major complications or
comorbidities. Therefore, we proposed to risk stratify and calculate
separate target prices for each participant hospital for CJR episodes
with MS-DRG 469 versus MS-DRG 470 anchor hospitalizations.
We considered risk adjusting the episode target prices by making
adjustments or setting different prices based on patient-specific
clinical indicators (for example, comorbidities). However, we did not
believe there is a sufficiently reliable approach that exists suitable
for CJR episodes beyond MS-DRG-specific pricing, and there is no
current standard on the best approach. At the time of developing the
proposed rule Tennessee, Ohio, and Arkansas are launching multi-payer
(including Medicaid and commercial payers, excluding Medicare) bundles
and include hip and knee replacement as an episode.22 23 24
These states' hip and knee episode definitions and payment models are
consistent with, though not the same as, the proposed CJR episode
described in the proposed rule. However, each of these three states
uses different risk adjustment factors. This variation across states
supported our stated belief in the proposed rule that there is
currently no standard risk adjustment approach widely accepted
throughout the nation that could be used under CJR, a model that would
apply to hospitals across multiple states. Therefore, we did not
propose to make risk adjustments based on patient-specific clinical
indicators.
---------------------------------------------------------------------------
\22\ Tennessee Health Care Innovation Initiative. http://www.tn.gov/HCFA/strategic.shtml. Accessed on April 16, 2015.
\23\ Ohio Governor''s Office of Health Transformation.
Transforming Payment for a Healthier Ohio, June 8, 2014. http://www.healthtransformation.ohio.gov/LinkClick.aspx?fileticket=TDZUpL4a-SI%3d&tabid=138, Accessed on
April 16, 2014.
\24\ Total Joint Replacement Algorithm Summary, Arkansas Health
Care Payment Improvement Initiative, November 2012. http://www.paymentinitiative.org/referenceMaterials/Documents/TJR%20codes.pdf. Accessed on April 17, 2015.
---------------------------------------------------------------------------
We also considered making risk adjustments based on the participant
hospital's average Hierarchical Condition Category (HCC) score for
patients with anchor CJR hospitalizations. The CMS-HCC risk adjustment
model quantifies a beneficiary's risk by examining the beneficiary's
demographics and historical claims data and predicting the
beneficiary's total expenditures for Medicare Parts A and B in an
upcoming year. However, the CMS-HCC risk adjustment model's intended
use is to pay Medicare Advantage (MA) plans appropriately for their
expected relative costs. For example, MA plans that disproportionately
enroll the healthy are paid less than they would have been if they had
enrolled beneficiaries with the average risk profile, while MA plans
that care for the sickest patients are paid proportionately more than
if they had enrolled beneficiaries with the average risk profile. The
CMS-HCC risk adjustment model is prospective. It uses demographic
information (that is, age, sex, Medicare/Medicaid dual eligibility,
disability status) and a profile of major medical conditions in the
base year to predict Medicare expenditures in the next year.\25\ As
previously noted, the CMS-HCC risk adjustment model is used to predict
total Medicare expenditures in an upcoming year, and may not be
appropriate for use in predicting expenditures over a shorter period of
time, such as the CJR episode, and may not be appropriate in instances
where its use is focused on LEJRs. Therefore, since we have not
evaluated the validity of HCC scores for predicting Medicare
expenditures for shorter episodes of care or for specifically LEJR
beneficiaries, we did not propose to risk
[[Page 73339]]
adjust the target prices using HCC scores for the CJR model.
---------------------------------------------------------------------------
\25\ Pope, C. et al., Evaluation of the CMS-HCC Risk Adjustment
Model Final Report. Report to the Centers for Medicare & Medicaid
Services under Contract Number HHSM-500-2005-00029I. RTI
International. Research Triangle Park, NC. March, 2011.
---------------------------------------------------------------------------
We also considered risk stratifying or setting different prices for
different procedures, such as different prices for hip versus knee
replacements, but we did not believe there would be substantial
variation in episode payments for these clinical scenarios to warrant
different prices or adjustments. Moreover, Medicare IPPS payments,
which account for approximately 50 percent \26\ of CJR episode
expenditures, do not differentiate between hip and knee procedures,
mitigating procedure-specific variation for the anchor hospitalization.
Furthermore, there are no widely accepted clinical guidelines to
suggest that PAC intensity would vary significantly between knee and
hip replacements. We sought comment on our proposal to price episodes
based on the MS-DRG for the anchor hospitalization, without further
risk adjustment.
---------------------------------------------------------------------------
\26\ Medicare FFS Parts A and B claims, CJR episodes, as
proposed in this rule, between October 2013 and September 2014.
---------------------------------------------------------------------------
The following is a summary of the comments received and our
responses.
Comment: Many commenters stated that proper risk adjustment is
necessary for the success of this model, and that anchor MS-DRG-
specific pricing can help but is not sufficient on its own. Proper risk
adjustment would account for differences in episode spend due to
patient variations that are out of providers' control. They stated that
MS-DRGs may capture variations within the inpatient setting, but do not
reflect patient variations post-discharge. Inappropriate risk
adjustment could lead to access issues for higher risk patients and
increased volume of LEJR procedures for younger/healthier patients by
participant hospitals looking to lower their average episode
expenditures.
Most commenters who wrote on the issue suggested risk adjustment or
complete exclusion for episodes with hip fractures, partial hip
replacements, and emergent (versus non-emergent or elective)
procedures. Some commenters provided analysis on hip fractures, in
particular, and demonstrated episodes with hip fractures are
significantly more expensive than those without hip fractures. Other
clinical and demographic dimensions offered for risk adjustment or
exclusion include the following: Procedure (total hip [THA] vs. total
knee [TKA] vs. partial hip [PHA] vs. ankle vs. limb reattachment);
socioeconomic status; patient functional status; age; and
comorbidities. Requests from commenters for risk adjustment based on
the previously stated dimensions were usually paired with requests to
also exclude patients from the CJR model, and we encourage readers to
read comments in section III.B.2.a. of this final rule for additional
details on the clinical and demographic dimensions requested for risk
adjustment or exclusion.
Some commenters who wrote on the issue of risk adjustment disputed
CMS' statement in the proposed rule that there is no standard risk
adjustment approach widely accepted throughout the nation. They pointed
to examples of existing risk adjustment approaches that could be used
for CJR episodes, such as Optum's Procedure Episode Grouper (PEG),
Truven's Medical Episode Grouper (MEG), Health Care Incentives
Improvement Institute's (HCI3) risk adjustment model, CMS's HCCs model,
and CMS's risk-adjusted quality/efficiency metric for elective LEJR
episodes: Hospital-Level, Risk-Standardized Payment Associated with a
90-Day Episode of Care for Elective Primary Total Hip Arthroplasty
(THA) and/or Total Knee Arthroplasty (TKA).
Response: In response to comments, we undertook further analysis.
Our analysis showed that episodes with hip fractures, identified by
historical anchor hospitalization claims with an ICD-9-CM hip fracture
code as the principal diagnosis, have approximately 70 percent greater
historical average episode expenditures than episodes without hip
fractures, even for episodes within the same anchor MS-DRG, confirming
analyses shared by some commenters that also showed episodes with hip
fractures to have significantly greater average expenditures.\27\ PHA
episodes and emergent episodes had similarly higher historical average
expenditures than TKA and THA episodes and non-emergent episodes,
respectively. There are clearly patient-specific conditions that lead
to significant episode expenditure variations, even within the same MS-
DRG.
---------------------------------------------------------------------------
\27\ Medicare FFS Parts A and B claims, CJR episodes, as
proposed in the proposed rule, between October 2013 and September
2014.
---------------------------------------------------------------------------
On the basis of the comments and our further analysis, we agree
with commenters that proper risk adjustment is necessary to
appropriately incentivize participant hospitals to deliver high quality
and efficient care. We acknowledge that a comprehensive risk adjustment
methodology beyond just setting different prices by anchor MS-DRGs
could more accurately risk adjust episodes for patient-specific
clinical and demographic factors that would drive variations in CJR
episode expenditures.
We disagree with commenters, though, that there is an already
existing, widely accepted risk adjustment methodology for CJR episodes.
The HCC model, as discussed earlier in this section, is not designed to
predict costs within CJR episodes and may not accurately predict CJR
episode expenditures. Commercial claims groupers such as Optum's PEG,
Truven's MEG, and HCI3's risk adjustment model utilize different
episode definitions from how we will define CJR episodes. Additionally,
these commercial groupers have yet to be validated for a Medicare
population; we believe there may be a different set of risk factors
that predict episode expenditures for Medicare beneficiaries than those
used to predict episode expenditures for younger and generally
healthier individuals with commercial insurance. We also acknowledge
that CMS has designed a risk-adjusted quality/efficiency metric for
elective LEJR episodes: Hospital-Level, Risk-Standardized Payment
Associated with a 90-Day Episode of Care for Elective Primary Total Hip
Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA). This metric,
though, has been developed for a different episode definition; most
notably, this risk-adjusted metric excludes emergent episodes while the
CJR episode definition does not exclude emergent episodes, as discussed
in section III.B. of this final rule.
We do believe that there are opportunities to learn from existing
comprehensive risk adjustment models, and we may explore how a
comprehensive risk adjustment model such as these may be adapted for
the CJR model in the future.
In the meantime, though, we also believe we can improve upon the
proposed approach of only setting different target prices by anchor MS-
DRG. Specifically, we can account for the impact of hip fracture status
(with hip fracture vs. without hip fracture), procedure choice (PHA vs.
TKA or THA), and emergence status (emergent vs. non-emergent) on
episode expenditures. According to our analysis, though, there was
significant correlation between incidence of hip fractures, partial hip
procedures, and emergent procedures--94 percent of partial hip
replacement episodes and 93 percent of emergent episodes are for
patients with hip fractures. Because of the correlation between these
three factors, we believe we can account for all three by risk
stratifying based on hip fracture status alone. We believe hip fracture
status is a more appropriate dimension on which
[[Page 73340]]
to risk stratify because it reflects patients' clinical status, as
opposed to partial hip replacements and emergent procedures which are
influenced by providers' care delivery decisions.
In light of the comments and our additional analysis, we will
modify our proposed policy to risk stratify, or set different target
prices, both for episodes anchored by MS-DRG 469 vs. MS-DRG 470 and for
episodes with hip fractures vs. without hip fractures. By adding hip
fracture status to our risk stratification approach, we believe we can
capture a significant amount of patient-driven episode expenditure
variation. Additionally, because of the high correlation between
incidence of hip fractures, partial hip procedures, and emergent
procedures, we do not believe we need to add any procedure-specific and
emergent status factors for risk stratification. We still believe, as
stated in the proposed rule that PAC intensity would not vary
significantly between TKA and THA for beneficiaries without hip
fractures.
We will identify episodes with hip fractures using ICD-9-CM or ICD-
10-CM diagnosis codes, where the hip fracture diagnosis is the
principal diagnosis on the anchor hospitalization claim for an LEJR
procedure. Our goal is to identify those CJR episodes where the primary
surgical treatment for the hip fracture is an LEJR procedure furnished
during the anchor hospitalization. The historical episodes with hip
fracture diagnosis codes on the anchor hospitalization claim will be
used to set the hip fracture episode target prices under the CJR model,
and episodes during the CJR model with hip fracture diagnosis codes on
the anchor hospitalization claim will be reconciled at the hip fracture
episode target prices.
In order to develop the initial list of ICD-9-CM hip fracture
diagnosis codes used to identify those historical episodes with hip
fracture for calculating hip fracture episode target prices, to
implement changes to the list to account for the transition to the ICD-
10-CM diagnosis code set that will be used to identify episodes during
the model performance years that will receive fracture episode target
prices, and to make other changes as necessary based on annual ICD-10-
CM coding changes or to address issues raised by the public throughout
the model performance years, we are implementing the following
subregulatory process, which mirrors the subregulatory process we will
use for the episode definition exclusions list described in section
III.B.2 of this final rule. We will use this process on an annual, or
more frequent, basis to update the ICD-CM hip fracture diagnosis code
list and to address issues raised by the public.
As part of this process, we will first develop the potential ICD-CM
hip fracture diagnosis codes based on our assessment according to the
following standards:
The ICD-CM diagnosis code is sufficiently specific that it
represents a bone fracture for which a physician could determine that a
hip replacement procedure, either a PHA or a THA, could be the primary
surgical treatment.
The ICD-CM diagnosis code is the primary reason (that is,
principal diagnosis code) for the anchor hospitalization.
We will then post a list of potential hip fracture diagnosis codes
(whether ICD-9-CM diagnosis codes, as necessary to develop initial
target prices, or ICD-10-CM diagnosis codes to be utilized during the
model performance years) to the CMS Web site at http://innovation.cms.gov/initiatives/cjr/ to allow for public input on our
planned application of these standards, and then we will adopt the ICD-
CM hip fracture diagnosis code list with posting to the CMS Web site of
the final ICD-CM hip fracture diagnosis code list after our
consideration of the public input.
With public release of this final rule, we are initiating this
subregulatory process to develop a final ICD-9-CM hip fracture
diagnosis code list that will be used to identify historical anchor
hospitalizations for beneficiaries with hip fracture for purposes of
determining episode spending in the historical period and developing
initial target prices for the model. The potential ICD-9-CM hip
fracture diagnosis code list is posted on the CJR Web site at http://innovation.cms.gov/initiatives/cjr/. Given our objective to quickly
develop target prices and provide them to participant hospitals in the
timeframe described in section III.C.4. of this final rule, we will
allow for public input on this list for 14 days after the public
release of this final rule. Public comments will be submitted via an
email address posted on the CJR Web site along with the list of
potential ICD-9-CM hip fracture diagnosis codes previously referenced.
We will consider the public's input and then, after consideration, we
will post the final ICD-9-CM hip fracture diagnosis code list to the
CMS Web site. This list will be used to calculate the first set of
target prices communicated to participant hospitals. Within 30 days of
public release of the final rule, we will again initiate this
subregulatory process to identify ICD-10-CM hip fracture diagnosis
codes by posting the potential ICD-10-CM hip fracture diagnosis code
list on the CMS Web site and seeking public input, so we can provide in
a timely manner the final list of ICD-10-CM hip fracture diagnosis
codes prior the beginning of the first model performance year.
Final Decision: After consideration of the public comments we
received, we are modifying the proposed rule to risk stratify (and set
different target prices) based on not just different anchor MS-DRGs but
also patients' hip fracture status. We will identify episodes with hip
fractures using ICD-9-CM or ICD-10-CM diagnosis codes in the principal
position on the claim for the anchor hospitalization. We are
instituting a subregulatory process in order to allow for public
comment and to finalize the ICD-9-CM and ICD-10-CM diagnosis codes to
be used in identifying hip fracture cases in the CJR model, which we
are initiating as of the public release of this final rule. We refer
readers to the list of ICD-9-CM diagnosis codes posted on the CJR model
Web site at http://innovation.cms.gov/initiatives/cjr/.
This policy is codified at Sec. 510.300(a).
(2) Three Years of Historical Data
We proposed to use 3 years of historical CJR episodes for
calculating CJR target prices. The set of 3-historical-years used would
be updated every other year. Specifically--
Performance years 1 and 2 would use historical CJR
episodes that started between January 1, 2012 and December 31, 2014;
Performance years 3 and 4 would use historical episodes
that started between January 1, 2014 and December 31, 2016; and
Performance year 5 would use episodes that started between
January 1, 2016 and December 31, 2018.
We considered using fewer than 3 years of historical CJR episode
data, but we are concerned with having sufficient historical episode
volume to reliably calculate target prices. We also considered not
updating the historical episode data for the duration of the model.
However, we stated in the proposed rule our belief that hospitals'
target prices should be regularly updated on a predictable basis to use
the most recent available claims data, consistent with the regular
updates to Medicare's payment systems, to account for actual changes in
utilization. We are not proposing to update the data annually, given
the uncertainty in pricing this could introduce for participant
hospitals. We also note that the effects of updating hospital-specific
data on the target price could be limited
[[Page 73341]]
as the regional contribution to the target price grows, moving to two-
thirds in performance year 3 when the first historical episode data
update would occur.
The following is a summary of the comments received and our
responses.
Comment: Commenters generally supported using historical
expenditures to set target prices. Several commenters expressed concern
that updating the 3 years of historical CJR episode data every other
year would effectively make participant hospitals compete against
themselves without consideration of whether they are already efficient.
Some of these commenters cited that BPCI does not update its historical
data for the entirety of the BPCI model, and some other commenters
noted that Medicare Shared Savings Program resets its historical
benchmark every three years with each new participation agreement.
There were also a few commenters that supported updating the 3 years of
historical CJR episode data every 2 years because it was better than
doing so every year.
Some commenters also stated that if we do update the historical
data, we should include previous reconciliation payments and repayments
to Medicare for the participant hospitals. We refer readers to comments
and responses to comments in section III.C.3 of this final rule for
further discussion on this comment.
Some commenters proposed alternative approaches to getting to
target prices other than using and updating historical data. Some
commenters suggested using a negotiations/bidding process approach to
get to target prices; Medicare would negotiate with or request bids
from providers for providing services covered under the CJR episode
definition. Some other commenters suggested applying some sort of
inflation factor, such as a CMS market basket update, for future years
of the model instead of updating the 3 years of historical CJR episode
data. These alternatives to using and updating the historical CJR
episode data would help prevent a participant hospital from competing
against its historical self, even if it is already efficient, in order
to qualify for reconciliation payments.
Response: We appreciate commenters' support for using historical
expenditures to set target prices. We acknowledge that BPCI does not
update participants' historical data and Medicare Shared Savings
Program does not reset participating entities' benchmark for 3 years
(until the beginning of a new agreement period). However, these
programs employ alternative mechanisms to account for recent national
trends reflecting changes in industry wide practice patterns. BPCI, for
example, retrospectively applies a national trend factor to trend
forward historical episode expenditure data and capture changes in
nationwide practice patterns between the time period used in the
historical data and the performance period. BPCI participants are not
penalized or rewarded for mirroring nationwide practice pattern trends.
In BPCI, however, participants' target prices are determined
retrospectively after the close of each performance period. We intend
to calculate and communicate target prices prior to the start of each
performance year, as discussed in section III.C.4.a of this final rule,
so we cannot utilize the retrospective national trend factor approach
as used in BPCI.
Instead, we proposed to capture changes in nationwide practice
patterns by updating every other year the historical CJR episode data
used to set target prices. We recognize that this approach of updating
the historical episode data every other year effectively assumes a zero
percent change in utilization between the latest year of historical
episode data and the performance year. We believe this can be a valid
estimate for a few years (for example, 2014 as the latest year of
historical episode data for 2017 target prices; update historical
episode data for 2018 target prices), but it is less likely to hold
true for longer periods of time (for example, 2014 as the latest year
of historical episode data for 2020 target prices; no update to
historical episode data). Therefore, we believe updating the historical
episode data is necessary. While updating the historical episode data
more frequently (that is, every year, instead of every other year)
would lessen our reliance on an assumption of zero percent utilization
change, doing so may exacerbate commenters' concerns that already
efficient hospitals would have to compete against themselves, as
discussed further later in this section.
We appreciate commenters' concerns that it may be unsustainable for
already efficient participant hospitals to continuously improve, and
that participant hospitals may undertake activities that promote care
coordination and improved quality of care but are not directly
reimbursed under applicable Medicare FFS payment systems. If we were
using 100 percent hospital-specific pricing, updating the historical
data used to set target prices without including reconciliation
payments would create a lower and harder to achieve target price for
participant hospitals that previously increased efficiency. As
discussed in section III.C.3 of this final rule, we may revisit in
future rulemaking our decision to exclude reconciliation payments and
repayment amounts when updating the set of historical years used to set
target prices. Additionally, as we transition to regional pricing over
the course of the model, participant hospitals will no longer compete
against their historical selves but rather strive to outperform their
regional peers. Under regional pricing, an already efficient hospital
may be able to achieve actual episode expenditures below the regional
target price without having to become even more efficient. By
performance year 3, when the first update to historical episode data
would occur, the majority of the target price would be based on the
regional component, not the hospital-specific component, as described
in section III.C.4.b.(5) of this final rule.
We appreciate commenters' suggestions on using alternative
approaches to setting target prices. We may consider such approaches
for future model tests.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposal, without modification, to use
three years of historical expenditures, updated every other year, to
set target prices.
(3) Trending of Historical Data to the Most Recent Year of the Three
We acknowledge that some payment variation may exist in the 3 years
of historical CJR episodes due to updates to Medicare payment systems
(for example, IPPS, OPPS, IRF PPS, SNF PPS, etc.) and national changes
in utilization patterns. Episodes in the third of the 3-historical-
years may have higher average payments than those from the earlier 2
years because of Medicare payment rate increases over the course of the
3-historical-years. We do not intend to have CJR incentives be affected
by Medicare payment system rate changes that are beyond hospitals'
control. In addition to the changes in Medicare payment systems,
average episode payments may change year over year due to national
trends reflecting changes in industry-wide practice patterns. For
example, readmissions for all patients, including those in CJR
episodes, may decrease nationally due to improved industry-wide
surgical protocols that reduce the chance of infections. We do not
intend to provide reconciliation payments to (or require repayments
from) hospitals for achieving lower (or higher) Medicare expenditures
solely because they followed national changes in practice
[[Page 73342]]
patterns. Instead, we aim to incentivize hospitals based on their
hospital-specific inpatient and PAC delivery practices for LEJR
episodes.
To mitigate the effects of Medicare payment system updates and
changes in national utilization practice patterns within the 3 years of
historical CJR episodes, we proposed to apply a national trend factor
to each of the years of historical episode payments. Specifically, we
proposed to inflate the 2 oldest years of historical episode payments
to the most recent year of the 3-historical-years described in section
III.C.4.b.(2) of the proposed rule. We proposed to trend forward each
of the 2 oldest years using the changes in the national average CJR
episode payments. We also proposed to apply separate national trend
factors for episodes anchored by MS-DRG 469 versus MS-DRG 470 to
capture any MS-DRG-specific payment system updates or national
utilization pattern changes. For example, when using CY 2012-2014
historical episode data to establish target prices for performance
years 1 and 2, under our proposal we would calculate a national average
MS-DRG 470 anchored episode payment for each of the 3-historical-years.
The ratio of the national average MS-DRG 470 anchored episode payment
for CY 2014 to that of CY 2012 would be used to trend 2012 MS-DRG 470
anchored episode payments to CY 2014. Similarly, the ratio of the
national average MS-DRG 470 anchored episode payment for CY 2014 to
that of CY 2013 would be used to trend 2013 episode payments to CY
2014. The previously stated process would be repeated for MS-DRG 469
anchored episodes. Trending CY 2012 and CY 2013 data to CY 2014 would
capture updates in Medicare payment systems as well as national
utilization pattern changes that may have occurred.
We considered adjusting for regional trends in utilization, as
opposed to national trends. However, we stated in the proposed rule our
belief that any Medicare payment system updates and significant changes
in utilization practice patterns would not be region-specific but
rather be reflected nationally.
We sought comment on our proposal to nationally trend historical
data to the most recent year of the 3 being used to set the target
prices.
The following is a summary of the comments received and our
responses.
Comment: Some commenters supported the use of national trends for
trending historical data to the most recent of the 3 being used to set
the target prices. Some commenters suggested blending regional, instead
of national, trends to be consistent with how target prices will be
blended, as discussed in section III.C.4.b.(5) of this final rule. Some
commenters inquired how trending historical data would capture changes
in Medicare FFS fee schedules.
Response: We appreciate commenters' support for the use of national
trends for trending historical data. This trending of historical data
to the most recent of the 3 being used to set target prices would
capture both Medicare FFS fee schedule and practice pattern changes.
Medicare FFS fee schedule changes would be captured in the trend factor
calculations; for example, if Medicare FFS fee schedules change so as
to increase overall payments by 4 percent between the oldest and most
recent year of historical episode data, the national trend factor
applied to the oldest year of historical episode data would be 1.04
(assuming no change in utilization patterns). Medicare FFS fee schedule
changes apply across the nation, and we believe that major changes to
practice patterns would be nationwide and not constrained to any one
region.
Comment: Many commenters requested for risk adjustment based on
patients' hip fracture status, among other clinical and demographic
dimensions.
Response: We refer readers to comments and responses to comments in
section III.C.4.b.(1) of this final rule for further discussion on risk
stratification, and we reference it here because changes to risk
stratification would impact how we would trend historical data to the
most recent year of the three being used. As discussed in the responses
to comments in section III.C.4.b.(1) of this final rule, we will modify
our proposal so as to set different target prices both for episodes
anchored by MS-DRG 469 vs. MS-DRG 470 and for episodes with hip
fractures vs. without hip fractures. Given this change, we must also
modify the proposed approach to apply national trend factor.
Specifically, instead of calculating different national trend factors
just for anchor MS-DRGs 469 vs. 470, we will calculate different
national trend factors for each combination of anchor MS-DRG (469 vs.
470) and hip fracture status (with hip fracture vs. without hip
fracture) using the methodology we proposed.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposal to trend historical data to
the most recent of the 3 being used to set target prices, though
instead of calculating different national trend factors just for anchor
MS-DRGs 469 vs. 470, we will calculate different national trend factors
for each combination of anchor MS-DRG (469 vs. 470) and hip fracture
status (with hip fracture vs. without hip fracture).
(4) Update Historical Episode Payments for Ongoing Payment System
Updates
We proposed to prospectively update historical CJR episode payments
to account for ongoing Medicare payment system (for example, IPPS,
OPPS, IRF PPS, SNF, MPFS, etc.) updates to the historical episode data
and ensure we incentivize hospitals based on historical utilization and
practice patterns, not Medicare payment system rate changes that are
beyond hospitals' control. Medicare payment systems do not update their
rates at the same time during the year. For example, IPPS, the IRF PPS,
and the SNF payment system apply annual updates to their rates
effective October 1, while the hospital OPPS) and MPFS apply annual
updates effective January 1. To ensure we appropriately account for the
different Medicare payment system updates that go into effect on
January 1 and October 1, we proposed to update historical episode
payments for Medicare payment system updates and calculate target
prices separately for episodes initiated between January 1 and
September 30 versus October 1 and December 31 of each performance year.
The target price in effect as of the day the episode is initiated would
be the target price for the whole episode. Note that in performance
year 5, the second set of target prices would be for episodes that
start and end between and including October 1 and December 31 because
the fifth performance period of the CJR model would end on December 31,
2020. Additionally, a target price for a given performance year may
apply to episodes included in another performance year. For example, an
episode initiated in November 2016, and ending in February 2017 would
have a target price based on the second set of 2016 target prices (for
episodes initiated between October 1 and December 31, 2016), and it
would be captured in the CY 2017 performance year (performance year 2)
because it ended between January 1 and December 31, 2017. We refer
readers to section III.C.3.c. of the proposed rule for further
discussion on the definition of performance years.
We proposed to update historical CJR episode payments by applying
separate Medicare payment system update factors each January 1 and
October 1 to each of the following six components of each hospital's
historical CJR payments:
Inpatient acute.
Physician.
[[Page 73343]]
IRF.
SNF.
HHA.
Other services.
A different set of update factors would be calculated for January 1
through September 30 versus October 1 through December 31 episodes each
performance year. The six update factors for each of the previously
stated components would be hospital-specific and would be weighted by
the percent of the Medicare payment for which each of the six
components accounts in the hospital's historical episodes. The weighted
update factors would be applied to historical hospital-specific average
payments to incorporate ongoing Medicare payment system updates. A
weighted update factor would be calculated by multiplying the
component-specific update factor by the percent of the hospital's
historical episode payments the component represents, and summing
together the results. For example, let us assume 50 percent of a
hospital's historical episode payments were for inpatient acute care
services, 15 percent for physician services, 35 percent for SNF
services, and 0.0 percent for the remaining services. Let us also
assume for this example that the update factors for inpatient acute
care services, physician services, and SNF services are 1.02, 1.03, and
1.01, respectively. The weighted update factor in this example would be
the following: (0.5 * 1.02) + (0.15*1.03) + (0.35*1.01) = 1.018. The
hospital in this example would have its historical average episode
payments multiplied by 1.018 to incorporate ongoing payment system
updates. The specific order of steps, and how this step fits in with
others, is discussed further in section III.C.4.c. of this final rule.
Each of a hospital's six update factors would be based on how
inputs have changed in the various Medicare payment systems for the
specific hospital. Additional details on these update factors will be
discussed later in this section.
Region-specific update factors for each of the previously stated
components and weighted update factors would also be calculated in the
same manner as the hospital-specific update factors. Instead of using
historical episodes attributed to a specific hospital, region-specific
update factors would be based on all historical episodes initiated at
any CJR eligible hospital within the region. For purposes of this rule,
CJR eligible hospitals are defined as hospitals that are paid under
IPPS and not a participant in BPCI Model 1 or in the risk-bearing
period of Models 2 or 4 for LEJR episodes, regardless of whether or not
the MSAs in which the hospitals are located were selected for inclusion
in the CJR model. CJR episodes initiated at a CJR eligible hospital
will for purposes of this rule be referred to as CJR episodes
attributed to that CJR eligible hospital.
We considered an alternative option of trending the historical
episode payments forward to the upcoming performance year using ratios
of national average episode payment amounts, similar to how we proposed
to trend the 2 oldest historical years forward to the latest historical
year for historical CJR episode payments in section III.C.4.b.(3) of
the proposed rule. Using ratios of national average episode payment
amounts would have the advantage of also capturing changes in national
utilization patterns in addition to payment system updates between the
historical years and the performance year. However, such an approach
would need to be done retrospectively, after average episode payments
can be calculated for the performance year, because it would rely on
the payments actually incurred in the performance period, data that
would be not be available before the performance period. While the
proposed approach of using component-specific weighted update factors
may be more complicated than the previously stated alternative to use
ratios of national average episode payment amounts, we stated in the
proposed rule our belief that the additional complication is outweighed
by the value to hospitals of knowing target prices before the start of
an episode for which the target price would apply. We sought comment on
this proposed approach of updating historical episode payments for
ongoing Medicare payment system changes.
We did not propose to separately and prospectively apply an
adjustment to account for changes in national utilization patterns
between the historical and performance years. If a prospective
adjustment factor for national utilization pattern changes were
applied, it may only be meaningful in performance years 2 and 4, when
the historical data used to calculate target prices would not be
updated, but another year of historical data would be available. In any
of the other 3 performance years, the latest available historical year
of data would already be incorporated into the target prices. Given
that we proposed to refresh the historical data used to calculate
target prices every 2 years, we did not believe an additional
adjustment factor to account for national practice pattern changes is
necessary to appropriately incentivize participant hospitals to improve
quality of care and reduce episode payments.
The following is a summary of the comments received and our
responses.
Comment: Several commenters noted that the Medicare payment system
update factors were complicated to calculate. Some commenters supported
the use of calculating Medicare payment system update factors at the
hospital-specific and regional levels to reflect practice pattern
variations, while some others proposed using national update factors to
incentivize reduction in medically unnecessary and/or inappropriate
practice pattern variations.
A couple of commenters also inquired whether the Medicare payment
system update factors accounted for changes Medicare FFS payment system
changes. A commenter requested we freeze MS-DRG weights for MS-DRGs 469
and 470 if the weights decrease in any given year as part of the annual
Medicare FFS IPPS payment system updates.
Response: We acknowledge that the Medicare payment system update
factor calculations are complex, but we believe the complexity is
necessary to account for Medicare FFS payment system changes. We will
use these payment system update factors to ensure that we incentivize
hospitals based on utilization and practice patterns, not Medicare
payment system rate changes. While changes to Medicare FFS rates for
individual services would be applicable nationwide, the relative
composition of each service in historical episodes will likely vary by
hospital and region. Calculating payment system update factors at the
hospital-specific and regional levels will more accurately capture the
effects of payment system changes.
We also note that we are finalizing a modification to the equations
used to calculate update factors for those payment systems that apply
annual updates to their rates effective October 1 of each year. In lieu
of calculating the update factors for inpatient acute, SNF, and IRF
services using the values applicable at the end of latest historical
year used to calculate target prices, we will use a blend of the values
applicable during the latest historical year. Such a change will
account for the payment systems that update payment rates on a fiscal
year cycle, ensure we are calculating update factors based on the
payment rates that apply to a given period to the extent feasible, and
result in more accurate target price calculations. We reflect this
change in the sections III.C.4.b.(4)(a),
[[Page 73344]]
III.C.4.b.(4)(c), and III.C.4.b.(4)(d) of this final rule
We believe freezing MS-DRG weights would run counter to our
objective to accurately account for the effects of Medicare FFS payment
system changes. If we freeze MS-DRG weights and the weights decrease,
we may inappropriately overestimate target prices.
Comment: Some commenters requested to have a single set of target
prices for the entire calendar year, as opposed to two different sets
of target prices that would account for intra-year Medicare FFS payment
systems updates: one set for January 1 through September 30, and a
second set for October 1 through December 31. These commenters stated
that a single target price for the entire year may be easier to
communicate to participant hospitals, and that the effect of mid-
calendar year changes in Medicare FFS (for example, October 1 IPPS
changes) could be estimated and reconciled against a single set of
target prices for the entire calendar year.
Response: We appreciate commenters' desire for simplicity. However,
we would not know the extent of October 1 Medicare FFS payment system
updates prior to January of the same year. Additionally, the October
update includes payment system updates for IPPS, which accounts for the
plurality of historical CJR episode expenditures. Without knowing the
magnitude of Medicare FFS payment system updates, we do not believe we
could reliably calculate target prices. Any estimate would likely
require corrections after the end of the performance year, rendering
the initial target price unreliable and unrepresentative of the target
price used for reconciliation.
Comment: Several commenters recommended that we modify the
definition of `CJR eligible hospitals,' the term used to identify
hospitals included in calculations for the regional component of target
prices (discussed further in section III.C.4.b.(5) of this final rule),
to not exclude hospitals that are participants in BPCI Model 1 or in
the risk bearing period of Models 2 or 4 for LEJR episodes. They
recommended that some regions may have a greater proportion of these
BPCI participants, and excluding them from the calculations for the
regional component of target prices would not accurately reflect the
region's historical expenditures. Additionally, with fewer hospitals
included, the region component of target prices would be more
significantly impacted by the performance of just CJR participant
hospitals.
Response: We agree with commenters' arguments to include hospitals
that are participants in BPCI Model 1 or in the risk bearing period of
Models 2 or 4 for LEJR episodes when calculating the regional component
of CJR target prices. Including these BPCI hospitals would more
accurately reflect the region's historical expenditures, independent of
the level of BPCI participation in the region. Therefore, we are not
finalizing our proposal to exclude these hospitals from the regional
calculation. We will modify the definition of ``CJR eligible
hospitals'' to include these BPCI hospitals so that their data is
included in the regional component of target prices. We will treat
these BPCI participants as though they were any other non-BPCI-
participating hospital--we would not apply the BPCI discount factor to
claims payments nor include BPCI reconciliation or repayments for these
BPCI hospitals. We do not intend to reduce target prices for
participant hospitals just because they are located in a region with
greater BPCI participation; instead, we want to ensure that we are
calculating a representative regional component for target prices. In
order to reduce potential confusion, we will also rename ``CJR eligible
hospitals'' to be ``CJR regional hospitals''.
We also clarify that BPCI LEJR episodes will be included in the
historical data used to calculate the hospital-specific component of
target prices. There may be some CJR participant hospitals who were
previously participants in BPCI Model 2; there may be some BPCI Model 2
episodes in the historical data initiated by PGPs for which the LEJR
procedure took place at the CJR participant hospital; or there may be
some BPCI Model 3 episodes in the historical data for which the LEJR
procedure took place at the CJR participant hospital. Including the
BPCI LEJR episodes from the historical data used to calculate the
hospital-specific component of target prices would parallel the
previously discussed approach to include BPCI LEJR episodes in the
regional component of target prices. Again, as previously discussed for
the regional component of target prices, we would not apply the BPCI
discount factor to claim payments nor include BPCI reconciliation or
repayments for the hospital-specific component of target prices.
Final Decision: After consideration of the public comments we
received, we are modifying our proposal to update historical episode
payments for ongoing payment system updates so as to include in the
definition of ``CJR eligible hospitals'' that are participants in BPCI
Model 1 or in the risk bearing period of Models 2 or 4 for LEJR
episodes, and rename ``CJR eligible hospitals'' to be ``CJR regional
hospitals.'' We are also finalizing a modification to how we calculate
update factors to more accurately capture payment system rate changes
throughout the calendar year for inpatient acute, IRF, and SNF
services. The modification is reflected in III.C.4.b.(4)(a),
III.C.4.b.(4)(c), and III.C.4.b.(4)(d) of this final rule.
(a) Inpatient Acute Services Update Factor
The proposed inpatient acute services update factor would apply to
payments for services included in the episode paid under the IPPS. This
would include payments for the CJR anchor hospitalization and related
readmissions at hospitals paid under IPPS, but not payments for related
readmissions at CAHs during the episode window. Payments for related
readmissions at CAHs would be captured under the update factor for
other services in section III.C.4.b.(4)(f) of the proposed rule.
The update factor applied to the inpatient acute services component
of each participant hospital and region's historical average episode
payments would be based on how inputs for the Medicare IPPS have
changed between the latest year used in the historical 3 years of
episodes and the upcoming performance period under CJR. We proposed to
use changes in the following IPPS inputs to calculate the inpatient
acute services update factor: IPPS base rate and average of MS-DRG
weights, as defined in the IPPS/LTCH Final Rules for the relevant
years. The average MS-DRG weight would be specific to each participant
hospital and region to account for hospital and region-specific
inpatient acute service utilization patterns. Hospital-specific and
region-specific average MS-DRG weights would be calculated by averaging
the MS-DRG weight for all the IPPS MS-DRGs included in the historical
episodes attributed to each participant hospital and attributed to CJR
eligible hospitals in the region, respectively; including MS-DRGs for
anchor admissions as well as those for subsequent readmissions that
fall within the episode definition. Expressed as a ratio, the inpatient
acute services adjustment factor would equal the following:
The numerator is based on values applicable for the
upcoming performance period (PP) for which a target price is being
calculated.
[[Page 73345]]
The denominator is based on a blend of values applicable
in the latest of the 3 historical years used in the target price (TP)
calculations, weighted to account for the values applicable prior to
October 1, and values applicable starting October 1 when IPPS updates
for the new fiscal year are in effect. Note that this weighting
incorporates a modification to our proposed methodology for calculating
update factors, as previously discussed in section III.C.4.(b)(4) of
this final rule.
Therefore, the inpatient acute services update factor formula is
shown as--
[GRAPHIC] [TIFF OMITTED] TR24NO15.003
(b) Physician Services Update Factor
The proposed physician services update factor would apply to
payments for services included in the episode paid under the MPFS for
physician services. We proposed to use changes in the following MPFS
inputs to calculate the physician services update factor of each
participant hospital and region's historical average episode payments:
RVUs; work, practice expense, and malpractice (MP) liability geographic
practice cost indices (GPCIs); and national conversion factor, as
defined in the MPFS Final Rule for the relevant years. Hospital-
specific and region-specific RVU-weighted GPCIs would be calculated to
account for hospital and region-specific physician service utilization
patterns. Hospital-specific and region-specific RVU-weighted GPCIs
would be calculated by taking the proportion of RVUs for work, practice
expense, and MP liability for physician services included in the
historical episodes and attributed to each participant hospital and
attributed to CJR eligible hospitals in the region, respectively, and
multiplying each proportion by the relevant GPCI.
Expressed as a ratio, the physician services update factor would
equal the following:
The numerator is based on GPCI values applicable for the
upcoming performance period (PP) for which a target price is being
calculated.
The denominator is based on GPCI values applicable at the
end of the latest of the 3 historical years used in the target price
(TP) calculations.
Therefore, the proposed physician services update factor formula is
shown as--
[GRAPHIC] [TIFF OMITTED] TR24NO15.004
(c) IRF Services Update Factor
The proposed IRF services update factor applies to payments for
services included in the episode paid under the Medicare inpatient
rehabilitation facility prospective payment system (IRF PPS). We
proposed to use changes in the IRF Standard Payment Conversion Factor,
an input for the IRF PPS and defined in the IRF PPS Final Rule for the
relevant years, to update Medicare payments for IRF services provided
in the episode. The IRF Standard Payment Conversion Factor is the same
for all IRFs and IRF services, so there is no need to account for any
hospital-specific or region-specific IRF utilization patterns; each
participant hospital and region would use the same IRF services update
factor.
Expressed as a ratio, the IRF PPS update factor would equal the
following:
The numerator is based on values applicable for the
upcoming performance period (PP) for which a target price is being
calculated.
The denominator is based on a blend of values applicable
in the latest of the 3 historical years used in the target price (TP)
calculations, weighted to account for the values applicable prior to
October 1, and values applicable starting October 1 when IRF PPS
updates for the new fiscal year are in effect. Note that this weighting
incorporates a modification to our proposed methodology for calculating
update factors, as previously discussed in section III.C.4.(b)(4) of
this final rule.
Therefore, the IRF services update factor formula is shown as--
[GRAPHIC] [TIFF OMITTED] TR24NO15.005
(d) SNF Services Update Factor
The proposed SNF services update factor would apply to payments for
services included in the episode and paid under the SNF PPS, including
payments for SNF swing bed services. The update factor applied to the
SNF services component of each participant hospital and region's
historical average episode payments would be based on how average
Resource Utilization Group (RUG-IV) Case-Mix Adjusted Federal Rates for
the Medicare SNF PPS (defined in the SNF PPS Final Rule) have changed
between the latest year used in the historical 3 years of episodes and
the upcoming performance period under CJR. The average RUG-IV Case-Mix
Adjusted Federal Rates would be specific to each participant hospital
and region to account for hospital and region-specific SNF service
utilization patterns. Hospital-specific and region-specific average
RUG-IV Case-Mix Adjusted Federal Rates would be calculated by averaging
the RUG-IV Case-Mix Adjusted Federal Rates for all SNF services
included in the historical episodes attributed to each participant
hospital and attributed to CJR eligible hospitals in the region,
respectively. We note that the RUG-IV Case-Mix Adjusted Federal Rate
may vary for the same RUG, depending on whether the SNF was categorized
as urban or rural.
Expressed as a ratio, the SNF services update factor would equal
the following:
The numerator is based on values applicable for the
upcoming
[[Page 73346]]
performance period (PP) for which a target price is being calculated.
The denominator is based on a blend of values applicable
in the latest of the 3 historical years used in the target price (TP)
calculations, weighted to account for values applicable prior to
October 1, and values applicable starting October 1 when SNF PPS
updates for the new fiscal year are in effect. Note that this weighting
incorporates a modification to our proposed methodology for calculating
update factors, as previously discussed in section III.C.4.(b)(4) of
this final rule.
Therefore, the SNF services update factor formula is shown as--
[GRAPHIC] [TIFF OMITTED] TR24NO15.006
(e) HHA Services Update Factor
The proposed HHA services update factor would apply to payments for
services included in the episode and paid under the HH PPS, but exclude
payments for Low Utilization Payment Adjustment (LUPA) claims (claims
with four or fewer home health visits) because they are paid
differently and would instead be captured in the update factor for
other services in section III.C.4.b.(f) of the proposed rule. The
update factor applied to the home health services component of each
participant hospital and region's historical average episode payments
would be based on how inputs for the Medicare HH PPS have changed
between the latest year used in the historical 3 years of episodes and
the upcoming performance period under CJR. We proposed to use changes
in the HH PPS base rate and average of home health resource group
(HHRG) case-mix weight, inputs for the HHA PPS and defined in the HHA
PPS Final Rule for the relevant years, to calculate the home health
services update factor. The average HHRG case-mix weights would be
specific to each participant hospital and region to account for
hospital and region-specific home health service utilization patterns.
Hospital-specific and region-specific HHA services update factors would
be calculated by averaging the HHRG case-mix weights for all home
health payments (excluding LUPA claims) included in the historical
episodes attributed to each participant hospital and attributed to CJR
eligible hospitals in the region, respectively.
Expressed as a ratio, the HHA adjustment factor would equal the
following:
The numerator is based on values applicable for the
upcoming performance period (PP) for which a target price is being
calculated.
The denominator is based on values applicable at the end
of the latest of the 3 historical years used in the target price (TP)
calculations.
Therefore, the proposed HHA services update factor formula is shown
as--
[GRAPHIC] [TIFF OMITTED] TR24NO15.007
(f) Other Services Update Factor
The other services update factor would apply to payments for
services included in the episode and not paid under the IPPS, MPFS, IRF
PPS, or HHA PPS (except for LUPA claims). This component would include
episode payments for home health LUPA claims and CJR related
readmissions at CAHs. For purposes of calculating the other services
update factor, we proposed to use the Medicare Economic Index (MEI), a
measure developed by CMS for measuring the inflation for goods and
services used in the provision of physician services.\28\ We would
calculate the other services update factor as the percent change in the
MEI between the latest year used in the TP calculation and its
projected value for the upcoming performance period. Because MEI is not
hospital or region-specific, each participant hospital and region would
use the same other services update factor.
---------------------------------------------------------------------------
\28\ Medicare Market Basket Data. http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketData.html.
---------------------------------------------------------------------------
(5) Blend Hospital-Specific and Regional Historical Data
We proposed to calculate CJR episode target prices using a blend of
hospital-specific and regional historical average CJR episode payments,
including CJR episode payments for all CJR eligible hospitals in the
same U.S. Census division as discussed further in section III.C.4.b.(6)
of the proposed rule. Specifically, we proposed to blend two-thirds of
the hospital-specific episode payments and one-third of the regional
episode payment to set a participant hospital's target price for the
first 2-performance years of the CJR model (CY 2016 and CY 2017). For
performance year 3 of the model (CY 2018), we proposed to adjust the
proportion of the hospital-specific and regional episode payments used
to calculate the episode target price from two-thirds hospital-specific
and one-third regional to one-third hospital-specific and two-thirds
regional. Finally, we proposed to use only regional historical CJR
episode payments for performance years 4 and 5 of the model (CY 2019
and CY 2020) to set a participant hospital's target price, rather than
a blend between the hospital-specific and regional episode payments.
The specific order of steps, and how this step fits in with others, is
discussed further in section III.C.4.c. of the proposed rule. We
welcome comment on the appropriate blend between hospital-specific and
regional episode payments and the change in that blend over time.
We considered establishing episode target prices using only
historical CJR hospital-specific episode payments for all 5 performance
years of the model (that is, episode payments for episodes attributed
to the participant hospital, as previously described in section
III.C.2. of the proposed rule). Using hospital-specific historical
episodes may be appropriate in other models such as BPCI Model 2 where
participation is voluntary and setting a region-wide target price could
lead to a pattern of selective participation in which inefficient
providers decline to participate, undermining the model's ability to
improve the efficiency and quality of care delivered by those
providers, while already-efficient providers receive windfall gains
even if they do not further improve efficiency. Because CJR model
participants will be required to participate in the model,
[[Page 73347]]
solely using hospital-specific historical episode data is not necessary
to avoid this potential concern. Furthermore, using only hospital-
specific historical CJR episode payments may provide little incentive
for hospitals that already cost-efficiently deliver high quality care
to maintain or further improve such care. These hospitals could receive
a relatively low target price because of their historical performance
but have fewer opportunities for achieving additional efficiency under
CJR. They would not receive reconciliation payments for maintaining
high quality and efficiency, while other hospitals that were less
efficient would receive reconciliation payments for improving, even if
the less historically efficient hospitals did not reach the same level
of high quality and efficiency as the more historically efficient
hospitals. Using only hospital-specific historical CJR episode payments
may also not be sufficient to curb inefficient care or overprovision of
services for hospitals with historically high CJR episode payments. In
such instances, using hospital-specific historical episode payments for
the CJR model could result in Medicare continuing to pay an excessive
amount for episodes of care provided by inefficient hospitals, and
inefficient hospitals would stand to benefit from making only small
improvements. Thus, we did not propose to set target prices based
solely on hospital-specific data for any performance years of the
model.
We considered establishing the episode target price using only
historical CJR regional episode payments for all 5 performance years of
the model. Though regional target pricing would reward the most
efficient hospitals for continuing to provide high quality and cost
efficient care, we are concerned about providing achievable incentives
under the model for hospitals with high historical CJR average episode
payments. We stated in the proposed rule our belief that a lower
regional price for such hospitals would leave them with little
financial incentive in performance year 1, especially without any
responsibility to repay payments in excess of the target price as
described in section III.C.3. of the proposed rule. Thus, we did not
propose to set target prices solely on regional data for the entire
duration of the model.
Therefore, we proposed initially to blend historical hospital-
specific and regional-historical episode payments and then transition
to using regional-only historical episode payments in establishing
target prices to afford early and continuing incentives for both
historically efficient and less efficient hospitals to furnish high
quality, efficient care in all years of the model. Our proposal more
heavily weights a hospital's historical episode data in the first 2
years of the model (two-thirds hospital-specific, one-third regional),
providing a reasonable incentive for both currently efficient and less
efficient hospitals to deliver high quality and efficient care in the
early stages of model implementation. Beginning in performance year 3,
once hospitals have engaged in care redesign and adapted to the model
parameters, we proposed to shift to a more heavily weighted regional
contribution (one-third hospital-specific, two-thirds regional in
performance year 3) and ultimately to a regional target price for
performance years 4 and 5. We stated in the proposed rule our belief
that by performance year 4, setting target prices based solely on
regional historical data would be feasible because hospitals would have
had 3 years under this model to more efficiently deliver high quality
care, thereby reducing some of the variation across hospitals. We
stated in the proposed rule our belief that transitioning to regional
only pricing in the latter years of the model would provide important
information about the reduction in unnecessary variation in LEJR
episode utilization patterns within a region that can be achieved.
We stated in the proposed rule our belief that transitioning to
regional-only pricing in the latter years of the model may provide
valuable information regarding potential pricing strategies for
successful episode payment models that we may consider for expansion in
the future. As discussed previously, substantial regional and hospital-
specific variation in Medicare LEJR episode spending currently exists
for beneficiaries with similar demographic and health status, so we are
proposing that the early CJR model years will more heavily weight
historical hospital-specific experience in pricing episode for a
participant hospital. Once the hospital has substantial experience with
care redesign, we expect that unnecessary hospital-specific variation
in episode spending will be minimized so that regional-only pricing
would be appropriate as we have proposed. We noted that, like episode
payment under the CJR model, Medicare's current payment systems make
payments for bundles of items and services, although of various
breadths and sizes depending on the specific payment system. For
example, the IPPS pays a single payment, based on national prices with
geography-specific labor cost adjustments, for all hospital services
furnished during an inpatient hospitalization, such as nursing
services, medications, medical equipment, operating room suites, etc.
Under the IPPS, the national pricing approach incentivizes efficiencies
and has, therefore, led to a substantial reduction in unnecessary
hospital-specific variation in resource utilization for an inpatient
hospitalization. On the other hand, the episode payment approach being
tested under BPCI Model 2 relies solely on provider-specific pricing
over the lifetime of the model, assuming the number of episode cases is
sufficient to establish a reliable episode price, an approach that has
potential limitations were expansion to be considered. Thus, we stated
in the proposed rule our belief that our proposal for CJR will provide
new, important information regarding pricing for even larger and
broader bundles of services once unnecessary provider-specific
variation has been minimized that would supplement our experience with
patterns and pricing under existing payment systems and other episode
payment models. We expect that testing of CJR will contribute further
information about efficient Medicare pricing strategies that result in
appropriate payment for providers' resources required to furnish high
quality, efficient care to beneficiaries who receive LEJR procedures.
This is essential information for any consideration of episode payment
model expansion, including nationally, in the future, where
operationally feasible and appropriate pricing strategies, including
provider-specific, regional, and national pricing approaches would need
to be considered.
We proposed an exception to the blended hospital-specific and
regional pricing approach for hospitals with low historical CJR episode
volume. We proposed to define hospitals with low CJR episode volume as
those with fewer than 20 CJR episodes in total across the 3-historical-
years used to calculate target prices. We stated in the proposed rule
our belief that calculating the hospital-specific component of the
blended target price for these historically low CJR episode volume
hospitals may be subject to a high degree of statistical variation.
Therefore, for each performance year, we proposed to use 100 percent
regional target pricing for participant hospitals who have fewer than
twenty historical CJR episodes in the 3-historical-years used to
calculate target prices, as described in section III.C.4.b.(2) of the
proposed rule. We note that the 3-historical-years used
[[Page 73348]]
to calculate target prices would change over the course of the model,
as described in section III.C.4.b.(2) of the proposed rule, and when
that happens, the twenty episode threshold would be applied to the new
set of historical years. If all IPPS hospitals nationally participated
(for estimation purposes, only) in CJR, we estimate about 5 percent of
hospitals would be affected by this proposed low historical CJR episode
volume provision.\29\ A minimum threshold of twenty episodes is almost
equal to the minimum number of admissions required in the Medicare
HRRP. HRRP payment adjustment factors are, in part, determined by
procedure/condition-specific readmission rates for a hospital. HRRP
requires at least 25 procedure/condition-specific admissions to
calculate the procedure/condition-specific readmission rate and to be
included in the hospital's overall HRRP payment adjustment factor.
Though the proposed minimum threshold of twenty episodes is slightly
less than the 25 admissions required for HRRP, we stated in the
proposed rule our belief that because we would not be calculating
infrequent events such as readmissions, we can achieve a stable price
with slightly fewer episodes.
---------------------------------------------------------------------------
\29\ Medicare FFS Parts A and B claims, CJR episodes, as
proposed in this rule, between October 2013 and September 2014.
---------------------------------------------------------------------------
We also proposed an exception to the blended hospital-specific and
regional pricing approach for participant hospitals that received new
CCNs during the 24 months prior to the beginning of, or during, the
performance year for which target prices are being calculated. These
participant hospitals with new CCNs may have formed due to a merger
between or split from previously existing hospitals, or may be new
hospitals altogether. As a general principle, we aim to incorporate
into the target prices all the historical episodes that would represent
our best estimate of CJR historical payments for these participant
hospitals with new CCNs. For participant hospitals with new CCNs that
formed from a merger between or split from previously existing
hospitals, we proposed to calculate hospital-specific historical
payments using the episodes attributed to the previously existing
hospitals. These hospital-specific historical payments would then be
blended with the regional historical payments according to the approach
previously described in this section. For participant hospitals with
new CCNs that are new hospitals altogether, we proposed to use the
approach previously described in this section for hospitals with fewer
than 20 CJR episodes across the 3-historical-years used to calculate
target prices. In other cases, due to an organizational change a
hospital may experience a change to an already existing CCN during the
24 months prior to the beginning of, or during, the performance year
for which target prices are being calculated. For example, one hospital
with a CCN may merge with a second hospital assigned a different CCN,
and both hospitals would then be identified under the single CCN of the
second hospital. While there may be more than 20 CJR episodes under the
second hospital's CCN in total across the 3-historical-years used to
calculate target prices, in this scenario our use of only those cases
under the second hospital's CCN in calculating hospital-specific
historical payments would fail to meet our general principle of
incorporating into target prices all the historical episodes that would
represent our best estimate of CJR historical payments for these now
merged hospitals. In this scenario, we proposed to calculate hospital-
specific payments for the remaining single CCN (originally assigned to
the second hospital only) using the historical episodes attributed to
both previously existing hospitals. These hospital-specific historical
payments would then be blended with the regional historical payments
according to the approach previously described in this section in order
to determine the episode price for the merged hospitals bearing a
single CCN.
We sought comment on this proposed approach for blending hospital-
specific and regional historical payments.
The following is a summary of the comments received and our
responses.
Comment: Many commenters supported the proposal to blend hospital-
specific and regional historical episode data to calculate target
prices. They explained that this balanced the incentivizes for already
efficient hospitals to continue great performance, and allowed
hospitals with historically high episode expenditures sufficient time
to create care pathways and implement practice pattern changes before
getting to 100 percent regional pricing in years 4 and 5 of the CJR
model. Some other commenters recommended for hospital-specific pricing
only because any definition of region would not properly account for
variations due to factors such as patient characteristics,
socioeconomic factors, and access to care.
Some commenters recommended that instead of blending regional and
hospital-specific historical average CJR episode payments, we use the
higher of the two to reward hospitals that are already efficient.
Some commenters recommended that we delay the transition to
regional pricing in order to afford more time for hospitals with high
historic episode expenditures, some commenters supported our proposal
to get to 100 percent regional pricing by year 4, and some others
recommended that we accelerate the transition to regional pricing to
appropriately reward already efficient participant hospitals.
Response: We appreciate commenters' support for blending hospital-
specific and regional historical episode data to calculate target
prices. We appreciate that the pace of transitioning to regional
pricing may benefit some participant hospitals more than others.
However, we believe that the proposed approach to get to 100 percent
regional pricing by year 4 strikes an appropriate balance between
providing participant hospitals time to adapt while providing important
information about the reduction in unnecessary variation in LEJR
episode utilization patterns within a region that can be achieved.
We believe that only using hospital-specific pricing would not
reward already efficient participant hospitals for maintaining high
performance; participant hospitals that are already delivering
efficient and high quality care would find it challenging to improve
upon their own historical performance in order to qualify for
reconciliation payments. Similarly, we believe that using the higher of
regional and hospital-specific prices would not sufficiently
incentivize inefficient participant hospitals to become more efficient;
participant hospitals that have historically high episode expenditures
would have less of an incentive to become significantly more efficient
over the course of the model if they can qualify for reconciliation
payments by improving only slightly relative to their own historical
performance, while still being less efficient than their regional
peers.
We acknowledge the importance of properly accounting for variations
in patient-specific clinical characteristics, socioeconomic conditions,
and access to care to appropriately incentivize participant hospitals
to deliver high quality and efficient care. We refer readers to
response to comments in section III.C.4.b.(1) of this final rule for
further discussion on risk stratification to account for such
variations. We also acknowledge that incorporating a regional component
of historical episode data into a participant hospital's target prices
may increase the presence of the variations as
[[Page 73349]]
commenters stated, thereby making appropriate risk adjustment and/or
risk stratification that much more important. As discussed in the
response to comments in section III.C.4.b.(1) of this final rule, we
will risk stratify based on anchor MS-DRG and hip fracture status, and
we may explore more comprehensive risk adjustment approaches.
Comment: Several commenters recommended modifying the definition of
low volume as it is used to determine which participant hospitals
receive 100 percent regional target prices because they do not have a
sufficient number of CJR episodes in the 3-historical-years of data
used to calculate target prices. Commenters suggested increasing the
low volume threshold for hospital-specific and regional target pricing
from 20 to, for example, 100 episodes, because 20 episodes was not
sufficient to remove random variation.
Response: We agree with commenters that a greater number of
participant hospital-specific episodes would better remove the effects
of random variation. However, if we increase the low volume threshold
for blending hospital-specific and regional target prices, more
participant hospitals would receive 100 percent regional prices in the
first three performance years of the model, and their target prices
would not incorporate any data from hospital-specific historical
experience. Let us take as an example a participant hospital that has
50 episodes in the 3-historical-years of data used to calculate target
prices for performance year 1, and let us assume that the hospital-
specific portion of its target price is higher than the regional
component. This participant hospital would need to become more
efficient so as to achieve actual episode expenditures below its target
prices. By blending the hospital-specific and regional components of
the target price, this hospital has a higher target price than it would
have had it received a 100 percent regional price. With the higher
target price, the participant hospital has a greater opportunity to
improve its efficiency and qualify for reconciliation payments. The
blending of regional and hospital-specific target prices affords
historically less efficient hospitals an opportunity to be rewarded for
improvement in the earlier performance years, while they prepare for
transitioning to 100 percent regional pricing by performance year 4. We
want to afford this transition opportunity to as many participant
hospitals as possible, while minimizing the effect of random variations
for hospitals with few historical episodes. In the proposed rule, we
compared our proposed low volume threshold of 20 episodes to the
threshold used for Medicare's HRRP program. We continue to believe that
20 episodes in the 3-historical-years of data used to calculate target
prices is the appropriate ``low volume'' threshold for blending target
prices that mitigates effects of random variation while still
incorporating hospital-specific historical experience and affording
participant hospitals an opportunity to transition to 100 percent
regional pricing.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposal to blend hospital-specific and
regional historical expenditures in setting target prices, though we
note that the term ``CJR eligible hospitals' is being renamed to ``CJR
regional hospitals'' as discussed in response to comments in section
III.C.4.b.(4) of this final rule.
(6) Define Regions as U.S. Census Divisions
In all 5 performance years we proposed to define ``region'' as one
of the nine U.S. Census divisions \30\ in Figure 3.
---------------------------------------------------------------------------
\30\ There are four census regions--Northeast, Midwest, South,
and West. Each of the four census regions is divided into two or
more ``census divisions''.''. Source: https://www.census.gov/geo/reference/gtc/gtc_census_divreg.html.. Accessed on April 15, 2015.
[GRAPHIC] [TIFF OMITTED] TR24NO15.008
[[Page 73350]]
We considered using states, HRRs, and the entire U.S. as
alternative options to U.S. Census divisions in defining the region
used in blending provider-specific and regional historical episode data
for calculating target prices. However, HRR definitions are
specifically based on referrals for cardiovascular surgical procedures
and neurosurgery, and may not reflect referral patterns for orthopedic
procedures. Using the entire U.S. would not account for substantial
current regional variation in utilization, which is significant for
episodes that often involve PAC use, such as LEJR procedures.\32\
Finally, we considered using states as regions but were concerned that
doing so would not allow for sufficient LEJR episode volume to set
stable regional components of target prices, especially for participant
hospitals in small states. We believe U.S. Census divisions provide the
most appropriate balance between very large areas with highly disparate
utilization patterns and very small areas that would be subject to
price distortions due to low volume or hospital-specific utilization
patterns.
---------------------------------------------------------------------------
\31\ http://www.eia.gov/consumption/commercial/census_maps.cfm.
\32\ Hussey PS, Huckfeldt P, Hirshman S, Mehrotra A. Hospital
and regional variation in Medicare payment for inpatient episodes of
care [published online April 13, 2015]. JAMA Intern Med.
doi:10.1001/jamainternmed.2015.0674.
---------------------------------------------------------------------------
We sought comment on our proposal to define a region as the U.S.
Census division for purposes of the regional component of blended
target prices under CJR.
The following is a summary of the comments received and our
responses.
Comment: Some commenters supported the use of U.S. Census divisions
as regions. Some commenters, though, stated U.S. Census divisions are
too large with significant practice and PAC access variations,
resulting in different average historical expenditures across hospitals
in the same U.S. Census division. Some commenters suggested an
alternative of using MSAs as regions; MSAs would align with the
provider selection process, and the smaller unit for regions would
better capture regional practice pattern differences. Other commenters,
including MedPAC, stated that we should define the entire nation as the
region (that is, national pricing) because we should be striving
towards eliminating regional variations in practice patterns.
Response: We appreciate commenters' support for the use of U.S.
Census divisions as regions. Especially given that commenters proposed
both larger regions (that is, national pricing) and smaller regions
(that is, MSAs), we still believe U.S. Census divisions provide the
most appropriate balance between very large areas with highly disparate
utilization patterns and very small areas that would be subject to
price distortions due to low volume or hospital specific utilization
patterns.
Comment: Several commenters noted that some of the selected MSAs
for participation in CJR span two different U.S. Census divisions.
These commenters stated that the true cost for hospitals in the same
MSA would likely not be different, and significant differences in
pricing would create unfair market advantages due to a hospital's
address within an MSA. They suggested blending the regional target
price component of the two U.S. Census divisions that are being spanned
for each of these MSAs, reflecting the distribution of the population
within the MSA/census regions.
Response: We agree with commenters that the true cost for hospitals
in the same MSA may not be different, and significant differences in
pricing may create unfair market advantages due to a hospital's address
within an MSA. We will modify our proposal and apply the same regional
target price component to target pricing for all participant hospitals
within an MSA, even if the MSA spans two U.S. Census divisions. There
are three selected MSAs for participation in CJR that span two U.S.
Census divisions: St. Louis, Cincinnati, and Cape Girardeau.
We considered the approach suggested by commenters--blending the
two regional target price components based on the population
distribution. However, using 2010 U.S. Census data, we determined that
at least 75 percent of the population in the previously mentioned MSAs
resides in just one of the U.S. Census divisions that the MSA spans.
For simplicity, we will completely group MSAs that span U.S. Census
divisions together with the U.S. Census divisions in which the Census
estimates the majority of people reside, as shown in Table 9:
Table 9--Region Grouping for Selected MSAS That Span U.S. Census Divisions
----------------------------------------------------------------------------------------------------------------
Original U.S. Census divisions
MSA spanned by MSA (state U.S. Census division used for CJR
included in MSA) region
----------------------------------------------------------------------------------------------------------------
St. Louis, MO[dash]IL................. West North Central (MO), East West North Central.
North Central (IL).
Cincinnati, OH[dash]KY[dash]IN........ East North Central (OH, IN), East North Central.
East South Central (KY).
Cape Girardeau, MO[dash]IL............ West North Central (MO), East West North Central.
North Central (IL).
----------------------------------------------------------------------------------------------------------------
Final Decision: After consideration of the public comments we
received, we are modifying our proposal to define regions as U.S.
Census divisions so as to ascribe the same regional component of target
prices for participant hospitals in MSAs that span U.S. Census
divisions. Specifically, as described in Table 9, selected MSAs that
span U.S. Census divisions will be attributed to one U.S. Census
division for purposes of calculating the regional component of CJR
target prices.
(7) Normalize for Provider-Specific Wage Adjustment Variations
We note that some variation in historical CJR episode payments
across hospitals in a region may be due to wage adjustment differences
in Medicare's payments. In setting Medicare payment rates, Medicare
typically adjusts facilities' costs attributable to wages and wage-
related costs (as estimated by the Secretary from time to time) by a
factor (established by the Secretary) reflecting the relative wage
level in the geographic area of the facility or practitioner (or the
beneficiary residence, in the case of home health and hospice services)
compared to a national average wage level. Such adjustments are
essential for setting accurate payments, as wage levels vary
significantly across geographic areas of the country. However, having
the wage level for one hospital influence the regional-component of
hospital-specific and regional blended target prices for another
hospital with a different wage level would introduce unintended pricing
distortions not based on utilization pattern differences.
[[Page 73351]]
In order to preserve how wage levels affect provider payment
amounts, while minimizing the distortions introduced when calculating
the regional-component of blended target prices, we proposed to
normalize for wage index differences in historical episode payments
when calculating and blending the regional and hospital-specific
components of blended target prices. Calculating blended target prices
from historical CJR episodes would help ensure we incentivize hospitals
based on historical utilization and practice patterns, not Medicare
payment system rate changes that are beyond hospitals' control.
We proposed to normalize for provider-specific wage index
variations using the IPPS wage index applicable to the anchor
hospitalization (that is, the IPPS wage index used in the calculation
of the IPPS payment for the anchor hospitalization). The anchor
hospitalization accounts for approximately 50 percent of the total
episode expenditures, and the IPPS wage index is applied to IPPS
payments in a similar manner as wage indices for other Medicare payment
systems are applied to their respective payments.\33\ Therefore, we
proposed that the IPPS wage index applicable to the anchor
hospitalization for each historical episode be used to normalize for
wage index variations in historical episode payments across hospitals
when calculating blended target prices. We proposed to specifically
perform this normalization using the wage normalization factor (0.7 *
IPPS wage index + 0.3) to adjust the labor-related portion of payments
affected by wage indices. The 0.7 approximates the labor share in IPPS,
IRF PPS, SNF, and HHA Medicare payments. We would normalize for
provider-specific wage index variations by dividing a hospital's
historical episode payments by the wage normalization factor.
---------------------------------------------------------------------------
\33\ Medicare FFS Parts A and B claims, CJR episodes, as
proposed in this rule, between October 2013 and September 2014.
---------------------------------------------------------------------------
We proposed to reintroduce the hospital-specific wage variations by
multiplying episode payments by the wage normalization factor when
calculating the target prices for each participant hospital, as
described in section III.C.4.c. of the proposed rule. When
reintroducing the hospital-specific wage variations, the IPPS wage
index would be the one that applies to the hospital during the period
for which target prices are being calculated (for example, FY 2016 wage
indices for the target price calculations for episodes that begin
between January 1 and September 30, 2016). The specific order of steps,
and how this step fits in with others, is discussed further in section
III.C.4.c. of the proposed rule. We sought comment on our proposal to
normalize for wage index differences using participant hospitals' wage
indices in order to calculate blended target prices.
The following is a summary of the comments received and our
responses.
Comment: Commenters emphasized the need to account for wage index
differences. Not accounting for these differences accurately may
unfairly disadvantage some hospitals. Some commenters expressed concern
about using 0.7 as the labor share for the labor related portions of
Medicare FFS payments; the weight index weight varies by Medicare FFS
payment system, and in IPPS in particular, the weight can be either
0.688 or 0.620, depending on the IPPS hospital's wage index. Some other
commenters noted that using only the IPPS wage index for the anchor
hospital would not accurately normalize expenditures for PAC providers
who have their own wage indices. Some of these commenters recommended
we blend hospital and PAC providers' wage indices. Some commenters
requested clarification on how we would account for wage index
differences between baseline and performance periods.
Response: We acknowledge the need to accurately account for wage
index differences so that we incentivize based on practice patterns and
not Medicare FFS fee schedule differences. We recognize that the
proposed approach of using the anchor hospital's wage index and 0.7 as
the labor share for the labor related portions of Medicare FFS payments
would only approximately normalize and reapply wage indices.
In response to commenters, we will modify our proposal and
normalize for wage indices at the claim level for both historical
episode expenditures and actual episode expenditures in each
performance year by using the wage index normalization algorithm
included in the CMS Price (Payment) Standardization Detailed
Methodology discussed in section III.C.3 of this final rule, the same
methodology we finalized to exclude the various special payment
provisions in calculating episode expenditures. By normalizing claims
for wage indices in the historical episode expenditure data at the
claim level, we will accurately account for wage indices and labor
shares for various providers and suppliers under the different Medicare
FFS payment systems. This will be a more accurate way than what we
proposed to achieve the same goal of accounting for wage index
differences so that we incentivize based on practice patterns and not
Medicare FFS wage adjustment differences. We will also normalize claims
for wage indices in performance year data, as we discuss further in
response to comments in section III.C.6.a. of this final rule.
We believe it is still important to reintroduce wage index
variations near the end of the target price calculation methodology.
Participant hospitals may use their reconciliation payments to invest
in care coordination or care delivery infrastructure, and we expect
that the costs for such investments would vary by geography due to
differences in local wages. For example, we expect that hiring a care
coordinator would cost a participant hospital more in the New York
metro region than in a rural part of New Mexico. If we do not
reintroduce wage index variations into target price calculations, we
would calculate reconciliation and repayment amounts that would not
capture labor cost variation throughout the country, and participant
hospitals in higher labor cost regions may see relatively less
financial incentive to invest in improved care quality and efficiency.
We intend to incentivize all hospitals to reduce episode spending under
the CJR model, regardless of local labor cost variations.
We will use the proposed approach to reintroduce wage index
variations--apply the participant hospital's wage index to episode
spending, using 0.7 as the labor share. While commenters are correct
that the IPPS labor share can be 0.688 or 0.620, depending on the
participant hospital's wage index, the labor share for PAC providers
also varies across Medicare FFS payment systems: ~0.695 for SNF PPS and
IRF PPS, and ~0.785 for HH PPS. Given this range for the labor share
across Medicare FFS payment systems, we believe that using 0.7 is an
appropriate estimate of the labor share for reintroducing wage index
variations. Additionally, as commenters pointed out, PAC providers have
their own wage indices. Because wage index variations are reintroduced
near the end of the target price calculation methodology and after
other features, such as blending, pooling, and update factors are
applied, we do not believe there is a simple approach to reintroduce
wage index variations at the claim level. We acknowledge that using the
participant hospital's wage index and 0.7 as the labor share would only
be an approximation of the wage index variations, but this
approximation would not change whether a participant hospital qualifies
for reconciliation
[[Page 73352]]
payments or is obligated to repay Medicare because we would apply wage
index normalization at the claim level for both target price
calculations (as previously discussed) as well as calculations of
actual episode spending (as discussed in response to comments in
section III.C.6.a. of this final rule), and the wage index variation
would be reintroduced in the same manner to both target price
calculations (as previously discussed) and actual episode spending
calculations (as discussed in response to comments in section
III.C.6.a. of this final rule). We believe that this approach to
reintroducing wage index variations is sufficient to modulate the
reconciliation and repayment amounts to reflect local labor cost
variations.
Final Decision: After consideration of the public comments we
received, we are modifying our proposal so as to normalize for wage
indices at the claim level by using the wage index normalization
algorithm included in the CMS Price (Payment) Standardization Detailed
Methodology discussed in section III.C.3., the same claim-level
standardization methodology we finalized in section III.C.3.a. to
exclude the various special payment provisions in calculating episode
expenditures. We are finalizing the proposal to reintroduce wage index
differences into calculations of historical and actual episode spending
based on the participant hospital's wage index and 0.7 as the labor
cost share.
(8) Combination of CJR Episodes Anchored by MS-DRGs 469 and 470
We proposed to pool together CJR episodes anchored by MS-DRGs 469
and 470 for target price calculations to use a greater historical CJR
episode volume and set more stable target prices. We note that we would
still calculate separate target prices for episodes anchored by MS-DRGs
469 versus 470, described later in this section.
To pool together MS-DRG 469 and 470 anchored episodes, we proposed
to use an anchor factor and hospital weights. The anchor factor would
equal the ratio of national average historical MS-DRG 469 anchored
episode payments to national average historical MS-DRG 470 anchored
episode payments. The national average would be based on episodes
attributed to any CJR eligible hospital. The resulting anchor factor
would be the same for all participant hospitals. For each participant
hospital, a hospital weight would be calculated using the following
formula, where episode counts are participant hospital-specific and
based on the episodes in the 3-historical-years used in target price
calculations:
[GRAPHIC] [TIFF OMITTED] TR24NO15.009
A hospital-specific pooled historical average episode payment would
be calculated by multiplying the hospital's hospital weight by its
combined historical average episode payment (sum of MS-DRG 469 and 470
anchored historical episode payments divided by the number of MS-DRG
469 and 470 historical episodes).
The calculation of the hospital weights and the hospital-specific
pooled historical average episode payments would be comparable to how
case mix indices are used to generate case mix-adjusted Medicare
payments. The hospital weight essentially would count each MS-DRG 469
triggered episode as more than one episode (assuming MS-DRG 469
anchored episodes have higher average payments than MS-DRG 470 anchored
episodes) so that the pooled historical average episode payment, and
subsequently the target price, is not skewed by the hospital's relative
breakdown of MS-DRG 469 versus 470 anchored historical episodes.
The hospital-specific pooled historical average payments would be
modified by blending and discount factors, as described in section
III.C.4.c. of the proposed rule. Afterwards, the hospital-specific
pooled calculations would be ``unpooled'' by setting the MS-DRG 470
anchored episode target price to the resulting calculations, and by
multiplying the resulting calculations by the anchor factor to produce
the MS-DRG 469 anchored target prices.
We would calculate region-specific weights and region-specific
pooled historical average payments following the same steps proposed
for hospital-specific weights and hospital-specific pooled average
payments. Instead of grouping episodes by the attributed hospital as is
proposed for hospital-specific calculations, region-specific
calculations would group together episodes that were attributed to any
CJR eligible hospital located within the region. The hospital-specific
and region-specific pooled historical average payments would be blended
together as discussed in section III.C.4.b.(3) of the proposed rule.
The specific order of steps, and how this step fits in with others, is
discussed further in section III.C.4.c. of the proposed rule.
We considered an alternative option of independently setting target
prices for MS-DRG 470 and 469 anchored episodes without pooling them.
However, hospital volume for MS-DRG 469 was substantially less than for
MS-DRG 470. In 2013 across all IPPS hospitals, there were more than 10
times as many MS-DRG 470 anchored episodes as compared to MS-DRG 469
anchored episodes.\34\ In the same analysis, the median number of
episodes for a hospital with at least 1 episode for the MS-DRG anchored
episode was more than 80 for MS-DRG 470 anchored episodes, though fewer
than 10 for MS-DRG 469 anchored episodes. Calculating target prices for
MS-DRG 469 anchored episodes separately for each participant hospital
may result in too few historical episodes to calculate reliable target
prices. We also considered pooling together MS-DRG 469 and 470 anchored
episodes without any anchor factor or hospital weights. However,
internal analyses suggest that average episode payments for these two
MS-DRG anchored episodes significantly differed; CJR episodes initiated
by MS-DRG 469 had payments almost twice as large as those initiated by
MS-DRG 470.\35\ This difference is reasonable given that Medicare IPPS
payments differ for MS-DRG 469 and 470 admissions, and inpatient
payments comprise approximately 50 percent of CJR episode payments.
Thus, pooling together MS-DRG 469 and 470 anchored episodes without any
anchor factor or hospital weights would introduce distortions due only
to case-mix differences.
---------------------------------------------------------------------------
\34\ Source: CCW Part A and Part B claims for CJR episodes
beginning in CY 2013.
\35\ Medicare FFS Parts A and B claims, CJR episodes, as
proposed in this rule, between October 2013 and September 2014.
---------------------------------------------------------------------------
The following is a summary of the comments received and our
responses.
[[Page 73353]]
Comment: Many commenters requested for risk adjustment based on
patients' hip fracture status, among other clinical and demographic
dimensions.
Response: We refer readers to comments and responses to comments in
section III.C.4.b.(1) of this final rule for further discussion on risk
stratification, and we reference it here because changes to risk
stratification would impact how we would combine CJR episodes anchored
by MS-DRGs 469 and 470. As discussed in the responses to comments in
section III.C.4.b.(1) of this final rule, we will modify our proposal
so as to risk stratify and set different target prices both for
episodes anchored by MS-DRG 469 vs. MS-DRG 470 and for episodes with
hip fractures vs. without hip fractures. To fully incorporate this
change, we will also modify the proposed approach to calculate anchor
factors and hospital and regional weights so as to apply them to four
groups of target prices, instead of two groups; otherwise, the approach
will be the same as proposed. Specifically, we will have three anchor
factors, instead of one:
[GRAPHIC] [TIFF OMITTED] TR24NO15.010
Additionally, hospital and regional weights will be calculated
using the following formula:
[GRAPHIC] [TIFF OMITTED] TR24NO15.011
Final Decision: After consideration of the public comments we
received, we are finalizing our proposal, with modification to
calculate anchor factors and hospital and regional weights while
incorporating the previously discussed changes to risk adjust not only
on anchor MS-DRG but also hip fracture status. Additionally, note that
the term ``CJR eligible hospitals'' is being renamed to ``CJR regional
hospitals'' as discussed in response to comments in section
III.C.4.b.(4) of this final rule.
(9) Discount Factor
When setting an episode target price for a participant hospital, we
proposed to apply a discount to a hospital's hospital-specific and
regional blended historical payments for a performance period to
establish the episode target price that would apply to the participant
hospital's CJR episodes during that performance period and for which
the hospital would be fully, or partly, accountable for episode
spending in relationship to the target price, as discussed in section
III.C.3. of the proposed rule. We expect participant hospitals to have
significant opportunity to improve the quality and efficiency of care
furnished during episodes in comparison with historical practice,
because this model would facilitate the alignment of financial
incentives among providers caring for beneficiaries throughout the
episode. This discount would serve as Medicare's portion of reduced
expenditures from the CJR episode, with any episode expenditure below
the target price potentially available as reconciliation payments to
the participant hospital where the anchor hospitalization occurred. We
proposed to apply a 2 percent discount for performance years 1 through
5 when setting the target price. We stated our belief in the proposed
rule that applying a 2 percent discount in setting the episode target
price allows Medicare to partake in some of the savings from the CJR
model, while leaving considerable opportunity for participant hospitals
to achieve further episode savings below the target price that they
would be paid as reconciliation payments, assuming they meet the
quality requirements as discussed in section III.C.5 of the proposed
rule.
The proposed 2 percent discount is similar to the range of the
discounts used for episodes in the ACE demonstration.\36\ In the
Medicare ACE,
[[Page 73354]]
a demonstration program that included orthopedic procedures such as
those included in CJR, participant hospitals negotiated with Medicare
discounts of 2.5 to 4.4 percent of all Part A orthopedic services and
0.0 to 4.4 percent of all Part B orthopedic services during the
inpatient stay (excluding PAC). Hospitals received the discounted
payment and reported that they were still able to achieve savings.\37\
We stated our belief in the proposed rule that there is similar, if not
potentially more, opportunity for savings in the CJR payment model
because it includes acute inpatient, as well as PAC, an area of episode
spending that accounts for approximately 25 percent of CJR episode
payments and exhibits more than 2 times the episode payment variation
\38\ than that of acute inpatient hospitalization.\39\ We stated in the
proposed rule our belief that with the proposed 2 percent discount,
participant hospitals have an opportunity to create savings for
themselves as well as Medicare, while also maintaining or improving
quality of care for beneficiaries.
---------------------------------------------------------------------------
\36\ IMPAQ International. Evaluation of the Medicare Acute Care
Episode (ACE) Demonstration: Final Evaluation Report. Columbia, MD:
IMPAQ International; May 2013. http://downloads.cms.gov/files/cmmi/ACE-EvaluationReport-Final-5-2-14.pdf. Accessed April 16, 2015.
\37\ IMPAQ International. Evaluation of the Medicare Acute Care
Episode (ACE) Demonstration: Final Evaluation Report. Columbia, MD:
IMPAQ International; May 2013. http://downloads.cms.gov/files/cmmi/ACE-EvaluationReport-Final-5-2-14.pdf. Accessed April 16, 2015.
\38\ Variation for purposes of this calculation refers to
standard deviation of inpatient and institutional post-acute episode
payments as a percentage of average inpatient and post-acute episode
payments, respectively.
\39\ Medicare FFS Parts A and B claims, CJR episodes, as
proposed in this rule, between October 2013 and September 2014.
---------------------------------------------------------------------------
The proposed 2 percent discount also matches the discount used in
the BPCI Model 2 90-day episodes, and is less than the discount used in
BPCI Model 2 30-day and 60-day episodes (3 percent). Hundreds of
current BPCI participants have elected to take on responsibility for
repayment in BPCI Model 2 with a 2 to 3 percent discount. Because many
BPCI participants volunteered to participate in a bundled payment model
with a discount, we stated in the proposed rule our belief that a
discount percent that is within, and especially a discount of 2 percent
that is at the lower end of, the BPCI discount range would allow CJR
participant hospitals to create savings for both themselves and
Medicare.
As stated previously in section III.C.3. of the proposed rule, we
proposed to phase in the financial responsibility of hospitals for
repayment of actual episode spending that exceeds the target price
starting in performance year 2. In order to help hospitals transition
to taking on this responsibility, we proposed to apply a reduced
discount of one percent in performance year 2 for purposes of
determining the hospital's responsibility for excess episode spending,
but maintain the 2 percent discount for purposes of determining the
hospital's opportunity to receive reconciliation payment for actual
episode spending below the target price. For example, under this
proposal in performance year 2, a hospital that achieves CJR actual
episode payments below a target price based on a 2 percent discount
would retain savings below the target price, assuming the quality
thresholds for reconciliation payment eligibility are met (discussed in
section III.C.5. of the proposed rule) and the proposed performance
year stop-gain limit (discussed in section III.C.8. of the proposed
rule) does not apply. Medicare would hold responsible for repayment
hospitals whose CJR actual episode payments exceed a target price based
on a one percent discount, assuming the proposed performance year 2
stop-loss limit (discussed in section III.C.8. of the proposed rule)
does not apply. Hospitals that achieve CJR actual episode payments
between a 2 percent-discounted target price and 1 percent-discounted
target price would neither receive reconciliation payments nor be held
responsible for repaying Medicare. The decision on which percent-
discounted target price applies will be made by evaluating actual
episode payments in aggregate after the completion of performance year
2, and the same percent-discounted target price would apply to all
episodes that are initiated in performance year 2. We proposed to apply
this reduced one percent discount for purposes of hospital repayment
responsibility only in performance year 2 and apply the 2 percent
discount for excess episode spending repayment responsibility for
performance years 3 through 5. Under this proposal, the discount for
determination of reconciliation payment for episode actual spending
below the target price would not deviate from 2 percent through
performance years 1 through 5.
In section III.C.5. of the proposed rule, we proposed voluntary
submission of data for a patient-reported outcome measure. We proposed
to incent participant hospitals to submit data on this measure by
reducing the discount percentage by 0.3 percentage points for
successfully submitting data, as defined in section III.D. of the
proposed rule. By successfully submitting data on this metric for
episodes ending in performance years 1, 2, 3, 4, and or 5, we would
adjust the discount percentage in the corresponding year(s) as follows:
For episodes beginning in performance year 2, set the
discount percentage in a range from 2 percent to 1.7 percent for
purposes of determining the hospital's opportunity to receive
reconciliation payment for actual episode spending below the target
price, and set the discount percentage in a range from 1 percent to 0.7
percent for purposes of determining the amount the hospital would be
responsible for repaying Medicare for actual episode spending above the
target price.
For episodes beginning in performance years 3 through 5,
set the discount percentage in a range from 2 percent to 1.7 percent
for purposes of reconciliation payment and Medicare repayment
calculations.
The determination of whether the hospital successfully submitted
data on the patient-reported outcome measure cannot be made until after
the performance year ends and data is reported. Therefore, participant
hospitals would be provided target prices for both scenarios whether
the successfully submit data or not and such determination will happen
at the time of payment reconciliation (discussed further in section
III.C.6. of the proposed rule).
We sought comment on our proposed discount percentage of 2 percent
for CJR episodes, our proposal to reduce the discount to 1 percent on a
limited basis in performance year 2, and our proposal to reduce the
discount by 0.3 percentage points for successfully reporting patient-
reported outcomes data in the corresponding year.
The following is a summary of the comments received and our
responses.
Comment: Many commenters expressed concern about participant
hospitals taking on financial risk in the CJR model. We refer readers
to comments in section III.C.2, of this final rule for more discussion
of such comments, and we reference them here because these comments may
impact how the proposed discount factor is used to phase in risk for
participant hospitals.
Response: As discussed in the responses to comments in section
III.C.2. of this final rule, we appreciate commenters' concerns about
participant hospitals' ability to manage risk. In the proposed rule, we
proposed to use several design elements to phase in risk to better help
transition participant hospitals. One of these design elements to phase
risk in was the use of a reduced discount factor by 1 percentage point
for
[[Page 73355]]
purposes of calculating repayment amounts in performance year 2, as
discussed earlier in this section. In response to commenters' concerns,
we will extend the use of a reduced discount factor for purposes of
calculating repayment amounts to apply not only in performance year 2,
but also in performance year 3.
Comment: Many commenters offered a variety of suggestions to CMS's
proposal and alternatives considered to link quality and payment in the
CJR model, including varying the discount percentage incorporated in
the target price at reconciliation based on the participant hospital's
quality performance. We refer readers to comments in section III.C.5 of
this final rule for greater discussion of comments on linking quality
and payment in the CJR mode.
Response: As discussed in the responses to comments later in this
final rule in section III.C.5. of this final rule, we are modifying the
proposed rule so as to use a composite score methodology to link
quality and payment in the CJR model. With this composite score
methodology, each hospital will receive a discount factor of 3 percent,
though the discount factor would be 2 percent for purposes of
calculating repayments to Medicare in performance years 2 and 3,
reflecting the proposed discount factor reduction by 1 percentage point
and the extension to performance year 3 of this reduction, to phase in
downside risk, as discussed in the previous response.
Each participant hospital may qualify for a quality incentive
payment. The quality incentive payment would not be a separate payment
stream, but rather it would alter a hospital's effective discount
factor used to calculate its target prices. Depending on a participant
hospital's quality performance, in performance years 1, 4, and 5, the
quality incentive payments could result in effective discount factors
ranging from 3 percent to 1.5 percent. In performance years 2 and 3,
the quality incentive payments could result in effective discount
factors for purposes of calculating reconciliation payments ranging
from 3 percent to 1.5 percent, and for purposes of calculating
repayment amounts from 2 percent to 0.5 percent. We note that the lower
effective discount factors for calculating repayment amounts in
performance years 2 and 3 reflect the reduction by 1 percentage point
in discount factor to phase in downside risk.
If hospitals' quality performance during the CJR model mirrors
historical quality performance, we expect the majority of the
participant hospitals to qualify for an effective discount factor of 2
percent each performance year for purposes of reconciliation payment
calculations, the same discount factor proposed for all participant
hospitals in the proposed rule. By using a range of discount factors,
we will offer more participant hospitals an opportunity to qualify for
reconciliation payments, and we will be able to better reward the
highest quality participant hospitals.
We refer readers to responses to comments in section III.C.5 of
this final rule for more details on quality incentive payments,
effective discount factors, the link between quality and payment, and
how participant hospitals may perform based on historical quality
performance.
Comment: Some commenters recommended that we not apply a discount
factor to any hospital because it would effectively function as a rate
cut for MS-DRGs 469 and 470. Some of these commenters suggested we
could achieve savings using a shared savings methodology (for example,
participant hospitals would receive 50 percent of actual episode
performance below undiscounted target prices, and would repay 50
percent of actual episode performance above undiscounted target
prices).
Response: We disagree with commenters that a discount factor is the
equivalent of a rate cut. We are providing participant hospitals the
opportunity to qualify for reconciliation payments for delivering high
quality and efficient care for LEJR episodes, and reconciliation
payments may likely exceed the value of the discount factor.
The discount factor will serve as Medicare's portion of reduced
expenditures from the CJR episode. We acknowledge that there are other
potential mechanisms, including shared savings methodologies, to
provide savings to Medicare while also incentivizing participant
hospitals. However, we also believe that a discount model, as proposed,
can also incentivize participant hospitals to deliver high quality and
efficient care while also providing savings to Medicare. We appreciate
commenters' suggestions and we may consider alternative methodologies,
such as shared savings, in the future.
Comment: Several commenters requested that we not apply a discount
factor to hospitals that are already efficient because they would not
be able to achieve further efficiencies. It would be challenging for
these efficient hospitals to qualify for reconciliation payments if
benchmarked against a target price that incorporates a discount factor.
Response: Commenters' concerns could be valid if we were basing
target prices only on hospital-specific episode expenditure data.
However, because we are blending hospital-specific and regional
components in the target price calculation, and transitioning to
completely regional target prices by performance year 4, target prices
for more efficient hospitals likely would be higher than what they
would be under a hospital-specific only pricing approach. We believe
that with the blending and transition to regional pricing, historically
efficient and high quality participant hospitals have a significant
opportunity to qualify for reconciliation payments. Additionally, as
discussed in the response to comments in section III.C.5. of this final
rule, we are modifying our proposal to provide lower effective discount
factors used to calculate target prices for participant hospitals with
better quality performance. Therefore, high quality participant
hospitals will have a lower hurdle to overcome to qualify for
reconciliation payments. We will continue to incorporate a discount
percentage into the target price for every participant hospital, and we
will use a reduced discount factor for participant hospitals with high
quality performance, as stated previously in this section's responses
to comments and in section III.C.5. of this final rule.
Comment: Commenters requested upfront investments to fund care
delivery (for example, care coordination), infrastructure, and quality
reporting changes that participant hospitals may need to make, similar
to how some ACOs use upfront investments in other models and programs
(for example, an initiative similar to the ACO Investment Model for
Medicare Shared Savings Program participants). Commenters suggested we
fund these upfront investments in a number of ways, including the
following: a supplemental lump sum payment at the start of the model;
increase, instead of discount, historical episode expenditures by 2
percent; or transition in an increasing discount factor, getting to 2
percent by the end of the model.
Response: We thank the commenter for the suggestion and for
recognizing the importance of potential care delivery, infrastructure,
and quality reporting changes participant hospitals may need to make
for an episode-based payment model such as CJR. However, we do not
believe that an additional upfront payment mechanism such as a per-
beneficiary-per-month payment or an additional payment per episode will
be necessary for hospitals to
[[Page 73356]]
successfully participate in this model. In BPCI, a similar episode-
based payment model, participants have been able to improve episode
expenditure performance without such additional upfront payment
mechanisms.
Additionally, we believe there may be low investment opportunities
for participant hospitals to achieve high quality and efficiency and
qualify for reconciliation payments in this model. For example,
participant hospitals may refer to high quality and efficient PAC
providers when appropriate, and updates to discharge and referral
patterns may be informed using already publicly available quality data
and historical episode expenditure data provided by CMS and discussed
in section III.E. of this final rule. PAC expenditures account for a
significant proportion of historical CJR episode expenditures
(approximately 30 percent \40\), and changes to discharge and referral
patterns could have significant impact on participant hospitals' actual
episode expenditure performance. We note that this rationale may not
hold true for other models (for example, patient-centered medical
homes, ACOs) where providers are responsible for beneficiaries' cost of
care over a longer period of time.
---------------------------------------------------------------------------
\40\ Medicare FFS Parts A and B claims, CJR episodes, as
proposed in this rule, between October 2013 and September 2014.
---------------------------------------------------------------------------
We also reiterate that as discussed in section III.C.5.b. of this
final rule, the quality measures selected for this model are already in
use for mandatory CMS quality reporting programs, such as the IQR
program. Hospitals will not experience an additional reporting burden
under this model for such measures. In addition, while we are including
testing of a voluntary patient-reported outcomes measures, as discussed
in section III.C.5.b.2. of this final rule, reporting of this measure
will be voluntary. We do not believe there is any required additional
burden on participant hospitals to report quality data.
Given the success of participants in a similar model, the
possibility to achieve reconciliation payments with relatively low
investment approaches, and the lack of required additional quality
reporting burden, we will not make additional upfront payments through
mechanisms such as per-beneficiary-per-month payments or additional
payments per episode.
Final Decision: After consideration of the public comments we
received, we are modifying our proposal to use a composite score
methodology to link quality and payment in the CJR model. With this
composite score methodology, a participant hospital may qualify for a
reconciliation payment and for different effective discount factors
depending on its quality performance. We refer readers to section
III.C.5. of this final rule more details on how quality and payment
will be linked.
c. Approach To Combine Pricing Features
In section III.C.4.(b) of the proposed rule we discuss the various
features we proposed to incorporate into our approach to set target
prices. We refer readers to that section for more information on
rationale and alternatives considered for each feature. In this section
we discuss how the different pricing features, as well as the episode
definition (section III.B. of the proposed rule) and adjustments to
payments included in the episodes (section III.C.3. of the proposed
rule), would fit together and be sequenced to calculate CJR episode
target prices for participant hospitals. The following steps would be
used to calculate MS-DRG 469 and 470 anchored episode target prices for
both January 1 through September 30 and October 1 through December 31
each performance year. The output of each step would be used as the
input for the subsequent step, unless otherwise noted.
(1) Calculate historical CJR episode payments for episodes
that were initiated during the 3-historical-years (section
III.C.4.b.(2) of the proposed rule) for all CJR eligible hospitals for
all Medicare Part A and B services included in the episode. We note
that specific Per Beneficiary Per Month (PBPM) payments may be excluded
from historical episode payment calculations as discussed in section
III.C.7.d. of the proposed rule.
(2) Remove effects of special payment provisions (section
III.C.3.a. of the proposed rule).
(3) Prorate Medicare payments for included episode
services that span a period of care that extends beyond the episode
(section III.C.3.b of the proposed rule.).
(4) Normalize for hospital-specific wage adjustment
variation by dividing the episodes outputted in step (3) by the
hospital's corresponding wage normalization factor described in section
III.C.4.b.(7) of the proposed rule.
(5) Trend forward 2 oldest historical years of data to the
most recent year of historical data. As discussed in section
III.C.4.b.(3) of the proposed rule, separate national trend factors
would be applied to episodes anchored by MS-DRG 469 versus MS-DRG 470.
(6) Cap high episode payment episodes with a region and
MS-DRG anchor-specific high payment ceiling as discussed in section
III.C.3.c. of the proposed rule, using the episode output from the
previous step. We have posted region-specific historical average
episode payments on the CJR Web site at http://innovation.cms.gov/
initiatives/CJR/. Note that these historical average episode payments
were based on our proposed policies and do not represent actual target
prices or the regional portion of actual target prices under the model.
(7) Calculate anchor factor and participant hospital-
specific weights (section III.C.4.b.(8) of the proposed rule) using the
episode output from the previous step to pool together MS-DRG 469 and
470 anchored episodes, resulting in participant hospital-specific
pooled historical average episode payments. Similarly, calculate
region-specific weights to calculate region-specific pooled historical
average episode payments.
(8) Calculate participant hospital-specific and region-
specific weighted update factors as described in section III.C.4.b.(4)
of the proposed rule. Multiply each participant hospital-specific and
region-specific pooled historical average episode payment by its
corresponding participant hospital-specific and region-specific
weighted update factors to calculate participant hospital-specific and
region-specific updated, pooled, historical average episode payments.
(9) Blend together each participant hospital-specific
updated, pooled, historical average episode payment with the
corresponding region-specific updated, pooled, historical average
episode payment according to the proportions described in section
III.C.4.b.(5) of the proposed rule. Participant hospitals that do not
have the minimum episode volume across the historical 3 years would use
0.0 percent and 100 percent as the proportions for hospital and region,
respectively.
(10) Reintroduce hospital-specific wage variations by
multiplying the participant hospital-specific blended, updated, and
pooled historical average episode payments by the corresponding
hospital-specific wage normalization factor, using the hospital's IPPS
wage index that applies to the hospital during the period for which
target prices are being calculated (section III.C.4.b.(7) of the
proposed rule).
(11) Multiply the appropriate discount factor, as
discussed in section III.C.4.b.(9) of the proposed rule to each
participant hospital's wage-adjusted, blended, updated, and pooled
historical
[[Page 73357]]
average episode payment. For performance years 1, 3, 4, and 5, two
discount factors would be used, one if the hospital successfully
submits data on the patient-reported outcomes measure proposed in
section III.C.5. of the proposed rule, and one if the hospital does not
successfully submit the data. For performance year 2, 4 discount
factors would be used to account for the 4 combinations of the
following: (a) Whether or not the hospital successfully submits data on
the patient-reported outcomes measure; and (b) for the different
discount factors proposed for purposes of calculating reconciliation
payments vs. calculating repayment amounts. The result of this
calculation would be the participant hospital-specific target prices
for MS-DRG 470 anchored episodes.
(12) Multiply participant hospitals' target prices for MS-
DRG 470 anchored episodes by the anchor factor (section III.C.4.b.(8)
of the proposed rule) to calculate hospitals' target prices for MS-DRG
469 anchored episodes.
The previously stated twelve steps would be used to calculate
target prices for episodes that begin between January 1 and September
30, as well as for episodes that begin between October 1 and December
31, for each performance year. The target price calculations for the
two different time periods each performance year would differ by the
IPPS wage index used in step (11) and the update factors used in step
(8). By following these twelve steps, we would calculate target prices
for each participant hospital for each performance year. We refer
readers to section III.C.4.b. of the proposed rule for further details
on each of the specific steps.
We sought comment on the proposed approach to sequence and fit
together the different pricing features, the episode definition
(section III.B. of the proposed rule), and adjustments to payments
included in the episodes (section III.C.3. of the proposed rule) to
calculate CJR episode target prices for participant hospitals.
The following is a summary of the comments received and our
responses.
Comment: Many commenters requested for risk adjustment based on
patients' hip fracture status, among other clinical and demographic
dimensions. Commenters also recommended that we modify the definition
of ``CJR eligible hospitals'', the term used to identify hospitals
included in calculations for the regional component of target prices,
to not exclude hospitals that are participating in BPCI.
Response: We refer readers to comments and responses to comments in
sections III.C.4.b.(1) and III.C.4.b.(4) of the final rule for further
discussion on risk stratification and CJR eligible hospitals,
respectively. We reference them here because changes to risk
stratification and CJR eligible hospitals would impact how we would
combine CJR pricing features. Given the changes to the proposed rule
described in sections III.C.3, III.C.4.b, and III.C.5, we are modifying
the different pricing features would fit together and be sequenced to
calculate CJR episode target prices for participant hospitals. The
following steps would be used to calculate different target prices in
each performance year for each combination of anchor MS-DRG (469 vs.
470), hip fracture status (with hip fracture vs. without hip fracture),
and period during which target prices are applicable within a
performance year (episodes initiated January 1 through September 30 vs.
October 1 through December 31 each performance year). The output of
each step would be used as the input for the subsequent step, unless
otherwise noted.
(1) Calculate historical CJR episode payments for episodes
that were initiated during the 3-historical-years (section
III.C.4.b.(2) of this final rule) for all CJR eligible hospitals for
all Medicare Part A and B services included in the episode. We note
that specific PBPM payments may be excluded from historical episode
payment calculations as discussed in section III.C.7.d. of this final
rule.
(2) Remove effects of special payment provisions (section
III.C.3.a. of this final rule) and normalize for wage index differences
(section III.C.4.b.(7) of this final rule) by standardizing Medicare
FFS payments at the claim-level.
(3) Prorate Medicare payments for included episode
services that span a period of care that extends beyond the episode
(section III.C.3.b of this final rule.).
(4) Trend forward 2 oldest historical years of data to the
most recent year of historical data. As discussed in section
III.C.4.b.(3) of this final rule, separate national trend factors would
be applied for each combination of anchor MS-DRG (469 vs. 470) and hip
fracture status (with hip fracture vs. no hip fracture).
(5) Cap high episode payment episodes with a region and MS
DRG anchor specific high payment ceiling as discussed in section
III.C.3.c. of this final rule, using the episode output from the
previous step. We have posted region specific historical average
episode payments on the CJR final rule Web site at http://
innovation.cms.gov/initiatives/CJR/.
(6) Calculate anchor factor and participant hospital
specific weights (section III.C.4.b.(8) of this final rule) using the
episode output from the previous step to pool together MS DRG 469 and
470 anchored episodes with and without hip fracture, resulting in
participant hospital specific pooled historical average episode
payments. Similarly, calculate region specific weights to calculate
region specific pooled historical average episode payments.
(7) Calculate participant hospital specific and region
specific weighted update factors as described in section III.C.4.b.(4)
of this final rule. Multiply each participant hospital specific and
region specific pooled historical average episode payment by its
corresponding participant hospital specific and region specific
weighted update factors to calculate participant hospital specific and
region specific updated, pooled, historical average episode payments.
(8) Blend together each participant hospital specific
updated, pooled, historical average episode payment with the
corresponding region specific updated, pooled, historical average
episode payment according to the proportions described in section
III.C.4.b.(5) of this final rule. Participant hospitals that do not
have the minimum episode volume across the historical 3 years would use
0.0 percent and 100 percent as the proportions for hospital and region,
respectively. For purposes of this final rule, we will define the
output of this step as the pre-discount target price for MS DRG 470
anchored episodes without hip fracture.
(9) Multiply the output of step (8) by the appropriate
anchor factors (step (6) of this target price calculation process and
detailed in section III.C.4.b.(8) of this final rule) for MS DRG 469
anchored episodes with hip fracture, MS DRG 469 anchored episodes
without hip fracture, and MS DRG 470 anchored episodes with hip
fracture. For purposes of this final rule, we will define the outputs
of this step as the pre-discount target prices for MS DRG 469 anchored
episodes with hip fracture, MS DRG 469 anchored episodes without hip
fracture, and MS DRG 470 anchored episodes with hip fracture.
(10) Multiply the pre-discount target prices for MS DRGs
469 and 470 episodes with and without hip fracture by the appropriate
effective discount factor that incorporates any quality incentive
payment, as briefly described in section III.C.4.b.(9) of this final
rule
[[Page 73358]]
and more specifically detailed in the response to comments in section
III.C.5. of this final rule and Tables 19, 20, and 21. The results of
these calculations will be participant hospitals' target prices for MS
DRG 469 anchored episodes with hip fracture, MS DRG 469 anchored
episodes without hip fracture, MS DRG 470 anchored episodes with hip
fracture, and MS DRG 470 anchored episodes without hip fracture.
The previously stated 10 steps will be used to calculate target
prices for episodes that begin between January 1 and September 30
(between April 1 and September 30 for performance year 1), as well as
for episodes that begin between October 1 and December 31, for each
performance year. The target price calculations for the two different
time periods each performance year will differ by the update factors
used in the seventh step. By following these ten steps, we will
calculate target prices for each participant hospital for each
performance year. We refer readers to section III.C.4.b. of this final
rule for further details on each of the specific steps.
Final Decision: After consideration of the public comments we
received, we are modifying our proposal to incorporate changes
described in sections III.C.3, III.C.4.b, and III.C.5 of this final
rule when fitting together and sequencing episode target price features
used to calculate CJR episode target prices for participant hospitals.
These final policies are set forth at Sec. 510.300 and Sec.
510.305.
5. Use of Quality Performance in the Payment Methodology
a. Background
Over the past several years Medicare payment policy has moved away
from FFS payments unlinked to quality and towards payments that are
linked to quality of care. Through the Affordable Care Act, we have
implemented specific IPPS programs like the HVBP program (subsection
(o) of section 1886 of the Act), the Hospital Acquired Condition
Reduction Program (HACRP) (subsection (q) of section 1886) and the HRRP
(subsection (p) of section 1886), where quality of care is linked with
payment. We have also implemented the Shared Savings Program, an ACO
program that links shared savings payment to quality performance. Since
the implementation of the HRRP in October 2012, readmission rates for
various medical conditions like THA and TKA (THA/TKA) have improved.
Trend analyses show a decrease in readmission rates and specifically
with THA/TKA risk-standardized readmissions rates (RSRR) from 5.4
percent (July 2010-June 2011) to 4.8 percent (July 2012-June 2013).\41\
Additionally, hospital THA/TKA RSCR decreased from 3.4 percent (April
2010 through March 2011) to 3.1 percent (April 2012 through March
2013). Despite the downward trend of THA/TKA RSRRs and RSCRs, the wide
dispersion in these readmission rates suggests there is still room for
hospitals to improve their performance on these measures as illustrated
by a THA/TKA RSRR distribution of 2.8 to 9.4 percent (July 2010-June
2013) and a THA/TKA RSCR distribution of 1.5 to 6.4 percent (April
2010-March 2013). In the proposed rule, we stated our belief that the
CJR model would provide another mechanism for hospitals to improve
quality of care, while also achieving cost efficiency. Incentivizing
high-value care through episode-based payments for LEJR procedures is a
primary objective of CJR. Therefore, incorporating quality performance
into the episode payment structure is an essential component of the CJR
model. We also stated our belief that the financial opportunity
discussed in section III.C.2. of the proposed rule would provide the
appropriate incentives necessary to reward a participant hospital's
achievement of episode savings when the savings are greater than the
discounted target price. For the reasons stated previously, we
discussed our belief that it would be important for the CJR model to
link the financial reward opportunity with achievement in quality of
care for Medicare beneficiaries undergoing LEJR.
---------------------------------------------------------------------------
\41\ Hospital Quality Initiatives. CMS Hospital Quality
Chartbook 2014. Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Medicare-Hospital-Quality-Chartbook-2014.pdf. Accessed
April 21, 2015.
---------------------------------------------------------------------------
As discussed in section III.C. of this final rule, which outlines
the payment structure proposed for the CJR model, each participant
hospital would have target prices calculated for MS-DRG 469 and 470
anchored episodes; each anchored episode would include an anchor
hospitalization for an LEJR procedure and a 90-day period after the
date of discharge from the anchor hospitalization. These episode target
prices represent expected spending for all related Part A and Part B
spending for such episodes, with a discount applied. Hospitals who
achieve actual episode spending below a target price for a given
performance period would be eligible for a reconciliation payment from
CMS, subject to the proposed stop-gain limit policy as discussed in
section III.C.8. of this final rule.
In the proposed rule, we proposed quality performance standards
that must also be met in order for a hospital to be eligible to receive
a reconciliation payment under CJR. Specifically, we described our
proposal to include a performance measure result threshold on select
outcomes-based quality measures as a requirement for participants to
receive a reconciliation payment if actual episode spending is less
than the target price under CJR in a performance year, in addition to a
payment adjustment for successful reporting of a voluntary measure in
development. Beginning in performance year one and continuing
throughout the duration of the model, we proposed to make
reconciliation payments only to those CJR hospital participants that
met or exceeded a minimum measure result threshold. We also discussed
an alternative approach to determining CJR reconciliation payment
eligibility and adjusting payment based on a quality score developed
from performance on three outcomes-based quality measures and success
in reporting the voluntary measurement in development.
b. Implementation of Quality Measures in the Payment Methodology
In section III.D. of the proposed rule, we proposed three measures
to assess quality of care of the hospitals participating in the CJR
model. We also proposed voluntary data submission for a patient-
reported outcome measure in development. In section III.C.5. of the
proposed rule, we proposed using three measures to determine
eligibility for a reconciliation payment, as well as proposed rewarding
hospitals that voluntarily submit data for the patient-reported outcome
measure. We also discussed an alternative approach to determining
reconciliation payment eligibility and adjusting payment based on a
composite quality score calculated from the three required outcome
measures and success on reporting voluntary data on the patient-
reported outcome measure.
(1) General Selection of Quality Measures
The CJR model is designed to provide financial incentives to
improve coordination of care for beneficiaries that we expect to lead
to avoidance of post-surgical complications and hospital readmissions,
as well as to improve patient experience through care redesign and
coordination. Furthermore, we acknowledge that achievement of savings
while ensuring high-quality care for Medicare FFS beneficiaries in LEJR
episodes would require close collaboration among hospitals,
[[Page 73359]]
physicians, PAC providers, and other providers and suppliers. In order
to encourage care collaboration among multiple providers of patients
undergoing THA and TKA, we proposed three measures, as described in
detail in section III.D.2. of this final rule, to determine hospital
quality of care and to determine eligibility for a reconciliation
payment under the CJR model. The measures we proposed are as follows:
Hospital-level 30-day, all-cause RSRR following elective
primary THA and/or TKA (National Quality Forum (NQF)#1551), an
administrative claims-based measure.
Hospital-level RSCR following elective primary THA and/or
TKA (NQF #1550), an administrative claims-based measure.
HCAHPS Survey measure (NQF #0166).
Beginning in performance year 1 and continuing throughout the
duration of the model, we proposed to make reconciliation payments only
to those CJR participant hospitals that met or exceeded a minimum
performance threshold on the measures previously listed. We proposed
that hospitals must meet or exceed the measure reporting thresholds and
other requirements described in section III.C.5 and III.D. of this
final rule on all three measures in order to be eligible for a
reconciliation payment.
These three outcome measures were chosen due to their: (1)
Alignment with the goals of the CJR model; (2) hospitals' familiarity
with the measures due to their use in other CMS hospital quality
programs, including programs that tie payment to performance such as
HVBP and HRRP; and (3) assessment of CMS priorities to improve the rate
of LEJR complications and readmissions, while improving patient
experience. In the proposed rule, we stated our belief that the three
quality measures we proposed for reconciliation payment eligibility
reflected these goals and accurately measured hospitals' level of
achievement on such goals.
(2) Adjustment to the Payment Methodology for Voluntary Submission of
Data for Patient-Reported Outcome (PRO) Measure
During our consideration of quality metrics for the CJR model, we
examined the feasibility of linking voluntary data submission of
patient-reported outcomes, beyond the current three required measures
discussed in section III.D.2. of this final rule for use in the model,
with the possibility of incentivizing participant hospitals under the
episode payment model to participate in this voluntary submission of
data. We specifically examined potential patient-reported outcome
measures since this type of outcome measure aligns with the CJR model
goal of improving LEJR episode quality of care, including a heightened
emphasis on patient-centered care where patients provide meaningful
input to their care. Furthermore, the availability of patient reported
outcome data would provide additional information on a participant
hospital's quality performance, especially with respect to a patient's
functional status, beyond the current three required measures discussed
in section III.D.2. of this final rule for use in the model. We noted
that we have a measure in development, the Hospital-Level Performance
Measure(s) of Patient-Reported Outcomes Following Elective Primary THA
or TKA measure or both (hence forth referred to as ``THA/TKA patient-
reported outcome-based measure''), that would support the National
Quality Strategy domain of patient and family engagement, and could
capture meaningful information that would not otherwise be available on
patient outcomes that are related to the quality of LEJR episodes under
CJR. In the proposed rule, we stated our belief that incorporating this
measure into CJR by adjusting the payment methodology for successful
voluntary data submission on the THA/TKA patient-reported outcome-based
measure (henceforth referred to as ``THA/TKA voluntary data'') would
provide participant hospitals with valuable information on functional
outcomes that would assist them in assessing an important patient-
centered outcome, engaging other providers and suppliers in care
redesign for LEJR episodes, as well as provide them with the potential
for greater financial benefit from improved LEJR episode efficiencies.
We did not believe it would be appropriate at this time to hold any
participant hospitals financially accountable for their actual THA/TKA
voluntary data, as we proposed to require for the three measures
described in section III.C.5.b.(5) of this final rule.
Instead, we proposed to adjust the episode payment methodology for
participant hospitals that successfully submit THA/TKA voluntary data
by reducing the discount percentage used to set the target price from
2.0 percent to 1.7 percent of expected episode spending based on
historical CJR episode data, hereinafter referred to as the voluntary
reporting payment adjustment. The proposed payment policies with
respect to reconciliation payment eligibility and the discount
percentage based on hospital voluntary data submission are summarized
in Table 10 for performance years 3 through 5 where we proposed that
hospitals have full repayment responsibility. The proposed specific
percentages that would apply for purposes of the repayment amount and
reconciliation payment are outlined for performance years 1 and 2 in
the discussion that follows.
Table 10--Proposed Reconciliation Payment Eligibility and Discount
Percentage Included in the Target Price for Each Participant Hospital
Based on Quality Performance in Performance Years 3 Through 5
------------------------------------------------------------------------
Does not meet
Discount percentage included in Meets thresholds thresholds for one
target price/reconciliation for all 3 required or more of 3
payment eligibility quality measures required quality
measures
------------------------------------------------------------------------
Successfully submits THA/TKA 1.7%/eligible..... 1.7%/ineligible.
voluntary data.
Does not successfully submit THA/ 2.0%/eligible..... 2.0%/ineligible.
TKA voluntary data.
------------------------------------------------------------------------
We refer readers to section III.D.3.a. of this final rule for
further discussion of the THA/TKA patient-reported outcome-based
measure and our proposed definition of successful reporting. In
addition, we refer readers to section III.C.4.b.(9) of this final rule
for discussion of the proposed discount of 2.0 percent (without the
voluntary reporting payment adjustment) to establish the target price.
In the proposed rule, we stated our belief that a voluntary reporting
payment adjustment of 0.3 percent of expected episode spending would,
on average, cover the participant hospitals' additional administrative
costs of voluntarily reporting patient risk variables and patient-
reported reported function for outcome calculation. We estimated the
value of this discount
[[Page 73360]]
reduction, on average, to be about $75 per LEJR episode at a
participant hospital, which we believed would be sufficient to pay
hospitals for the resources required to survey beneficiaries pre- and
post-operatively about functional status and report this information
required for measure development to CMS. We also believed that
voluntary reporting on this patient-reported outcome measure would be
integral to implementation of the CJR model, as it would allow us to
further develop and evaluate the measure for potential use in this
model in the future as a measure of quality that is important and not
captured in any other available measures.
We proposed that the voluntary reporting payment adjustment would
be available for all years of the model, unless we find the measure to
be unfeasible or have adequately developed the measure such that
continued voluntary data collection is no longer needed for measure
development during the course of the model. In those situations, we
would notify participant hospitals that the voluntary reporting payment
adjustment was no longer available as we would cease collecting the
data.
We proposed that when we provide the episode target price to each
participant hospital at 2 times during the performance year, we would
provide different target prices reflecting the 2.0 percent and 1.7
percent discounts. At the time of reconciliation for the performance
year, we would determine which participant hospitals successfully
reported the THA/TKA voluntary data for that performance year. The
effects of this voluntary reporting payment adjustment would vary for
each year of the model, depending on the proposed reconciliation
payment and repayment policies for that performance year. For hospitals
that achieved successful reporting of the THA/TKA voluntary data in
performance year 3, 4, or 5, we would use the target price reflecting
the 1.7 percent discount (compared with the 2.0 percent discount for
nonreporting or unsuccessfully reporting hospitals) to calculate the
hospital's reconciliation payment or repayment amount. Based on this
comparison, consistent with the proposal described in section III.C.6.
of this final rule, we would make a reconciliation payment if actual
episode spending was less than the target price (and the thresholds for
reconciliation payment eligibility are met for the three required
quality measures) or make participant hospitals responsible for
repaying Medicare if actual episode spending exceeded the target price.
For performance year 2, when we proposed that repayment responsibility
would be phased-in, for participant hospitals with successful THA/TKA
voluntary data reporting, we would use a target price reflecting the
1.7 percent discount (compared with the 2.0 percent discount for
nonreporting or unsuccessfully reporting hospitals) to determine if
actual episode spending was below the target price, whereupon the
participant hospital would receive a reconciliation payment if the
quality thresholds on the three required measures were met. In order to
help hospitals transition to taking on repayment responsibility, we
proposed to apply a reduced discount of 0.7 percent for successful THA/
TKA voluntary data reporting hospitals (compared with 1.0 percent for
nonreporting or unsuccessfully reporting hospitals) in performance year
2 for purposes of determining the hospital's repayment responsibility
for excess episode spending. For performance year 1, when we proposed
that there would be no repayment responsibility, for participant
hospitals with successful THA/TKA voluntary data reporting, we would
use a target price reflecting the 1.7 percent discount (compared with
the 2.0 percent discount for nonreporting or unsuccessfully reporting
hospitals) to determine if actual episode spending was below the target
price, whereupon the participant hospital would receive a
reconciliation payment if the quality thresholds on the three required
measures were met. In the proposed rule, we stated our belief that this
proposed voluntary reporting payment adjustment would provide the
potential for increased financial benefit for participant hospitals due
to a higher target price (that reflects a lower discount percentage)
that successfully report the measure. Participant hospitals that
successfully reported the voluntary data would be subject to a lower
repayment amount (except for performance year 1 when hospitals have no
repayment responsibility) or a higher reconciliation payment (assuming
the thresholds are met on the three required measures for
reconciliation payment eligibility), than hospitals that did not
successfully report the voluntary data.
In general, we proposed that participant hospitals that met the
performance thresholds for the three required quality measures and
reduced actual episode spending below the target price, as well as
successfully reported the THA/TKA voluntary data, would be eligible to
retain an additional 0.3 percent of the reduced episode expenditures
relative to participant hospitals that successfully reported the three
required quality measures but did not report voluntary data, funds
which would offset additional administrative costs that the participant
hospitals would incur in reporting on the measure. Additionally, for
performance years 2-5 where we proposed that participant hospitals
would have payment responsibility, participant hospitals with increased
actual episode spending above the target price would not be required to
repay 0.3 percent of the increased episode expenditures (relative to
participant hospitals that do not report voluntary data), funds that
would offset additional administrative costs that the participant
hospitals would incur in reporting on the measure. These costs would
include the hospital staff time required for training on the measure,
as well as then gathering and reporting on multiple patient risk
variables from LEJR episode beneficiaries' medical records and locating
beneficiaries and administering via phone survey questions on
functional status, which would also then be reported to CMS. Thus, we
expected that the proposal would encourage reporting by a number of
participant hospitals, and it would have the potential to benefit those
hospitals that successfully reported on the measure. Therefore, this
proposal could financially benefit reporting hospitals that would also
collect valuable information on patient functional outcomes that could
inform their LEJR care redesign. While this measure remains in
development from our perspective to ensure translation of data across
care settings and the respective hospital communities during the 90-day
post-discharge episode of care, participant hospitals would gain
anecdotal, locally relevant information regarding the patient-reported
outcomes of their own patients that could inform participant hospitals'
continuous quality improvement efforts.
We considered two alternative options to adjust the CJR payment
methodology by modifying the required quality measure thresholds for
reconciliation payment eligibility for those participant hospitals that
successfully submit the THA/TKA voluntary data. First, we considered
adjusting the threshold that hospitals must meet on the three required
quality measures for reconciliation payment eligibility if reduced
episode spending was achieved from the unadjusted 30th percentile
threshold to the adjusted 20th percentile threshold for performance
years 1, 2, and 3, and from the unadjusted 40th percentile to the
adjusted 30th percentile for performance years 4 and 5. Second, we
[[Page 73361]]
considered only requiring hospitals to meet the 30th percentile
threshold on two of three outcome measures for performance years 1, 2,
and 3, and the 40th percentile threshold on two of three outcome
measures for performance years 4 and 5. These options would provide the
opportunity for some participant hospitals, specifically those that
missed the unadjusted percentile for one or more of the three required
quality measures by a specified margin, to receive reconciliation
payments if actual episode spending was less than the target price.
However, these options could benefit only a subset of participant
hospitals that successfully reported the THA/TKA voluntary data. For
the majority of participant hospitals that we expect would meet the
unadjusted thresholds for all three required measures, these options
would not provide any incentive to voluntarily report the data because
the hospitals would not benefit from voluntarily reporting the
additional measure. We decided not to propose either of these options
to adjust the CJR payment methodology for participant hospitals that
voluntarily report data on the new measure because the limited benefit
could result in few hospitals choosing to report on the measure,
thereby limiting our progress in developing the measure. We noted that
these two considered options and our proposal were not mutually
exclusive.
We sought comment on the proposed voluntary reporting payment
adjustment of reducing the discount percentage from 2.0 percent to 1.7
percent for CJR participant hospitals that voluntarily and successfully
report on the THA/TKA voluntary data. Given our interest in robust
hospital participation in reporting on the THA/TKA voluntary data under
CJR, we were specifically interested in information on the additional
resources and their associated costs that hospitals would incur to
report THA/TKA voluntary data, as well as the relationship of these
costs to the potential financial benefit participant hospitals could
receive from the proposed reduced discount of 1.7 percent. Based on
such information, we would consider whether a change from the proposed
discount factor reduction due to successful voluntary data submission
would be appropriate. We also sought comment on whether the alternative
payment methodology adjustments considered, or combination of
adjustments, would more appropriately incentivize CJR participant
hospitals to submit THA/TKA voluntary data. In the proposed rule, we
stated our belief that development of the THA/TKA patient-reported
outcome measure would benefit from reporting by a broad array of
participant hospitals, including those that currently deliver high
quality, efficient LEJR episode care and those that have substantial
room for improvement on quality and or cost-efficiency.
We summarize the public comments we received on the proposed
voluntary reporting payment adjustment and provide our responses in
section III.C.5.b.(5)(c)(iii) of this final rule. We did not receive
public comments on the alternative payment methodology adjustments that
we discussed in the proposed rule. Furthermore, in light of our
interest in encouraging CJR participant hospital THA/TKA voluntary data
reporting, we also considered alternative approaches to collect this
information or provide hospitals with funds to help cover their
associated administrative costs other than adjustments to the CJR model
payment methodology. One alternative would be for hospitals to collect
and report on patient pre-operative information collected 0 to 90 days
before surgery, while CMS would engage a contractor to collect and
report the post-operative information collected 9 to 12 months after
surgery. This approach would reduce some of the administrative burden
of collection and reporting on hospitals, although participant
hospitals would need to provide CMS with certain beneficiary
information, including contact information that would be needed for a
CMS contractor to contact the beneficiary at a later date. We sought
comment on this alternative, including whether hospitals would incur
significant additional administrative costs to report on the data prior
to surgery and how CMS could best provide funds to offset some of those
costs, through an adjustment to the CJR payment methodology or other
means. We also sought comment on the information participant hospitals
would need to provide to CMS so that a CMS contractor could collect and
report the post-operative data, and the most efficient ways for
hospitals to provide this information to us. Finally, we considered an
approach that would provide hospitals with separate payment outside of
an adjustment to the CJR payment methodology to specifically assist in
covering their administrative costs of reporting THA/TKA voluntary
data, in order to achieve robust hospital participation in reporting.
We sought comment on the hospital administrative costs that would be
incurred for reporting, as well as on approaches we could take to
ensure that hospitals achieved successful reporting under such an
approach if separate payment was made. Finally, we expressed our
interest in comments regarding the comparative strength of these
various alternatives in encouraging hospitals to participate in
reporting THA/TKA voluntary data.
We did not receive any public comments on the alternatives we
discussed other than adjustments to the payment methodology to collect
THA/TKA voluntary data and provide hospitals with funds to cover the
required resources. We summarize these comments we received in section
III.C.5.b.(5)(c)(iii) of this final rule and provide our responses.
(3) Measure Risk-Adjustment and Calculations
All three proposed outcome measures are risk-adjusted, and we refer
readers to section III.D.2. of this final rule for a full discussion of
these measures and risk-adjustment methodologies. We believed that
risk-adjustment for patient case-mix is important when assessing
hospital performance based on patient outcomes and experience and
understanding how a given hospital's performance compares to the
performance of other hospitals with similar case-mix.
(4) Applicable Time Period
We proposed to use a 3-year rolling performance or applicable
period for the Hospital-level 30-day, all-cause RSRR following elective
primary THA and/or TKA (NQF #1551) and the Hospital-level RSCR
following elective primary THA and/or TKA (NQF #1550) measures. We also
specifically proposed to align with the HIQR Program's 3-year rolling
performance period for the RSRR and RSCR measures since we believed
that a 3-year performance period yields the most consistently reliable
and valid measure results (FY 2015 IPPS/LTCH final rule, 79 FR 50208
through 50209). For the HCAHPS Survey measure, we proposed to follow
the same performance period as in the HIQR Program (FY 2015 IPPS/LTCH
final rule, 79 FR 50259). HCAHPS scores are created from 4 consecutive
quarters of survey data; publicly reported HCAHPS results are also
based on 4 quarters of data. For the voluntary data collection for the
proposed THA/TKA patient-reported outcome-based performance measure,
the optimal reporting time period had not been determined at the time
of issuance of the CJR model proposed rule. Therefore, we proposed
defining the applicable time period as
[[Page 73362]]
12 month intervals that may begin between July 1, 2016 and December 31,
2016, and continue in subsequent performance years for a total of four
or fewer performance periods. Participant hospitals will submit
required data to CMS in a mechanism similar to the data submission
process for the HIQR Program within sixty days of the end of each 12
month period. As described in section III.C.5.b.(2) of the proposed
rule, the proposed voluntary reporting payment adjustment of reducing
the discount percentage from 2.0 percent to 1.7 percent for CJR
participant hospitals that successfully report on the THA/TKA voluntary
data would begin in year 2 and also apply to subsequent years of the
model. We are not finalizing the proposed voluntary reporting payment
adjustment, as discussed further in section III.C.5.b.(5)(c)(iii) of
this final rule. We note that we summarize the public comments we
received on the proposed applicable time period and provide our
responses in section III.D.3.d. of this final rule, and we summarize
the public comments we received on the reporting time period for the
THA/TKA patient-reported outcome and limited risk variable data and
provide our responses in section III.D.3.a.(9) of this final rule.
(5) Criteria for Applicable Hospitals and Performance Scoring
(a) Identification of Participant Hospitals for the CJR Model
As discussed in section III.A.2. of this final rule, all CJR
participant hospitals will be IPPS hospitals.
(b) Methodology To Determine Performance on the Quality Measures
To determine performance on the quality measures, we proposed to
calculate measure results for all three measures as outlined in the
Quality Measures section III.D.2. of this final rule. Performance on
the three measures for the CJR model participant hospitals would be
compared to the national distribution of measure results for each of
these measures obtained through the HIQR Program. The HIQR Program is
an IPPS program in which public reporting is a focus of the program for
the nation's acute care hospitals, and we proposed using the absolute
value of the CJR model participant hospital's result to determine if
that participant hospital was eligible for a reconciliation payment. In
essence, we intended to take the HIQR Program measure results (also
posted publicly) for the proposed measures, identify the proposed
threshold, and apply the thresholds as outlined in section
III.C.5.b.(5)(c)(iii) of this final rule. In the proposed rule, we
stated our belief that it would be reasonable to use the HIQR Program
distribution of measure results to identify a measure result threshold
because--(1) The hospitals in the HIQR Program represent most acute
care hospitals in the nation; (2) the CJR model participant hospitals
are a subset of the hospitals in the HIQR Program; and (3) the
expectation that the CJR model participant hospitals meet a measure
result threshold based on a national distribution of measure results
would encourage the CJR model participant hospitals to strive to attain
measure results consistent with or better than hospitals across the
nation. For a detailed description of how we proposed to determine the
measure result thresholds for consideration of a reconciliation payment
adjustment, see section III.C.5.b.(3) and III.C.5.b.(5)(c) of this
final rule. We would not want to encourage CJR model participant
hospitals to strive for measure results or quality of care performance
that may be lower than the national measure results. Given that the CJR
participant hospitals are a subset of the HIQR Program participant
hospitals, they are familiar with these three measures and may have put
into place processes that will help to improve quality of care in the
LEJR patient population. Finally, once the measure results were
calculated, we proposed to use these results to determine eligibility
for reconciliation payment, which is discussed in detail in the next
section.
We summarize the public comments we received on the proposed
calculation of the measure results and application of performance
thresholds and provide our responses in sections III.D.2 and
III.C.5.b.(5)(c)(iii) of this final rule, respectively.
To be considered to have successfully reported the voluntary data
collection and submission for the THA/TKA voluntary data, we proposed
that successfully reporting would mean participant hospitals must meet
all of the following:
Submit the data elements listed in section III.D.3.a.(2)
of this final rule.
Data elements listed in section III.D.3.a.(3) of this
final rule must be submitted on at least 80 percent of their eligible
elective primary THA/TKA patients (patients eligible for pre-operative
THA/TKA voluntary data submission are those described in section
III.D.3.a.(3) of this final rule); patients eligible for post-operative
THA/TKA voluntary data submission are those described in section
III.D.3.a.(3) of this final rule and also having a THA/TKA procedure
date during the anchor hospitalization at least 366 days prior to the
end of the data collection period. Therefore, participant hospitals
would not be expected to collect and submit post-operative THA/TKA
voluntary data on patients who are fewer than 366 days from the date of
surgery.
THA/TKA voluntary data submission must occur within 60
days of the end of the most recent performance period.
Hospitals that meet these three standards and successfully submit
THA/TKA voluntary data would be eligible for the proposed voluntary
reporting payment adjustment of reducing the discount percentage from
2.0 percent to 1.7 percent for CJR participant hospitals that
voluntarily and successfully report on the THA/TKA voluntary data. We
note that we are not finalizing this voluntary reporting payment
adjustment proposal as discussed in section III.C.5.b.(5)(c)(iii) of
this final rule. However, we continue to believe that encouraging
collection and submission of the THA/TKA voluntary data through the CJR
model would increase availability of patient-reported outcomes to both
participant hospitals that collect and submit data on their own
patients in the model (and their patients as well); further development
of an outcomes measure that provides meaningful information on patient-
reported outcomes for THA/TKA procedures that are commonly furnished to
Medicare beneficiaries; provide another quality measure that may be
incorporated into the CJR model policy linking quality to payment in
future performance years, pending successful development of the
measure; and inform the quality strategy of future payment models.
Collecting data on at least 80 percent of hospital's eligible THA/TKA
patients would provide sufficiently representative data to allow for
development and testing of the THA/TKA patient-reported outcome-based
performance measure.
We invited public comment on the proposal to calculate measure
results for all three measures as outlined in the Quality Measures
section III.D.2. of this final rule. We also sought public comment on
our proposal for hospitals to meet three requirements, previously
outlined, in order to be considered as successfully submitting THA/TKA
voluntary data.
We summarize the public comments on the proposals to calculate
measure results and determine measure result thresholds and provide our
responses in sections III.D.2. and III.C.5.b.(5)(c)(iii) of this final
rule, respectively. We summarize the public comments on the proposals
for successful THA/TKA
[[Page 73363]]
voluntary data submission and provide our responses in section
III.D.3.a. of this final rule.
(c) Methodology To Link Quality and Payment
(i) Background
In proposing a methodology for linking payment for LEJR episodes to
quality under this model, we considered several alternatives.
Specifically, we considered making reconciliation payments to hospitals
tied to achievement and improvement in quality performance or,
alternatively, establishing minimum quality performance thresholds for
selected quality measures from the beginning of the model or a later
year, which would reward achievement but not necessarily improvement.
While we proposed as discussed section III.C.5.b.(5)(c) of this final
rule to establish minimum thresholds for participant hospital
performance on three selected quality measures for reconciliation
payment eligibility each performance year from the beginning of the
model, we also discussed in detail an alternative we considered, which
would make quality incentive payments related to hospital achievement
and improvement on the basis of a composite quality score developed for
each performance year. The composite quality score would affect
reconciliation payment eligibility and change the effective discount
included in the target price experienced by a participant hospital at
reconciliation.
Similar to the proposal described in section III.C.5.b.(5)(c) of
this final rule, the alternatives considered would require a
determination of participant hospital performance on all three proposed
required quality measures, described in section III.D.2. of this final
rule, based on the national distribution of hospital measure result
performance, but instead of identifying the participant hospital's
performance percentile for comparison with a threshold requirement, we
would do so for purposes of assigning points toward a hospital
composite quality score. Both the hospital-level 30-day, all cause
Risk-Standardized Readmission Rate (RSRR) following elective primary
THA and/or TKA (NQF #1551) measure and the hospital-level Risk-
Standardized Complication Rate (RSCR) following elective primary THA
and/or TKA (NQF #1550) measure directly yield rates for which a
participant hospital performance percentile could be determined and
compared to the national distribution in a straightforward manner. As
discussed in section III.D.2.c. of this final rule, we proposed to use
the HCAHPS Linear Mean Roll Up (HLMR) score calculated using the HCAHPS
Survey measure (NQF #0166). Once the HLMR scores are calculated, the
participant hospital performance percentile could also be determined
and compared to the national distribution in a straightforward manner.
In addition, the alternatives considered would account for the
successful submission of voluntary THA/TKA data on the patient-reported
outcome measure, as discussed in section III.C.5.b.(2) of this final
rule, in the calculation of the composite quality score.
(ii) Alternatives Considered To Link Quality and Payment
We considered assigning each participant hospital a composite
quality score, developed as the sum of the individual quality measure
scores described later in this section, which were set to reflect the
intended weights for each of the quality measures and the successful
submission of THA/TKA voluntary data in the composite quality score.
The participant hospital's composite quality score would affect
reconciliation payment eligibility and could also provide the
opportunity for quality incentive payments under the CJR model. Each
quality measure would be assigned a weight in the composite quality
score and possible scores for the measures would be set to reflect
those weights. A composite quality score for each performance year
would be calculated for each participant hospital based on its own
performance that would affect reconciliation payment eligibility and
the hospital's opportunity to receive quality incentive payments under
the model. The composite quality score would also change the effective
discount included in the target price experienced by the hospital at
reconciliation for that performance year. We would weigh participant
hospital performance on each of the three measures and successful
submission of voluntary THA/TKA data according to the measure weights
displayed in Table 11.
Table 11--Quality Measure Weights Under the Composite Quality Score
Alternative Considered in the Proposed Rule
------------------------------------------------------------------------
Weight in
composite
Quality measure quality score
(%)
------------------------------------------------------------------------
Hospital[dash]level 30[dash]day, all[dash]cause RSRR 20
following elective primary THA and/or TKA (NQF #1551)..
Hospital[dash]level RSCR following elective primary THA 40
and/or TKA (NQF #1550).................................
HCAHPS Survey (NQF #0166)............................... 30
Voluntary THA/TKA data submission on 10
patient[dash]reported outcome measure..................
------------------------------------------------------------------------
We would assign the lowest weight of 10 percent to the successful
submission of THA/TKA data on the patient-reported outcome measure
because these data represent a hospital's meaningful participation in
advancing the quality measurement of LEJR patient-reported outcomes but
not actual outcome performance for LEJR episodes under the CJR model.
In the proposed rule, we stated our belief the three required measures
that represent LEJR outcomes deserve higher weights in the composite
quality score. We would assign a modest weight of 20 percent to the
readmissions measure because, while we believed that readmissions are
an important quality measure for LEJR episodes, the episode payment
methodology under the model already provides a strong financial
incentive to reduce readmissions that otherwise would contribute
significantly to greater actual episode payments. Furthermore,
hospitals generally have already made significant strides over the past
several years in reducing readmissions due to the inclusion of this
measure in other CMS hospital programs that make payment adjustments
based on performance on this measure. We believed that a higher weight
than 20 percent would overvalue the contribution of readmissions
performance as an indicator of LEJR episode quality in calculating the
composite quality score. Furthermore, other CMS hospital programs may
also make a payment adjustment based on hospital performance on the
readmissions measure, so we would not want this measure to also
strongly influence reconciliation payment eligibility and the
opportunity for quality incentive payments under the
[[Page 73364]]
CJR model. We would assign a higher weight of 30 percent to the HCAHPS
Survey measure because we believed that incorporating this quality
measure, which reflects performance regarding patients' perspectives on
care, including communication, care transitions, and discharge
information, is a highly meaningful outcome measure of LEJR episode
quality under the CJR model. However, we did not believe it would be
appropriate assign the HCAHPS Survey measure the highest weight of the
four measures, as the measure is not specific to LEJR episode care, but
rather to all clinical conditions treated by participant hospitals.
Finally, we would assign the highest weight, 40 percent, to the
complications measure. We believed this measure should be weighted the
most because it is specific to meaningful outcomes for primary THA and
TKA that are the major procedures included in LEJR episodes under the
CJR model. The measure includes important complications of LEJR
episodes, such as myocardial infarction, pneumonia, surgical site
bleeding, pulmonary embolism, death, mechanical joint complications,
and joint infections occurring within various periods of time during
the LEJR episode. LEJR episodes under the CJR model are broadly defined
so that reducing complications should be a major focus of care redesign
that improves quality and efficiency under this model, yet because
complications may not be as costly as readmissions, the payment
incentives under the model would not as strongly target reducing
complications as reducing readmissions. We sought comment on this
weighting of the individual quality scores in developing a composite
quality score for each participant hospital.
Under such an approach, we would first score individually each
participant hospital on the Hospital-level 30-day, all-cause RSRR using
the elective primary THA and/or TKA (NQF #1551) measure; Hospital-level
RSCR following using the elective primary THA and/or TKA measure (NQF
#1550); and HCAHPS Survey measure (NQF #0166) based on the participant
hospital's performance percentile as compared to the national
distribution of hospitals' measure performance, assigning scores
according to the point values displayed in Table 12. These individual
measure scores were set to reflect the measure weights included in
Table 11 so they could ultimately be summed without adjustment in
calculating the composite quality score.
Table 12--Individual Scoring Under the Composite Quality Score Alternative Considered for Three Required Quality
Measures in the Proposed Rule
----------------------------------------------------------------------------------------------------------------
Complications measure HCAHPS survey quality Readmissions measure
Performance percentile quality score (points) score (points) quality score (points)
----------------------------------------------------------------------------------------------------------------
>=90th............................... 8.00 6.00 4.00
>=80th and <90th..................... 7.40 5.55 3.70
>=70th and <80th..................... 6.80 5.10 3.40
>=60th and <70th..................... 6.20 4.65 3.10
>=50th and <60th..................... 5.60 4.20 2.80
>=40th and <50th..................... 5.00 3.75 2.50
>=30th and <40th..................... 4.40 3.30 2.20
<30th................................ 0.00 0.00 0.00
----------------------------------------------------------------------------------------------------------------
Given the current national distribution of hospital performance on
these measures, in the proposed rule we stated our belief that small
point increments related to higher measure performance deciles would be
the most appropriate way to assign more points to reflect meaningfully
higher quality performance on the measures. The absolute differences
for each decile among the three measures reflect the intended weight of
the measure in the composite quality score. We would assign any low
volume participant hospital without a reportable value for the measure
to the 50th performance percentile of the measure, so as not to
disadvantage a participant hospital based on its low volume alone
because that hospital may in actuality provide high quality care. These
three measures are well-established measures in use under CMS hospital
programs, so we did not believe that scores below the 30th percentile
reflect quality performance such that they should be assigned any
individual quality measure score points for LEJR episodes under CJR.
However, we also considered reducing scores incrementally across the
bottom three deciles in order to provide greater incentives for quality
improvement for hospitals that may not believe they can attain the 30th
performance percentile on one or more of the three measures and to
avoid creating a ``cliff'' at the 30th performance percentile. We
sought comment on this scoring approach to the three required quality
measures.
Additionally, we would assign a measure quality score of one point
for participant hospitals that successfully submit THA/TKA voluntary
data and 0 points for participant hospitals that do not successfully
submit these data. Because we would not use the actual THA/TKA
voluntary data on the patient-reported outcome measure in assessing
LEJR episode quality performance under the model, we believed this
straightforward binary approach to scoring the submission of THA/TKA
voluntary data for the patient-reported outcome measure development
would be appropriate.
We note that the Shared Savings Program utilizes a similar scoring
and weighting methodology, which is described in detail in the CY2011
Shared Savings Program Final Rule (see Sec. 425.502). The HVBP and
HACRP programs also utilize a similar scoring methodology, which
applies weights to various measures and assigns an overall score to a
hospital (79 FR 50049 and 50102).
We would sum the score on the three quality measures and the score
on successful submission of THA/TKA voluntary data to calculate a
composite quality score for each participant hospital. Then we would
incorporate this score in the model payment methodology by first,
requiring a minimum composite quality score for reconciliation payment
eligibility if the participant hospital's actual episode spending is
less than the target price and second, by making quality incentive
payments that change the effective discount percentage included in the
target price experienced by the hospital in the reconciliation process.
The payment policies we would apply are displayed in Tables 13, 14, and
15 for the performance years of the model.
[[Page 73365]]
Under the CJR model as proposed, there would be no participant hospital
repayment responsibility in performance year 1 and this responsibility
would begin to be phased-in in performance year 2, with full
implementation in performance year 3.
Table 13--Performance Year 1: Relationship of Composite Quality Score To Reconciliation Payment Eligibility and
the Effective Discount Percentage Experienced at Reconciliation Under the Composite Quality Score Alternative
Considered in the Proposed Rule
----------------------------------------------------------------------------------------------------------------
Eligible for Effective discount
Eligible for quality percentage for Effective discount
Composite quality score reconciliation incentive reconciliation percentage for repayment
payment payment payment (%) amount
----------------------------------------------------------------------------------------------------------------
<=5.00....................... No.............. No.............. 3.0 Not applicable.
>5.00 and <=9.25............. Yes............. No.............. 3.0 Not applicable.
>9.25 and <=15.20............ Yes............. Yes............. 2.0 Not applicable.
>15.20....................... Yes............. Yes............. 1.5 Not applicable.
----------------------------------------------------------------------------------------------------------------
Table 14--Performance Year 2: Relationship of Composite Quality Score to Reconciliation Payment Eligibility and
the Effective Discount Percentage Experienced at Reconciliation Under the Composite Quality Score Alternative
Considered in the Proposed Rule
----------------------------------------------------------------------------------------------------------------
Effective discount Effective discount
Eligible for Eligible for percentage for percentage for
Composite quality score reconciliation quality incentive reconciliation repayment amount
payment payment payment (%) (%)
----------------------------------------------------------------------------------------------------------------
<=5.00.......................... No................ No................ 3.0 2.0
>5.00 and <= 9.25............... Yes............... No................ 3.0 2.0
>9.25 and <= 15.20.............. Yes............... Yes............... 2.0 1.0
>15.20.......................... Yes............... Yes............... 1.5 0.5
----------------------------------------------------------------------------------------------------------------
Table 15--Performance Years 3-5: Relationship of Composite Quality Score to Reconciliation Payment Eligibility
and the Effective Discount Percentage Experienced at Reconciliation Under the Composite Quality Score
Alternative Considered in the Proposed Rule
----------------------------------------------------------------------------------------------------------------
Effective discount Effective discount
Eligible for Eligible for percentage for percentage for
Composite quality score reconciliation quality incentive reconciliation repayment amount
payment payment payment (%) (%)
----------------------------------------------------------------------------------------------------------------
<=5.00.......................... No................ No................ 3.0 3.0
>5.00 and <= 9.25............... Yes............... No................ 3.0 3.0
>9.25 and <= 15.20.............. Yes............... Yes............... 2.0 2.0
>15.20.......................... Yes............... Yes............... 1.5 1.5
----------------------------------------------------------------------------------------------------------------
Under this approach, the CJR model discount included in the target
price without consideration of the composite quality score would be 3.0
percent, not the 2.0 percent described under our payment proposal in
section III.C.4.b.(9) of this final rule. In the proposed rule, we
stated our belief that a discount percentage of 3.0 percent without
explicit consideration of episode quality is reasonable as it is within
the range of discount percentages included in the ACE demonstration and
it is the Model 2 BPCI discount factor for 30 and 60 day episodes,
where a number of BPCI participants are testing LEJR episodes subject
to the 3.0 percent discount factor. Hospitals that provide high quality
episode care would have the opportunity to receive quality incentive
payments that would reduce the effective discount percentage as
displayed in Tables 13, 14, and 15. Depending on the participant
hospital's actual composite quality score, quality incentive payments
could be valued at 1.0 percent to 1.5 percent of the hospital's
benchmark episode price (that is, of the expected episode spending
prior to application of the discount factor to calculate a target
price).
Under this methodology, we would require hospitals to achieve a
minimum composite quality score of greater than 5.00 to be eligible for
a reconciliation payment if actual episode spending was less than the
target price. Participant hospitals with below acceptable quality
performance reflected in a composite quality score less than or equal
to 5.00 would not be eligible for a reconciliation payment if actual
episode spending was less than the target price. A level of quality
performance that is below acceptable would not affect participant
hospitals' repayment responsibility if actual episode spending exceeds
the target price. We believed that excessive reductions in utilization
that lead to low actual episode spending and that could result from the
financial incentives of an episode payment model would be limited by a
requirement that this minimum level of LEJR episode quality be achieved
for reconciliation payments to be made. This policy would encourage
hospitals to focus on appropriate reductions or changes in utilization
to achieve high quality care in a more efficient manner. Therefore,
these hospitals would be ineligible to
[[Page 73366]]
receive a reconciliation payment if actual episode spending was less
than the target price.
For hospitals with composite quality scores of less than or equal
to 5.00, we also considered a potential alternative approach. Under
this approach, we would still permit this group of hospitals to receive
reconciliation payments but would impose a quality penalty that would
increase their effective discount percentage to 4.0 percent for
purposes of calculating the reconciliation payment or recoupment amount
in performance years 3 through 5, 4.0 percent for calculating the
reconciliation payment and 3.0 percent for calculating the repayment
amount in performance year 2, and 4.0 percent for calculating the
reconciliation payment in performance year 1 where participant
hospitals have no repayment responsibility. A potential advantage of
this approach is that it would provide stronger incentives for quality
improvement for participant hospitals with low performance on quality,
even if they did not expect to be able to reduce actual episode
spending below the target price. In addition, this approach would
provide financial incentives to improve the efficiency of care even for
hospitals that did not expect to meet the minimum quality score for
reconciliation payment eligibility, while still providing strong
incentives to provide high-quality care. The disadvantage of this
approach is that it could provide reconciliation payments even to
hospitals that did not achieve acceptable quality performance.
Participant hospitals with an acceptable composite quality score of
>5.00 and <=9.25 would be eligible for a reconciliation payment if
actual episode spending was less than the target price because their
quality performance was at the acceptable level established for the CJR
model. They would not be eligible for a quality incentive payment at
reconciliation because their episode quality performance, while
acceptable, was not good or excellent. Therefore, these hospitals would
be eligible to receive a reconciliation payment if actual episode
spending was less than the target price.
Participant hospitals with a good composite quality score of >9.25
and <=15.20 would be eligible for a quality incentive payment at
reconciliation if actual episode spending was less than the target
price because their quality performance exceeded the acceptable level
required for reconciliation payment eligibility under the CJR model. In
addition, they would be eligible for a quality incentive payment at
reconciliation for good quality performance that equals 1.0 percent of
the participant hospital's benchmark price, thereby changing the
effective discount percentage included in the target price experienced
by the hospital at reconciliation. Thus, participant hospitals
achieving this level of quality for LEJR episodes under CJR would
either have less repayment responsibility (that is, the quality
incentive payment would offset a portion of their repayment
responsibility) or receive a higher payment (that is, the quality
incentive payment would add to the reconciliation payment) at
reconciliation than they would have otherwise based on a comparison of
actual episode spending to the target price that reflects a 3.0 percent
discount. Therefore, these hospitals would be eligible to receive a
reconciliation payment if actual episode spending was less than the
target price and would also receive a quality incentive payment.
Finally, hospitals with an excellent composite score quality score
of >15.20 would be eligible to receive a reconciliation payment if
actual episode spending was less than the target price because their
quality performance exceeded the acceptable level required for
reconciliation payment eligibility under the CJR model. In addition,
they would be eligible for a higher quality incentive payment at
reconciliation for excellent quality performance that equals 1.5
percent of the participant hospital's benchmark price, thereby changing
the effective discount percentage included in the target price
experienced by the hospital at reconciliation. Thus, participant
hospitals achieving this level of quality for LEJR episodes under CJR
would either have less repayment responsibility (that is, the quality
incentive payment would offset a portion of their repayment
responsibility) or receive a higher payment (that is, the quality
incentive payment would add to the reconciliation payment) at
reconciliation than they would have otherwise based on a comparison of
actual episode spending to the target price that reflects a 3.0 percent
discount. Therefore, these hospitals would be eligible to receive a
reconciliation payment if actual episode spending was less than the
target price and would also receive a quality incentive payment.
Under this methodology, the proposed stop-loss and stop-gain limits
discussed in section III.C.8. of this final rule would not change. We
believed this approach to quality incentive payments based on the
composite quality score could have the effect of increasing the
alignment of the financial and quality performance incentives under the
CJR model to the potential benefit of participant hospitals and their
collaborators as well as CMS, although it would substantially increase
the complexity of the methodology to link quality and payment. We
sought comment on this alternative approach to basing reconciliation
payment eligibility and quality incentive payments on the participant
hospital's composite quality score under the CJR model, as well as the
composite quality scoring ranges applicable to the respective payment
policies.
While we described in detail this alternative considered to link
quality to payment under CJR, we did not propose this methodology for
several reasons. First, the Shared Savings Program and HVBP program
utilize many more measures than we proposed for the CJR model. For
example, the Shared Savings Program initially incorporated thirty-three
measures across four quality domains (79 FR 67916 and 67917). The range
of measures in the Shared Savings Program and the HVBP program lends
itself to a scoring approach, which can account for many measures and
allows providers to achieve a high score despite performing well on
some measures but achieving lower performance on others. There is a
detailed description of the Shared Savings Program scoring methodology
on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Quality_Measures_Standards.html.
We believed that given the more limited set of measures chosen for the
CJR model, a scoring approach such as the alternative described in this
section could diminish the importance of each measure. Use of a scoring
approach would not allow hospital performance on two different outcomes
to be easily reviewed and understood with respect to the impact of
individual measure performance on Medicare's actual payment for the
episode under the model. Second, we believed the measures proposed for
this model represent goals of clinical care that should be achievable
by all hospitals participating in the model that heighten their focus
on these measures, especially the readmissions and complications
measures, for LEJR episodes based on the financial incentives in the
model. Finally, we believed that a methodology that assesses
performance based on absolute values of a specific set of measures that
[[Page 73367]]
are already in use, as we proposed for the CJR model, would be the most
appropriate methodology to provide achievable and predictable quality
targets for participant hospitals on measures that monitor the most
meaningful quality of care outcomes in a model where some acute care
hospitals that might not choose to participate in a voluntary model are
also included. Our proposed method as discussed in the next section
reflected our expectation that hospitals achieve a certain level of
performance on measures to ensure that hospitals provide high-quality
care under the model.
Finally, we also considered an approach whereby participant
hospitals would not be penalized with regard to their eligibility for
reconciliation payments in CJR for failure to meet the specified
thresholds for the quality measures in performance year 1 of the model;
in other words, we would delay the proposal described in the next
section to performance year 2 rather than beginning in performance year
1. We considered calculating participant hospital performance on the
required measures for the model, and, if actual episode spending was
less than the target price, the participant hospital would receive a
full reconciliation payment of savings achieved beyond the target
price, regardless of performance on the quality measures. However, we
did not believe this would be appropriate for the CJR model, given that
two of the measures are administrative claims-based and thus impose no
additional reporting burden on hospitals; rather, these two measures
are established measures in existing CMS quality programs, and a
central goal of the model is improving care for Medicare beneficiaries
in LEJR episodes. We noted that the HCAHPS Survey measure (NQF #0166)
is also an established measure in the HIQR Program and would not impose
additional reporting burden on hospitals.
We summarize the public comments we received on these alternatives
considered to link quality and payment and provide our responses in
section III.C.5.b.(5)(c)(iii) of this final rule. We note that we will
be adopting the composite score methodology for the CJR model, as
discussed in our responses to comments in section III.C.5.b.(5)(c)(iii)
of this final rule.
(iii) Threshold Methodology and Final Policy To Link Quality and
Payment
For the reasons outlined in the previous section, we did not
propose to use similar methodologies to other CMS programs that would
tie CJR episode reconciliation payment eligibility and reconciliation
payment and Medicare repayment amounts to a composite quality score on
specified quality measures, but as discussed later in this section, we
instead proposed to simply assess performance or achievement on a
quality measure by setting a measure result threshold for each measure
beginning in performance year 1 of the model.
We proposed that the CJR measure result threshold would be based on
the measure results from the HIQR Program, a nationally-established
program, and would use its national distribution of measure results.
These are the same measure results posted on Hospital Compare or in the
Hospital Compare downloadable database (https://data.medicare.gov/data/hospital-compare) for the HIQR Program. We refer readers to the earlier
discussion of the HIQR Program, which utilizes measures to assess most
acute care hospitals in the nation. Determining the CJR model target
thresholds are discussed in the next section.
As previously described, we proposed for the CJR model the
following three required measures to assess LEJR episode quality of
care:
Hospital-level 30-day, all-cause RSRR following elective
primary THA and/or TKA (NQF #1551).
Hospital-level RSCR following elective primary THA and/or
TKA (NQF #1550).
HCAHPS Survey (NQF #0166).
We also proposed to make a voluntary reporting payment adjustment
for CJR participant hospitals who successfully and voluntarily submit
data for the THA/TKA patient-reported outcome-based performance measure
(henceforth referred to as ``THA/TKA voluntary data'') as described in
sections III.C.5.b.(2) and III.D.3.a. of this final rule. We proposed
that participant CJR hospitals must meet or surpass a specified
threshold for each required measure beginning for performance year 1 of
the model in order to be eligible for a reconciliation payment if
actual episode payments are less than the target price. The calculation
of the HCAHPS Survey measure is described in section III.D.2.c. of this
final rule. We proposed to use the individual measure results
calculated as specified in section III.D. of this final rule for the
three required measures to determine hospital eligibility for
reconciliation payment for each performance year of the CJR model.
Also, as discussed in section III.C.4. of this final rule, which
outlines the proposed pricing structure for the CJR model, target
prices for MS-DRG 470-anchored episodes and for MS-DRG 469-anchored
episodes would be calculated for hospitals participating in the model
for an episode of care extending 90 days after discharge from the
anchor hospitalization. Participant hospitals that achieve actual
episode payment below the specified target price for a given
performance period would be eligible for a reconciliation payment,
provided that the participant hospital also met episode quality
thresholds on the three required measures for the performance period.
We proposed to use the following quality criterion to determine if
a participant hospital qualifies for a reconciliation payment based on
the episode quality thresholds on the three required measures:
The hospital's measure result is at or above the 30th percentile of
the national hospital measure results calculated for all HIQR-Program
participant hospitals for each of the three required measures for each
performance period (for a detailed description of how we determined the
performance period and reconciliation payment eligibility, see section
III.C.5. of this final rule).
Using HIQR Program's 3 year rolling period as outlined in section
III.D.2.d. (Applicable Time Period) of this final rule, if a
participant hospital performed at or above the 30th percentile of all
HIQR Program hospitals for each of the three required measures and if
actual episode payment was less than the target price for the specified
performance year, we would make a reconciliation payment to the
hospital. Failure to achieve the threshold on one or more measures
would result in the participant hospital not receiving a reconciliation
payment regardless of whether the actual episode payment was less than
the target price for that performance period. We proposed that for
hospitals with insufficient volume to determine performance on an
individual measure, these hospitals would be considered to be
performing at the threshold level and their results would be publicly
posted with all other participant hospitals' measure results (for a
detailed summary of public reporting, see section III.D.5. of this
final rule). We did not believe it would be appropriate to potentially
penalize high quality, efficient hospitals due to their low volume,
given that meeting the required quality measure thresholds would be
required for reconciliation payment eligibility.
We also proposed for performance years 4 and 5 to increase the
measure result threshold to the 40th percentile. We believed that
increasing the measure result threshold to the 40th percentile
[[Page 73368]]
would encourage participants to strive for continued quality
improvement throughout the 5 performance years of the model. We sought
comment on our proposal to make a reconciliation payment to a
participant hospital that achieves actual episode spending below the
target price for a performance year and performs at or above the 30th
percentile of HIQR program participant hospitals for all three required
quality measures in performance years 1 through 3 or the 40th
percentile in performance years 4 and 5, as well as our proposal to
consider low volume hospitals to be performing at the threshold level.
We proposed to require hospitals to meet the threshold for all
three measures for the following reasons. The measures proposed for
this model are fully developed, NQF-endorsed, and implemented measures
in CMS IPPS programs. These measures are also publicly reported on the
Hospital Compare Web site. Hospitals are familiar with the
complications and readmissions quality measures and with the HCAHPS
Survey, as they are currently included in the HIQR Program, HVBP
program, and HRRP (79 FR 50031, 50062, 50208, 50209 and 50259), and we
believed that there would be minimal additional administrative burden
for hospitals. All three measures are widely utilized nationally; thus,
a nationally-based threshold would be an appropriate benchmark. In
addition, the goal of the CJR model is LEJR episode care redesign that
includes effective care coordination and management of care
transitions. Strategies to prevent and efficiently manage post-
procedure complications and hospital readmissions following an LEJR
procedure are consistent with the goals of the model; a hospital cannot
succeed in this model without engaging in care redesign efforts that
would address aspects of care included in these measures. Failure to
perform successfully on these key quality measures (defined by meeting
the minimum thresholds) would indicate that hospitals are not achieving
quality consistent with the goals of the model to specifically
incentivize greater improvement on these measures than hospitals not
participating in the CJR model, and should not be eligible to receive a
reconciliation payment from Medicare even if reduced episode spending
is achieved. Finally, the approach we proposed is consistent with CMS'
goal of moving hospitals and other providers to value-based payment
that ties payment to quality. In the 5 performance years of this model,
performance on quality measures would only be applied to determining
eligibility for a reconciliation payment; quality measures would not be
used to determine participant hospitals' financial responsibility,
except for the proposed voluntary reporting payment adjustment
described in described in section III.C.5.b.(3) of this final rule. In
essence, participant hospitals' responsibility to repay Medicare the
difference between their target price and their actual episode payment,
should actual episode payments exceed the target price, would not be
impacted by performance on quality measures.
Finally, we proposed to increase the measure result thresholds for
the final 2 performance years of the model, to ensure that CJR
participant hospitals continue to maintain a high level of quality
performance or improve performance on these measures as they gain
experience with implementation of this payment model. More
specifically, we proposed that in order for a participant hospital to
receive a reconciliation payment for actual episode spending that is
less than the target price for performance years 4 and 5, the
participant hospital's measure result must be at or above the 40th
percentile of the national hospital measure results calculated for all
HIQR-Program participant hospitals for each of the three required
measures for each performance period. As previously noted, we proposed
to use the most recently available HCAHPS 4-quarter roll-up to
calculate the HLMR. In the proposed rule, we stated our belief that
holding the participant hospitals to a set measure result threshold for
the first 3 years, and increasing this threshold for performance years
4 and 5, would emphasize the need to maintain and improve quality of
care while cost efficiencies are pursued. We sought comment on our
proposed approach to incorporating quality performance into eligibility
for reconciliation payments under the CJR model for participant
hospitals.
Table 16 displays the proposed thresholds that participant
hospitals must meet on the various measures over the 5 model
performance years.
Table 16--Proposed Thresholds for Required Quality Measures To Determine Participant Hospital Reconciliation Payment Eligibility Over 5 Years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Measure PY1 Threshold PY2 Threshold PY3 Threshold PY4 Threshold PY5 Threshold
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospital-level 30-day, all-cause 30th percentile....... 30th percentile....... 30th percentile...... 40th percentile...... 40th percentile.
RSRR following elective primary
THA and/or TKA (NQF #1551).
Hospital-level RSCR following 30th percentile....... 30th percentile....... 30th percentile...... 40th percentile...... 40th percentile.
elective primary THA and/or TKA
(NQF #1550).
HCAHPS Survey (NQF #0166).......... 30th percentile....... 30th percentile....... 30th percentile...... 40th percentile...... 40th percentile.
--------------------------------------------------------------------------------------------------------------------------------------------------------
We sought comment on our proposed methodology to utilize quality
measure performance in the payment methodology for CJR, as well as the
proposed thresholds for participant hospital reconciliation payment
eligibility over the performance years of the model.
As discussed in section III.C.5.b.(2) of this final rule, we stated
our belief that hospitals that choose to submit THA/TKA voluntary data
should have the potential to benefit financially through an adjustment
to the payment methodology of the model. We proposed a voluntary
reporting payment adjustment for hospitals that successfully submit the
THA/TKA voluntary data by reducing the discount percentage incorporated
into the target price from 2.0 percent to 1.7 percent. This voluntary
reporting payment adjustment would start in performance year 1 and
would be available through performance year 5 of the model for each
year that the hospital successfully reports THA/TKA voluntary data. As
proposed, reporting THA/TKA voluntary data would not affect eligibility
for a reconciliation payment if actual episode payments are less than
the target price. Participant hospitals would still need to meet the
30th or 40th percentile threshold, as applicable to the given
performance year, on all
[[Page 73369]]
three required quality measures (Table 16).
We considered, but did not propose, two other alternatives to
adjust the payment methodology for participant hospitals that
successfully report the THA/TKA voluntary data as described in section
III.C.5.b.(2) of this final rule. These alternatives would change the
threshold percentile for the three required quality measures or,
alternatively, reduce the number of required measures in which the
threshold must be met provided that successful THA/TKA voluntary data
were reported for a performance year. First, we considered reducing the
threshold for reconciliation payment eligibility that participant
hospitals must meet on the three required quality measures from the
30th percentile threshold to the 20th percentile threshold for
performance years 1, 2, and 3, and from the 40th percentile to the 30th
percentile for performance year. Second, we considered only requiring
hospitals to meet the 30th percentile threshold on two of three outcome
measures for performance years 1, 2, and 3, and the 40th percentile
threshold on two of three outcome measures in performance years 4 and
5. Under both of these alternatives, the eligibility for reconciliation
payments could change based on the THA/TKA voluntary data. We sought
comment on these alternative payment methodology adjustments that could
impact reconciliation payment eligibility, unlike the proposed
voluntary reporting payment adjustment. We note that the other
alternative approaches to encouraging THA/TKA voluntary data reporting
for CJR beneficiaries as discussed in section III.C.5.b.(2) of this
final rule that would not require adjustments to the CJR payment
methodology would also not affect reconciliation payment eligibility.
The following is a summary of the comments received and our
responses on the proposals and alternatives discussed in section
III.C.5. of the proposed rule, including the proposed threshold
methodology for reconciliation payment eligibility, as well as the
alternatives considered that would change the proposed threshold
requirements for participant hospitals that successfully report
voluntary THA/TKA data. As cross-referenced several times earlier in
this section, these comments and our responses also discuss a number of
other proposals, alternatives considered, and other topics related to
linking quality and payment under the CJR model for which we sought
public comment.
Comment: Some commenters questioned the rationale for linking
quality to episode payment for participant hospitals under the CJR
model, arguing that the model should not be focused on individual
hospital performance but on the overall performance of hospitals within
the model, with respect to both the cost and quality of LEJR episode
performance. The commenters observed that BPCI, a bundled payment model
that includes LEJR as the most commonly selected episode and shares
many features with the proposed CJR model, does not tie payment to
quality, although BPCI has quality reporting requirements. They claimed
that CMS, hospitals, and other providers lack experience with pay-for-
performance in a bundled payment context and, therefore, that the level
of performance that should be expected from providers under bundled
payment is not yet understood. A commenter urged CMS to focus on the
big picture in the CJR model, specifically changes in critical aspects
of performance versus the national average for all hospitals along the
continuum, potential changes in the types or nature of services to
beneficiaries undergoing LEJR procedures, and aggregate changes in
patient outcomes. Commenters asserted that tying a hospital's payment
to performance on quality measures was not the only or the best way to
make maintaining or improving LEJR episode quality performance central
to the CJR model. Several commenters stated that implementing pay-for-
performance in an episode payment model was premature, and recommended
that CMS, at most, adopt a pay-for-reporting methodology while quality
data are being collected and analyzed to determine the appropriate
level of quality performance that should be specifically rewarded.
Several commenters urged CMS to delay implementing the proposed
quality performance thresholds for reconciliation payment eligibility
until performance year 2, or later, where the performance period for
measure data would correspond more fully or completely to performance
years under the model. They recommended that the first year or two of
the CJR model should be pay-for-reporting and, because the proposed
THA/TKA Complications measure (NQF #1550) and the THA/TKA Readmissions
measure (NQF #1551) are claims-based measures and the HCAHPS Survey
measure (NQF #0166) is currently administered by hospitals, all
participant hospitals would be expected to meet the CJR model quality
performance requirements, which would only require public reporting in
performance year 1 and possibly performance year 2. Several commenters
in favor of pay-for-reporting in the first performance year asserted
that such an approach would be consistent with other CMS value-based
initiatives. A commenter also claimed that a year of pay-for-reporting
would allow participant hospitals the time to establish internal
systems for analyzing quarterly claims data and provide them with
maximal opportunity to achieve savings that could be invested in these
systems.
Response: We note that we currently have broad experience with pay-
for-performance in Medicare programs, including the HRRP, HVBP Program,
HAC Reduction Program, and the Shared Savings Program. These pay-for-
performance programs have improved the quality of care for Medicare
beneficiaries. For example, since the implementation of HRRP in 2012,
readmission and complications rates for various medical conditions such
as elective THA/TKA have been significantly reduced, thereby resulting
in improvements in the quality of care for Medicare beneficiaries
undergoing LEJR procedures. Furthermore, pay-for-performance is a
feature of a number of Innovation Center models currently in testing.
We refer readers to section III.D.5. of this final rule for further
discussion of public reporting of pay-for-performance data during
performance year 1 of the model.
While the current BPCI models do not specifically link payment to
quality, the Request for Applications describing the BPCI model design
features was released over 4 years ago, in August 2011. We now have two
years of experience with BPCI Model 2 Awardees, the model that most
closely resembles the CJR model, in the risk-bearing period, and the
year 1 BPCI annual evaluation and monitoring report from February 2015
is publicly available on the CMS Web site at: https://innovation.cms.gov/Files/reports/BPCI-EvalRpt1.pdf. We have developed
and adopted a variety of new quality measures in programs and models
since 2011, as well as gained experience with pay-for-reporting and
pay-for-performance in a variety of models and programs involving a
wide range of health care providers and clinical conditions. Given our
extensive experience over the past several years with pay-for-
performance approaches, the availability of existing measures that
reflect the quality of care for elective THA/TKA episodes, and the
breadth of the CJR model, which reaches
[[Page 73370]]
substantially all IPPS hospitals in the selected MSAs, including those
hospitals who otherwise would not participate in a voluntary payment
model, we believe that a pay-for performance approach is necessary and
appropriate beginning in the model's first performance year. IPPS
hospitals have substantial experience over multiple years with CMS
programs that include pay-for-performance and we believe, given the
proposed quality measures for the CJR model, that CJR pay-for-
performance in an episode payment model is a natural extension to
bundled payment of pay-for-performance measures used in current CMS
programs. While we acknowledge that pay-for-performance is not the only
way for a model to heighten a focus on maintaining or improving the
quality of LEJR episode care, we believe that the CJR model, like other
Innovation Center models, should target both improved quality and
reduced costs. Based on our experience in other programs and models, we
believe that pay-for-performance under the CJR model shows great
promise in moving participant hospitals toward greater efficiency and
higher quality of LEJR episodes. In view of successful implementation
of pay-for-performance in other CMS hospital programs using similar
quality measures that has resulted in significant improvements in the
quality of care, we believe IPPS hospitals have sufficient experience
to be ready for pay-for-performance under the CJR model. We expect that
other features of the model design, including our plans for data
sharing, will help participant hospitals committed to care redesign
toward these goals achieve success on both quality and cost performance
for episodes.
We note that the quality measures finalized for the model as
discussed in section III.D.2. of this final rule rely upon data that
hospitals are already submitting and which are already analyzed by CMS
for other programs, so we see no reason to adopt a period of pay-for-
reporting for the first performance year of the model or longer. In the
proposed rule, we considered a similar policy that would not penalize
hospitals with regard to their eligibility for reconciliation payments
for failure to meet the proposed quality measure thresholds in
performance year 1. However, we continue to believe that adopting pay-
for-reporting and not pay-for-performance in performance year 1 or
longer would be inappropriate given that two of the proposed quality
measures are administrative claims-based measures and impose no
additional reporting burden on hospitals, the proposed measures are all
established measures in existing CMS quality programs, and a central
goal of the CJR model is improving care for Medicare beneficiaries in
LEJR episodes. In this regard, the CJR model is different from some
other CMS value-based initiatives where the data for some measures were
newly submitted by providers or newly analyzed by CMS early in the
initiative. Furthermore, we do not believe that participant hospitals
need a year of pay-for-reporting to develop systems for analyzing
episode claims under the model, as we expect hospitals to already be
focused on improving their performance on these measures. The two
measures finalized for the CJR model are aligned with the goals of the
CJR model, are familiar to hospitals based on their use in other CMS
hospital programs, and are aligned with CMS priorities to reduce LEJR
complications while improving the patient experience. Because the
measures reflect these goals and accurately measure hospitals' level of
achievement and improvement on quality outcomes that are important to
beneficiaries undergoing LEJR procedures, we are finalizing our
proposal to implement a pay-for-performance approach in the CJR model
in the first performance year by using quality performance in the
episode payment methodology.
Comment: Some commenters supported the proposed strategy to link
quality to payment through performance thresholds for quality measures
that would result in reconciliation payment eligibility if the
thresholds were met. Several commenters further reasoned that there
should be no need to increase thresholds for reconciliation payment
eligibility over the performance years of the model as CMS had proposed
because the possibility of reconciliation payment provides an adequate
quality improvement incentive. A commenter in favor of the proposed
threshold approach recommended that CMS make the proposed THA/TKA
voluntary patient-reported outcome (PRO) data submission mandatory and
significantly increase incentives around their collection.
A number of commenters estimated that under CMS' proposal, more
than half of the participant hospitals would be ineligible for
reconciliation payments based on their current quality measure
performance, even if episode savings were achieved during a performance
year. The commenters stated that CMS should not use performance
percentiles that would always exclude a predetermined number of
participant hospitals from reconciliation payments, and hold hospitals
to multiple quality performance standards for the same measure
performance under different CMS models and programs. They contended
that performance percentiles, as measures of relative performance, do
not reflect best practices and, therefore, recommended that CMS require
a level of absolute measure performance rather than relative
performance when incorporating quality performance into the payment
methodology under the CJR model. The commenters did not describe the
absolute levels of performance that they would recommend on the quality
measures for the CJR model. Several commenters claimed that the use of
thresholds for reconciliation eligibility disadvantages small hospitals
because only one or two patient instances could change the participant
hospital's performance percentile and, therefore, affect the hospital's
eligibility for reconciliation payments. Other commenters pointed out
that the Shared Savings Program uses quality thresholds, but the
methodology accounts for improvement and the program is voluntary,
while hospital participation would be required in the CJR model and
improvement was not considered in the pay-for-performance methodology
CMS proposed.
Other commenters asserted that CMS' proposal linking quality
measure performance to eligibility for reconciliation payments failed
to reflect the quality of care delivered in the context of the model
due to flaws in the proposed approach to determining participant
hospital performance in relation to the thresholds. The commenters
contended that the proposed methodology to determine performance on
quality measures and link performance to reconciliation payment
eligibility uses arbitrary distinctions in performance among hospitals
that are not borne out by the data or even by CMS's own method of
assigning ratings of performance on the Hospital Compare Web site. They
stated that use of measure result point estimates to determine
performance percentiles under CMS' proposal for performance thresholds
for reconciliation payment eligibility may not be appropriate because:
(1) The THA/TKA Complications measure (NQF #1550) and the THA/TKA
Readmissions measure (NQF #1551) are a ratio comparing observed to
expected outcome, where expected is based on the national performance,
so an individual hospital's performance
[[Page 73371]]
should be assessed within confidence intervals as the measure was
originally specified, tested, and endorsed by the NQF; and (2) there
may not be a clinically and statistically significant difference in the
performance of hospitals immediately above and below the 30th
percentile. The commenters observed that while the HRRP uses measure
result point estimates (the same measure results proposed in section
III.C.5.b.(5)(b) of the proposed rule, which proposed to use the
absolute values of the CJR model participant hospital measure results)
in calculating the excess readmission ratio in accordance with the
statutory provision that defines this ratio, they stated that CMS has
the flexibility under the statutory authority for the CJR model to use
confidence intervals in determining outcome measure results for use in
the payment methodology.
A number of commenters recommended that CMS adopt a threshold
methodology that would utilize the confidence intervals used on the
Hospital Compare Web site that distinguishes performance based on the
three categories of comparison to the national rate on the THA/TKA
Complications measure (NQF #1550) and the THA/TKA Readmissions measure
(NQF #1551) to determine if a participant hospital is eligible for
reconciliation payment. On Hospital Compare, hospitals are grouped into
``no different than national rate,'' ``better than national rate,'' or
``worse than national rate'' for each measure. The commenters
recommending this methodology recommended against use of the HCAHPS
Survey measure (NQF #0166).
Therefore, the commenters maintained that CMS should modify its
proposal and set the quality performance thresholds for reconciliation
payment eligibility at ``worse than national rate,'' rather than at the
30th percentile or above compared to the national rate. Specifically,
the commenters suggested if performance on both the THA/TKA
Complications measure (NQF #1550) and the THA/TKA Readmissions measure
(NQF #1551) is statistically ``worse than national rate,'' then a
participant hospital should not be eligible for reconciliation payment.
Those hospitals that are deemed ``no different than national rate'' or
``better than national rate'' on both measures should automatically be
deemed eligible for any potential reconciliation payment. Some
commenters further urged CMS to also allow participant hospitals
performing ``worse than national rate'' on one or both quality measures
to receive reconciliation payments if CJR model episode savings were
achieved as long as the hospital submits a corrective action plan to
CMS describing their future strategies to improve quality of care,
including contributing a portion of the reconciliation payment to
quality performance improvement strategies. These commenters asserted
that the quality performance thresholds should provide equal financial
opportunity and incentives to all hospital participants.
The commenters claimed that setting quality performance thresholds
at the level of ``worse than national rate'' as displayed on the
Hospital Compare Web site would reduce confusion among the public with
an interest in hospital performance under the CJR model, and strike an
appropriate balance between encouraging hospital to focus on quality
performance and providing hospitals with a fair opportunity to receive
reconciliation payments if episode savings are achieved. A commenter
reported that nationally there are 22 hospitals with performance on the
THA/TKA Complications measure (NQF #1550) or the THA/TKA Readmissions
measure (NQF #1551) that is ``worse than national rate,'' and only one
hospital that is ``worse than national rate'' on both measures.
Response: We appreciate the support of some commenters for our
proposal to set performance thresholds for reconciliation payment
eligibility at the 30th percentile based on the national distribution
of measure results, as well as the concerns expressed by some
commenters about using relative performance to assess participant
hospital episode quality performance in the CJR model. We continue to
believe that relative measure performance is the most appropriate way
to incorporate quality performance into the CJR model because we do not
have sufficient information about hospital performance to set and use
an absolute performance result on each measure. We believe that
hospitals nationally are working to improve their performance on the
quality measures proposed for the CJR model on an ongoing basis and,
thus, while we expect that CJR participant hospitals will have a
heightened focus on improvement on these measures as a result of the
financial incentives resulting from episode payment, we are not yet
certain in this model test what performance outcomes can be achieved
under best practices. Therefore, we will not set absolute performance
results as quality thresholds for reconciliation payment eligibility
under the CJR model. We continue to believe that relative measures of
quality performance are most appropriate for the CJR model as hospitals
continue to make progress nationally on improving patient outcomes.
Furthermore, we will not make THA/TKA voluntary PRO and limited
risk variable data submission mandatory and increase the incentives
around their collection in the CJR pay-for-performance methodology as
recommended by a commenter. This measure remains under development, and
we want to encourage robust hospital reporting to speed measure
development, but the measure is not yet ready to have its results
incorporated in the CJR model methodology in the manner recommended by
the commenter. We refer readers to section III.D.3.a. of this final
rule for further discussion of our future plans to incorporate PRO
measure results in the CJR pay-for-performance methodology.
We appreciate the suggestions of many commenters that we utilize
outcome measure thresholds of ``worse than national rate'' as displayed
on the Hospital Compare Web site to set the thresholds for
reconciliation payment eligibility. For purposes of the Hospital
Compare Web site, we made a specific choice around categorizing
hospitals to performance categories for public display of hospital
measure results in order to display a high level of statistical
certainty about differences in hospital quality performance that would
be reviewed by beneficiaries and other members of the public.
Specifically for the Hospital Compare Web site, to assign hospitals to
performance categories, the hospital's interval measure estimate is
compared to the national rate. If the 95 percent interval estimate
includes the national observed rate for that measure, the hospital's
performance is in the ``no different than national rate'' category. If
the entire 95 percent interval estimate is below the national observed
rate for that measure, then the hospital is performing ``better than
national rate.'' Finally, if the entire 95 percent interval estimate
for the hospital is above the national observed rate for that measure,
the hospital's performance is ``worse than national rate.''
Regarding the commenter who suggested that an individual hospital's
performance on a measure should be assessed within confidence intervals
as the measure was originally specified, tested, and endorsed by the
NQF, we note that the THA/TKA Complications measure (NQF #1550) was not
endorsed by the National Quality Forum for its use with an interval
estimate, since NQF endorses measure specifications and not the use of
measures in various programs
[[Page 73372]]
or models. We acknowledge that CMS uses outcome measure ratios and
rates in different ways that may lead to some confusion for
stakeholders. We also want to clarify that during measure development
of the THA/TKA Complications measure (NQF #1550) and the THA/TKA
Readmissions measure (NQF #1551), these measures were developed and
tested to yield risk-standardized ratios, which are multiplied by the
national rate and reported as risk-standardized rates in Hospital
Compare, and that the 95 percent interval estimate is specifically used
to display the measure for public reporting on the Hospital Compare Web
site. We chose to use rates on the Hospital Compare Web site because we
believe that presentation of a rate on the Hospital Compare Web site is
better understood by consumers than a measure result expressed as a
predicted-to-expected ratio. For purposes of the CJR model, we will
also use risk-standardized rates for the THA/TKA Complications measure
(NQF #1550) as discussed in section III.D.2.a. of this final rule. We
discuss our final decision not to adopt the THA/TKA Readmissions
measure (NQF #1551) for this model in section III.D.2.b. of this final
rule.
We note that ``worse than national rate'' is the quality
performance threshold for reconciliation payment eligibility
recommended by many commenters as the statistically certain measure of
poor hospital quality performance, yet almost every hospital in the
country already exceeds this level on the THA/TKA Complications measure
(NQF #1550) and the THA/TKA Readmissions measure (NQF #1551).
Nationally, we estimate that only 29 hospitals currently perform at
``worse than national rate'' on one or more of these measures, a number
that is similar to the estimate provided by a commenter. Thus, based on
current measure performance only a very small number of hospitals would
fail to meet the quality performance thresholds for reconciliation
payment eligibility recommended by many commenters. We do not believe
that adopting ``worse than national rate'' as the threshold for
reconciliation payment eligibility, or applying no threshold as
recommended by some commenters if a hospital ``worse than national
rate'' submits a corrective action plan to CMS, would further encourage
quality improvement or maintenance of high performance for participant
hospitals in the CJR model, beyond the incentives that already exist in
CMS programs.
Either incorporating a ``worse than national rate'' threshold or
applying no threshold would essentially eliminate pay-for-performance
under the CJR model, which would not be consistent with our final
decision discussed in the prior response to public comments to
incorporate a pay-for-performance methodology in the CJR model
beginning in performance year 1.
Regarding the recommendations to use interval estimates to identify
hospitals with performance ``worse than national average'' as the most
equitable approach to identifying statistically valid poor hospital
performance on quality measures, we have previously explained our
position on the use of interval estimates when determining payment
outcomes for hospital performance on measures. Specifically for the
HRRP where we use point estimates for quality measure performance, we
acknowledged outcome measures of risk-standardized condition-specific
readmission rates to be statistical measures (77 FR 53394). We also
recognized that statistical measures will include some degree of
variation and stated that other Medicare programs use similar
statistical measures as part of their programs, so any consideration of
the use of interval estimates with respect to the HRRP may have
implications for other programs (77 FR 53394). Despite this reality, we
finalized the HRRP methodology for quality measure performance (76 FR
51673), which results in the use of a point estimate for a hospital's
excess readmission ratio (77 FR 53394), and we use point estimates in
other CMS programs that rely upon statistically-based outcome measures,
such as the HVBP Program. (76 FR 26504). We note that over the past
several years the HRRP has shown that use of point estimates in the
program has still led to improvement in hospital readmission
rates.42 43 We, therefore, continue to believe that quality
performance can be assessed by measure result point estimates that do
not rely on the statistical certainty of interval estimates which may
fail to identify real, clinically meaningful differences in hospital
measure performance.
---------------------------------------------------------------------------
\42\ Gerhardt G, Yemane A, Hickman P, Oelschlaeger A, Rollins E,
Brennan N. Data Shows Reduction in Medicare Hospital Readmission
Rates During 2012. Medicare & Medicaid Research Review 2013: 3(2):
E1-E12.
\43\ Medicare Hospital Quality Chartbook 2014: Performance
Report on Outcome Measures. Prepared by Yale New Haven Health
Services Corporation Center for Outcomes Research and Evaluation for
the Centers for Medicare and Medicaid Services 2014:23. https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Medicare-Hospital-Quality-Chartbook-2014.pdf.
---------------------------------------------------------------------------
However, we agree with the commenters that our proposal to set
performance thresholds for reconciliation payment eligibility at the
30th percentile does not reflect the statistical certainty of intervals
around hospital measures performance results and may not adequately
account for the variation that occurs in risk-standardized rates like
the THA/TKA Complications measure (NQF #1550) and the THA/TKA
Readmissions measure (NQF #1551) proposed for use in the CJR model. We
also agree with the commenters that setting required measure
performance thresholds for reconciliation eligibility may provide
insufficient quality and cost episode improvement incentives for some
participant hospitals in the CJR model. We estimate that based on their
current quality measure performance one-third of participant hospitals
would not be eligible for reconciliation payments under our proposed
thresholds for the three required quality measures, even if those
hospitals achieved savings beyond the target price. While our estimate
is lower than the estimate of more than 50 percent of participant
hospitals that was provided by some commenters, we agree with the
commenters that the proposed methodology would not provide significant
quality and cost episode improvement incentives for a substantial
percentage of participant hospitals in the CJR model.
We continue to believe there are real, clinically meaningful
differences that are important to Medicare beneficiaries in hospital
performance on the THA/TKA Complications measure (NQF #1550) finalized
for this model, as well as opportunities for improvement, which are not
recognized by the statistical certainty approach that we use for the
Hospital Compare Web site but can be appropriately recognized by
assigning hospitals to measure performance percentiles, such as we
proposed for the CJR model. We also believe it is appropriate to make
different choices for estimating measure performance for model or
program payment policies, depending on the context. For example, in the
CJR model where we proposed to use quality performance in the payment
methodology of a model specifically focused on quality outcomes
directly addressed by the proposed measures, we believe a different
approach to estimating performance differences than the statistical
certainty approach used on the Hospital Compare Web site would allow us
to observe and reward real quality performance incentivized by episode
payment that otherwise would
[[Page 73373]]
be unrecognized. Therefore, we continue to believe that assigning
hospital measure results to a performance percentile in comparison with
the national distribution is an appropriate strategy to categorize and
recognize hospitals achieving different levels of quality performance
on the measures. We note that assigning hospitals to performance
percentiles based on their measure result point estimates, and then
using deciles of performance in a pay-for-performance model payment
methodology that does not use hospital performance percentiles as
thresholds, would help account for some of the statistical variation
that could occur in measure result point estimates and reduce the
likelihood that we would consider variation to be a real change in
measure performance. Therefore, we are finalizing our proposal
discussed in section III.C.5.b.(5)(b) of this final rule to assign each
participant hospital's measure point estimate to a performance
percentile based on the national distribution of measure results.
However, because the statistical uncertainty in measure results
increases the challenge of determining the most equitable performance
threshold, below which the level of performance is no longer in the
best interest of the beneficiary, as well as our interest in providing
quality and cost episode improvement incentives for all participant
hospitals under the CJR model, we are not finalizing our proposal to
set performance percentile thresholds for reconciliation payment
eligibility in the CJR model. Because we are not using performance
percentile thresholds for reconciliation payment eligibility in the CJR
model's final pay-for-performance methodology, we will neither be
setting nor changing such thresholds in the context of the model's
payment methodology over the model's performance years. We will be
adopting the composite score methodology, as discussed in the following
response to comments.
Comment: Many commenters offered a variety of other perspectives on
CMS' proposal and alternatives considered to link quality and payment
in the CJR model. Several commenters recommended that CMS tie a portion
of the reconciliation payment to the proposed quality measure threshold
performance for each of the 3 measures, specifically: \1/3\ of the
reconciliation payment would be made if one of the quality measure
performance thresholds is achieved, \2/3\ of the reconciliation payment
would be made if two of the quality measure performance thresholds were
achieved, and the full reconciliation payment would be made if all
three quality measure performance thresholds were achieved. These
commenters urged CMS to accompany this policy with no repayment
responsibility in all years for participant hospitals that achieved all
three quality measure performance thresholds, even if actual episode
spending exceeds the target price. The commenters reasoned that this
revised approach would provide the potential for more financial reward
for participant hospitals providing high quality episode care, and
limit the financial risk for participant hospitals furnishing high
quality care.
Some commenters who opposed the use of performance percentiles on
quality measures that were included in CMS' threshold proposal also
opposed the alternative composite quality score approach for the same
reasons, mainly because it would rely on performance percentiles
derived from point estimates of quality measure performance to award
points toward the composite quality score. However, a number of
commenters favored the use of a composite quality score to link quality
and payment, rather than thresholds for reconciliation payment
eligibility, because the composite quality score would provide an
opportunity for more participant hospitals to receive reconciliation
payments if episode savings were achieved and would vary a participant
hospital's financial reward in direct relationship to its episode
quality performance.
Other commenters suggested further refinements to the composite
score methodology, including different weighting of the measures. A
commenter urged CMS to reconsider the composite score weights discussed
in the proposed rule, and establish them as: HCAHPS Survey 25 percent;
Complications 50 percent, and Readmissions 25 percent. The commenter
reasoned that the Readmissions measure weight should be reduced due to
the measure's use in other CMS programs. Finally, the commenter
recommended that CMS modify the minimum percentile to receive quality
measure score points to the 10th percentile, and add a band for
incremental performance between the 10th percentile and the current
national average performance, where an increasing proportion of any
reconciliation payment from episode savings would be paid. The
commenter urged CMS to pay the full reconciliation payment for episode
savings beyond the target price to any hospital with quality
performance above the national average.
Several commenters, who also recommended additional quality
measures, stated that CMS should place greater weight in the composite
quality score on ambulation, followed by pain experience and
management, and finally followed by the Complications, Readmissions,
and HCAHPS Survey measures in descending order of importance when
calculating the composite quality score. Another commenter contended
that CMS should increase the HCAHPS Survey measure weight and make the
submission of THA/TKA voluntary PRO and limited risk variable data
mandatory for performance year 2 and subsequent years, to increase the
effect of patient experience on the financial opportunity of
participant hospitals under the CJR model. A commenter recommended
that, rather than participant hospital percentiles of performance
compared to the national distribution of hospital measure performance,
CMS use hospital-specific metrics that should be able to ``top out''
with high quality performance. The commenter suggested that CMS could
measure performance annually on each measure for every participant
hospital, and establish a minimum and maximal optimal measure result
for the measure that could guide performance scoring. Finally, a
commenter urged CMS to reconsider awarding the 50th percentile of
performance for individual measure scores that make up the composite
quality score without actual measure results, as CMS would not be
assured that those hospitals were providing good quality care.
A number of commenters recommended that CMS vary the discount
percentage incorporated in the target price at reconciliation based on
the participant hospital's level of quality performance. Other
commenters stated that high-performing hospitals on quality should have
opportunities for greater reconciliation payments if that high-quality
performance is sustained, recommending that CMS include no discount in
the target price or a smaller discount percentage for these hospitals
than would be used for hospitals with lower levels of quality
performance. Finally, several commenters contended that hospitals
furnishing care of lower quality should incur financial penalties based
on their quality performance.
Response: We appreciate the suggestions of the commenters on
features of the CJR pay-for-performance methodology that would be
valuable in providing the most robust incentives for quality
improvement or maintenance of high-quality performance for all CJR
participant hospitals. As described
[[Page 73374]]
previously in this section, we are finalizing our proposal discussed in
section III.C.5.b.(5)(b) of this final rule to assign each participant
hospital's quality measure result point estimate to a performance
percentile based on the national distribution of measure results, but
we are not finalizing our proposal to set performance percentile
thresholds for reconciliation payment eligibility under the CJR model.
We agree with many of the commenters that the pay-for-performance
methodology under the CJR model should provide the opportunity for
financial reward to participant hospitals with an acceptable level of
episode quality performance, while also including an incentive for
quality improvement if the hospital's current level of quality is low.
We also agree with the commenters who stated that the CJR pay-for-
performance methodology should provide the potential for increased
financial reward for participant hospitals that furnish higher-quality
care through payments that would either increase the reconciliation
payment to the hospital or reduce the hospital's repayment
responsibility depending on the hospital's episode cost performance for
the model performance year. However, we do not agree with the
commenters who recommended that those hospitals achieving high-quality
episode performance should not be expected to improve their episode
efficiency because we believe that substantial opportunities to reduce
Medicare expenditures in the context of high-quality episode care exist
for virtually all participant hospitals. Innovation Center models are
generally designed with a focus on both reducing costs and improving
the quality of care for model beneficiaries. Therefore, we will
continue to incorporate a discount percentage into the target price for
every participant hospital as discussed in section III.C.4.b. of this
final rule in the methodology for setting target prices for the CJR
model.
We also do not agree with the commenters who recommended that
hospitals with low-quality performance incur financial penalties under
the model, because the model is specifically designed to reward episode
quality performance and cost savings. We discussed an alternative under
the composite quality score approach in section III.C.5.b.(5)(c)(ii) of
the proposed rule that would impose a quality penalty on hospitals with
a low composite quality score that would otherwise lead them to be
ineligible for reconciliation payments (80 FR 41243 through 41244).
Under this alternative, we would reduce the effective discount
percentage for these hospitals, thus imposing a 1 percent penalty for
their low quality performance, regardless of whether or not episode
savings are achieved beyond the target price. We continue to believe
that while this approach would provide stronger incentives for quality
improvement for participant hospitals with low performance on quality,
even if they did not expect to be able to reduce actual episode
spending below the target price, it could provide reconciliation
payments even to those hospitals that did not achieve acceptable
quality performance. Therefore, we believe that the risk to
beneficiaries and CMS of these low-quality performing hospitals
achieving savings in the context of poor quality care by sharply
decreasing utilization to levels that reflect stinting on medically
necessary care are so significant that adopting this alternative would
not be appropriate. Instead, we will provide the opportunity for
quality incentive payments that relate to the participant hospital's
overall quality performance and improvement on the model's quality
measures as reflected in the hospital's composite quality score that we
will calculate for each performance year at the time reconciliation is
carried out for that performance year.
As previously discussed, we are not finalizing our proposal to set
performance percentile thresholds for reconciliation payment
eligibility in the CJR model. Based on public comments that addressed
our reconciliation payment eligibility threshold proposal, the
alternatives considered, and the objectives of the pay-for-performance
methodology under the CJR model, we believe that the composite score
methodology that we discussed in the proposed rule that would determine
reconciliation payment eligibility and change the effective discount
percentage experienced by a participant hospital at reconciliation is
the most appropriate pay-for-performance approach to achieve the
objectives previously described. While the majority of commenters
favored the threshold proposal with modification to adopt much lower
quality thresholds of ``worse than national average'' performance that
would result in eligibility of almost all participant hospitals for
reconciliation payments if savings were achieved beyond the target
price, a substantial percentage of commenters supported the composite
score methodology or another approach that would provide greater
financial reward to participant hospitals for higher quality
performance. The composite score methodology omits the proposed 30th
percentile performance minimum standard for all required quality
measures as a definitive cut-off point for eligibility for
reconciliation payments and replaces it with a quality scoring system
that provides hospitals with multiple possible combinations of quality
performance that can result in a hospital reaching eligibility for the
reconciliation payment, thereby providing opportunity for
reconciliation payments to hospitals achieving an acceptable or higher
level of overall quality performance. This methodology also provides an
incentive structure that acknowledges that high-quality episodes should
be rewarded with greater financial opportunity under the CJR model,
either through increased reconciliation payments or reduced repayment
responsibility, depending upon the participant hospital's episode cost
performance during a performance year. We appreciate the support of the
commenters who share our view on the merits of the composite score
approach.
We discussed in the proposed rule, but did not propose, a composite
quality score methodology because at the time we believed that such an
approach could diminish the importance of each quality measure given
the limited number in the model, that the measures represented clinical
goals that should be achievable by all hospitals participating in the
model, and that a threshold methodology would provide the most
achievable and predictable quality targets for the CJR model that
requires participation (80 FR 41244). However, we agree with the
commenters that the proposed threshold methodology would not
sufficiently incentivize and reward quality improvement and acceptable
or high quality performance under the CJR model for a substantial
proportion of participant hospitals even if savings beyond the target
are achieved. In contrast, the composite quality score methodology will
allow performance on each required quality measure to be meaningfully
valued in the model's pay-for-performance methodology, incentivizing
and rewarding cost savings in relation to the quality of episode care
provided by the participant hospital. Despite the small number of final
CJR model quality measures, the measures represent both clinical
outcomes and patient experience, and each carries substantial value in
the composite quality score. Participant hospitals could achieve an
acceptable or good composite quality score despite performing well on
one of the required measures but achieving lower
[[Page 73375]]
performance on the other required measure. Thus, while quality
performance on each measure would not be required for reconciliation
payment eligibility, performance on each measure would be valued in the
composite quality score methodology. Based on our review of the public
comments, including the technical issues raised about measure result
statistical variation in point estimates, we believe that a participant
hospital's overall quality performance under the CJR model should be
considered in the pay-for-performance approach, rather than performance
on each quality measure individually determining the financial
opportunity under the model. The composite score methodology also
provides a framework for incorporating additional measures of
meaningful outcomes for LEJR episodes, as discussed in section III.D.3.
of this final rule, in the CJR pay-for-performance methodology in the
future. Finally, while we believe that high quality performance on all
of the measures represents goals of clinical care that should be
achievable by all CJR model participant hospitals that heighten their
focus on these measures, we appreciate that many hospitals have room
for significant improvement in their current measure performance. The
composite score methodology, which does not set performance thresholds
for each measure for reconciliation payment eligibility, will provide
the potential for financial reward for more participant hospitals that
reach overall acceptable or better quality performance, thus
incentivizing their continued efforts to improve the quality and
efficiency of episodes.
In the proposed rule, we presented weights for the proposed quality
measures in the composite quality score and note that we need to revise
those weights for the final rule given that we are not adopting the
THA/TKA Readmissions measure (NQF #1551) for the CJR model. As some
commenters encouraged us to assign more weight than we discussed in the
proposed rule to measures of patient experience and functional status,
we believe it would be most appropriate to redistribute the 20 percent
measure weight from the THA/TKA Readmissions measure (NQF #1551)
equally to the two required measures we adopted for the model,
specifically assigning an additional 10 percent weight each to the THA/
TKA Complications measure (NQF #1550) and the HCAHPS Survey measure
(NQF #0166). We note that the overall distribution of measure weight in
the composite quality score would provide 50 percent weight to health-
related conditions that arise following LEJR surgery (through the THA/
TKA Complications measure (NQF #1550)) and 50 percent weight to patient
experience (through the HCAHPS Survey measure (NQF #0166) and THA/TKA
voluntary PRO and limited risk variable data submission). We believe
this weighting appropriately balances patient experience with
meaningful health outcomes for beneficiaries, by providing equal weight
in the composite quality score to both dimensions, consistent with the
patient-centered priorities for quality measurement that some
commenters urged us to adopt.
The final measure weights in the composite quality score for the
CJR model are displayed in Table 17.
Table 17--Final Quality Measure Weights in Composite Quality Score
------------------------------------------------------------------------
Weight in
composite
Quality measure quality score
(%)
------------------------------------------------------------------------
Hospital[dash]level RSCR following elective primary THA 50
and/or TKA (NQF #1550).................................
HCAHPS Survey (NQF #0166)............................... 40
THA/TKA voluntary PRO and limited risk variable data 10
submission.............................................
------------------------------------------------------------------------
Consistent with the scoring of individual measure percentile
performance as assigned to a decile, as we discussed in the proposed
rule, and our final decision to use performance percentiles for both
required quality measures, as discussed earlier in this section, for
each model performance year we will assign individual measure
performance scores to each participant hospital based on the values in
Table 18. These individual measure performance scores have been set to
reflect the final measures weights in Table 17 so they can ultimately
be summed without adjustment in calculating the composite quality
score. The absolute differences for each performance decile among the
two measures reflect the intended weight of the measure performance in
the composite quality score.
As we further discussed in the proposed rule, we will assign
participant hospitals without a measure value to the 50th performance
percentile (80 FR 41242). A participant hospital will not have a value
for the THA/TKA Complications measure (NQF #1550) if the hospital does
not meet the minimum case count of 25 cases in the 3 year measurement
period which is required to ensure reliability of the measure result.
In section III.D.4. of this final rule, we discuss the 25 case minimum
and note that this quality measure case minimum is the same as the
minimum used in the HIQR Program (75 FR 50185 and 76 FR 51609). We
further note that as described in section III.D.2.a. of this final
rule, the THA/TKA Complications measure (NQF #1550) only includes
primary elective THA/TKA procedures which are a subset of the LEJR
episodes included in the CJR model. As a result, it is possible for a
CJR participant hospital to have LEJR episodes but no cases that meet
the criteria to be included in the THA/TKA Complications measure (NQF
#1550). Regarding the HCAHPS Survey measure (NQF #0166), a participant
hospital will not have a reported value for the HCAHPS Survey measure
(NQF #0166) if it did not meet the minimum of 100 completed surveys and
did not have 4 consecutive quarters of HCAHPS data, which are required
to ensure the reliably of the measure. In section III.D.4. of this
final rule, we discuss the 100 case minimum and note that this quality
measure case minimum is the same as the minimum used in the HVBP
Program (76 FR 26502).
Moreover, we note that in rare cases, if CMS identifies an error in
the data used to calculate the measure resulting in suppression of the
data for public reporting on Hospital Compare, a hospital will not have
a value for the THA/TKA Complications measure (NQF #1550) or HCAHPS
Survey measure (NQF #0166) measure and would be assigned to the 50th
performance percentile of the measure, as applicable.
Lastly, new hospitals that are identified as participants in the
CJR model may not have sufficient data within the measure performance
periods to calculate a value for the THA/TKA Complications measure (NQF
#1550) or HCAHPS Survey measure (NQF #0166) and would be assigned to
the 50th performance percentile of the measure, as applicable.
For hospitals that are in the situations previously described, we
will assign participant hospitals without a measure value the 50th
performance percentile of the measure result distribution. We intend to
publicly report the measure results used to calculate the composite
quality score for all participant hospitals. While we understand the
concerns of the commenter that we have no actual outcome measure
results for certain hospitals, we continue to believe it would be
unfair to disadvantage a participant hospital in the pay-for-
[[Page 73376]]
performance methodology of this model based on insufficient number or
no applicable cases alone and, therefore, we will assign these
hospitals to the 50th performance percentile, which is the middle of
the national measure performance distribution, and assign quality
performance points to the participant hospital accordingly based on the
performance percentile scale identified in Table 18.
Moreover, as we also discussed in the proposed rule, we will not
assign individual measure score performance points to a hospital
categorized to a performance percentile below the 30th percentile
because we do not believe lower performance percentiles reflect quality
performance such that they should be assigned any individual quality
measure score performance points for LEJR episodes under the CJR model.
Although a commenter suggested providing individual quality measure
score points to hospitals beginning at the 10th performance percentile,
we continue to disagree that performance below the 30th performance
percentile reflects sufficient quality on these two well-established
measures in CMS hospital programs to award quality measure points. We
note, however, that a participant hospital assigned no performance
points for one required quality measure could still be eligible for
reconciliation payments if episode savings are achieved beyond the
target price as long that hospital has achieved a sufficient
performance percentile on the other required quality measure.
Additionally, we will assign a measure quality score of two points
for participant hospitals that successfully submit THA/TKA voluntary
PRO and limited risk variable data and 0 points for participant
hospitals that do not successfully submit these data. The requirements
for successful data submission in each performance year are discussed
in section III.D.3.a. of this final rule. While we discussed awarding 1
point for successful submission in the proposed rule, this was an error
because we also stated that the submission of THA/TKA voluntary PRO and
limited risk variable data would constitute 10 percent of the composite
quality score, which is based on a maximum score of 20 points. Two
points is the correct value that reflects 10 percent of the maximum
score.
Table 18--Final Individual Scoring for Two Required Quality Measures
----------------------------------------------------------------------------------------------------------------
THA/TKA Complications HCAHPS Survey measure
measure (NQF #1550) (NQF #0166) quality
quality performance performance score
Performance percentile score (points) (1 (Points) (0.8
additional point additional point
available for available for
improvement) improvement)
----------------------------------------------------------------------------------------------------------------
>=90th........................................................ 10.00 8.00
>=80th and <90th.............................................. 9.25 7.40
>=70th and <80th.............................................. 8.50 6.80
>=60th and <70th.............................................. 7.75 6.20
>=50th and <60th.............................................. 7.00 5.60
>=40th and <50th.............................................. 6.25 5.00
>=30th and <40th.............................................. 5.50 4.40
<30th......................................................... 0.00 0.00
----------------------------------------------------------------------------------------------------------------
We will sum the performance and, if applicable, improvement scores
(as discussed in the following response to comments) on the two
required quality measures with the score on the successful submission
of THA/TKA voluntary PRO and limited risk variable data to calculate a
composite quality score for each performance year for a participant
hospital. This composite quality score will then be incorporated into
the pay-for-performance methodology for the CJR model that assigns a
participant hospital to a quality category at the time of
reconciliation for a performance year. We will first require a minimum
composite quality score for reconciliation payment eligibility if the
participant hospital's actual episode spending is less than the target
price and second, make quality incentive payments that change the
effective discount percentage included in the target price experienced
by the hospital in the reconciliation process. Thus, hospitals with
higher composite quality scores may financially benefit from their
episode quality performance compared to hospitals with lower quality
performance in a different quality category, regardless of whether
episode savings are achieved. For example, in performance year 4,
actual episode spending for a hospital with an excellent composite
quality score would be reconciled to a target price reflecting a 3.0
percent discount factor, but then the participant hospital would
receive a quality incentive payment of 1.5 percent of the hospital's
pre-discount target price that would either increase the hospital's
reconciliation payment if savings were achieved or reduce the
hospital's repayment responsibility if actual episode spending exceeded
the target price. In contrast, actual episode spending for a hospital
with an acceptable composite quality score would be reconciled to a
target price reflecting a 3.0 percent discount factor, but then the
participant hospital would not receive any quality incentive payment.
Thus, the excellent quality performance by the participant hospital in
the excellent quality category would provide a financial benefit to
that hospital of 1.5 percent of the pre-discount target price,
regardless of whether the hospital achieved savings for episodes.
As discussed in the proposed rule regarding the composite quality
score alternative approach to pay-for-for performance under the CJR
model, the discount for all participant hospitals included in the
target prices will be 3.0 percent. We refer readers to section
III.C.4.b.(9) of this final rule for further discussion of the discount
factor included in the target prices. Hospitals that provide high-
quality episode care will have the opportunity to receive quality
incentive payments that will reduce the effective discount percentage
as displayed in Tables 19, 20, and 21, based on their composite quality
score that places each hospital into one of four quality categories,
specifically ``Below Acceptable,'' ``Acceptable,'' ``Good,'' and
``Excellent.'' Three tables are required to display the effective
discount percentages for each quality category due to the phase-in of
hospital repayment responsibility from no responsibility in performance
year 1, to partial responsibility in performance
[[Page 73377]]
years 2 and 3, and finally full responsibility in performance years 4
and 5 as discussed in section III.C.4.b.(9) of this final rule.
Depending on the participant hospital's actual composite quality score
that places the hospital in a quality category, quality incentive
payments will be valued at 1.0 percent to 1.5 percent of the hospital's
benchmark episode price (that is, of the expected episode spending
prior to application of the discount factor to calculate a target
price).
While the final policy to place participant hospitals into one of
four quality categories to determine reconciliation payment eligibility
and, if applicable, the value of quality incentive payments is the same
as that presented in the proposed rule, the applicable scoring ranges
for each quality category discussed in the proposed rule are different
from the ranges we are finalizing in Tables 19, 20, and 21 for several
reasons. First, we are not finalizing the THA/TKA Readmissions measure
(NQF #1551) as part of the CJR model's pay-for-performance methodology,
requiring us to redistribute the 20 percent weight in the composite
quality score that we had presented for that measure. That
redistribution is discussed earlier in this section. Second, our final
policy includes quality improvement points in addition to quality
performance points in the composite quality score, as discussed in the
following response to comments. We estimate based on current quality
measure performance that approximately 4 percent and 7 percent of all
participant hospitals would qualify for improvement points on the
HCAHPS Survey measure (NQF #0166) and the THA/TKA Complications measure
(NQF #1550), respectively.
The most significant reason for a change in the scoring ranges for
the quality categories in the final rule is due to our strengthening
the financial incentives for participant hospitals under the CJR model
through the composite quality score pay-for-performance methodology to
improve quality performance or maintain high-quality performance for
episodes. We agree with the commenters who urged us to ensure that most
participant hospitals that achieve savings beyond the discount included
in the target price receive reconciliation payments if their episode
quality is acceptable and that we provide the potential for
significantly greater financial reward for hospitals that achieve or
maintain high quality episode performance. Therefore, we have
reassessed our quality performance expectations for each quality
category by examining the current quality measure performance of
participant hospitals in the context of the national measure
performance distribution. We have adjusted the final scoring ranges to
balance the quality performance required for each quality category with
the financial incentives (reconciliation payment eligibility and
quality incentive payments) to achieve the quality performance required
for the category. In the context of our final composite quality score
ranges for each quality category, we estimate that approximately 10
percent of participant hospitals placed in the ``Below Acceptable''
quality category based on their composite quality score would not be
eligible for reconciliation payments based on their current quality
measure performance, compared to 14 percent based on the proposed rule
composite score measures and ranges. Similarly, we estimate that
approximately 12 percent of participant hospitals would be eligible for
reconciliation payments through placement in the ``Acceptable'' quality
category but would not receive quality incentive payments based on
their current quality performance, compared to 30 percent in this
quality category based on the proposed rule measures and score ranges.
We estimate that the large majority of participant hospitals,
specifically 64 percent, would be placed in the ``Good'' quality
category based on their current quality performance and would,
therefore, be eligible for reconciliation payments and for quality
incentive payments valued at 1.0 percent of the hospital's benchmark
episode price, compared to 46 percent based on the proposed rule
measures and score ranges. Finally, we estimate that 14 percent of
participant hospitals through placement in the ``Excellent'' quality
category would be eligible for reconciliation payments and for quality
incentive payments valued at 1.5 percent of the hospital's benchmark
episode price, compared to an estimate of 10 percent based on the
proposed rule measures and score ranges. Thus, for each quality
performance category, we have slightly lowered our quality performance
expectations from our proposed rule discussion of the composite quality
score approach, in order to provide participant hospitals with more
significant financial incentives to improve their quality and cost
performance under the CJR model, as well as their incentives to
maintain high-quality performance.
Hospitals will be required to achieve a minimum composite quality
of score greater than or equal to 4.0 to be eligible for a
reconciliation payment if actual episode spending is less than the
target price. Participant hospitals with below acceptable quality
performance reflected in a composite quality score less than 4.0 will
be assigned to the ``Below Acceptable'' quality category and will not
be eligible for a reconciliation payment if actual episode spending is
less than the target price. A level of quality performance that is
below acceptable will not affect participant hospitals' repayment
responsibility if actual spending exceeds the target price. We believe
that the requirement that this minimum level of LEJR episode quality be
achieved for reconciliation payments to be made is important to protect
beneficiaries from excessive reductions in utilization that may result
from the financial incentives in an episode payment model to lower
actual episode spending. Under the pay-for-performance methodology of
the CJR model, this policy should encourage participant hospitals to
focus on appropriate reductions or changes in utilization that lead to
high quality, more efficient care. Based on current hospital quality
measure performance, approximately ninety percent of participant
hospitals would have a composite quality score of greater than or equal
to 4.0 and be eligible for reconciliation payments based on acceptable
or better quality performance.
Participant hospitals with an acceptable composite quality score of
greater than or equal to 4.0 and less than 6.0 will be assigned to the
``Acceptable'' quality category and be eligible for a reconciliation
payment if actual episode spending is less than the target price
because their quality performance is at the acceptable level
established for the CJR model. They will not be eligible for a quality
incentive payment at reconciliation because their episode quality
performance, while acceptable, is not good or excellent. Therefore,
these hospitals will be eligible to receive a reconciliation payment if
actual episode spending is less than the target price.
Participant hospitals with a good composite quality score of
greater than or equal to 6.0 and less than or equal to 13.2 will be
assigned to the ``Good'' quality category and be eligible for a quality
incentive payment at reconciliation if actual episode spending is less
than the target price because their quality performance exceeds the
acceptable level required for reconciliation payment eligibility under
the CJR model. In addition, they will be eligible for a quality
incentive payment at reconciliation for good quality performance that
equals 1.0 percent of the participant hospital's benchmark
[[Page 73378]]
price, thereby changing the effective discount percentage included in
the target price experienced by the hospital at reconciliation. Thus,
participant hospitals achieving this level of quality for LEJR episodes
under CJR will either have less repayment responsibility (that is, the
quality incentive payment will offset a portion of their repayment
responsibility) or receive a higher payment (that is, the quality
incentive payment would add to the reconciliation payment) at
reconciliation than they would have otherwise based on a comparison of
actual episode spending to the target price that reflects a 3.0 percent
discount. Therefore, these hospitals will be eligible to receive a
reconciliation payment if actual episode spending is less than the
target price and will also receive a quality incentive payment.
Finally, hospitals with an excellent composite score quality score
of greater than 13.2 will be assigned to the ``Excellent'' quality
category and be eligible to receive a reconciliation payment if actual
episode spending is less than the target price because their quality
performance exceeds the acceptable level required for reconciliation
payment eligibility under the CJR model. In addition, they will be
eligible for a higher quality incentive payment at reconciliation for
excellent quality performance that equals 1.5 percent of the
participant hospital's benchmark price, thereby changing the effective
discount percentage included in the target price experienced by the
hospital at reconciliation. Thus, participant hospitals achieving this
level of quality for LEJR episodes under CJR will either have less
repayment responsibility (that is, the quality incentive payment will
offset a portion of their repayment responsibility) or receive a higher
payment (that is, the quality incentive payment would add to the
reconciliation payment) at reconciliation than they would have
otherwise based on a comparison of actual episode spending to the
target price that reflects a 3.0 percent discount. Therefore, these
hospitals will be eligible to receive a reconciliation payment if
actual episode spending is less than the target price and would also
receive a quality incentive payment.
Table 19--Performance Year 1: Relationship of Composite Quality Score to Reconciliation Payment Eligibility and the Effective Discount Percentage
Experienced at Reconciliation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effective discount
Eligible for Eligible for quality percentage for Effective discount
Composite quality score Quality category reconciliation incentive payment reconciliation percentage for repayment
payment payment (%) amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
<4.0.............................. Below Acceptable..... No................... No.................. 3.0 Not applicable.
>=4.0 and <6.0.................... Acceptable........... Yes.................. No.................. 3.0 Not applicable.
>=6.0 and <=13.2.................. Good................. Yes.................. Yes................. 2.0 Not applicable.
>13.2............................. Excellent............ Yes.................. Yes................. 1.5 Not applicable.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 20--Performance Years 2 and 3: Relationship of Composite Quality Score to Reconciliation Payment Eligibility and the Effective Discount Percentage
Experienced at Reconciliation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effective discount
Eligible for Eligible for quality percentage for Effective discount
Composite quality score Quality category reconciliation payment incentive payment reconciliation percentage for
payment (%) repayment amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
<4.0................................. Below Acceptable....... No..................... No..................... 3.0 2.0
>=4.0 and <6.0....................... Acceptable............. Yes.................... No..................... 3.0 2.0
>=6.0 and <=13.2..................... Good................... Yes.................... Yes.................... 2.0 1.0
>13.2................................ Excellent.............. Yes.................... Yes.................... 1.5 0.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 21--Performance Years 4 and 5: Relationship of Composite Quality Score to Reconciliation Payment Eligibility and the Effective Discount Percentage
Experienced at Reconciliation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effective discount
Eligible for Eligible for quality percentage for Effective discount
Composite quality score Quality category reconciliation payment incentive payment reconciliation percentage for
payment (%) repayment amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
<4.0................................. Below Acceptable....... No..................... No..................... 3.0 3.0
>=4.0 and <6.0....................... Acceptable............. Yes.................... No..................... 3.0 3.0
>=6.0 and <=13.2..................... Good................... Yes.................... Yes.................... 2.0 2.0
>13.2................................ Excellent.............. Yes.................... Yes.................... 1.5 1.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Under this methodology, the final stop-loss and stop-gain limits
discussed in section III.C.8. of the final rule will not change for
participant hospitals in different quality categories. Despite the
limited number of quality measures adopted for the CJR model at this
point in time compared to other programs, such as the Shared Savings
Program and HBVP Program that use more measures in a quality scoring
methodology, after considering the public comments we believe this
approach to quality incentive payments based on the composite quality
score will have the effect of increasing the alignment of the financial
and quality performance incentives under the CJR model to the potential
benefit of participant hospitals and their collaborators as well as
CMS, although it substantially increases the
[[Page 73379]]
complexity of the pay-for-performance methodology to link quality and
payment. The final methodology also provides a framework for
incorporating quality performance and quality improvement in the pay-
for-performance methodology of the CJR model as additional measures
become available for consideration for the CJR model. We refer readers
to section III.D.3. of this final rule for discussion of future
measures for the model.
Comment: Many commenters urged CMS to provide incentives for
hospitals to continuously improve the quality of care under the model.
The commenters asserted that scoring approaches incorporating
improvement have been successfully used in other CMS programs, such as
the Shared Savings Program and HVBP Program, as well as other
Innovation Center payment models. The commenters recommended that the
proposed thresholds for reconciliation payment eligibility were
inadequate as they would provide no incentive for further quality
improvement for the approximately 50 percent of participant hospitals
currently performing better than the proposed thresholds on all three
proposed quality measures. Some of these commenters favored the
composite quality score methodology and further recommended that in
addition to incorporating quality performance on the quality measures
in the CJR model payment methodology through the composite quality
score, CMS should reward year-over-year quality improvement, like the
Shared Savings Program.
A few commenters recommended that CMS reward quality improvement
under the CJR model as long as there is no increase in episode
spending, observing that under the statutory authority for the CJR
model, one of the three expectations for a model is that it would
increase the quality of care without increasing spending. The
commenters claimed that setting a target price that always includes a
discount over expected episode spending should not be necessary for
participant hospitals that demonstrate improvements in quality
performance.
Response: We appreciate the perspectives of the commenters who
recommended that we directly reward hospitals for quality improvement,
consistent with pay-for-performance policies under other CMS programs
such as the HVBP Program and the Shared Savings Program. We note that
the proposed pay-for-performance quality threshold methodology would
have provided no additional potential for financial reward for quality
improvement once participant hospitals met the 30th performance
percentile threshold for reconciliation payment eligibility in the
first three performance years and the 40th performance percentile
threshold in the fourth and fifth performance years on the three
proposed quality measures. As some commenters pointed out, the proposal
was unlikely to advance a major goal of the CJR model to continue to
improve the quality or maintain current high quality of care for
beneficiaries in LEJR episodes at all participant hospitals. In
contrast, the composite quality score methodology that incorporates
quality measure performance and that we finalized in the preceding
response to public comments may indirectly reward quality improvement.
Quality measure performance for a performance year within a higher
performance decile than the prior performance year may result in a
higher number of quality performance points for that measure and,
ultimately, a higher composite quality score that may result in
participant hospital assignment to a quality category that provides
quality incentive payments or a higher amount of quality incentive
payments than the prior performance year's lower composite quality
score. However, without further refinement of the composite quality
score methodology finalized previously, unlike the pay-for-performance
methodology in other CMS programs such as the Shared Savings Program,
the CJR model would not directly reward quality improvement in the
scoring methodology, thereby providing a lesser incentive for quality
improvement than directly including points for improvement in the
composite quality score as recommended by some commenters.
As we stated earlier in this section, we are not yet certain in
this model test what performance outcomes can be achieved under best
practices. Therefore, we believe a refinement to the composite score
methodology in order to drive quality improvement for participant
hospitals that have historically lagged in quality performance on the
CJR model quality measures is appropriate, to supplement the composite
score's valuing of quality performance in the pay-for-performance
methodology of the model. We agree with the commenters that we should
directly reward quality improvement under the CJR model pay-for-
performance methodology to encourage participant hospitals currently at
all levels of quality performance to improve their performance as they
strive to achieve high quality performance outcomes under best
practices. Like the commenters, we recognize that the heightened focus
on episode cost and quality performance by participant hospitals may
lead to substantial year-over-year quality measure improvement over the
model performance years, and we agree that improvement should be valued
in the pay-for-performance methodology, in addition to the quality
measure performance percentile actually achieved by the hospital.
However, we disagree with the commenters who suggested that participant
hospitals demonstrating quality improvement should not be expected to
demonstrate episode cost efficiency in order for quality improvement to
be rewarded. Improved quality performance and cost savings are closely
linked in the CJR pay-for-performance methodology, as both are major
goals of the CJR model.
Therefore, we will refine the composite score methodology discussed
in the proposed rule that assigns quality performance points based on
performance percentiles for each measure to add the potential for
incremental quality improvement points to be awarded for substantial
improvement in performance on a required quality measure. We believe
that the actual level of quality performance achieved should be most
highly valued in the composite quality score to reward those hospitals
furnishing high-quality care to CJR model beneficiaries, with a smaller
contribution to the composite quality score made by improvement points
if measure result improvement is achieved. We acknowledge that just
because a hospital shows substantial improvement on a measure result,
this does not necessarily mean the episode care is high-quality, yet
the improvement spurred by the hospital's participation in the CJR
model deserves to be valued as the hospital's performance is moving in
a direction that is good for the health of beneficiaries. Valuing
improvement is especially important because the CJR model involves such
a wide range of hospitals that must participate if they are located in
the selected MSAs, and the hospitals will be starting from many
different current levels of quality performance. This refinement to the
composite quality score methodology will help to provide all
participant hospitals with a strong incentive to improve LEJR episode
outcomes, including those hospitals with historically lagging quality
performance.
Specifically, we will add into the composite quality score 10
percent of the maximum value for one or both of
[[Page 73380]]
the required measures, as applicable, which would equal 1 point for the
THA/TKA Complications measure (NQF #1550) or 0.8 point for the HCAHPS
Survey measure (NQF #0166), for those participant hospitals that
demonstrate substantial improvement from the prior year's measure
performance percentile on that measure. This modest increment of 10
percent will allow us to continue to value most significantly quality
performance in the composite quality score, while incorporating a
significant but lesser value on quality improvement. We believe that
rewarding improvement by allocating 10 percent of the maximum quality
performance points to improvement on a measure provides a significant
incentive for participant hospitals to achieve national high
performance benchmarks on the quality measures, as well as provides an
incentive for historically lagging hospitals to make significant
quality improvements.
Because of the uncertainty of statistical measures, as discussed
previously in this section, and our annual comparison of a participant
hospital's measure result to the national distribution to determine the
hospital's performance percentile, we will only award measure quality
improvement points where improvement is substantial and reflective of
true improvement in quality performance on the individual measure.
Thus, in order to be considered for improvement points on one of the
measures, a participant hospital must have had a reportable measure
performance result for that measure in the prior year. We note that in
considering quality improvement points for award in the first model
performance year, we will use measure results from the prior year
quality measure performance period in determining each participant
hospital's measure performance percentile against which we will compare
its measure performance percentile for CJR model performance year 1 to
determine if quality improvement points should be awarded. For the
HCAHPS Survey measure (NQF #0166), the prior year quality measure
performance period used will be July 1, 2014 through June 30, 2015. For
the THA/TKA Complications measure (NQF #1550), the prior year quality
measure performance period used will be April 1, 2012 through March 31,
2015. The measure performance percentiles for performance year 1 will
be determined from measure results from the performance year 1 quality
measure performance periods as displayed in Table C5 of this final
rule.
We are defining substantial as improving 3 deciles or more in
comparison to the national distribution of measure results. Improvement
of three deciles represents a quality measure result change of over
one-third of the range between the 10th percentile and the 90th
percentile measure results. The 3 decile threshold to define
substantial improvement is based on historical Hospital Compare
information demonstrating that improving three deciles in measure
performance on an annual basis is a challenging but attainable
threshold for hospitals and reflects true improvement in quality
performance on the individual measure. We estimate based on current
quality measure performance over the most recent two years of available
quality measure result data that 30 and 55 participant hospitals would
qualify for improvement points on the HCAHPS Survey measure (NQF #0166)
and the THA/TKA Complications measure (NQF #1550), respectively.
We note that when a participant hospital is awarded improvement
points in addition to performance points on a specific required
measure, the sum of these points for the measure will be slightly
greater than the measure performance points that would be awarded to a
hospital in the performance decile that is one level higher than the
participant hospital's actual performance decile. By recognizing
quality performance in the CJR model pay-for-performance methodology,
supplemented by valuing quality improvement, we believe participant
hospitals at all current levels of quality performance, including those
historically lagging, will have the greatest incentives to achieve high
and/or improved quality of care under the CJR model through strong
financial incentives that are linked to quality.
Comment: A number of commenters urged CMS to further reduce the CJR
model discount percentage in the target price for those participant
hospitals who successfully reported THA/TKA voluntary PRO and limited
risk variable data. They recommended that CMS apply a discount of 1.5
percent, rather than the proposed 1.7 percent, to the target price in
order to support a participant hospital's development of an effective
and efficient process for reporting. A commenter requested that CMS
provide a stronger financial incentive for THA/TKA PRO voluntary and
limited risk variable data submission as well as compensation for the
additional hospital costs of data collection, reasoning that because
the proposal for the reduced discount percentage only covers the
expected additional costs of data collection, no financial incentive is
present for hospitals to report these data. Several commenters stated
that CMS should go further and require the submission of THA/TKA
voluntary PRO and limited risk variable data by participant hospitals
in order for reconciliation payments to be paid because, while limiting
structure and process measures to value more highly outcome measures is
laudable, the most important consideration in quality outcomes for CJR
model beneficiaries should be beneficiary functional status. The
commenters expressed disappointment in CMS' proposal that reporting
would be voluntary and urged CMS to institute pay-for-reporting for
these data are a requirement for hospitals to be paid any savings
achieved for their episodes beyond the target price. Many commenters
encouraged CMS to incorporate patient-reported outcomes measure
performance in the CJR model as soon as possible, and some commenters
further recommended that CMS delay implementation of the model until
the PRO measure is available for use.
Response: We appreciate the emphasis the commenters placed upon
measure development and implementation to capture the functional status
of beneficiaries following LEJR procedures. Patient-reported outcomes
following elective THA and TKA, which are the focus of the measure
under development, are critically important for these costly procedures
that beneficiaries choose to improve their quality of life, despite the
lengthy recovery period involved. Pay-for-performance in the CJR model,
an episode payment model that is designed to incentivize efficient,
high-quality episode care, will benefit greatly from the incorporation
of participant hospital performance on a measure of functional status
when it is fully developed. We refer readers to section III.D.3.a.(9)
of this final rule for further discussion of our plans and timeline to
incorporate the THA/TKA Patient-Reported Outcome Performance Measure
(PRO-PM) result in the CJR model when its development is complete after
the period of THA/TKA voluntary PRO and limited risk variable data
submission under the CJR model. We do not believe it would be
appropriate to delay implementation of the CJR model until the measure
has completed development, because the other final measures adopted for
the model, as described in section III.D.2.a. through c. of this final
rule, are meaningful measures of LEJR episode quality and
[[Page 73381]]
the CJR model provides an unprecedented opportunity to complete
development of the THA/TKA PRO-PM because of the broad scope of the
model test.
Because the measure is currently under development, we believe our
final model payment policies and future plans for use of the measure
result in the CJR model provide sufficient incentive and increased
financial opportunity to encourage robust reporting by participant
hospitals of THA/TKA voluntary PRO and limited risk variable data. For
the reasons discussed earlier in this section, we are not finalizing
our proposed pay-for-performance threshold methodology to determine a
participant hospital's reconciliation payment eligibility if episode
savings are achieved beyond the target price. Therefore, we are not
finalizing our proposal to reduce the discount percentage to 1.7
percent from 2.0 percent for successful submission of THA/TKA voluntary
PRO and limited risk variable data. Instead, under our final policy we
are incorporating the successful criterion for submission of THA/TKA
voluntary PRO and limited risk variable data into our composite quality
score methodology for the CJR model, awarding points to participant
hospitals who successfully submit these data that will be added into
the calculation of the hospital's composite quality score, consistent
with our discussion of the alternative approach to linking quality and
payment in the proposed rule as described in detail earlier in this
section. We refer readers to section III.D.3.a.(9) of this final rule
for our final definition of successful reporting of THA/TKA voluntary
PRO and limited risk variable data for each performance year of the CJR
model. Furthermore, as the PRO-PM remains under development, we will
not require the reporting of THA/TKA voluntary PRO and limited risk
variable data for reconciliation payment eligibility. However, the
successful reporting of the voluntary data may increase a participant
hospital's financial opportunity under the model, which may be greater
than the hospital's increased administrative cost to report the data.
While the final policy to incorporate successful reporting of THA/TKA
voluntary PRO and limited risk variable data into the composite quality
score methodology is not directly keyed to addressing the hospital
resources required for reporting as would have been true for the
voluntary reporting payment adjustment that we proposed, we note that
voluntary reporting can only help a hospital qualify for quality
incentive payments and unsuccessful reporting will not hurt a
participant hospital's eligibility for reconciliation payments.
Summary of Final Decisions: After consideration of the public
comments we received, we are finalizing our proposal discussed in
section III.C.5.b.(5)(b) of this final rule to assign participant
hospital required outcome measure point estimates to performance
percentiles based on the national distribution. We summarize the public
comments we received on the proposed criteria for successfully
reporting the voluntary THA/TKA data, as discussed in section
III.C.5.b.(5)(b) of this final rule, and provide our responses in
section III.D.3.a. of this final rule. However, we are not finalizing
our proposal discussed in section III.C.5.b.(5)(c)(iii) of this final
rule of a pay-for-performance methodology that identifies specific
performance thresholds for the required quality measures that must be
met for reconciliation payment eligibility. We are also not finalizing
our proposal discussed in section III.C.5.b.(2) of this final rule to
reduce the discount factor included in the target price for successful
submission of THA/TKA voluntary PRO and limited risk variable data.
Instead, based on our review of the public comments, we are finalizing
the use of a composite quality score, as discussed in section
III.C.5.b.(5)(c)(ii) of this final rule, that is based on quality
performance and improvement on the THA/TKA Complications measure (NQF
#1550) and the HCAHPS Survey measure (NQF #0116), as well as submission
of THA/TKA voluntary PRO and limited risk variable data, and places
participant hospitals in one of four quality categories for each
performance year, ``Below Acceptable,'' ``Acceptable,'' ``Good,'' and
``Excellent.'' The final payment policies for the quality categories
for the CJR model performance years are discussed earlier in this
section and displayed in Tables 19, 20, and 21. We summarize the public
comments we received on the proposed applicable time period, as
discussed in section III.C.5.b.(4) of this final rule, and provide our
responses in section III.D.3.d. of this final rule. We also summarize
the public comments we received on the reporting time period for the
THA/TKA patient reported outcome and limited risk variable data
discussed in section III.C.5.b.(4) of this final rule and provide our
responses in section III.D.3.a.(8) of this final rule.
We have added new definitions to Sec. 510.2, specifically:
``Composite quality score'' means a score computed for each participant
hospital to summarize the hospital's level of quality performance and
improvement on specified quality measures, as described in Sec.
510.315; ``Quality performance points'' are points that CMS adds to a
participant hospital's composite quality score for a measure based on
the performance percentile scale and for successful data submission of
patient reported outcomes; and ``Quality improvement points'' are
points that CMS adds to a participant hospital's composite quality
score for a measure if the hospital's performance percentile on an
individual quality measure increases from the previous performance year
by at least three deciles on the performance percentile scale. We have
revised Sec. 510.305(f)(2) and (g)(2) and (3) to reflect the role of
the composite quality score in determining reconciliation payment
eligibility. The final pay-for-performance methodology is set forth in
Sec. 510.315, which has been retitled, ``Composite quality scores for
determining reconciliation payment eligibility and quality incentive
payments,'' and revised to set forth the final pay-for-performance
methodology of the CJR model as described in this final rule.
6. Process for Reconciliation
We outlined in the proposed rule our proposals for how we intend to
reconcile aggregate related Medicare payments for a hospital's
beneficiaries in CJR episodes during a performance year against the
applicable target price in order to determine if reconciliation payment
(or repayment, beginning in performance year 2) is applicable under
this model. We refer readers to section III.B. of this final rule for
our definition of related services for LEJR episodes under CJR, to
section III.C.2.a. of this final rule for our definition of performance
years, and to section III.C.4. of this final rule for discussion of our
approach to establish target prices.
a. Net Payment Reconciliation Amount (NPRA)
The proposed rule detailed our proposal to conduct reconciliation
by calculating a NPRA for each hospital participant in the model. After
the completion of a performance year, we proposed to retrospectively
calculate a participant hospital's actual episode performance based on
the episode definition. We noted that episode payments for purposes of
the CJR model would exclude the effects of special payment provisions
under existing Medicare payment systems (section III.C.3.a. of this
final rule), be subject to
[[Page 73382]]
proration for services that extend beyond the episode (section
III.C.3.b. of this final rule), and exclude certain PBPM payments for
programs and models specified in section III.C.7.d. of this final rule.
We proposed that some episodes may be excluded entirely from the CJR
model due to overlap with BPCI episodes, as discussed in section
III.C.7.b. of this final rule. Finally, we proposed that actual episode
payments calculated for purposes of CJR would be capped at anchor MS-
DRG and region-specific high episode payment ceilings (section
III.C.3.c. of this final rule). We proposed to apply the high episode
payment ceiling policy to episodes in the performance year similarly to
how we apply it to historical episodes (section III.C.4.c. of this
final rule). Episode payments for episodes attributed to CJR eligible
hospitals would be determined and the high episode payment ceiling
would be calculated as two standard deviations above the mean. Any
actual episode payment amount above the high payment ceiling would be
capped at the applicable ceiling.
We proposed to compare each participant hospital's actual episode
payment performance to its target prices. We proposed that, as
discussed in section III.C.4. of this final rule, a participant
hospital would have multiple target prices for episodes ending in a
given performance year, based on the MS-DRG anchor (MS-DRG 469 versus
MS-DRG 470), the performance year when the episode was initiated, when
the episode was initiated within a given performance year (January 1
through September 30 of the performance year, October 1 through
December 31 of the performance year, October 1 through December 31 of
the prior performance year), and whether the participant hospital
successfully submitted THA/TKA voluntary PRO and limited risk variable
data. The applicable target price for each episode would be determined
using the previously stated criteria, and the difference between each
CJR episode's actual payment and the relevant target price (calculated
as target price subtracted by CJR actual episode payment) would be
aggregated for all episodes for a participant hospital within the
performance year, representing the raw NPRA. This amount would be
adjusted per the steps discussed later in this section, creating the
NPRA.
We proposed to adjust the raw NPRA to account for post-episode
payment increases (section III.C.8.e. of this final rule) and stop-loss
and stop-gain limits (section III.C.8.b. of this final rule). Any NPRA
amount greater than the proposed stop-gain limit would be capped at the
stop-gain limit, and any NPRA amount less than the proposed stop-loss
limit would be capped at the stop-loss limit.
We did not propose to include any CJR reconciliation payments or
repayments to Medicare under this model for a given performance year in
the NPRA for a subsequent performance year. We want to incentivize
providers to provide high quality and efficient care in all years of
the model. If reconciliation payments for a performance year are
counted as Medicare expenditures in a subsequent performance year, a
hospital would experience higher Medicare expenditures in the
subsequent performance year as a consequence of providing high quality
and efficient care in the prior performance year, negating some of the
incentive to perform well in the prior year. Therefore, we proposed to
not have the NPRA for a given performance year be impacted by CJR
repayments or reconciliation payments made in a prior performance year.
For example, if a CJR hospital receives a $10,000 reconciliation
payment in the second quarter of 2017 for achieving episode spending
below the target price for performance year 1, that $10,000
reconciliation payment amount would not be included in the performance
year 2 calculations of actual episode spending. However, as discussed
in section III.C.6.b. of this final rule, during the following
performance year's reconciliation process, we proposed to account for
additional claims run-out and overlap from the prior performance year,
and net that amount with the subsequent performance year's NPRA to
determine the reconciliation or repayment amount for the current
reconciliation. The following is a summary of comments received and our
response.
Comment: Commenters emphasized the need to accurately account for
wage index differences when calculating target prices and conducting
reconciliation activities.
Response: We refer readers to comments and responses to comments in
section III.C.4.b.(7) of this final rule for further discussion on the
finalized target price calculation policy to normalize for wage index
differences at the claim level and to reintroduce wage index
differences based on the participant hospital's wage index and labor
cost share. In order to maintain consistency with the target price
calculations, and to more accurately normalize for the effects of wage
index differences, we will apply the same claim-level wage index
normalization to claim payments included in actual episode expenditures
for each performance year when calculating a hospital's NPRA.
We also refer readers to response to comments in section
III.C.4.b.(7) of this final rule on the importance of reintroducing
wage index differences when calculating target prices and
reconciliation and repayment amounts. In order to maintain consistency
with the target price calculations, we will reintroduce wage index
differences when calculating NPRA by applying the participant
hospital's wage index and 0.7 as the labor cost share. By mirroring the
target price calculation approach for accounting for wage index
differences, we can better ensure that any reconciliation amounts or
repayments to Medicare are due to differences in practice patterns, not
Medicare FFS wage index policy variations.
Comment: A commenter suggested that CMS perform reconciliation
calculations differently when a beneficiary in a CJR episode receives
PAC from a SNF or HHA not recommended by the CJR hospital discharge
planners. Another commenter noted that the reconciliation calculation
CMS proposed needed refinement as it pertains to the proposed
methodology for setting episode prices and paying model participants;
the commenter's suggestions pertaining to the payment methodology are
addressed in section III.C.4. of this final rule.
Response: We thank commenters for their suggestions. However, we do
not believe it is appropriate to make adjustments to a given hospital's
NPRA based on the choice of PAC facility for beneficiaries discharged
from that facility. Such a change would be inconsistent with our goal
of maintaining beneficiary choice and access to care, discussed in
section III.F. of this final rule. We also note that the process for
calculating the NPRA is consistent with our methodology for calculating
target prices and actual episode spending during the performance period
(section III.C.4.b. of this final rule), along with the adjustments to
NPRA that would account for post-episode spending (III.C.8.d. of this
final rule) and the stop-loss and stop-gain limits discussed in section
III.C.8.b. of this final rule.
Final Decision: We refer readers to section III.C.4. of this final
rule for discussion of modifications to how the target prices and
performance period episode spending are calculated, including risk
stratification for fracture patients. In addition, section III.C.5. of
this final rule addresses our final policy on how quality performance
will be
[[Page 73383]]
used to determine a CJR hospital's effective discount percentage.
However, after consideration of the public comments we received, we are
modifying our proposal to calculate the NPRA utilizing the methodology
described in this subsection to account for wage index normalization
and reintroduction when calculating actual episode expenditures in a
performance year and including the modifications to calculation of
target prices and actual episode spending as described elsewhere in
this section. After the completion of a performance year, we will
retrospectively calculate a participant hospital's actual episode
spending based on the episode definition. Each participant hospital's
actual episode payment performance will be compared to its target
prices, creating the raw NPRA, and then adjusted for the stop-loss and
stop-gain limits, as well as post-episode spending, creating the NPRA.
b. Payment Reconciliation
We proposed to reconcile payments retrospectively through the
following reconciliation process. We proposed to reconcile a
participant hospital's CJR actual episode payments against the target
price 2 months after the end of the performance year. More
specifically, we would capture claims submitted by March 1st following
the end of the performance year and carry out the NPRA calculation as
described previously to make a reconciliation payment or hold hospitals
responsible for repayment, as applicable, in quarter 2 of that calendar
year.
Comment: Some commenters explicitly supported CMS's proposal to
implement a retrospective reconciliation process. However, a few
commenters suggested CMS implement a prospective reconciliation process
(see section III.C.2.b. of this final rule for discussion of comments
on the retrospective payment methodology). Commenters suggested CMS
make a prospective bundled payment to hospitals for all services
provided during a CJR episode; hospitals would then distribute payments
to other providers and suppliers. A commenter suggested that CMS hold a
specified percentage of total episode payments for downstream (non-
hospital) providers and suppliers furnishing services during CJR
episodes and hospitals would later distribute the amount of the
withheld payment to providers and suppliers based on quality and
efficiency.
Response: We refer readers to section III.C.4.b. of this final rule
for discussion of comments received on our proposed methodology to
establish target prices and retrospectively calculate performance
period episode spending.
We considered the suggestion to implement a blended reconciliation
approach by withholding a specified percentage of FFS payments and
later distributing the remainder of payments to hospitals for
disbursement to downstream providers and suppliers. We believe that the
operational challenges associated with such an approach would introduce
significant administrative burden for hospitals. We also note that, as
discussed in section III.C.10. of this final rule, we are finalizing
policies that will allow participant hospitals to engage in financial
arrangements and relationships with downstream providers and suppliers.
We believe these relationships will allow participant hospitals the
opportunity to share financial risk with downstream providers and
suppliers and engage such entities in efforts to improve quality and
efficiency throughout the episode.
Final Decision: After consideration of the public comments we
received, we are finalizing our proposal, without modification, to
conduct a retrospective reconciliation process for the CJR model.
To address issues of overlap with other CMS programs and models
that are discussed in section III.C.7. of the proposed rule, we also
proposed that during the following performance year's reconciliation
process, we would calculate the prior performance year's episode
spending a second time to account for final claims run-out, as well as
overlap with other models as discussed in section III.C.7. of this
final rule. This would occur approximately 14 months after the end of
the prior performance year. As discussed later in this section, the
amount from this calculation, if different from zero, would be applied
to the NPRA for the subsequent performance year in order to determine
the amount of the payment Medicare would make to the hospital or the
hospital's repayment amount. We note that the subsequent reconciliation
calculation would be applied to the previous calculation of NPRA for a
performance year to ensure the stop loss and stop gain limits discussed
in section III.C.8. of this final rule are not exceeded for a given
performance year.
For the performance year 1 reconciliation process, we would
calculate a participant's, as previously described, and if positive,
the hospital would receive the amount as a reconciliation payment from
Medicare. If negative, the hospital would not be responsible for
repayment to Medicare, consistent with our proposal to phase in
financial responsibility beginning in performance year 2. Starting with
the CJR reconciliation process for performance year 2, in order to
determine the reconciliation or repayment amount, the amount from the
subsequent reconciliation calculation would be applied to the NPRA. We
proposed that if the amount is positive, and if the hospital meets the
minimum quality score required to be eligible for reconciliation,
(discussed further in section III.C.5. of this final rule), the
hospital would receive the amount as a reconciliation payment from
Medicare. If the amount is negative, Medicare would hold the
participant hospital responsible for repaying the absolute value of the
repayment amount following the rules and processes for all other
Medicare debts. Note that given our proposal to not hold participant
hospitals financially responsible for repayment for the first
performance year, during the reconciliation process for performance
year 2 only, the subsequent calculation amount (for performance year 1)
would be compared against the performance year 1 NPRA to ensure that
the sum of the NPRA calculated for performance year 1 and the
subsequent reconciliation calculation for year 1 is not less than zero.
For performance years 2 through 5, though, we proposed that Medicare
would hold the participant hospital responsible for repaying the
absolute value of the repayment amount following the rules and
processes for all other Medicare debts. The following table illustrates
a simplified example of how the subsequent reconciliation calculation
may affect the following year's reconciliation payment. The second
column represents the raw NPRA calculated for Performance Year 1,
meaning that Hospital A's aggregated episode spending was $50,000 below
the target price multiplied by the number of episodes. The third column
represents the subsequent reconciliation calculation, indicating that
when calculating episode spending during Performance Year 1 a second
time, we determined that Hospital A's aggregated episode spending was
$40,000 below the target price multiplied by the number of episodes,
due to claims runout, accounting for model overlap, or other reasons.
The fourth column represents the difference between the subsequent
reconciliation calculation and the raw NPRA calculated for Performance
Year 1. This difference is then combined with the amount in the fifth
column to create the reconciliation
[[Page 73384]]
payment amount for PY2, which is reflected in the sixth column.
Table 22--Sample Reconciliation Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Difference
Performance Year between PY1 Reconciliation
Performance Year 1 subsequent subsequent Performance Year payment made to
1 (2016) raw NPRA reconciliation reconciliation 2 (2017) raw NPRA hospital in
calculation calculation and quarter 2 2018
raw NPRA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospital A............................................... $50,000 $40,000 ($10,000) $25,000 $15,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
This reconciliation process would account for overlaps between the
CJR model and other CMS models and programs as discussed in section
III.C.7. of this final rule, and would also involve updating
performance year episode claims data. We also note that in cases where
a hospital has appealed its quality performance results on the
complications and HCAHPS quality measures through the IQR program
appeal process, discussed in section III.D. of this final rule, and
where such appeal results would result in a different effective
discount percentage or quality incentive payment under the CJR model,
the subsequent reconciliation calculation will account for these
updates as well.
For example, for performance year 1 for the CJR model in 2016, we
would capture claims submitted by March 1st, 2017, and reconcile
payments for participant hospitals approximately 6 months after the end
of the performance year in quarter 2 of calendar year 2017. We would
carry out the subsequent calculation in the following year in quarter 2
of calendar 2018, simultaneously with the reconciliation process for
the second performance year, 2017. Table 23 provides the reconciliation
timeframes for the model. Lastly, we proposed that the reconciliation
payments to or repayments from the participant hospital would be made
by the MAC that makes payment to the hospital under the IPPS. This
approach is consistent with BPCI Model 2 operations.
We proposed this approach in order to balance our goals of
providing reconciliation payments in a reasonable timeframe, while
being able to account for overlap and all Medicare claims attributable
to episodes. We stated that pulling claims 2 months after the end of
the performance year would provide sufficient claims run-out to conduct
the reconciliation in a timely manner, given that our performance year
includes episodes ending, not beginning, by December 31st. We note that
in accordance with the regulations at Sec. 424.44 and the Medicare
Claims Processing Manual (Pub. L. 100-04), Chapter 1, Section 70,
Medicare claims can be submitted no later than 1 calendar year from the
date of service. We recognized that by pulling claims 2 months after
the end of the performance year to conduct reconciliation, we would not
have complete claims run-out. However, we believed that the 2 months of
claims run-out would be an accurate reflection of episode spending and
consistent with the claims run-out timeframes used for reconciliation
in other payment models, such as BPCI Models 2 and 3. The alternative
would be to wait to reconcile until we have full claims run out 12
months after the end of the performance year, but we were concerned
that this approach would significantly delay earned reconciliation
payments under this model. Because we proposed to conduct a second
calculation to account for overlap with other CMS models and programs,
we proposed to incorporate updated claims data with 14 months run out
at that time. However, we did not expect that the updated data should
substantially, in and of itself, affect the reconciliation results
assuming hospitals and other providers and suppliers furnishing
services to Medicare beneficiaries in CJR episodes follow usual
patterns of claims submission and do not alter their billing practices
due to this model.
Table 23--Proposed Timeframe for Reconciliation in CJR
----------------------------------------------------------------------------------------------------------------
Second Second
Model Reconciliation Reconciliation calculation to calculation
Model performance performance claims submitted payment or address overlaps adjustment to
year period by repayment and claims reconciliation
run[dash]out amount
----------------------------------------------------------------------------------------------------------------
Year 1 *.............. Episodes ending March 1, 2017... Q2 2017......... March 1, 2018... Q2 2018.
April 30, 2016
to December 31,
2016.
Year 2................ Episodes ending March 1, 2018... Q2 2018......... March 1, 2019... Q2 2019.
January 1, 2017
through
December 31,
2017.
Year 3................ Episodes ending March 1, 2019... Q2 2019......... March 2, 2020... Q2 2020.
January 1, 2018
through
December 31,
2018.
Year 4................ Episodes ending March 2, 2020... Q2 2020......... March 1, 2021... Q2 2021.
January 1, 2019
through
December 31,
2019.
Year 5................ Episodes ending March 1, 2021... Q2 2021......... March 1, 2022... Q2 2022.
January 1, 2020
through
December 31,
2020.
----------------------------------------------------------------------------------------------------------------
* Note that the reconciliation for Year 1 would not include repayment responsibility from CJR hospitals.
[[Page 73385]]
Comment: Several commenters supported the proposed reconciliation
process. However, many commenters requested that CMS conduct
reconciliation activities on a quarterly or semi-annual, instead of
annual, basis. Some commenters suggested that CMS offer participant
hospitals the option of electing annual or a more frequent
reconciliation timeline. Commenters stated numerous reasons for their
request, including: Providing revenue and cash flow to hospitals
throughout the year to aid in care coordination and redesign efforts;
giving hospitals interim data on financial performance; the time lag
between the end of a performance year and the subsequent reconciliation
calculation; utilizing data for improving care processes; giving
hospitals the opportunity to gainshare with other providers and
suppliers with greater frequency; and consistency with the frequency of
reconciliation in the BPCI initiative, among other reasons. Some
commenters supported the proposal to make reconciliation payments or
require repayment on an annual basis, but requested that CMS also
conduct interim quarterly reconciliation projections to provide
hospitals with information on financial performance throughout the
performance year. Several commenters claimed that the proposed
reconciliation process would result in reduced revenue for hospitals
throughout the performance period. However, a commenter stated that
receiving annual reconciliation results in the second quarter of the
calendar year following the completion of a performance year would
provide hospitals with timely feedback and opportunity to adjust
strategies in subsequent years to improve or maintain financial
performance. Another commenter noted that annual reconciliation at the
end of each performance year would give participants an early
indication of progress under the model.
Response: We appreciate the perspectives of the commenters on our
proposal. In response to commenters' concerns that an annual
reconciliation process would result in reduced revenue for hospitals,
we are clarifying that model participants, and all providers and
suppliers, would continue to bill and be paid through normal Medicare
FFS processes throughout the model for Part A and Part B services
furnished to beneficiaries during a CJR episode, with a retrospective
reconciliation process after the conclusion of a performance year. We
disagree that an annual reconciliation process would result in reduced
revenue for hospitals. In addition, we note that beginning in the
second quarter of 2017 when the first reconciliation is performed, CJR
hospitals will be able to utilize any reconciliation payments they earn
to invest in care redesign and coordination efforts on an ongoing
basis. We emphasize that the delay of financial repayment
responsibility until performance year 2 means no hospital will be
required to make a repayment to Medicare until the second quarter of
2018 for actual episode spending exceeding the target price. In
addition, the delay of the model start date until April 1, 2016 and
truncated first performance year will reduce the amount of time between
beginning participation in the CJR model and the first reconciliation.
We appreciate commenters' concerns and request for more frequent
feedback on performance throughout the performance period. However, we
continue to believe that an annual reconciliation process is most
appropriate for the following reasons. As previously stated in this
section, providers and suppliers have a calendar year to submit FFS
claims for payment. Implementing a quarterly reconciliation process, as
we do for the BPCI models, would mean that many claims may be
incomplete at the time of the reconciliation. The BPCI reconciliation
process incorporates 3 subsequent reconciliation calculations, and BPCI
participants have experienced significant fluctuation in financial
results between the initial reconciliation and the subsequent
calculations. We believe our proposed annual reconciliation approach
will lead to more stable financial results for providers. We also note
based on our experience with the BPCI models that a quarterly
reconciliation process results in model participants' near constant
engagement in the reconciliation and appeals processes. This can
potentially take time away from efforts focused on care redesign and
coordination with providers and suppliers engaged in furnishing care
for beneficiaries under the model. In addition, given our plan to
assess hospital performance on quality measures (discussed in section
III.C.5. of this final rule), we note that annual reconciliation
processes will be necessary in order to calculate an accurate composite
quality score for hospital participants, since quality measures are
calculated on an annual basis. We also proposed to perform annual
reconciliation for consistency with other models and programs such as
the Shared Savings Program. As discussed in section III.C.7.e.of this
final rule, we will allow for beneficiaries to be assigned to an ACO
and have a concurrent CJR episode. We will perform our reconciliation
calculations and then make the reconciliation and repayment amounts
available to other models and programs in order to account for
overlapping beneficiaries. We have aligned our annual reconciliation
timeline with the ACO models and program in order to make this
information available before the ACO models and program begin their
annual financial reconciliation calculations; such a timeline is
necessary to be able to account for program and model overlap.
We understand commenters' assertions that annual reconciliation
does not allow for frequent feedback on financial performance under the
model. We would like to reiterate that we will be providing both line-
level and summary claims data to model participants on a quarterly
basis, as discussed in section III.E. of this final rule. Such data are
intended to provide hospitals with information about their care
patterns and to identify opportunities for care redesign and savings.
This data will also provide ongoing feedback to hospitals about their
performance under the model, by including both raw claims as well as
summary data with information about their episode spending and care
patterns. Moreover, unlike in BPCI Models 2 and 3, we will be providing
model participants with performance year target prices on a prospective
basis, as discussed in section III.C.4 of this final rule. Prospective
target pricing will provide hospitals with increased certainty about
financial targets under the model. Finally, we also considered
commenters' requests to conduct interim financial reconciliation
calculations on a quarterly basis and provide the results of such
calculations to hospitals. Because of the potential for volatility
between the interim results and the final reconciliation results, and
our concern that such results would not provide additional meaningful
information to hospitals not present in the claims data and prospective
target prices, we are not pursuing an interim reconciliation process at
this time. However, we will continue to consider commenters'
suggestions and will consider the feasibility of providing interim
results in the future if we believe it could aid hospitals in
succeeding under this model and would provide additional information
not already present in the previously stated claims data and target
prices.
[[Page 73386]]
Final Decision: After consideration of the public comments we
received, we are finalizing our proposal, without modification, to
conduct financial reconciliation on an annual basis. We will engage
with CJR hospitals throughout the model to ensure the prospective
target prices and quarterly data provided to hospitals provide
sufficient ongoing feedback and data to hospitals between
reconciliations. As previously noted, we will continue to consider
commenters' suggestions and consider the feasibility of further interim
financial results in the future if warranted.
Comment: Several commenters expressed concerns about post-payment
denials and Recovery Audit Contractor (RAC) or MAC reviews that may
occur after the CJR model reconciliation processes are complete. A
commenter asserted that providers could be doubly penalized for such
claims if review and denial occurs after the subsequent reconciliation
calculation, in particular if a claim is denied for more than 100
percent of the payment amount. The commenter noted further concern due
to the aggregated reconciliation calculation; that is if a given claim
is later denied for an amount greater than 100 percent of the payment
amount, the denied amount could affect more than just the claim in
question. The commenter urged CMS to exempt all claims attributed to
the CJR model from post-payment review and denial.
Another commenter requested that CMS further outline the
reconciliation and repayment processes, including how reconciliation
would be conducted for Periodic Interim Payment (PIP) hospitals.
Finally, a commenter requested a more flexible repayment process for
hospitals meeting certain eligibility criteria, but did not suggest
specific criteria.
Response: We appreciate the commenters' views. We believe the
proposed process to perform a reconciliation calculation 2 months after
the conclusion of a performance year, with a subsequent reconciliation
calculation 12 months later, will allow sufficient time for routine
monitoring, review, and adjustment. We acknowledge that audits and
reviews may occur after our reconciliation processes are complete,
agreeing that post-payment reviews may occur up to 3 years after the
submission of a claim, or longer in some instances. However, we believe
that concluding reconciliation processes 14 months after the completion
of a performance year provides a reasonable timeframe for claims run-
out and subsequent actions on a claim and is consistent with other
payment reconciliation processes, such as the reconciliation of
hospital cost reports, which can have impacts that are mostly but not
entirely reconciled across multiple payment systems. With respect to
commenters' specific suggestions, we note that prohibiting review of
all claims submitted for a beneficiary during a CJR episode would not
be consistent with our stated goals of the model to monitor for quality
and appropriateness of care. While we appreciate the concern that the
price setting methodology under this model already provides a limit on
spending during the episode, we point out that provider payments are
not absolutely capped and hospitals are therefore not completely at
risk. During the initial model period in which hospitals will not be
financially responsible for repayment to Medicare for spending
exceeding the target price, all risk will be borne by Medicare. In
addition, in later years of the model all CJR hospital gains and losses
are capped, as discussed in section III.C.8. of this final rule,
meaning that Medicare will continue to bear risk for unusually costly
cases. We do not believe that CMS should be denied the full flexibility
to utilize all current processes for pre- and post-payment review based
on existing rules and regulations for claims associated with care
furnished under this model. Such a policy could potentially encourage
inefficient or inaccurate billing practices, or hinder CMS' ability to
appropriately monitor provider and supplier practices under the model.
We also note that such situations would only happen if a claim were
later denied and as such, encourage providers and suppliers submitting
claims to ensure accuracy and that policies as laid out in this final
rule are followed by all providers and suppliers submitting Medicare
FFS claims for services furnished to beneficiaries under the model.
In response to these comments we have considered whether it would
be appropriate to allow subsequent reconciliations if claims are denied
and reprocessed after the second reconciliation. We do not believe this
is appropriate for several reasons. First, we note that in the event
that the hospital's total episode spending exceeded the target price,
we are finalizing policies that limit hospitals' financial
responsibility for such spending, as discussed in section III.C.8. of
this final rule. Second, the entire purpose of MAC and RAC audits is to
ensure that Medicare payments are correctly administered and made only
for services delivered in accordance with statute and regulation. If
the hospital enters into appropriate collaboration agreements with high
quality, responsible, and compliant PAC providers, the 14-month period
prior to the second reconciliation provides ample opportunity for the
hospital and its collaborators to work together to conduct internal
audits and ensure that PAC claims are properly submitted or corrected.
We believe it is appropriate for hospitals to continue to share some
risk with Medicare even after the final reconciliation, and believe
this provides additional incentives for them to work closely with their
collaborators to ensure that all services are delivered appropriately.
Third, we believe it is important to conclude the reconciliation
process in the timeframe we have previously outlined in this section,
in order to provide hospitals with financial results and certainty over
their performance under the model. Additional subsequent
reconciliations could introduce uncertainty for model participants.
Finally, we do agree that we have a responsibility to ensure that MACs,
RACs, and other auditing entities audit services delivered under the
CJR using the rules and regulations governing the CJR model in addition
to all other relevant statute, regulation, and guidance. We believe
that appropriate contractor training and oversight will protect
hospitals from inappropriate denials while protecting beneficiaries
from the use of inappropriate services and protecting Medicare from
making payments on inappropriate claims. We reiterate the information
provided in the proposed rule that when a hospital is eligible for a
reconciliation payment, such payment would be made to participant
hospitals in a form and manner specified by CMS. In cases where
repayment is required, as stated in the proposed rule, CMS will follow
the normal Medicare debt processes, such as issuing a demand letter.
CMS intends to build on existing processes for making reconciliation
payments to hospitals or requiring repayment which are familiar to
hospitals. Such processes will rely on electronic and other established
processes to the extent possible. We also reiterate that as discussed
in section III.C.8. of this final rule, certain hospitals would be
afforded additional financial protections. We believe are protections
are sufficient and an extended repayment process for such hospitals is
not necessary.
With regard to PIP hospitals, we appreciate that commenters point
out the different payment processes that apply to such hospitals. PIP
hospitals receive biweekly payments based on
[[Page 73387]]
hospitals' estimates of applicable Medicare reimbursement for a given
cost period. Such hospitals also submit FFS claims to Medicare, which
are reconciled against the payments made through the PIP processes.
Given that such hospitals continue to submit FFS claims and the
reconciliation and repayment amounts from the CJR model would not be
included in the PIP hospital cost reports at settlement, we do not
believe it is necessary to institute a separate reconciliation process
for PIP hospitals.
Summary of Final Decisions: After consideration of the public
comments we received, we are finalizing our proposal to calculate the
NPRA as previously outlined. We are also finalizing, without
modification, our proposal to conduct an annual retrospective
reconciliation with one subsequent reconciliation calculation in the
following year.
The following table illustrates the final timeframe for
reconciliation.
Table 24--Final Timeframe for Reconciliation in CJR
----------------------------------------------------------------------------------------------------------------
Second Second
Model Reconciliation Reconciliation calculation to calculation
Model performance performance claims submitted payment or address overlaps adjustment to
year period by repayment and claims run- reconciliation
out amount
----------------------------------------------------------------------------------------------------------------
Year 1 *.............. Episodes ending March 1, 2017... Q2 2017......... March 1, 2018... Q2 2018.
June 30, 2016
to December 31,
2016.
Year 2................ Episodes ending March 1, 2018... Q2 2018......... March 1, 2019... Q2 2019.
January 1, 2017
through
December 31,
2017.
Year 3................ Episodes ending March 1, 2019... Q2 2019......... March 2, 2020... Q2 2020.
January 1, 2018
through
December 31,
2018.
Year 4................ Episodes ending March 2, 2020... Q2 2020......... March 1, 2021... Q2 2021.
January 1, 2019
through
December 31,
2019.
Year 5................ Episodes ending March 1, 2021... Q2 2021......... March 1, 2022... Q2 2022.
January 1, 2020
through
December 31,
2020.
----------------------------------------------------------------------------------------------------------------
* Note that the reconciliation for Year 1 would not include repayment responsibility from CJR hospitals.
This final policy is set forth at Sec. 510.305.
7. Adjustments for Overlaps With Other Innovation Center Models and CMS
Programs
a. Overview
In the proposed rule, we acknowledged that there may be
circumstances where a Medicare beneficiary in a CJR episode may also be
assigned to an ACO participating in the Shared Savings Program or
otherwise accounted for in a payment model being tested by the
Innovation Center. Current or forthcoming programs and models with
potential overlap with CJR are displayed in Table 24. For purposes of
this final rule, ``total cost of care'' models refers to models in
which episodes or performance periods include participant financial
responsibility for all Part A and Part B spending, as well as some Part
D spending in select cases. We use the term ``shared savings'' to refer
to models in which the payment structure includes a calculation of
total savings and CMS and the model participants each retain a
particular percentage of that savings. We note that there exists the
possibility for overlap between CJR episodes and shared savings
programs and models such as the Pioneer ACO Model, other total cost of
care models such as the OCM, other Innovation Center payment models
such as BPCI, and other models or programs that incorporate per-
beneficiary-per-month fees or other payment structures.
Table 25--Current Programs and Models With Potential Overlap With CJR Model
----------------------------------------------------------------------------------------------------------------
Per-beneficiary- per-month
Program/model Brief description Shared savings? (PBPM) payments?
----------------------------------------------------------------------------------------------------------------
Pioneer ACO Model.............. ACO shared savings Yes....................... No.
model.
Medicare Shared Savings Program ACO shared savings Yes....................... No.
(Shared Savings Program). program.
Next Generation ACO Model *.... ACO shared savings Yes....................... No.
model.
Comprehensive Primary Care Pays primary care Yes....................... Yes.
initiative (CPCi). providers for improved
and comprehensive care
management.
Multi[dash]payer Advanced Multi[dash]payer model Yes....................... Yes.
Primary Care Practice (MAPCP). for advanced primary
care practices, or
``medical homes``.
Bundled Payments for Care Bundled payment program No........................ No.
Improvement (BPCI). for acute or PAC
services or both.
Oncology Care Model (OCM) *.... Multi[dash]payer model No........................ Yes.
for oncology physician
group practices (PGPs).
Comprehensive ESRD Care ACO for ESRD Medicare Yes....................... No.
Initiative (CEC) *. beneficiaries.
Million Hearts *............... Model targeting No........................ Yes.
prevention of heart
attack and stroke.
[[Page 73388]]
Medicare Care Choices Model Hospice concurrent care No........................ Yes.
(MCCM) *. model.
----------------------------------------------------------------------------------------------------------------
* Denotes model in pre-implementation phase.
In the proposed rule, we outlined the following issues that may
arise in such overlap situations that must be addressed under CJR.
First, beneficiaries in CJR episodes could also be part of BPCI Model 2
or 3 LEJR episodes or BPCI non-LEJR episodes, and the clinical services
provided as part of each episode may overlap entirely or in part.
Second, CJR reconciliation payments and repayments that are made under
Part A and B and attributable to a specific beneficiary's episode may
be at risk of not being accounted for by other models and programs when
determining the cost of care under Medicare for that beneficiary.
Third, some Innovation Center models make PBPM payments to entities for
care coordination and other activities, either from the Part A or B
Trust Fund or both, or from the Innovation Center's own appropriation
(see section 1115A(f) of the Act). These payments may occur during a
CJR episode. Finally, there could be instances when the expected
Medicare savings for a CJR beneficiary's episode (represented by the
discount percentage) is not achieved by Medicare because part of that
savings is paid back to the hospital or another entity under the Shared
Savings Program or a total cost of care model in which the beneficiary
is also included. We sought comment on our proposals to account for
overlap with the Shared Savings Program and other models, including
those listed in Table 24 as well as other CMS models or programs.
The following is a summary of the comments received and our
responses.
Comment: A commenter requested that CMS not limit providers from
developing and implementing other episode-based payment models while
participating in the CJR model.
Response: We clarify that we have not included any limitations on
participation in future or current models through this final rule. In
addition, we have included the policies in this section in order to
allow for CJR hospitals to participate in other models and initiatives
concurrently with the CJR model.
b. CJR Beneficiary Overlap With BPCI Episodes
BPCI is an episode payment model testing LEJR episodes, as well as
47 other episodes, in acute or PAC or both settings (Models 1, 2, 3 or
4). As discussed in section III.A. of the proposed rule, we proposed to
exclude from selection for participation in the CJR payment model those
geographic areas where 50 percent or more of LEJR episodes are
initiated at acute care hospitals testing the LEJR episode in BPCI in
Models 1, 2 or 4 as of July 1, 2015. In that same section, we proposed
that acute care hospitals in selected geographic areas participating in
BPCI under Model 1 (acute care only) and those participating as episode
initiators for the LEJR episode in Model 2 (acute and PAC from 30 to 90
days post-discharge) or Model 4 (prospective episode payment for the
LEJR anchor hospitalization and related readmissions for 30 days post-
discharge) be excluded from CJR. We discuss the comments received on
this proposal and our responses in section III.A.4. of this final rule.
While we believed these proposals will mitigate the overlap of CJR
beneficiaries with BPCI episodes, there may still be instances of model
overlap that we need to account for under CJR. These include
circumstances when a beneficiary is admitted to a CJR participant
hospital for an LEJR procedure where the beneficiary would also be in a
BPCI Model 2 episode under a PGP that would initiate the episode under
BPCI. In another example, a beneficiary discharged from an anchor
hospitalization under CJR could enter a BPCI Model 2 LEJR episode at
another hospital for a phased second joint replacement procedure or
enter a BPCI Model 3 LEJR episode upon initiation of PAC services at a
BPCI PAC provider episode initiator for the LEJR episode. Similarly, a
beneficiary in a BPCI Model 2 or Model 3 LEJR episode could be admitted
to a CJR participant hospital for a phased second joint replacement. In
all such scenarios in which there is overlap of CJR beneficiaries with
any BPCI LEJR episodes, we proposed that the BPCI LEJR episode under
Models 1, 2, 3, or 4 take precedence and we would cancel (or never
initiate) the CJR episode. Because the cancelation (or lack of
initiation) would only occur for overlap with BPCI LEJR episodes, we
expect that the participant hospital and treating physician would
generally be aware of the beneficiary's care pathway that would cancel
or not initiate the CJR episode. Therefore, we would exclude the CJR
episode from the CJR participant hospital's reconciliation calculations
where we compare actual episode payments to the target price under the
CJR model. If we were to allow both CJR and BPCI LEJR episodes to
overlap, we would have no meaningful way to apply the payment policies
in two models with overlapping care redesign interventions and
episodes. Participants in BPCI have an expectation that eligible
episodes will be part of the BPCI model test, whereas CJR participants
would be aware that episodes may be canceled when there is overlap with
BPCI episodes as previously discussed in this final rule. We aim to
preserve the integrity of ongoing model tests without introducing major
modifications (that is, CJR episode precedence) that could make
evaluation of existing models more challenging. We considered that
there may also be instances of overlap between CJR and BPCI Model 3
LEJR episodes where our proposal to give precedence to all BPCI
episodes could lead to undesirable patient steering because the BPCI
Model 3 episode does not begin until care is initiated at an episode-
initiating PAC provider. It could be possible for a participating CJR
hospital to purposefully guide a beneficiary to a BPCI Model 3 LEJR
episode initiating PAC provider to exclude that beneficiary's episode
from CJR. We considered giving precedence to the CJR episode in overlap
with Model 3 beneficiaries because the CJR episode begins with
admission for the anchor hospitalization and thus includes more of the
episode services. However, we believed the steering opportunities would
be limited due to the preservation of beneficiary choice of provider in
this model (as discussed in section III.E. of the proposed rule). As
outlined in section III.F. of this final rule, CJR hospitals must
provide patients with a complete list of all
[[Page 73389]]
available PAC options. Moreover, BPCI Model 3 PAC providers are
actively involved in the decision to admit patients to their
facilities. As episode initiators in BPCI, such providers are subject
to monitoring and evaluation under that model and would be vigilant
about not engaging in steering themselves or spurred by other
providers. Nevertheless, we will monitor CJR hospitals to ensure
steering or other efforts to limit beneficiary access or move
beneficiaries out of the model are not occurring (see section III.F.).
We sought comment on the proposed approach to address overlap
between CJR and BPCI episodes. The following is a summary of the
comments we received and our responses.
Comment: Many commenters supported the proposal to apply precedence
rules that attribute episodes to BPCI PGPs and PAC providers in cases
of overlap with CJR. Commenters noted the significant investment PGPs
and PAC providers have made in BPCI and a desire for these entities to
continue engagement in care redesign under BPCI. A commenter noted that
for many providers, 3-year participation in BPCI will expire near the
time when CJR begins requiring participant hospitals to accept full
financial responsibility for episode spending. The commenter believes
it would not be appropriate to change the episode precedence rules for
BPCI providers prior to the conclusion of providers' 3-year BPCI
participation, as attributing Model 2 and Model 3 PGP and PAC LEJR
episodes to CJR in lieu of BPCI could create confusion. Commenters also
requested that CMS provide additional clarification of a number of
potential scenarios beyond those addressed in the proposed rule.
Some commenters disagreed with our proposed policy to apply
precedence to BPCI Model 2 and Model 3 PGPs and PAC providers.
Commenters contended that the proposed policy was unfair, given that
BPCI participants entered models voluntarily, but hospitals in CJR were
not given the opportunity to opt out and would be at risk for episodes
where others did not perceive enough opportunity to voluntarily enter
into risk agreements under BPCI. Commenters expressed concern that,
given the precedence rules, CJR hospitals could potentially lose many
episodes to BPCI and may be financially responsible for a low volume of
episodes. Some commenters also suggested we apply a minimum threshold
to remove hospitals from the CJR model based on BPCI PGP participation.
A commenter disagreed with the proposal for BPCI PAC entities at
risk for a shorter episode duration than the CJR proposed episode to be
given precedence. Another commenter cited the potential for patient
steering issues that could arise due to our proposed policy to give
BPCI PGPs precedence over CJR hospitals for LEJR episodes. In
particular, the commenter was concerned that the precedence rules would
lead to BPCI PGPs capturing lower-risk episodes, leaving CJR hospitals
at risk for more high-risk episodes. The commenter suggested we give
precedence to CJR episodes over BPCI PGP and PAC episodes to mitigate
steering concerns.
Another commenter was concerned about potential confusion when
episodes initiated at the same acute care hospital could be in both
models; for example, when episodes initiated by a BPCI PGP at a
hospital or discharged to a Model 3 PAC are attributed to BPCI while
the remaining episodes are a part of CJR. The commenter believed that
following both sets of rules (for the BPCI and CJR models) within the
same hospital could be confusing for hospitals and partner providers
and suppliers, limiting providers' ability to target care redesign
efforts toward patients for whom a CJR hospital is financially
responsible. Another commenter requested CMS publish a public list of
BPCI episode initiators whose episodes would take precedence over CJR
episodes.
Response: We agree with commenters' assertion that maintaining
participation in the voluntary BPCI models and recognizing the
significant investments in care redesign and care coordination already
made by BPCI participants is important. BPCI participants have an
agreement with CMS and in some cases have already been participating in
the voluntary BPCI initiative for several years.
In response to commenters' requests for additional examples of
overlap scenarios, we clarify that LEJR overlap could occur in, but is
not limited to, the following situations:
A beneficiary is admitted to a CJR hospital for an LEJR
procedure and discharged to a PAC provider participating in BPCI Model
3 for the LEJR episode; the episode is attributed to the BPCI Model 3
PAC provider.
A beneficiary is admitted to a CJR hospital for an LEJR
procedure by a PGP participating in BPCI Model 2; the episode is
attributed to the BPCI Model 2 PGP.
A beneficiary is admitted to a CJR hospital for an LEJR
procedure by a PGP participating in BPCI Model 3; the episode is
attributed to the BPCI Model 3 PGP.
A beneficiary is admitted to a CJR hospital for an LEJR
procedure, followed by a second phased LEJR procedure within 90 days of
the first procedure. The second LEJR procedure is attributed to a PGP
participating in BPCI Model 2 or 3 or is followed by admission to a PAC
provider participating in BPCI Model 3 for the LEJR episode. The first
LEJR episode would be canceled and the second episode would be
attributed to the BPCI provider.
We acknowledge that some CJR hospitals could be financially at risk
for a small proportion of LEJR episodes initiated at the hospital if
there are high-volume PGPs or PAC providers in their community
initiating LEJR episodes under BPCI, yet we continue to believe those
hospitals have opportunity under the CJR model. Physicians and PAC
providers may already have worked on care redesign for LEJR
beneficiaries, and the hospitals have an opportunity to learn from that
experience. Having a smaller number of beneficiaries in the CJR model
to begin with also places hospitals at less financial risk, which may
allow them to more rapidly and nimbly design care pathways, test them,
and refine them on a smaller number of beneficiaries and with less
resources than if all of the hospital's LEJR beneficiaries were in the
CJR model from the start. We also note that, given that many providers'
3-year participation in BPCI would end in 2017 or 2018, in many cases
full financial responsibility for all of a participant hospital's LEJR
procedures under the CJR model would not be in effect until the
conclusion of the BPCI participation period when the CJR participant
hospitals could have responsibility for a larger number of episodes. By
that point in time, CJR participant hospitals should have several years
of experience with LEJR episodes focusing on quality and efficiency,
and the larger number of beneficiaries can then be integrated into
existing pathways.
While we understand the concerns of some commenters that physician
and PAC providers participating in BPCI will focus on low-risk
beneficiaries, leaving higher-risk beneficiaries to be the participant
hospital's responsibility under the CJR model so that the CJR model
beneficiaries in a performance year will not resemble those in the
baseline period used to set target prices, there are a number of model
design features that make this unlikely. First, as discussed in section
III.C.4.b.(1) of this final rule, we are stratifying episodes on the
basis of a beneficiary's hip fracture
[[Page 73390]]
status, a major factor related to higher-cost episodes, so that CJR
model participant hospitals will be appropriately paid for higher-risk
beneficiaries with hip fractures. Second, we will be monitoring for
access to care and delayed care as discussed in section III.F. of this
final rule as well as under BPCI, and examining the CJR model for
unintended consequences such as adverse selection of patients and
inappropriate referral practices in the evaluation as discussed in
section IV. of this final rule. Section III.C.12. of this final rule
also details our enforcement mechanisms for the CJR model.
We appreciate commenters' contention that allowing for both models
to coexist for LEJR episodes within the same acute care hospital may be
confusing for providers. However, we believe the importance of
continuing PGP and PAC participation in BPCI Models 2 and 3 outweighs
this risk, and believe that local providers, in the best interest of
Medicare beneficiaries and cost and quality success under the two
models, will coordinate and collaborate to respond to their
circumstances. We also note that while the BPCI and CJR models differ
in various ways, the broad goals of the models are the same: Improving
quality of care while reducing spending during the episode. We believe
it is reasonable for hospitals, PGPs, and PAC providers to engage in
care redesign strategies targeted at LEJR episodes in general,
regardless of attribution of an LEJR episode to a particular model.
Such overlap within the same hospital may incentivize additional
coordination between the entities already engaged in care redesign
under BPCI and acute care hospitals that will begin such activities as
participants in CJR.
In response to the commenter who requested a list of BPCI episode
initiators, we refer readers to the publicly available list of current
episode initiators in BPCI on the model Web site at http://innovation.cms.gov/initiatives/Bundled-Payments/Participating-Health-Care-Facilities/index.html.
Final Decision: After consideration of the public comments
received, we are finalizing our proposal, without modification, to
apply precedence to BPCI Model 2 and Model 3 PGP and PAC provider LEJR
episodes. Specifically, if at any time during a beneficiary's CJR LEJR
episode, that beneficiary would also be in a BPCI Model 2 or Model 3
LEJR episode, the beneficiary's CJR episode would either not be
initiated or would be canceled such that it would not be included in
the participant hospital's CJR reconciliation where actual episode
spending is compared to the target price.
Comment: Many commenters requested that CMS apply precedence rules
in cases of CJR and BPCI non-LEJR overlap. Some commenters requested
that BPCI non-LEJR episodes would have precedence in the case of
overlap between a BPCI non-LEJR episode and a CJR LEJR episode, while
others requested that CJR have precedence. Commenters stated that there
was no way to fairly attribute savings between the two models in such
scenarios, if CMS allows for overlap between CJR and BPCI non-LEJR
episodes as proposed. A commenter stated that it would not be possible
to comment on which model should have precedence (CJR or BPCI) due to
ambiguity about which model would be more prevalent or expanded in the
future; another commenter shared this view, but stated that its opinion
on which model should have precedence was dependent upon the specific
financial arrangements and waivers finalized for the CJR model.
Response: We appreciate the feedback and request for clarification
on whether BPCI or CJR episode would have precedence when the same
beneficiary could be in a CJR model episode and a BPCI non-LEJR episode
for an overlapping period of time. We clarify that we did not propose a
calculation to attribute savings between the two models when concurrent
episodes occur. We proposed that each model would continue to perform
financial reconciliation activities as usual. We also believe such
overlap situations will be relatively rare, given that many LEJR
procedures are elective and would only be furnished when a physician
determines it is clinically appropriate for a beneficiary to undergo a
major surgery. We believe a beneficiary undergoing an LEJR procedure in
close proximity to an inpatient hospitalization for another condition
will be an infrequent occurrence. Applying precedence rules could
introduce confusion for providers participating in BPCI for non-LEJR
episodes and in the CJR model. For example, if a CJR hospital could
retrospectively have an LEJR episode canceled if the beneficiary is
readmitted to another hospital and initiates a BPCI episode for a non-
LEJR episode such as congestive heart failure, the CJR hospital could
be generally unaware of the beneficiary's care pathway.
As we noted in the proposed rule, we believe that where there is
overlap between BPCI and CJR LEJR episodes, providers would generally
be aware of such situations. For example, BPCI PGPs and PAC providers
would be aware that a PGP initiating an LEJR episode at a CJR hospital,
or an admission to a PAC facility in BPCI Model 3 would cancel the CJR
episode. CJR hospitals could maintain a list of BPCI participants in
their area. In contrast, if we allow any BPCI non-LEJR episode to
cancel all CJR episodes, CJR hospitals may not be aware of the
beneficiary's eventual care pathway. For example, CJR hospitals may be
unaware of cases in which the CJR LEJR episode is canceled and the non-
LEJR BPCI episode takes precedence because a wide range of BPCI
clinical episodes and provider types could cancel the CJR episode
during the 90 day post-discharge period.
We expect such cases of overlap to be rare given current BPCI
participation and the participant CJR model hospitals. We also
reiterate that when such overlap occurs, each model (BPCI and CJR)
would continue its normal financial reconciliation processes. When
overlap occurs, it is possible that savings achieved during one model
could also be counted as savings under the other model. In such cases
it could be difficult to determine whether savings achieved during an
episode were attributable to care redesign activities under BPCI or
CJR. However, allowing for overlap between BPCI non-LEJR and CJR
episodes will maximize the testing of episodes under both models and
encourage providers under BPCI and CJR to engage in care redesign and
coordination activities for all beneficiaries attributed to either
model. The following examples illustrate potential situations of
overlap:
A beneficiary is admitted to a CJR hospital for an LEJR
procedure and later readmitted to the same or a different CJR hospital
for a congestive heart failure episode under BPCI.
A beneficiary is in a BPCI PGP Model 2 episode for chronic
obstructive pulmonary disease at a CJR hospital and has an LEJR
procedure at the same or a different CJR hospital during the post-
anchor hospital discharge period of the BPCI episode.
In both situations, each model would calculate episode spending and
perform financial reconciliation as normal.
Summary of Final Decisions: After consideration of the public
comments received, we are finalizing our proposal, without
modification, to apply precedence to BPCI Model 2 and Model 3 PGP and
PAC LEJR episodes. By precedence, we mean that if for any portion of
CJR model episode, a beneficiary would also be in a BPCI LEJR episode
under Model 2 or Model 3, we will cancel (or never initiate) the CJR
episode. We refer readers to III.B.3.
[[Page 73391]]
for further discussion of the circumstances under which CJR episodes
will be canceled. We are also finalizing the proposal, without
modification, to allow for overlap between the period of time in which
a beneficiary is in a CJR episode and a BPCI non-LEJR episode.
c. Accounting for CJR Reconciliation Payments and Repayments in Other
Models and Programs
Under CJR, we proposed to annually, as applicable, make
reconciliation payments to or receive repayments from participating CJR
hospitals based on their quality performance and Medicare expenditures,
as described in section III.C.6. of the proposed rule. While we
proposed that these reconciliation payments or repayments would be
handled by MACs, the calculation of these amounts would be done
separately before being sent through the usual Medicare claims
processing systems. Nevertheless, it is important that other models and
programs in which providers are accountable for the total cost of care
be able to account for the full Medicare payment, including CJR-related
reconciliation payments and repayments as described in section III.C.6.
of the proposed rule, for beneficiaries who are also in CJR episodes.
Accordingly, it is necessary to have beneficiary-specific information
on CJR-related reconciliation payments and repayments available when
those models and programs make their financial calculations. Thus, in
addition to determining reconciliation payments and repayments for the
participant hospitals in the CJR model, we proposed to also calculate
beneficiary-specific reconciliation payment or repayment amounts for
CJR episodes to allow for those other programs and models, as their
reconciliation calculation timeframes permit, to determine the total
cost of care for overlapping beneficiaries. We would perform the
reconciliation calculations for CJR hospitals and make information
about the CJR reconciliation or repayment amounts available to other
programs and models, such as the Shared Savings Program and Pioneer ACO
as well as non-ACO total cost of care models such as CPCi and OCM that
begin reconciliation calculations after CJR. For example, this strategy
is currently in place to account for overlaps between beneficiaries
assigned or aligned to Pioneer and Shared Savings Program ACOs and BPCI
model beneficiaries. Beneficiary-specific reconciliation payment or
repayment amounts are loaded into a shared repository for use during
each program or model's respective reconciliations. However, we note
that we proposed not to make separate payments to, or collect
repayments from, participating CJR hospitals for each individual
episode, but, instead, to make a single aggregate reconciliation
payment or repayment determination for all episodes for a single
performance year, as discussed in section III.C.6. of the proposed
rule. As described in section III.C.6 of the proposed rule, we proposed
to conduct reconciliation based on claims data available 2 months after
the end of the performance year and a second calculation based on
claims data available 14 months after the end of a performance year to
account for claims run-out and potential overlap with other models. The
rationale for this proposed reconciliation process was to be able to
make payments to, and require repayment from, CJR participant hospitals
in a timely manner and to be able to account for overlaps in other
models and programs. In addition, the timing of the reconciliation was
determined giving consideration to when the other total cost of care
programs and models conduct their reconciliations so that when they
perform their financial calculations, they will have the information
necessary to account for beneficiary-specific payments/repayments made
under the CJR model as it is consistent with their policies. We intend
to report beneficiary-specific payments and repayment amounts made for
the CJR model in the CMS Master Database Management (MDM) System that
generally holds payments/repayment amounts made for CMS models and
programs. Other total cost of care models and programs can use the
information on CJR payment/repayment amounts reported in the Master
Database Management System in their financial calculations such as in
their baseline or benchmark calculations or reconciliations, to the
extent that is consistent with their policies.
We sought comment on our proposed approach to ensuring that the
full CJR episode payment for a beneficiary is accounted for when
performing financial calculations for other total cost of care and
episode-based payment models and programs. The following comments and
responses refer to the implications of our proposal to ensure other
models are able to account for the full CJR episode payment, including
any reconciliation payment or repayment amount. As discussed later in
this section, many commenters expressed concern about how this policy
would affect ACO financial calculations. Because total cost of care
models and programs, including the Shared Savings Program and other ACO
models, would include the full CJR episode payment (that is, including
any reconciliation or repayment amounts) in their annual financial
calculations determining the total spending for a beneficiary, most of
the savings achieved during a CJR episode would be attributed to the
CJR model. As discussed in section III.C.7.e. of this final rule, in
some select cases the savings amount represented by the discount
percentage could be attributed to a Shared Savings Program or other ACO
model entity.
The following is a summary of comments received and our response.
Comment: Commenters did not offer feedback on the implications of
the proposed policy on overlap with non-ACO total cost of care models.
Commenters generally supported the proposal to attribute episode
savings to the CJR model when the CJR hospital is aligned to an ACO as
a participant or provider/supplier. However, several commenters
expressed concern about the proposed policy, requesting that savings
earned during an episode (that is, any reconciliation payments) be
fully attributed to the ACO--by not accounting for reconciliation
payments in determining Medicare spending for an ACO's assigned
beneficiaries--when the ACO and CJR participant hospital are unrelated.
These commenters claimed that attributing savings to the ACO in such
cases is important for the following reasons: Ensuring ACOs are able to
earn savings during a CJR episode in some situations, supporting
population-based health models, not penalizing providers already taking
on risk, and testing a different method of overlap from the BPCI
initiative. Several commenters stated that attributing savings to the
CJR episode, regardless of whether the ACO and CJR hospital are
related, would make ACOs unable to earn savings during any CJR episode
and could erode the Shared Savings Program over the long-term as
episode-based payment models grow. A commenter also asserted that the
proposed policy could result in increased utilization of LEJR
procedures in lieu of less costly clinical interventions.
Response: We thank commenters for their feedback and engagement on
the issue of how to attribute savings among various models and programs
when overlap occurs. We also appreciate commenters' support for the
proposal to attribute savings to the CJR episode when the CJR hospital
is aligned to the ACO as a participant or provider/supplier.
[[Page 73392]]
In response to commenters who requested that we fully attribute
savings achieved (represented by reconciliation payments) during CJR
episodes to the ACO in cases where a beneficiary is assigned to an ACO
and initiates a CJR episode at a hospital that is not aligned to the
ACO as a participant or provider/supplier, we decline to diverge from
the approach we have taken in other episode payment models because we
wish to maintain consistency and because such a change would be
unworkable, as we discuss later in this section. There are several ways
in which CMS potentially could attribute savings achieved during a CJR
episode to the ACO in lieu of the CJR hospital, but after considering
them, we have concluded that each option has far-reaching and
undesirable implications for the policies and operations of both the
CJR model and ACOs. The first option would involve making the ACO to
which a beneficiary is assigned the financially responsible entity for
the CJR episode so that reconciliation payments or repayments would
ultimately be the responsibility of the ACO. To accomplish this, we
would need to determine a way to make the reconciliation payment to or
request the repayment amount from the unrelated CJR hospital on behalf
of the ACO. This would mean that the CJR hospital would need to have a
financial arrangement with the unrelated ACO to pay the ACO the
reconciliation payment or the ACO would need to pay the CJR hospital if
payment is due to Medicare. Under this approach, it would be necessary
to conduct a separate reconciliation process for beneficiaries
attributed to the unrelated ACO and another reconciliation for all
other beneficiaries with CJR episodes. This would disrupt our approach
to the financial protections discussed in section III.C.8. of this
final rule--that is, stop-loss and stop-gain, which are intended to
apply to all of a CJR hospital's episodes, because we would need to
apply those thresholds separately to the episodes attributed to the
unrelated ACO. We believe this, in turn, would be confusing for
participant hospitals. We note that this is distinct from our policy to
report beneficiary-specific reconciliation amounts in the MDM, as
previously discussed in this section, which would occur after
performing the reconciliation calculations and applying the stop-loss
and stop-gain thresholds for a given hospital across all of its
aggregated episodes.
A second approach would be for all models or programs (CJR and the
Shared Savings Program or other ACO) to conduct reconciliation
activities for all beneficiaries as normal. The attribution of savings
for those CJR beneficiaries assigned to an unrelated ACO could be
accounted for through the subsequent reconciliation through the
following process. Reconciliation payments could be recouped from CJR
participant hospitals and paid to the ACOs in cases where a beneficiary
was assigned to an ACO and had a CJR episode at an unrelated CJR
hospital. However, we decline to adopt this approach because it would
introduce significant uncertainty for CJR participant hospitals and
could cause large fluctuations in reconciliation and repayment amounts
between the initial reconciliation and subsequent calculation.
Additional policies would also need to be adopted in order to ensure
the financial reconciliation activities for the CJR model and the
Shared Savings Program or shared savings models are able to account for
such transactions, including further coordination of reconciliation
timelines and policies to account for the subsequent reconciliation
calculations. At present, we have not made any proposals for such types
of financial arrangements between the initiatives that would allow for
such transactions.
A final option would be to cancel (or never initiate) a CJR episode
for any beneficiary assigned to an unrelated ACO. Beneficiaries
assigned to such ACOs would need to be excluded from CJR financial
reconciliation calculations. Implementing such a policy would be
challenging, given our plan to conduct CJR reconciliation activities
prior to ACO financial reconciliations, in which ACOs finalize their
list of assigned beneficiaries. It would not be possible to finalize a
list of CJR episodes or beneficiaries until after the ACO models or the
Shared Savings Program, as applicable, had completed their financial
reconciliations. Additionally, CJR participant hospitals would not know
until well after episodes were completed whether the hospital was
actually responsible for a particular beneficiary's episode under the
CJR model. While we note that in some cases a CJR episode could be
canceled for other reasons, such as precedence for a BPCI PGP episode
as discussed in III.C.7.b, in such cases we believe that CJR hospitals
will generally be aware of the possibility of episode cancelation due
to BPCI precedence. For example, a CJR hospital may be aware that any
time a given PGP furnishes an LEJR procedure to a Medicare beneficiary
in the CJR hospital, that beneficiary will most likely be in a BPCI,
not CJR, episode. In contrast, the uncertainty of final ACO assignment
lists prior to the CJR reconciliation activities could lead to
significant unanticipated changes in episode attribution. In addition,
the high volume of potential CJR episodes that would be canceled under
this approach could potentially limit the scope of the CJR model test.
As discussed in section I.A. of this final rule, CJR is intended to be
a robust test of episode payment across many types of hospitals.
Because this approach is generally inconsistent with our proposals
for the CJR model, we decline to adopt it. In addition, if CMS were to
pursue a policy for attributing CJR model episode savings to an ACO in
lieu of to the CJR hospital, the ACO--not the hospital--would become
the risk-bearing entity for some beneficiaries (those assigned to the
ACO), which is inconsistent with our stated policy in section III.A.2.
of this final rule to designate hospitals as financially responsible
for all CJR episodes. As discussed in detail in section III.A.2. of
this final rule, we believe hospitals are the most appropriate entities
to manage the care and financial responsibility for CJR episodes. CJR
hospitals could be unaware that beneficiaries are assigned to an ACO,
given that their episodes would be canceled or attributed to the ACO
only in cases where the CJR hospital is not participating in the ACO.
Given the significant complexity such a change would introduce, and
the changes in other CJR model and ACO policies and operations that
would be required to implement such a change (such as CJR model
reconciliation processes, application of financial protections for
hospitals, and financial arrangements), we continue to believe it is
most appropriate, consistent with the policies of both the CJR model
and the Shared Savings Program and other ACO models, and operationally
feasible to attribute savings achieved during a CJR episode (that is,
reconciliation payments) to the CJR model in all cases. Doing so also
attributes these savings to the episode that is most proximate to the
beneficiary's care during an LEJR episode. We refer readers to section
III.C.7.e. of this final rule for discussion of the CJR discount
percentage and attribution of the savings represented by the discount
percentage.
We do not agree that our proposal to attribute savings achieved
during CJR episodes via reconciliation payments to the CJR participant
instead of the ACO incentivizes overutilization of LEJR procedures,
penalizes providers taking on risk, or harms population-based health
models. First, as discussed in
[[Page 73393]]
section III.F.2. of this final rule, we believe that the usual tools
employed by CMS including data analysis, the process of tracking
patterns of utilization and trends in the delivery of care, and medical
review, a clinical audit process by which we verify that services paid
by Medicare were reasonable and necessary in accordance with section
1862(a)(1)(A) of the Act, will help to ensure that LEJR procedures
under the CJR model are reasonable and necessary. Second, ACOs will be
assured of predictable spending (at the amount of the target price,
which would in all cases reflect a discount off total spending that
would have occurred absent the CJR model) for care provided during CJR
episodes, as opposed to the uncertainty of spending for beneficiaries
not included in CJR episodes. Although ACOs may estimate they can
achieve more savings for these beneficiaries' episodes than the
discount factor reflected in the CJR model target price, higher savings
are not certain. ACOs will continue to have savings opportunities for
CJR model beneficiaries during the other 9 or so months of the ACO's
performance year, as well as for unrelated services throughout the CJR
model episode. This also holds true for the BPCI episodes currently in
testing, which include 48 surgical and medical episodes, many of them
far less frequent and with less predictable costs than the LEJR
episodes in the CJR model. Finally, the population health focus of ACOs
will continue to be valuable as it is much broader than the CJR model,
with great potential for improving the overall health of Medicare
beneficiaries and reducing costs. For example, the CJR model begins
with admission to the inpatient hospital for the LEJR procedure, yet
the underlying clinical condition for beneficiaries undergoing elective
THA or TKA is most likely to be long-standing osteoarthritis. Evidence-
based conservative management of this condition may delay the THA or
TKA or eliminate the need for it altogether, in which case a CJR model
episode would never occur. The same concept holds true for all of the
episode payment models currently in testing that are focused around an
inpatient hospitalization. An ACO's expertise and skill in population
health care management may sharply reduce the need for inpatient
hospitalization, resulting in substantial direct savings to the ACO and
no initiation of an episode under an episode payment model.
Coexistence of episode-based payment models and ACOs may lead to
improved care redesign and coordination strategies, and ultimately,
improved quality of care for beneficiaries. While episode-based payment
models such as the CJR model target care during a relatively short time
span, models incorporating the total cost of care over a longer time
period such as ACOs focus on population health and strategies to
improve care coordination across the entire spectrum of care. In order
to achieve the agency's goals of better care, smarter spending, and
healthier people, CMS must engage providers in a variety of models and
rigorously evaluate the results of such models and programs in order to
identify specific care redesign strategies and payment mechanisms that
are effective in reaching these goals. An important feature of such
testing and evaluation is also understanding how various models or
programs work alongside other initiatives. For this reason, we believe
it is appropriate for CMS to allow for the coexistence of various
initiatives such as episode-based payment models and ACOs. Doing so
will provide robust information on the results of each model, including
information on how particular payment structures fare across a variety
of regions and in markets with varying levels of provider participation
in other models.
In addition, we note that although there are important structural
differences between initiatives such as CJR and the Shared Savings
Program or other ACO models, the underlying goals are the same. Both
CJR and the ACO initiatives target improved quality of care and reduced
spending during a defined period of time. Over time, provider
organizations participating in one or both types of models will
continue to find ways to work together to better coordinate care for
beneficiaries, improve clinical efficiencies and reduce unnecessary
utilization of health care services, and succeed financially under
various types of payment models and programs.
Finally, while we appreciate commenters' suggestion that we test a
different method for overlap with ACOs than that used for the BPCI
initiative, we do not intend to test a different savings attribution
method at this time. Both BPCI and the CJR model share the common
episode-initiating event of an inpatient hospitalization and, in the
case of each of these models as designed, we have concluded that the
same savings attribution policy is appropriate. As we develop other
episode payment models in the future and consider the potential for
expansion of successful episode payment models, we will consider the
perspectives offered by the commenters on the CJR model in the design
of those models as we develop overlap policies or consider changes to
existing policies.
For the reasons previously stated, we are finalizing our proposal
to attribute savings achieved (via reconciliation payments) during CJR
episodes to CJR participant hospitals. We refer readers to section
III.C.7.e. of this final rule for discussion of the attribution of
savings for the CJR discount percentage.
Comment: A commenter requested that CMS not account for overlap
between models by including reconciliation payments or savings amounts
from one model in the financial calculations for another model. The
commenter asserted that any double counting of savings would be offset
by compounded efficiencies and clinical integration.
Response: We agree with the commenter that the coexistence of
various models and programs is likely to result in compounded
efficiencies and clinical integration. However, under all models and
programs we believe it is important that Medicare Trust Fund payments
made on behalf of beneficiaries be accounted for to the extent feasible
and that CMS not pay back savings that should be maintained by the
Medicare program. We are finalizing various policies, as outlined
elsewhere in this section, to minimize the double payment of savings
achieved during CJR episodes and under other models and programs. In
addition, we note that under the Shared Savings Program regulations at
425.604(a)(6)(ii), CMS considers all Part A and B expenditures,
including payments made under a demonstration or model. Given that CJR
reconciliation payments are made from the Trust Funds, and can be
attributed to a particular assigned beneficiary, the Shared Savings
Program regulations require that such payments be taken into account
for the calculation of shared savings or losses.
Comment: Several commenters requested that CMS provide CJR
hospitals with a list of beneficiaries prospectively aligned to ACOs.
Commenters stated that such information would aid participants in both
CJR and the model or program.
Response: We appreciate the commenters' suggestion. However,
providing such a list to CJR participants could potentially lead to
patient steering. Because we expect hospitals and other providers and
suppliers to engage in care redesign activities under both an ACO model
or the Shared Savings Program and the CJR model, it would not be
appropriate to create incentives for providers and suppliers to
[[Page 73394]]
treat beneficiaries differently based on ACO alignment status.
Comment: Numerous commenters requested that CMS allow for Shared
Savings Program ACOs or other current or future ACOs participating in
risk-bearing ACO models (such as under the Next Generation ACO model)
to opt out of the CJR model for beneficiaries aligned to those ACOs.
Several commenters suggested allowing Track 2 or Track 3 Shared Savings
Program ACOs that had achieved savings in previous performance years to
opt out of the CJR model for their aligned beneficiaries.
Response: As previously discussed, we believe it is possible and
desirable for the multiple CMS programs and models to coexist. We also
believe the coexistence of episode-based payment models and total cost
of care models such as ACOs can lead to increased efficiencies for both
initiatives and additional coordination among providers. As discussed
in section III.A. of this final rule, we do not believe it would be
appropriate to allow ACOs to opt their aligned hospitals out of the CJR
model. Such a policy could significantly diminish the number of
participants in the CJR model, eroding our ability to evaluate the CJR
model. As discussed in section I.A. of this final rule, CJR is intended
to test the effect of episode payment across a variety of hospitals.
Significantly limiting the scope of the model by allowing ACOs to opt
their hospitals out of participation in CJR would impact our ability to
achieve the goals of the model.
Comment: A commenter requested that if precedence is not given to
Shared Savings Program ACOs for savings arising from CJR episodes
initiated at unrelated hospitals, CMS should require CJR hospitals to
sign agreements with ACOs in the same MSA to coordinate care for such
beneficiaries. The commenter suggested such mandated agreements include
specific requirements for the CJR hospital to coordinate a
beneficiary's care, such as documented use of clinical practice
guidelines and a care plan.
Response: Requiring this type of agreement would be inappropriate
at this time because it is inconsistent with current CMS policies and
practices. While we offer opportunities for providers participating in
models such as CJR to enter into financial arrangements with other
providers and suppliers and encourage model participants to form
clinical partnerships or financial arrangements with other providers
and suppliers where appropriate, we do not require specific care
coordination agreements or arrangements between entities participating
in different CMS models or programs. For further information on our
policies regarding agreements and relationships between providers and
suppliers coordinating care for beneficiaries under the CJR model, we
refer readers to section III.C.10. of this final rule for discussion of
financial arrangements under the CJR model.
Summary of Final Decisions: After consideration of the public
comments we received, we are finalizing our policy to make
reconciliation and repayment amounts under the CJR model available to
other models and programs to include in their financial reconciliation
calculations.
This policy is set forth at Sec. 510.305.
d. Accounting for PBPM Payments in the Episode Definition
There are currently five CMS models that pay PBPM payments to
providers for new or enhanced services as displayed in Table 17. These
PBPM payments vary as to their funding source (Medicare Trust Funds or
Innovation Center appropriation), as well as to their payment
methodology.
In general, these PBPM payments are for new or enhanced provider or
supplier services that share the goal of improving quality of care
overall and reducing Medicare expenditures for services that could be
avoided through improved care coordination. Some of these PBPM payments
may be made for services furnished to a beneficiary that is in another
Innovation Center model at the that same time that the beneficiary is
in a CJR LEJR episode, but the clinical relationship of services paid
by the PBPM payments to the CJR episode will vary. For purposes of CJR,
we consider clinically related those services paid by PBPMs that are
for the purpose of care coordination and care management of any
beneficiary diagnosis or hospital readmission not excluded from the CJR
episode definition, as discussed in section III.B.2. of this final
rule.
We would determine whether the services paid by PBPM payments are
excluded from the CJR episode on a model by model basis based on their
funding source and clinical relationship to CJR episodes. If we
determine a model's PBPM payments are for new or enhanced services that
are clinically related to the CJR episode and the PBPM payment is
funded through the Medicare Part A or B Trust Fund, we would include
the services paid by the PBPM payment to the extent they otherwise meet
the proposed episode definition for the CJR model. That is, we would
include the clinically related services paid by a PBPM payment if the
services would not otherwise be excluded based on the principal
diagnosis code on the claim, as discussed in section III.B.2 of the
proposed rule. The PBPM payments for clinically related services would
not be excluded from the historical CJR episodes used to calculate
target prices when the PBPM payments are present on Part A or Part B
claims, and they would not be excluded from calculation of episode
actual expenditures during the performance period. PBPM model payments
that we determine are clinically unrelated would be excluded,
regardless of the funding mechanism or diagnosis codes on claims for
those payments. We note that in the case of PBPM model payments,
principal diagnosis codes on a Part B claim (which are used to identify
exclusions from CJR episodes, as discussed in section III.B. of this
final rule), would not denote the only mechanism for exclusion of a
service from the CJR episode. All such PBPM model payments we determine
are clinically unrelated would be excluded as discussed in this
proposal. Finally, all services paid by PBPM payments funded through
the Innovation Center's appropriation under section 1115A of the Act
would be excluded from CJR episodes, without a specific determination
of their clinical relationship to CJR episodes. We believed including
such PBPM payments funded under the Innovation Center's appropriation
and not included on claims would be operationally burdensome and could
significantly delay any reconciliation payments and repayments for the
CJR model. In addition, because these services are not paid for from
the Medicare Part A or B Trust Fund, we are not confident that they
would be covered by Medicare under existing law. Therefore, we believed
the services paid by these PBPM payments are most appropriately
excluded from CJR episodes. Our proposal for the treatment of services
paid through model PBPM payments in CJR episodes would pertain to all
existing models with PBPM payments, as well as future models and
programs that incorporate PBPM payments. We believed that this proposal
is fully consistent with our goal of including all related Part A and
Part B services in the CJR episodes, as discussed in section III.B.2.
of the proposed rule.
Under this proposal, only one of the active models displayed in
Table 17 include services paid by PBPM payments that would not be
excluded from CJR episodes. The MAPCP model makes PBPM payments that
are funded
[[Page 73395]]
through the Trust Fund for new or enhanced services that coordinate
care, improve access, and educate patients with chronic illnesses. We
expect these new or enhanced services to improve quality and reduce
spending for services that may have otherwise occurred, such as
hospital readmissions, and consider them to be clinically related to
CJR episodes because the PBPM payments would support care coordination
for medical diagnoses that are not excluded from CJR episodes. Thus, we
proposed that services paid by PBPM payments under the MAPCP model not
be excluded from CJR episodes to the extent they otherwise meet the
proposed episode definition. While the OCM model will pay for new or
enhanced services through PBPM payments funded by the Medicare Part B
Trust Fund, we did not believe these services are clinically related to
CJR episodes. The OCM model incorporates episode-based payment
initiated by chemotherapy treatment, a service generally reported with
ICD-9-CM and ICD-10-CM codes that are specifically excluded from the
CJR episode definition in section III.B.2. of this final rule. We
believed the care coordination and management services paid by OCM PBPM
payments would be focused on chemotherapy services and their
complications, so the services would be clinically unrelated to CJR
episodes. Therefore, we proposed that services paid by PBPM payments
under the OCM model be excluded from CJR episodes. Similarly, we
proposed to exclude services paid by PBPM payments under the Medicare
Care Choices Model (MCCM) from the CJR episode spending calculations.
The MCCM focuses on providing care coordination and palliative care
services for beneficiaries with certain conditions certified as
terminally ill with a life expectancy of 6 months or less that have not
elected the Medicare hospice benefit. The MCCM seeks to test whether
providing palliative care services, without beneficiaries having to
forgo curative care, incentivizes beneficiaries to elect hospice
sooner. This is aimed at addressing the large percentage of hospice
beneficiaries who elect the hospice benefit too late to fully benefit
from the range of services that hospice has to offer at end of life.
Since the purpose of the MCCM is to test whether providing palliative
care services to beneficiaries who are otherwise eligible to elect the
Medicare hospice benefit without requiring the beneficiary to forgo
curative care results in beneficiaries electing the hospice benefit
sooner, we are not including such payments in the CJR episode spending
calculations at this time. In addition, unlike the regular hospice
benefits, which are furnished to beneficiaries in lieu of curative care
and which therefore can be coordinated during a LEJR episode, as
described in section III.B.2.b. of this final rule, the services
furnished under the MCCM will be in addition to curative services. We
note that we are including such curative services in the episode, as
they are consistent with our episode definition described in III.B.2.of
this final rule, but not the services represented by the PBPM, which
are provided in addition to curative services. Beneficiaries electing
the hospice benefit could have lower episode spending because they have
forgone curative care, however beneficiaries included in the MCCM may
have higher episode spending because they are receiving both curative
care and the services represented by the PBPM. We do not want to create
incentives that deter providers from enrolling beneficiaries in the
MCCM model. We note that Part A and Part B services would be included
in episodes in both the historical and performance periods used for
spending calculations, while the inclusion of PBPM payments would only
occur for those time periods (historical and performance periods)
during which the relevant model was active. Given that the MCCM was not
active during the CJR initial historical period, if we were to include
MCCM PBPM payments they would only be included in CJR performance
period spending calculations. Excluding MCCM payments also ensures that
we do not incentivize providers to avoid enrolling beneficiaries in the
MCCM to minimize the effect of the PBPM payment amounts on episode
spending during CJR performance periods.
We acknowledge there may be new models not included in Table 17
that could incorporate a PBPM payment for new or enhanced services. We
would plan to make our determination about whether services paid by a
new model PBPM payment that is funded under the Medicare Trust Funds
are clinically related to CJR episodes through the same subregulatory
approach that we are proposing to use to update the episode definition
(excluded MS-DRGs and ICD-10-CM diagnosis codes). We would assess each
model's PBPM payment to determine if it would be primarily used for
care coordination or care management services for excluded clinical
conditions under the LEJR episode definition for CJR based on the
standards we proposed to use to update the episode definition that are
discussed in section III.B.2 of the proposed rule.
If we determine that the PBPM payment would primarily be used to
pay for services to manage an excluded clinical condition, we would
exclude the PBPM payment from the CJR episode on the basis that it pays
for unrelated services. If we determine that the PBPM payment could
primarily be used for services to manage an included clinical
condition, we would include the PBPM payment in the CJR episode if the
diagnosis code on the claim for the PBPM payment was not excluded from
the episode, following our usual process for determining excluded
claims for Part B services in accordance with the episode definition
discussed in section III.C.2 of the proposed rule. We would post our
proposed determination about whether the PBPM payment would be included
in the episode to the CMS Web site to allow for public input on our
planned application of these standards, and then adopt changes to the
overlap list with posting to the CMS Web site of the final updated list
after our consideration of the public input.
We sought comment on our proposals to account for Innovation Center
model PBPM payments under CJR.
The following is a summary of the comments received and our
responses.
Comment: A commenter supported the proposal to exclude CPCi, OCM,
and MCCM PBPM payments and the proposal to seek future public input on
PBPM payments that are clinically related to CJR.
Response: We thank the commenter for support of our proposal to
exclude CPCi, OCM, and MCCM PBPM payments from CJR episode spending
calculations.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposed policy, without modification,
to include PBPM payments that are funded with Trust Fund dollars, if
the services would not otherwise be excluded under the model episode
definition. Included PBPM payments would be included in CJR model
financial calculations only for historical and performance periods
during which the model with a PBPM is active and the PBPM is funded
with Trust Fund dollars.
This policy is set forth at Sec. 510.200.
e. Accounting for Overlap With Medicare Initiatives Involving Shared
Savings and Total Cost of Care Models
In addition to the Medicare Shared Savings Program under section
1899 of the Act, there are several ACO and other Innovation Center
models that make or will make, once implemented, providers
[[Page 73396]]
accountable for total cost of care over 6 to 12 months, including the
Pioneer ACO Model, Next Generation ACO Model, Comprehensive ESRD Care
(CEC) Model, CPCi, OCM, and the MAPCP Demonstration. Some of these are
shared savings models (or programs, in the case of the Shared Savings
Program), while others do not involve shared savings but still hold
participating providers accountable for the total cost of care during a
defined episode of care, such as OCM. Note that as discussed in section
III.C.7.a. of this final rule, ``total cost of care'' models refer to
models in which episodes or performance periods include participant
financial responsibility for all Part A and Part B spending, as well as
some Part D spending in select cases. Each of these payment models
holds providers accountable for the total cost of care over the course
of an extended period of time or episode of care by applying various
payment methodologies. In the proposed rule, we stated our belief that
it is important to simultaneously allow beneficiaries to receive care
under broader population-based and other total cost of care models, as
well as episode payment models that target a specific episode of care
with a shorter duration, such as CJR. Allowing beneficiaries to receive
care under both types of models may maximize the potential benefits to
the Medicare Trust Funds and participating providers and suppliers, as
well as beneficiaries. Beneficiaries stand to benefit from care
redesign that leads to improved quality for LEJR episodes of care even
while also receiving care under these broader models, while entities
that participate in other models and programs that assess total cost of
care stand to benefit, at least in part, from the cost savings that
accrue under CJR. For example, a beneficiary receiving an LEJR
procedure may benefit from a hospital's care coordination efforts with
regard to care during the inpatient hospitalization. The same
beneficiary may be attributed to a primary care physician affiliated
with an ACO who is actively engaged in coordinating care for all of the
beneficiary's clinical conditions throughout the entire performance
year, beyond the 90-day post-discharge LEJR episode.
We proposed that a beneficiary could be in a CJR episode, as
defined in section III.B. of this final rule, by receiving an LEJR
procedure at a CJR hospital, and also attributed to a provider
participating in a model or program in Table 17. For example, a
beneficiary may be attributed to a provider participating in the
Pioneer ACO model for an entire performance year, as well as have a CJR
episode during the ACO's performance year. Each model incorporates a
reconciliation process, where total included spending during the
performance period or episode are calculated, as well as any potential
savings achieved by the model or program. Given that we proposed to
allow for such beneficiary overlap, we stated our belief that it would
be important to account for savings under CJR and the other models and
programs with potential overlap in order that CMS can apply the
respective individual savings-related payment policies of the model or
program, without attributing the same savings to more than one model or
program. In the proposed rule, we stated our belief that when overlap
occurs, it is most appropriate to attribute Medicare savings accrued
during the CJR time period (hospitalization plus 90 days post-
discharge) to CJR to the extent possible. The CJR episode has a shorter
duration and is initiated by a major surgical procedure, requiring an
inpatient hospitalization. In contrast, the total cost of care models
listed in Table 17 incorporate 6 to 12 month performance periods for
participants and, in general, have a broader focus on beneficiary
health. Our intention was to ensure that CJR episodes are attributed
the full expected savings to Medicare to the extent possible. As such,
we proposed the following policies to ensure that other programs and
models are able to account for the reconciliation payments paid to CJR
hospitals to the extent possible prior to performing their own
reconciliation calculations and that, in all appropriate circumstances,
the CJR model or the other program or model would make an adjustment
for savings achieved under the CJR model and partially paid back
through shared savings/performance payments under other initiatives to
ensure that the full CJR model savings to Medicare is realized.
We proposed that the total cost of care calculations under non-ACO
total cost of care models would be adjusted to the extent feasible to
account for beneficiaries that are aligned to participants in the model
and whose care is included in CJR in order to ensure that the savings
to Medicare achieved under CJR (the discount percentage) are not paid
back under these other models through shared savings or other
performance-based payment. Thus, the non-ACO total cost of care models
would adjust their calculations to ensure the CJR discount percentage
is not paid out as savings or other performance-based payment to the
other model participants. As previously discussed, we believe that the
efficiencies achieved during the CJR episode should be credited to the
entity that is closest to that care for the episode of care in terms of
time, location, and care management responsibility, rather than the
broader entity participating in a total cost of care model that spans a
longer duration. We proposed that the non-ACO total cost of care models
to which this policy would apply would include CPCi, OCM, and MAPCP. We
sought comment on our proposal to account for overlap with those non-
ACO total cost of care models and any other current or forthcoming
models.
We received no comments on our proposed policy to account for the
potential for the discount percentage to be paid out as savings by a
non-ACO total cost of care model.
We proposed a different policy for accounting for overlap with
Shared Savings Program and other ACO models. We noted that given the
operational complexities and requirements of the Shared Savings Program
reconciliation process, it would not be feasible for the Shared Savings
Program to make an adjustment to account for the discount to Medicare
under a CJR episode under existing program rules and processes.
Additionally, for programmatic consistency across the Shared Savings
Program and other ACO models, given that our ACO models generally are
tested for the purpose of informing future potential changes to the
Shared Savings Program, in the proposed rule we stated our belief that
the ACO model overlap adjustment policy should be aligned with the
Shared Savings Program policy. Thus, we proposed that under CJR, we
would make an adjustment to the reconciliation amount if available to
account for any of the applicable discount for an episode resulting in
Medicare savings that is paid back through shared savings under the
Shared Savings Program or any other ACO model, but only when a CJR
participant hospital also participates in the ACO and the beneficiary
in the CJR episode is also assigned to that ACO. This adjustment would
be necessary to ensure that the applicable discount under CJR is not
reduced because a portion of that discount is accounted for in shared
savings to the ACO and thus, indirectly, is paid back to the hospital.
However, we proposed not to make an adjustment under CJR when a
beneficiary receives an LEJR procedure at a participant hospital and is
assigned
[[Page 73397]]
to an ACO in which the hospital is not participating. While this
proposal would leave overlap unaccounted for in such situations, we did
not believe it would be appropriate to hold responsible for repayment
the hospital that managed the beneficiary during the episode through a
CJR adjustment, given that the participant hospital may have engaged in
care redesign and reduced spending during the CJR episode and may be
unaware that the beneficiary is also assigned to an ACO. However, we
recognized that as proposed this policy would allow an unrelated ACO
full credit for the Medicare savings achieved (via the discount
percentage) during the episode. The evaluation of the CJR model, as
discussed in section IV. of this final rule, would examine overlap in
situations where there is overlap between ACOs and CJR to the extent
feasible and the potential effect on Medicare savings.
We note that our proposed policy would entail CJR reclaiming from
the participant hospital any discount percentage paid out as shared
savings under the Shared Savings Program or ACO models only when the
hospital is participating in an ACO as a participant or provider/
supplier and the beneficiary is assigned to that ACO, while other total
cost of care models such as CPCi would adjust for the discount
percentage in their calculations to the extent feasible. While it is
operationally feasible for smaller total cost of care models in
testing, such as CPCi, to make an adjustment to account for any CJR
discount percentage paid out as sharing savings or other performance-
based payments, the operational complexities and requirements of the
large permanent Medicare ACO program, the Shared Savings Program, make
it infeasible for that program to make an adjustment in such cases, and
in the proposed rule we stated our belief that other ACO models in
testing that share operating principles with the Shared Savings Program
should follow the same policies as the Shared Savings Program
adjustment for certain overlapping ACO beneficiaries. As the landscape
of CMS models and programs changes, we may revisit this policy through
future rulemaking.
We sought comment on our proposal for adjustments to account for
overlap of the discount percentage between CJR and ACO models or
programs.
The following is a summary of the comments received and our
responses.
Comment: A commenter suggested that the proposal could create a
disincentive for health systems to expand participation in ACO
initiatives due to the more favorable treatment of non-ACO
participating hospitals. The commenter also requested that CMS not
recoup the portion of the discount percentage paid out as savings,
regardless of whether the CJR hospital is participating in an ACO as a
participant or provider/supplier.
Response: As discussed in section III.C.7.c. of this final rule, we
proposed to make CJR reconciliation and repayment amounts available for
other models and programs to include in their financial calculations.
As commenters noted, the effect of this proposed policy is that savings
achieved during the CJR episode would generally be attributed to the
CJR model. This proposed policy does not distinguish between ACO and
non-ACO entities. In contrast, this section outlines our proposal to
make an adjustment to CJR reconciliation amounts in certain situations
when a portion of the CJR discount percentage was paid out as savings
to an ACO.
For purposes of limiting the instances in which a portion of the
discount percentage is doubly counted as savings, we proposed the
following. When a beneficiary has a CJR episode and is also assigned to
an ACO, it is possible that a portion of the CJR discount percentage
could be paid out as savings through the ACO's financial
reconciliation. The reconciliation or repayment amounts shared with
other models for incorporation into their financial calculations are
based on the episode target price, which does not include the spending
amount equal to the discount percentage as the discount represents
potential savings to Medicare. We proposed that when overlap occurs
between CJR hospitals that are participating in an ACO model or program
as a participant or provider/supplier, we would make an adjustment to
the reconciliation payment (if available) to account for the portion of
the discount that was paid to the ACO as shared savings. For example,
through the subsequent reconciliation calculation, described in section
III.C.6. of this final rule we would reduce a CJR hospital's
reconciliation payment by the dollar amount that would have been saved
by CMS under the applicable CJR discount percentage, but was determined
to have been paid to the ACO as shared savings. In cases where the CJR
hospital is not participating in the Shared Savings Program or an ACO
model, we would not make such an adjustment. We believe it is
reasonable to minimize the situations in which the CJR discount
percentage is double counted as savings. We also believe our policy not
to make this adjustment in the case of an unrelated ACO is appropriate,
given that the ACO may be unaware of the beneficiary's care pathway or
that the beneficiary's LEJR episode is included in the CJR model
because the CJR hospital and the ACO are not related. We also note that
while making an adjustment to a CJR hospital's reconciliation payment
is within the scope of the CJR model, adjusting shared savings amounts
for ACO entities would necessitate changes to agreements to the Shared
Savings Program and other ACO model agreements and methodologies. For
the reasons previously stated, we believe unrelated ACOs should not be
required to repay the amount of the CJR discount percentage included in
the ACO's financial reconciliation.
We do not believe our proposed policy would create a disincentive
for health systems to participate in an ACO. Hospitals that are not
participating in the Shared Savings Program or other ACO models are
treated the same as those participating in an ACO for purposes of
determining attribution of savings during the CJR episode represented
by the reconciliation payments, as previously discussed in section
III.C.7.c. of this final rule. As discussed in that section, after
performing the financial reconciliation calculations for CJR, we will
put the reconciliation or repayment amounts, as applicable, in a shared
repository for other models or programs to use in their own financial
calculations. The reconciliation or repayment amounts would be taken
into account as if they were FFS payments made for a covered service
furnished to a beneficiary, to the extent that such inclusion of
payments is consistent with the other model or program's policies. In
applying this policy, we will not make a distinction between hospitals
or other providers based on participation in an ACO or other
initiative. The reconciliation or repayment amounts will be available
for all other models or programs to use in their financial calculations
as appropriate. In cases where the other initiative includes the CJR
reconciliation or repayment amounts in their financial calculations,
the savings achieved during an episode would be attributed to CJR,
except in cases where the discount percentage is paid out as savings to
another model or program participant, as discussed later in this
section. In addition, in cases where some or all of the CJR discount
percentage is paid out to an ACO hospital through the ACO's financial
reconciliation, making an adjustment to the reconciliation payment
where available to account for the discount percentage does not
penalize the hospital participating in an ACO. Such
[[Page 73398]]
adjustment ensures that the discount percentage is not paid out as
savings to the same or a related entity.
Comment: A commenter questioned the methodology CMS proposed for
accounting for such overlap, requesting that the calculation be pro-
rated for the 90-day episode and only include the portion related to
CJR model participants.
Response: Although our calculations to determine reconciliation or
repayment amounts would be done in aggregate across all CJR episodes
for a given participants, overlap adjustments and calculations would be
done at the beneficiary level. Therefore, we do not believe proration
is necessary.
Final Decision: After consideration of the public comments we
received, we are finalizing our proposal, without modification, to
account for overlap with non-ACO total cost of care models and ACO
models and programs. In cases where a portion of the CJR discount
percentage is paid out as savings to a non-ACO model participant, the
other model will make an adjustment to their financial reconciliation
calculation to the extent feasible. In the case of such overlap with an
entity participating in the Shared Savings Program or an ACO model, the
CJR model would require repayment of the portion of the discount
percentage paid out as savings through the subsequent reconciliation
process, by making an adjustment to the reconciliation amount if
available. If a CJR hospital did not earn a reconciliation payment, the
adjustment would not be made. That is, we will not increase the amount
of a hospital's repayment amount in order to account for the portion of
the discount percentage paid out as savings. This adjustment would only
be undertaken when the CJR hospital is also aligned to an ACO as a
participant or a provider/supplier and the beneficiary in the CJR
episode was assigned or aligned to the ACO. We may revisit our approach
to accounting for overlap with the Shared Savings Program and ACO
models in future rulemaking.
Summary of Final Decisions: After consideration of the public
comments we received, we are finalizing our proposal, without
modification, for non-ACO total cost of care models to adjust their
financial reconciliation calculations to the extent feasible to ensure
that a portion of the CJR discount is not paid out as savings under
that model. We are also finalizing our proposal, without modification,
to make an adjustment to a CJR hospital's subsequent reconciliation
calculation, when the CJR hospital also participates in the ACO and the
beneficiary in the CJR episode is also assigned to that ACO, to account
for when a portion of the CJR discount percentage is paid out as shared
savings the ACO.
This policy is set forth at Sec. 510.305.
8. Limits or Adjustments to Hospital Financial Responsibility
a. Overview
As discussed in section III.A. of the proposed rule, we proposed
designating as the financially responsible providers in CJR all acute
care hospitals paid under the IPPS that are located in the selected
geographic areas for this test of 90-day post-discharge LEJR episodes,
with the exception of some hospitals that we proposed to exclude
because of participation in BPCI (Models 1, 2, or 4) for LEJR episodes.
We are interested in ensuring a broad test of episode payment for this
clinical condition among different types of hospitals, including those
who may not otherwise choose to participate in an episode payment
model. Many of the participant hospitals would likely be key service
providers in their communities for a variety of medical and surgical
conditions extending well beyond orthopedic procedures. We want to gain
experience with this model before extending it to hospitals in uncommon
circumstances. In addition, we acknowledge that hospitals designated
for participation in CJR currently vary with respect to their readiness
to function under an episode payment model with regard to their
organizational and systems capacity and structure, as well as their
beneficiary population served. Some hospitals may more quickly be able
to demonstrate high quality performance and savings than others, even
though we proposed that the episode target prices be based
predominantly on the hospital's own historical episode utilization in
the early years of CJR.
We also note that providers may be incentivized to excessively
reduce or shift utilization outside of the CJR episode, even with the
quality requirements discussed in section III.C.5. of the proposed
rule. In order to mitigate any excessive repayment responsibility for
hospitals or reduction or shifting of care outside the episode,
especially beginning in performance year 2 of the model when we
proposed to begin to phase in responsibility for repaying Medicare for
excess episode spending, we proposed several specific policies that are
also referenced in section III.C.6.b. of the proposed rule.
b. Limit on Raw NPRA Contribution to Repayment Amounts and
Reconciliation Payments
(1) Limit on Raw NPRA Contribution to Repayment Amounts
When hospital repayment responsibility begins in the second
performance year of CJR, under this final rule, hospitals would be
required to repay Medicare for episode expenditures that are greater
than the applicable target price. As discussed in the section III.C.3.c
of the proposed rule regarding our proposed pricing adjustment for high
payment episodes, hospitals participating in CJR would not bear
financial responsibility for actual episode payments greater than a
ceiling set at two standard deviations above the mean regional episode
payment. Nevertheless, hospitals would begin to bear repayment
responsibility beginning in performance year 2 for those episodes where
actual episode expenditures are greater than the target price up to the
level of the regional episode ceiling. In aggregate across all
episodes, the money owed to Medicare by a hospital for actual episode
spending above the applicable target price could be substantial if a
hospital's episodes generally had high payments. As an extreme example,
if a hospital had all of its episodes paid at two standard deviations
above the mean regional episode payment, the hospital would need to
repay Medicare a large amount of money, especially if the number of
episodes was large.
To limit a hospital's overall repayment responsibility for the raw
NPRA contribution to the repayment amount under this model, we proposed
a 10 percent limit on the raw NPRA contribution to the repayment amount
in performance year 2 and a 20 percent limit on the raw NPRA
contribution to the repayment amount in performance year 3 and
subsequent years. Hereinafter we refer to these proposed repayment
limits as stop-loss limits. In performance year 2 as we phase in
repayment responsibility, the hospital would owe Medicare under the
proposed CJR payment model no more than 10 percent of the hospital's
target price for the anchor MS-DRG multiplied by the number of the
hospital's CJR episodes anchored by that MS-DRG during the performance
year, for each anchor MS-DRG in the model. Ten percent provides an even
transition with respect to maximum repayment amounts from performance
year 1, where the hospital bears no repayment responsibility, to the
proposed stop-loss limit in performance years 3 through 5 of 20
percent. In performance years 3
[[Page 73399]]
through 5 when repayment responsibility is fully phased in, no more
than 20 percent of the hospital's target price for the MS-DRG
multiplied by the number of the hospital's CJR episodes with that MS-
DRG in that performance year would be owed by the hospital to Medicare
under the proposed CJR payment model. The proposed stop-loss percentage
of 20 percent would be symmetrical in performance years 3 through 5
with the proposed limit on the raw NPRA contribution to reconciliation
payments discussed in the following section.
We had believed that a stop-loss limit of 20 percent is appropriate
when the hospital bears full repayment responsibility, based on our
assessment of the changes in practice pattern and reductions in quality
of care that could lead to significant repayment responsibility under
the CJR model, as compared to historical LEJR episode utilization. We
estimate that the IPPS payment for the anchor hospitalization makes up
approximately 50 percent of the episode target price, and we expect
that the anchor hospitalization offers little opportunity for
efficiencies to be achieved by reducing Medicare expenditures. In
contrast, we expect significant episode efficiencies could be achieved
in the 90 days following discharge from the anchor hospitalization
through reductions in related hospital readmissions and increased
utilization of appropriate lower intensity PAC providers, specifically
increased utilization of home health services and outpatient therapy
and reduced utilization of SNFs and IRFs. Hospital readmissions and
facility-based PAC increase the typical Medicare episode payment by 30
to 45 percent over episodes that do not include these services. The
proposed 20 percent stop-loss limit related to the total episode
payment corresponds to approximately 40 percent of episode payment for
the post-discharge period only, where the major opportunities for
efficiency through care redesign occur. Thus, taking into consideration
the historical patterns used to set target prices, we believed it is
reasonable to hold participant hospitals responsible for repayment of
actual episode spending that is up to 20 percent greater than the
target price. If a participant hospital's repayment amount due to the
raw NPRA would otherwise have exceeded the stop-loss limit of 20
percent (comparable to 40 percent of Medicare payment for the post-
discharge period), the hospital's episodes would include much poorer
episode efficiency as compared to the hospital's historical episodes,
with large proportions of episodes including related readmissions and
facility-based PAC, costly services that we do not expect to be
necessary for most beneficiaries whose care is well-coordinated and
appropriate throughout a high quality LEJR episode.
The following hypothetical example illustrates how the proposed
stop-loss percentage would be applied in a given performance year for
the episodes of a participant hospital. In performance year 3, a
participant hospital had ten episodes triggered by MS-DRG 469, with a
target price for these episodes of $50,000. The hospital's episode
actual spending for these ten episodes was $650,000. The hospital's raw
NPRA that would otherwise be $150,000 ((10 x $50,000)-$650,000) would
be capped at the 20 percent stop-loss limit of $100,000 (0.2 x 10 x
$50,000) so the hospital would owe CMS $100,000, rather than $150,000.
In performance year 3, the same participant hospital also has 100
episodes triggered by MS-DRG 470, with a target price for these
episodes of $25,000. The hospital's episode actual spending for these
100 episodes was $2,800,000. The hospital's raw NPRA would be $300,000
((100 x $25,000)-$2,800,000), an amount that would be due to CMS in
full as it would not be subject to the 20 percent stop-loss limit of
$500,000 (0.2 x 100 x $25,000).
[[Page 73400]]
[GRAPHIC] [TIFF OMITTED] TR24NO15.012
As illustrated in Figure 4 where we display results from our
national model for the proposed CJR performance year 2 policies when
the phase-in of repayment responsibility begins and under the
assumption that utilization remains constant, we estimate that the 10
percent stop-loss limit would impact the amount of repayment due to the
raw NPRA for about 11 percent of hospitals. For performance year 3, the
20 percent stop-loss limit would affect significantly fewer hospitals,
only about 3 percent. We note that the stop-loss limit for years 3
through 5 where repayment responsibility is fully implemented is
consistent with the BPCI Model 2 policy. While Figure 3 assumes no
change in utilization patterns, under the model test we expect that the
proposed stop-loss limits could actually affect a smaller percentage of
hospitals in each performance year because we expect LEJR episode care
redesign incentivized by the model's financial opportunities to
generally reduce unnecessary utilization, thereby reducing actual
episode spending and, correspondingly, any associated repayment amounts
due to the raw NPRA. We note that we would include any post-episode
spending amount due to Medicare according to the policy proposed in
section III.C.8.d. of the proposed rule in assessing the total
repayment amount due to the raw NPRA against the stop-loss limit for
the performance year to determine a hospital's total payment due to
Medicare, if applicable.
We sought comment on our proposal to adopt a 10 percent stop-loss limit
in performance year 2 and 20 percent stop-loss limit in performance
year 3 and beyond in CJR as hospital repayment responsibility for
excess episode spending above the target price is phased in and then
maintained in the model. The following is a summary of the comments
received and our responses.
Comment: Several commenters commented on our proposal for stop-loss
limits and expressed support of our proposal to establish stop-loss
limits on financial responsibility to 10 percent in year 2, 20 percent
in years 3 through 5 that aligned with BPCI and comments in support of
the premise of phase-in risk under a mandatory model. However, we also
received several comments in opposition of our approach for stop-loss
limits. Several commenters requested that we either delay downside risk
until Performance Year 3 or set the maximum stop-loss limit at 10
percent, as opposed to 20 percent. Several commenters suggested that we
phase in downside risk more slowly with various permutations of the
transition to downside risk such as 3 percent in year 3, 6 percent in
year 4 and 10 percent in year 5 which aligned more with the Shared
Savings Program Track 2 or that we phase in risk with no repayment in
year 1 and 2 and stop loss limit set at intervals leading up to 10
percent by performance year 5. Commenters found the stop loss limit to
be high considering that the IPPS payment for an LEJR episode comprised
50 percent of a payment, so a 10 percent stop-loss limit would actually
represent 20 percent of DRG payment and a 20 percent stop-loss limit
would represent 40 percent of DRG payment. Additionally, a commenter
was concerned that if hospitals only treat
[[Page 73401]]
outlier cases, episode costs could be highly skewed, resulting in
repayment. Commenters requested for a more gradual transition to
downside risk and a lower stop-loss limit to allow for hospitals to
have more time to gain experience under a mandatory model.
Additionally, commenters were concerned with the downward pressures
faced by hospitals under Medicare reimbursement such as penalties under
HRRP, HAC, HITECH and sequestration, and that hospitals need to manage
moving to ICD-10 and changes under MACRA. The commenter requested that
given the other competing Medicare payment policies that are affecting
hospitals, we should provide for a lower stop-loss limit.
Response: We thank the commenters for the concerns they raised
regarding the proposed stop-loss limit. As described earlier in this
final rule, we acknowledge that it may take time for the hospitals to
make changes in response to this model and to assume downside risk. We
have made several changes in response to such concerns, including
delaying the start date of this model to April 1, 2016. Additionally,
we have provided safeguards for high cost outlier episodes where we are
finalizing capping episodes that are two standard deviations above the
mean regional price when determining episode target prices and actual
episode payments. Similarly, we agree with commenters that we can
provide a more gradual transition to downside risk as hospitals make
changes to infrastructure, care coordination, and financial alignment
in response to this model. Additionally, we believe a gradual
transition to downside risk may reduce the effect of random variation
in the early years of the model that could result in highly skewed
episode costs that would result in hospital repayment. We are
finalizing our policy for no downside risk in Performance Year 1, a
stop-loss limit of 5 percent in Performance Year 2, a stop-loss limit
of 10 percent in Performance Year 3 and full downside risk with a stop-
loss limit of 20 percent in Performance Years 4 and 5. We believe that
as we move to regional pricing, hospitals will gain more experience
with the model and reduce unnecessary utilization, allowing them better
manage additional downside risk capped at 20 percent in Performance
Year 4 and 5.
Comment: We received a comment that we should align our stop-loss
limit policy with BPCI such that we allow hospitals to choose their
level of risk among different tracks such as 5 percent stop loss/stop
gain, 10 percent stop loss/stop gain or 20 percent stop loss/stop gain
limits. The commenter suggested that as hospitals have more control
over the risk they take on, they can get more benefit in terms of stop-
gain. Commenter suggested that, similar to BPCI, hospitals should be
able to change their risk level on a quarterly basis.
Response: While this may be similar to how the BPCI model operates,
we do not believe it would be appropriate to allow for that option at
this time. One of the goals of this model is to evaluate the
generalizability of a bundled payment model for selected hospitals and
we are interested in evaluating the effects on hospitals for assuming
financial responsibility of an episode of care that include downside
risk with limits over time. If we allow hospitals to choose their risk
level over time, it adds to the operational complexity of this model
and may limit the generalizability of the findings.
Comment: We received a comment that we should use dollar thresholds
to set the stop-loss limits as opposed to percentages. The commenter
was concerned that depending on the amount of volume at a hospital, the
proposed 10 percent stop-loss limit in Performance Year 2 or 20 percent
stop-loss limit in Performance Year 3 through 5 could be difficult to
absorb.
Response: We believe that it would be operationally complex to
establish a stop-loss limit based on a dollar amount given the payment
policies finalized in this rule. It would be difficult to establish a
dollar amount stop-loss limit as selected hospitals have varying
volumes for LEJR episodes that we are not able to predict over the
course of the model. Additionally, we are finalizing to adjust target
episode prices twice a year in accordance with updates to the Medicare
FFS schedules so it would be challenging to additionally adjust stop-
loss limits based on a dollar amount. We believe the percentage based
stop-loss limits are easier for the public to understand.
Final Decision: After consideration of the public comments we
received, we are finalizing to apply stop-loss limits of 5 percent in
performance year 2, 10 percent in performance year 3 and 20 percent for
performance years 4 and 5. This is a change from the proposed rule
where we had proposed to apply stop-loss limits of 10 percent in
Performance Year 2 and 20 percent in Performance Years 3 through 5. We
are codifying these changes at Sec. 510.305(e)(1)(v)(C).
(2) Limit on Raw NPRA Contribution to Reconciliation Payments
We believed a limit on reconciliation payments for CJR would be
appropriate for several reasons. Due to the proposed nature of the CJR
model during performance year 1, when hospitals have no repayment
responsibility for excess episode spending above the target price, CMS
bears full financial responsibility for Medicare actual episode
payments for an episode that exceed the target price, and we believed
our responsibility should have judicious limits. Therefore, we believed
it would be reasonable to cap a hospital's reconciliation payment due
to the raw NPRA as a percentage of episode payment on the basis of
responsible stewardship of CMS resources. In addition, we note that
beginning in performance year 1, participant hospitals would be
eligible for reconciliation payments due to the NPRA if actual episode
expenditures are less than the target price, assuming the proposed
quality thresholds are met. This proposal for reconciliation payments
due to the NPRA provides a financial incentive to participant hospitals
from the beginning of the model to manage and coordinate care
throughout the episode with a focus on ensuring that beneficiaries
receive the lowest intensity, medically appropriate care throughout the
episode that results in high quality outcomes. Therefore, we also
believed it would be reasonable to cap a hospital's reconciliation
payment due to the raw NPRA based on concerns about potential excessive
reductions in utilization under the CJR model that could lead to
beneficiary harm.
In determining what would constitute an appropriate reconciliation
payment limit due to the raw NPRA, we believed it should provide
significant opportunity for hospitals to receive reconciliation
payments for greater episode efficiency that includes achievement of
quality care and actual episode payment reductions below the target
price, while avoiding creating significant incentives for sharply
reduced utilization that could be harmful to beneficiaries. Thus, for
all 5 performance years of the model, we proposed a limit on the raw
NPRA contribution to the reconciliation payment of no more than 20
percent of the hospital's target prices for each MS-DRG multiplied by
the number of the hospital's episodes for that MS-DRG. Hereinafter we
refer to this proposed reconciliation payment limit as the stop-gain
limit. This proposed stop-gain limit is parallel to the 20 percent
stop-loss limit proposed for performance year 3 and beyond. We believed
that a parallel stop-gain and stop-loss limit is important to provide
proportionately similar protections to CMS and participant hospitals
for their financial
[[Page 73402]]
responsibilities under CJR, as well as to protect the health of
beneficiaries.
As illustrated in Figure 3 where we displayed results from our
national model for the proposed CJR performance year 2 policies under
the assumption that utilization remains constant, we estimate that the
20 percent stop-gain limit would impact the reconciliation payment
amount due to the raw NPRA of almost no hospitals. We note that a stop-
gain limit of 20 percent is consistent with BPCI Model 2 policy. While
Figure 3 assumes no change in utilization patterns, under the model
test we expect that the proposed stop-gain limit could actually affect
a few hospitals in each performance year because we expect LEJR episode
care redesign incentivized by the model's financial opportunities to
generally reduce unnecessary utilization, thereby reducing actual
episode spending and, correspondingly, increasing any associated
reconciliation payment amounts due to the raw NPRA. Nevertheless, we
believed the proposed stop-gain limit of 20 percent provides
substantial opportunity for hospitals to achieve savings over the
target price without excessive reductions in utilization, and those
savings would be paid back to hospitals fully in most cases without
being affected by the stop-gain limit. We sought comment on our
proposal to adopt a 20 percent stop-gain limit for all performance
years of CJR.
We note that we plan to monitor beneficiary access and utilization
of services and the potential contribution of the stop-gain limit to
any inappropriate reduction in episode services. We refer readers to
section III.F. of the proposed rule for our proposals on monitoring and
addressing hospital performance under CJR.
The following is a summary of the comments received and our
responses.
Comment: Commenters were generally supportive of the proposed stop-
gain limit policy at 20 percent as it aligns with BPCI. Another
commenter supported the 20 percent stop-gain limit but noted that it is
not proportional to the stop-loss limit of 20 percent that was proposed
to begin in Performance Year 3 because hospitals have to invest and
achieve a minimum 2 percent savings for the Medicare discount from a
blend of regional and provider spend which may represent a higher cost
savings. Some commenters requested that we remove a stop-gain limit as
there are sufficient safeguards in the rule that a stop gain limit was
not necessary. Additionally, commenters found a stop-gain limit could
serve as a disincentive for hospitals and hospital systems to undertake
those reforms that truly transform care.
Response: As described earlier, in response to comments that
hospitals need a more time to assume downside risk, we are similarly
finalizing a more gradual transition the stop-loss limit of 20 percent
such that in Performance Year 2, the stop-loss limit is 5 percent, in
Performance Year 3, the stop loss limit is 10 percent and in
Performance Year 4 and 5, the stop-loss limit is 20 percent. As
described in the proposed rule, we proposed parallel stop-loss and
stop-gain limits in order to provide proportionately similar
protections to CMS and participant for their financial responsibilities
under CJR, as well as to protect the health of beneficiaries. Because
we are changing our stop-loss limits in this final rule to provide for
a more gradual transition to a stop-loss limit of 20 percent, we are
believe it would be similarly appropriate to implement a gradual
transition to the full stop-gain limit of 20 percent. We believe that
the commenters' arguments for requiring additional time to make changes
to adapt to the model and to take on financial responsibility similarly
applies to hospitals' ability to obtain upside risk under this model.
We want to ensure that any repayments in the early years of the model
are not due to random variation and accordingly, we have applied a
transition to downside risk with more gradual stop-loss limits during
the course of the model. We similarly want to ensure that any savings
achieved by the hospitals in the early years of the model are also not
due to random variation and believe it would be appropriate to apply a
parallel transition with more gradual stop-gain limits during the
course of the model. Additionally, we want to ensure that changes that
the hospitals undertake to improve efficiency that include achievement
in quality care and episode payment reductions below the target episode
price also do not result in sharp decreases in utilization that could
be harmful to beneficiaries. Implementing parallel stop-loss and stop-
gain limits provides significant opportunity for hospitals to reduce
episode spending through care redesign and care coordination, with
appropriate safeguards to ensure that such redesign and coordination
activities are clinically appropriate and do not result in reduced
quality of care. We recognize that while some hospitals may already be
adept at such coordination activities, given that we are requiring
participation in the CJR model, such safeguards are necessary to
protect beneficiaries and the Trust Funds while hospitals less
experienced with care redesign adapt to the model and begin to engage
in care redesign activities. While we are implementing various
mechanisms to monitor for inappropriate changes in utilization as
discussed later in this rule, we believe it would also be appropriate
to transition to upside risk in the same manner as we are finalizing to
transition to downside risk. In addition, we believe parallel stop-loss
and stop-gain limits are appropriate for the CJR model in order to
ensure that both CMS and hospitals in the model are similarly at risk
for episode spending. Accordingly, we are finalizing a 5 percent stop-
gain limit in Performance Year 1 and 2, 10 percent stop-gain limit in
Performance Year 3 and 20 percent stop-gain limit in Performance Years
4-5. We believe that it is appropriate that as participant hospitals
increase their downside risk, they can similarly increase their
opportunity for additional payments under this model.
Additionally, we acknowledge the comment that hospitals need to
achieve a certain percent savings, representing the Medicare discount
before they are able to receive a reconciliation payment and be subject
to the stop-gain limits. As discussed in section III.C.4.b.(9) of this
final rule, we are modifying our policy in this final rule so as to use
lower discount factors for purposes of determining the hospital's
responsibility for excess episode spending not only in performance year
2, but also in performance year 3. Additionally, as discussed in
section III.C.5. of this final rule, we are modifying the proposed rule
so as to provide different levels of quality incentive payments that
would modulate participant hospitals' effective target price discount
factor based on their quality performance. We expect participant
hospitals to have significant opportunity to improve the quality and
efficiency of care furnished during episodes in comparison with
historical practice, because this model would facilitate the alignment
of financial incentives among providers and suppliers caring for
beneficiaries throughout the episode. This discount would serve as
Medicare's portion of reduced expenditures from the episode, with any
episode expenditure below the target price potentially available as
reconciliation payments to the participant hospital where the anchor
hospitalization occurred.
Final Decision: After consideration of the public comments we
received, we are finalizing to establish stop-gain limits that
correspond to the finalized stop-loss limits such that the stop-gain
limit is 5 percent in Performance Years 1 and 2, 10 percent in
Performance Year
[[Page 73403]]
3 and 20 percent in Performance Year 4 and 5. We are codifying the
establishment of stop-gain limits in this model at Sec.
510.305(e)(1)(v)(D).
c. Policies for Certain Hospitals To Further Limit Repayment
Responsibility
As discussed in section III.C.3. of the proposed rule, we proposed
that participant hospitals would be subject to repayment responsibility
for episode actual spending in excess of the applicable target price
beginning in performance year 2. Hospitals participating in CJR would
not be responsible for actual episode payments greater than a ceiling
set at two standard deviations above the mean regional episode payment
as described earlier in this section. Additionally, we proposed a 10
percent limit on the raw NPRA contribution to the repayment amount in
performance year 2 and a 20 percent limit on the raw NPRA contribution
to the repayment amount in performance year 3 and beyond, as described
in the previous section of this final rule.
Though our proposals provide several safeguards to ensure that
participant hospitals have limited repayment responsibility due to the
raw NPRA, we are proposing additional protections for certain groups of
hospitals that may have a lower risk tolerance and less infrastructure
and support to achieve efficiencies for high payment episodes.
Specifically, we are proposing additional protections for rural
hospitals, SCHs, Medicare Dependent Hospitals and Rural Referral
Centers (RRCs). We note that these categories of hospitals often have
special payment protections or additional payment benefits under
Medicare because we recognize the importance of preserving Medicare
beneficiaries' access to care from these hospitals. In MedPAC's Report
to the Congress in June 2012, MedPAC examined issues related to rural
Medicare beneficiaries and found that ``The primary objective of rural
special payments is to ensure that Medicare does its part to support
the financial viability of rural providers that are necessary for
beneficiaries' access to care. Some form of special payments will be
needed to maintain access in areas with low population density where
providers inevitably have low patient volumes and lack economies of
scale.'' \44\
---------------------------------------------------------------------------
\44\ MedPAC Report to Congress June 2012, Chapter 5, page 121.
---------------------------------------------------------------------------
We proposed that a rural hospital would have additional protections
under the stop-loss limit proposal. For the purpose of this model, we
are proposing to define a rural hospital as an IPPS hospital that is
either located in a rural area in accordance with Sec. 412.64(b) or in
a rural census tract within an MSA defined at Sec. 412.103(a)(1) or
has reclassified to rural in accordance with Sec. 412.103. Such rural
hospitals would have additional protections under the stop-loss limit
proposal. Consistent with the findings in MedPAC's June 2012 Report to
the Congress, we believed rural hospitals may have a lower risk
tolerance and less infrastructure and support to achieve efficiencies
for high payment episodes, particularly if they are the only rural
hospital in an area.
Our preliminary analysis examining national spending for MS-DRGs
469 and 470 from October 1, 2013 to September 30, 2014 showed that MS-
DRGs 469 and 470 cases represent a slightly higher proportion of cases
and spending for rural hospitals than the national average (for
example, MS-DRG 470 episode spending represents 12 percent of IPPS
spending for rural hospitals and represents 9 percent of IPPS spending
nationally).\45\ Additionally, our analysis on the distribution of
national spending of MS-DRGs 469 and 470 episodes by service type (that
is inpatient, outpatient, SNF, Home Health, Physician Part B, DME),
found that on average, inpatient services account for the most spending
for an MS-DRGs 469 and 470 episode (53 percent of spending for an MS-
DRG 469 episode and 55 percent of spending for MS-DRG 470 episode). SNF
services account for 27 percent of spending for MS-DRG 469 and 18
percent of spending for MS-DRG 470. The spending distribution for all
rural IPPS hospitals also differs from the national average. For rural
hospitals, inpatient services for CJR episodes account for more
spending than the national average (56 percent for MS-DRG 469 and 57
percent for MS-DRG 470 for rural hospitals) and SNF spending is higher
than the national average (29 percent for MS-DRG 469 and 21 percent for
MS-DRG 470 for rural hospitals). It is evident that this category of
hospitals has different spending patterns than the national average.
Furthermore, hospitals in rural areas often face other unique
challenges. Rural hospitals may be the only source of healthcare
services for beneficiaries living in rural areas, and beneficiaries
have limited alternatives should rural hospitals be subject to
financial changes under this model. Additionally, because rural
hospitals may be in areas with fewer providers including fewer
physicians and PAC facilities, rural hospitals may have more limited
options in coordinating care and reducing spending while maintain
quality of care under this model. We believed that urban hospitals may
not have similar concerns as they are often in areas with many other
providers and have greater opportunity to develop efficiencies under
this model. Given that rural hospitals have different episode spending
patterns, have different challenges in coordinating care and reducing
cost than urban hospitals and serve as a primary access to care for
beneficiaries, we believed that we should have a more protective stop-
loss limit policy as described later in this section.
---------------------------------------------------------------------------
\45\ Medicare FFS Parts A and B claims, CJR episodes as
proposed, between October 1, 2013 and September 30, 2014.
---------------------------------------------------------------------------
Additionally, we proposed to provide additional protections for
SCHs as defined in Sec. 412.92, Medicare Dependent Hospitals as
defined in Sec. 412. 108 and RRCs as defined in Sec. 412.96.
Hospitals paid under the IPPS can qualify for SCH status if they meet
one of the following criteria:
Located at least 35 miles from other like hospitals.
Located in a rural area, located between 25 and 35 miles
from other like hospitals, and no more than 25 percent of residents or
Medicare beneficiaries who become hospital inpatients in the hospital's
service area are admitted to other like hospitals located within a 35-
mile radius of the hospital or the hospital has fewer than 50 beds and
would meet the 25 percent criterion if not for the fact that some
beneficiaries or residents were forced to seek specialized care outside
of the service area due to the unavailability of necessary specialty
services at the hospital.
Hospital is rural and located between 15 and 25 miles from
other like hospitals but because of local topography or periods of
prolonged severe weather conditions, the other like hospitals are
inaccessible for at least 30 days in each of 2 out of 3 years.
Hospital is rural and the travel time between the hospital
and the nearest like hospital is at least 45 minutes.
If an IPPS hospital qualifies to be a SCH, the hospital can be paid
the higher of the federal payment rate paid to IPPS hospitals or a
cost-based hospital-specific rate as described in Sec. 412.78. Under
OPPS, a rural SCH can receive a 7.1 percent add on payment for most
services with certain exceptions, in accordance with Sec. 419.43(g).
These criteria to qualify for SCH status demonstrate that SCHs are
likely to be the sole hospital in an area. Furthermore, additional
payments
[[Page 73404]]
provided under Medicare FFS for SCHs, demonstrates Medicare's interest
in ensuring these hospitals are able to provide services to the
Medicare beneficiaries who may have limited access to providers in
their area. As a result, we believed that we should provide SCHs
additional protections from hospital responsibility for repayment in
this model. We note that we proposed to exclude these add-on payments
for SCHs, as described in section III.C.3.a. of the proposed rule.
MDHs are defined as a hospital that meets the following criteria:
Located in a rural area.
Has 100 beds or less.
Is not a SCH.
Sixty percent of the hospital's inpatient days or
discharges were attributable to individuals entitled to Medicare Part A
benefits during specified time periods as provided in Sec. 412.108.
MDHs also qualify for special additional payments under the IPPS
where an MDH can receive the higher of a payment under the federal
standard rate for IPPS hospitals or the payment under federal standard
rate for IPPS hospitals plus 75 percent of the difference in payments
between a cost based hospital-specific rate and the federal standard
rate as described in Sec. 412.108(c). These criteria demonstrate that
MDHs are small, rural hospitals that have a high Medicare case mix
percentage and receive additional payments under the IPPS to ensure
financial stability and preserve beneficiary access to care to these
hospitals. Thus, we believed these factors demonstrate that we should
provide additional safeguards from hospital responsibility for
repayment in order to preserve access to care. We note that we proposed
to exclude these payment enhancements for MDHs, as described in section
III.C.3.a. of the proposed rule.
RRCs are defined as IPPS hospitals with at least 275 beds that meet
the following criteria:
Fifty percent of the hospital's Medicare patients are
referred from other hospitals or from physicians who are not on the
staff of the hospital.
At least 60 percent of the hospital's Medicare patients
live more than 25 miles from the hospital.
At least 60 percent of all services the hospital furnishes
to Medicare patients are furnished to patients who live more than 25
miles from the hospital.
If a hospital does not meet the criteria described previously, a
hospital can also qualify for RRC status if a hospital meets the
following criteria:
For specified period of time, the hospital has a case-mix
that equals the lower of the median case mix index (CMI) value for all
urban hospitals nationally; or the median CMI value for urban hospitals
located in its region, excluding those hospitals receiving indirect
medical education payments.
Its number of discharges is at least--
++ 5,000 (or 3,000 for an osteopathic hospital); or
++ The median number of discharges for urban hospitals in the
census region in which it is located, set by the CMS through IPPS
rulemaking.
Additionally, a hospital must meet one of the following
criteria:
++ More than 50 percent of its active medical staff are specialists
who meet the conditions specified atSec. 412.96(c)(3).
++ At least 60 percent of all discharges are for inpatients who
reside more than 25 miles from the hospital.
++ At least 40 percent of all inpatients treated are referred from
other hospitals or from physicians who are not on the hospital's staff.
As an RRC, a hospital can qualify for several additional payments under
the IPPS. For example, an RRC is not subject to the 12 percent cap on
Medicare Disproportionate Share Hospital payments that a rural hospital
would otherwise be subject to, in accordance with Sec. 412.106(d).
Although RRCs are larger and have a higher Medicare patient mix, they
often serve as the sole provider to treat higher acuity cases, as
demonstrated by the RRC qualification criteria. As a result of these
unique characteristics of these hospitals, RRCs can receive additional
payments under Medicare FFS. Thus, it is also important to provide
additional protections for RRCs such that participation in this model
does not result in significant financial loss that may reduce access
for Medicare beneficiaries.
For these reasons, we proposed a stop-loss limit of 3 percent of
episode payments for these categories of hospitals in performance year
2 and a stop-loss limit of 5 percent of episode payments for
performance years 3 through 5. More specifically, in performance year
2, a rural hospital, SCH, RRC or MDH that is a participant hospital
would owe Medicare due to the raw NPRA no more than 3 percent of the
hospital's target price for the anchor MS-DRG multiplied by the number
of the hospital's CJR episodes with that anchor MS-DRG in the
performance year. Additionally, in performance years 3 through 5, a
rural hospital, SCH, RRC or MDH that is a participant hospital would
owe Medicare due to the raw NPRA no more than 5 percent of the
hospital's target price for the anchor MS-DRG multiplied by the number
of the hospital's CJR episodes with that anchor MS-DRG in the
performance year. We believed a different stop-loss limit policy is
warranted given the different spending patterns and the unique hospital
characteristics for these groups of hospitals as described earlier. We
believed this proposal strikes an appropriate balance between
protecting hospitals that often serve as the only access of care for
Medicare beneficiaries and having these hospitals meaningfully
participate in the model. We note that this proposal does not impact
the proposed stop-gain policy for these categories of hospitals. Rural
hospitals, SCHs, MDHs and RRCs would still have the opportunity to
participate in full gains at 20 percent similar to other hospitals.
Hospitals can apply for SCH, MDH and RRC status through their MACs
and Regional Office at any time. MACs maintain the list of SCHs, MDHs,
and RRCs in the CMS Provider Specific File, which they update on a
quarterly basis. The special hospital designations recorded in the
Provider Specific File are used in Medicare claims pricing to ensure
that these hospitals are paid according to their special hospital
designation. Additionally, CMS can identify which hospitals are
considered rural for the purpose of this policy, using the Provider
Specific File to identify physical geographic location of a hospital
and the MACs to identify whether an urban hospital has reclassified to
rural under Sec. 412.103 or located in a rural census tract of an MSA
defined under Sec. 412.103(a)(1). Thus, we proposed to identify rural
hospitals, MDHs, SCHs and RRCs at the time of reconciliation using the
Provider Specific File updated in December of the end of the
performance year and information from the MACs, and those hospitals
would be subject to the 3 percent stop-loss limit policy for that
performance year 2, and 5 percent stop-loss limit policy in performance
years 3 through 5. For example, to identify the hospitals that would
receive a 3 percent stop-loss limit for performance year 2, we would
use the Provider Specific File updated in December 2017. We note that
the special Medicare payment designation of MDH status has been
extended through FY 2017 by legislation under the MACRA. As a result,
the proposed additional protections for hospital responsibility for
repayment for MDHs would only apply to the extent that MDH status
exists under Medicare.
[[Page 73405]]
In other words, should MDH expire on or after September 30, 2017, we
would not identify hospitals as MDHs to receive the 5-percent stop-loss
limit policy for performance year 3. Though MDH status is set to expire
after the third quarter of 2017, we would still identify MDHs to
receive the 3-percent stop loss limit policy for all of performance
year 2.
We note that we also considered excluding rural hospitals, SCHs,
MDHs and RRCs from the CJR model altogether due to our concerns of
placing significant responsibility for actual episode payment above the
target price on these hospitals. Additionally, we were also concerned
that from an evaluation perspective, we would not have sufficient
sample size of CJR episodes from these categories of hospitals to have
significant results of how these groups of hospitals perform under this
model. We weighed our reasons for excluding these hospitals with the
potential qualitative information we would gain from payment innovation
tests on rural hospitals in this model. We concluded that because the
CJR model strives to test episode payment for a broad variety of
hospitals, it would be preferable to include these hospitals in the CJR
model and provide additional protections from a large repayment
responsibility. We welcome public comment on our proposed stop-loss
limit for rural hospitals, SCHs, MDHs and RRCs and on our alternative
consideration to exclude these hospitals entirely from the CJR model.
Comment: Several commenters commented on our proposal to provide a
more protective stop-loss for rural hospitals, SCHs, MDHs and RRCs. and
support of the more protective stop-loss for rural hospitals, SCHs,
MDHs and RRCs in order to preserve access to care. Some commenters
suggested even more protective stop-loss for these categories of
hospitals such as delaying downside risk until Performance Year 3, not
providing for downside risk to these hospitals or reducing downside to
1 percent in Performance Year 3, 3 percent in Performance Year Four,
and 5 percent in Performance Year Five. We also received comments that
we should exclude all-together rural hospitals, SCHs, MDH and RRCs,
because as we had acknowledged in the proposed rule, these hospitals
may not be able to take on financial risk under this model.
Response: We are interested in including these categories of
hospitals in our model to see the impact of a bundled payment model in
providers that may not otherwise participate in a voluntary program and
to better understand the generalizability of this model. However, we
recognize the concerns that these categories of hospitals may be less
equipped to take on risk and may be the only access of care in their
areas. Thus, we proposed to provide for a more limited stop-loss for
these categories of hospitals at 3 percent for Performance Year 2 and 5
percent for Performance Years 3 through 5. We had proposed that rural
hospitals, MDHs, SCHs and RRCs would still have the opportunity to
participate in full gains at 20 percent similar to other hospitals in
the model. While we would provide for more limited downside risk for
these categories of hospitals for the reasons previously stated, we
believe rural hospitals, MDHs, SCHs and RRCs should have the
opportunity to receive the gains to the same extent as the other
hospitals in the model. We note that we are finalizing to provide for a
more gradual stop-loss limit for all other hospitals in the model where
the stop-loss limit is 5 percent in Performance Year 2, 10 percent in
Performance Year 3 and 20 percent in Performance Years 4-5.
Additionally, we are finalizing that the stop-gain limit would be
proportional to the stop-loss limit such that in Performance Year 1-2,
the stop-gain limit would be 5 percent; in Performance Year 3, the
stop-gain limit would be 10 percent; and in Performance Years 4-5, the
stop gain limit would be 20 percent We believe the our rationale
described earlier in this section to provide for a more gradual
transition to stop-gain limits over the course of the model should
similarly apply to rural hospitals, SCHs, MDHs and RRCs, particularly
in light of our concerns that these categories of hospitals have lower
risk tolerance and less infrastructure and support to achieve
efficiencies for high payment episodes. We want to ensure that any
performance gains by these categories of hospitals are not based on
random variation but rather due to implementing changes to achieve
efficiencies for high payment episodes. Thus, we are finalizing a more
gradual stop-gain limit where the stop-gain limit is 5 percent in
Performance Year 2, 10 percent in Performance Year 3 and 20 percent in
Performance Years 4-5 for all hospitals in the model, including rural
hospitals, SCHs, MDHs and RRCs.
Comment: Some commenters recommended that we apply the protective
stop-loss limits to other categories of providers with similar low-risk
tolerance as rural hospitals, SCHs, MDHs and RRCs. A commenter
suggested that we apply the protective stop-loss limit to hospitals in
bankruptcy, or undergoing major restructuring under State oversight
like safety net hospitals under the Medicaid DSRIP waiver in New York.
Another commenter suggested that we provide a protective stop-loss
limit for urban referral centers. Another commenter requested that we
provide risk corridors for providers that partner with participant
hospitals such as IRFs and SNFs.
Response: As described in the proposed rule and finalized in this
final rule, we are providing additional protections on repayment
through more limited stop-loss to certain categories of hospitals that
are financially responsible for the 90-day episode spending in this
model. Because the provider at risk in this model is the hospital, we
believe it is appropriate to provide for limits on financial gain and
repayment. We do not believe it would be appropriate to provide risk
corridors for other types of providers that may be involved in the
continuum of care in a 90 day episode for LEJR such as PAC providers
since we will not be making a reconciliation payment or recoupment to
those providers. Additionally, we have provided more protective stop-
loss limits for certain categories of hospitals that have been
recognized by Medicare through additional Medicare FFS payment
incentives as often being the only access of care for Medicare
beneficiaries and thus it is in our interest to both be able to keep
them in the model but recognizing their lower risk tolerance. We do not
believe it would be appropriate to provide a limited stop-loss to
safety net hospitals under the Medicaid DSRIP waiver in New York. The
CJR model addresses a defined population (FFS Medicare beneficiaries
undergoing LEJR procedures) for which there are potentially avoidable
expenditures (arising from less than optimal care coordination). We
believe the DSRIP waiver in New York, which is a waiver provided under
the Medicaid program, does not directly impact Medicare FFS payments or
a hospital's ability to be in the CJR model at this time. If healthcare
transformation initiatives led by States raise concerns about a
participant hospital's ability to be in the model, we would address the
issue in future rulemaking as necessary. Additionally, we do not
believe it would be appropriate to carve out additional protections for
other types of hospitals at this time because we want to evaluate, in
part, the model's generalizability, which becomes challenging if we add
more exceptions. We will continue to monitor the effects
[[Page 73406]]
of this model on different categories of hospitals.
Comment: We received a comment regarding our proposal to provide
MDHs with the more limited stop-loss until the MDH payment status
expires under statute in 2017. The commenter requested that we continue
to provide the more limited-stop loss for hospitals currently
classified as MDHs in the final rule, if MDH status expires. The
commenter stated that while the higher payments afforded to MDHs are
set to expire in 2017, the concerns on their ability to bear risk and
infrastructure capacity issues will remain.
Response: We had proposed that hospitals that maintain SCH, MDH or
RRC status during the performance year would be subject to the
protective stop-loss limit. We understand the concern that with the
expiration of MDH status under legislation in September 30, 2017,
hospitals will lose their MDH designation and additional Medicare FFS
payments provided under the MDH designation. Additionally, under the
expiration of MDH status, hospitals would no longer qualify for the
protective stop-loss limit tied to that status under this model. Should
the MDH payment status expire, some MDHs may apply with their MACs to
determine if they qualify as an RRC or SCH and would be able to
maintain the protective stop-loss limit in this model. However, we
believe it would be inconsistent to apply the additional benefit of
protective stop-loss limits to former MDHs when by law, those hospitals
are not permitted to retain the other Medicare payment benefits
provided to MDHs. Additionally we proposed and are finalizing to
identify MDHs at the time of reconciliation in the Provider Specific
File updated in December of the end of the performance year and
information from the MACs and the MDHs identified in that file would be
subject to the protective stop-limits. Should the MDH payment status
expire, the Provider Specific File would no longer be updated by MACs
to identify hospitals that would have met the expired MDH criteria as
it would no longer be a Medicare payment policy. As a result, it would
be operationally challenging to appropriately identify the hospitals
that would have met the criteria to receive MDH status and to apply
protective stop-loss to those hospitals. In general, we recognize that
hospitals may change their status on an annual basis during the course
of this model based on whether or not a hospital can continue to meet
the criteria for the special payment designation, and should a hospital
no longer meet the rural, SCH, MDH or RRC designation, it would no
longer receive the protective stop-loss limit.
Comment: Some comments requested that urban hospitals that
reclassify to rural hospitals should be considered rural and be subject
to the more protective stop-loss limits. The commenters stated that we
generally consider hospitals that undergo urban-to-rural
reclassification pursuant to Sec. 412.103 as rural for all Medicare
payment purposes and we should consistently treat them as rural under
this model and provide this category of hospitals with the more
protective stop-loss limit.
Response: We agree with the commenters that urban hospitals that
reclassify to rural under Sec. 412.103 should be considered a rural
hospital for the purposes of this model and receive the more limited
stop-loss. We note that we proposed to define rural hospitals as an
IPPS hospital that is either located in a rural area in accordance with
Sec. 412.64(b) or in a rural census tract within an MSA defined at
Sec. 412.103(a)(1) or has reclassified to rural in accordance with
Sec. 412.103 and to provide a more limited stop-loss for such rural
hospitals. However, we note that rural hospitals were inadvertently
excluded from the proposed regulation language at Sec.
510.305(e)(1)(v)(E) defining which categories of hospitals would be
subject to a lower stop-loss limit. Thus, we are finalizing our
proposal to provide a more protective stop-loss limit to rural
hospitals as previously defined, as well as MDHs, SCHs and RRC, and
will revise the regulatory language at Sec. 510.305(e)(1)(v)(E) to
reflect our final policy.
Comment: Some commenters were concerned that hospitals with low
volume of LEJR episodes have a lower risk tolerance, similar to rural
hospitals, SCHs, MDHs and RRCs, may be subject to greater volatility in
episode payments and would not have adequate volume to spread the risk
of high cost episodes. A commenter's analysis showed that volume is an
important determinant of per-episode spending where the average loss
was higher for hospitals with fewer episodes. Commenters raised
concerns that hospitals with fewer episodes per year may have fewer
resources in terms of capital to invest in data infrastructure or care
redesign. Commenters suggested that we exclude low volume hospitals
from the model, remove downside risk for low volume hospitals or
provide a lower stop-loss limit for these hospitals. Commenters
provided varying definitions for what qualifies as a low volume
hospital ranging from 35 LEJR episodes per year to 100 LEJR episodes
per year.
Response: We believe that we can address these concerns for low
volume hospitals by the other design changes that we are finalizing in
this final rule to mitigate risk as participant hospitals implement the
necessary changes to improve efficiencies for LEJR episodes and quality
of care. These changes made in this final rule would alleviate concerns
for low volume hospitals such that special policies for low volume
hospitals are not necessary. First, we believe that the policy
finalized in this rule in response to public comments to allow for a
more gradual transition to the stop-loss limit of 20 percent beginning
in Performance Year 4 will alleviate the concerns of hospitals bearing
financial risk in a mandatory model. Participant hospitals, including
low volume hospitals, will have additional time to make changes in
response to the model and gradually take on more upside and downside
risk. Second, we believe that our policy, finalized in this rule, to
risk stratify MS-DRG 469 and MS-DRG 470 for hip fractures will reduce
the variability in the episode costs. We acknowledge that hip fractures
can increase the 90 day episode spend so by risk stratifying for hip
fracture, we are creating an episode target price for MS-DRG 469 and
MS-DRG 470 with and without hip fractures. For a hospital with a lower
volume of cases, the risk stratification for hip fractures will
mitigate variability in episode costs if a hospital that has fewer
episodes treats higher proportion of hip fracture cases. We disagree
with commenters that we should exclude low volume hospitals from the
model because we are interested in evaluating the experience of small
providers and the inclusion of these hospitals in the model is part of
our overall desire to see the impact of a bundled payment model in
providers who would not otherwise participate in a voluntary program.
We would be concerned that setting a threshold for low volume could
result in hospital gaming in order to be below that threshold and be
excluded from the model.
We are finalizing our proposal to provide for a lower stop-loss
limit for rural hospitals, RRCs, MDHs and SCHs and codifying this
policy at Sec. 510.305(e)(1)(v)(E). Additionally, we are finalizing to
provide a stop-gain limit that correspond to the finalized stop-loss
limits for other hospitals in the model such that the stop-gain limit
is 5 percent in Performance Years 1 and 2, 10 percent in Performance
Year 3 and 20 percent in Performance Years 4 and 5 that would apply to
all hospitals in
[[Page 73407]]
the model including rural hospitals, MDHs, SCHs and RRCs. We are
codifying the establishment of stop-gain limits in this model at Sec.
510.305(e)(1)(v)(D).
d. Hospital Responsibility for Increased Post-Episode Payments
We noted that while the proposed CJR episode would extend 90-days
post-discharge from the anchor hospitalization, some hospitals may have
an incentive to withhold or delay medically necessary care until after
an episode ends to reduce their actual episode payments. We did not
believe this would be likely, especially given the relatively long
episode duration. However, in order to identify and address such
inappropriate shifting of care, we proposed to calculate for each
performance year the total Medicare Parts A and B expenditures in the
30-day period following completion of each episode for all services
covered under Medicare Parts A and B, regardless of whether the
services are included in the proposed episode definition (section
III.B. of the proposed rule), as is consistent with BPCI Model 2.
Because we base the proposed episode definition on exclusions,
identified by MS-DRGs for readmissions and ICD-9-CM diagnosis codes for
Part B services as discussed in section III.B. of the proposed rule,
and Medicare beneficiaries may typically receive a wide variety of
related (and unrelated) services during the CJR episode that extends 90
days following discharge from the anchor hospitalization, there is some
potential for hospitals to inappropriately withhold or delay a variety
of types of services until the episode concludes, without attending
carefully to the episode definition, especially for Part B services
where diagnosis coding on claims may be less reliable. This
inappropriate shifting could include both those services that are
related to the episode (for which the hospital would bear financial
responsibility as they would be included in the actual episode spending
calculation) and those that are unrelated (which would not be included
in the actual episode spending calculation), because a hospital engaged
in shifting of medically necessary services outside the episode for
potential financial reward may be unlikely to clearly distinguish
whether the services were related to the episode or not in the
hospital's decisions.
This calculation would include prorated payments for services that
extend beyond the episode as discussed in section III.C.3.b. of the
proposed rule. Specifically, we would identify whether the average 30-
day post-episode spending for a participant hospital in any given
performance year is greater than three standard deviations above the
regional average 30-day post-episode spending, based on the 30-day
post-episode spending for episodes attributed to all CJR regional
hospitals in the same region as the participant hospital. We proposed
that beginning in performance year 2, if the hospital's average post-
episode spending exceeds this threshold, the participant hospital would
repay Medicare for the amount that exceeds such threshold, subject to
the stop-loss limits proposed elsewhere in the proposed rule. We sought
comment on this proposal to make participant hospitals responsible for
making repayments to Medicare based on high spending in the 30 days
after the end of the episode and for our proposed methodology to
calculate the threshold for high post-episode spend.
The following is a summary of the comments received and our
responses.
Comment: Some commenters opposed the proposal entirely, finding
that it represented excessive monitoring of LEJR episodes. Other
commenters supported monitoring 30 day post-episode spending, but
requested certain modifications to the proposal. Other commenters
supported our rationale to monitor a hospital's 30 day post-episode
spending to identify potential inappropriate shifting of care, but they
opposed our proposal to require participant hospitals to repay Medicare
for the amount of post-episode spend that exceeds the threshold.
Commenters also requested that the categories of services excluded from
the episode definition should also be excluded when determining the 30
day post-episode spending because they found it to be inappropriate to
hold a hospital responsible for unrelated services, particularly those
related to high-cost conditions like the onset of therapy for cancer or
the sudden inclusion of clotting factors for hemophilia. Lastly, we
received comments in support of our proposal, agreeing that this
approach could help identify participant hospitals that withhold or
delay medically necessary care until after an episode ends in order to
reduce their actual episode spending. A commenter suggested that rather
than requiring a participant hospital to repay Medicare up to the stop-
loss limit if they are found to have excessive 30 day post-episode
spending, we implement an additional financial penalty for participant
hospitals that are found to inappropriately delay care. The commenter
suggested that the penalty should not be capped at the proposed stop-
loss limit arguing that a hospital that has already substantially
exceeded target prices and had to repay CMS under the stop-loss limit
will have little incentive to refrain from stinting on care unless a
separate penalty exists.
Response: We continue to believe that monitoring for 30 day post-
episode spending is an appropriate tool to identify inappropriate
shifts in care based on our experience with BPCI. We disagree with
commenters that we should exclude the same set of services that are
excluded from the episode definition in the 30 day post-episode spend
because of concern that this model could lead to shifting of both
related and unrelated (those not included in the episode definition)
services due to some providers encouraging delays of services for
beneficiaries that are not immediately necessary, without
discriminating between those services that are in and out of the
episode definition. Additionally, our experience with BPCI that
similarly includes all costs when monitoring for 30 day post-episode
spending has helped to inform our policy for the CJR model. Based on
our experience with BPCI, we have not found that by including all costs
to measure 30 day post-episode spending, that we are inappropriately
penalizing hospitals. While we understand commenters' concerns that
hospitals could be held responsible for high costs conditions that are
not included in the episode definition, our policy aims to strike a
balance to hold participating hospitals accountable for inappropriate
shifts or delays in care and to provide hospitals with safeguards on
financial risk for 30 day post-episode spend. To that end, we are
setting a high threshold where only hospitals that have a 30 day post-
episode spending average that is three standard deviations above the
regional average would be subject to repay that difference to Medicare,
and in the case where the hospital's average 30 day post-episode
spending exceeds regional average 30 day post-episode spending, the
participant hospital would repay Medicare for the amount that exceeds
such threshold, subject to the stop loss limits. Additionally, we
disagree with the commenter that the penalty for high post-episode
spending should not be capped at the proposed stop-loss limit because
we still want to provide safeguards for high cost spending for
participant hospitals. We note that, as described earlier, we are
finalizing to reduce the stop-loss limits for Performance Year 2 and 3
to provide participating hospitals a more gradual transition to assume
downside risk
[[Page 73408]]
under this model so that repayment under the 30 day post-episode
spending policy will be even more limited. We note that participant
hospitals that are eligible for reconciliation payments in a
performance year that also have an average 30 day post-episode spend
that is higher than three standard deviations from the regional average
30 day post-episode spend would have their reconciliation payments
reduced by the amount by which spending exceeds three standard
deviations.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposal as proposed and codifying this
policy at Sec. 510.305(e)(1)(v)(A). We note that the term ``CJR
eligible hospitals'' is being renamed to ``CJR regional hospitals'' as
discussed in response to comments in section III.C.4.b.(4) of this
final rule. CJR regional hospitals are all IPPS hospitals located in a
region, including IPPS hospitals that are participants in BPCI Model 1
or in the risk bearing period of Models 2 or 4 for LEJR episodes.
Accordingly, 30-day post-episode spending for episodes attributed to
all IPPS hospitals including BPCI hospitals in the same region as the
participant hospital would be included to determine the value that is
three standard deviations greater than the regional average 30 day
post-episode spend and to determine if a participant hospital has
excessive average 30 day post-episode spending.
9. Appeal Procedures
Under the CJR model, we proposed that we would determine target
prices for episodes of care using the methodology described in section
III.C. of the proposed rule. We proposed to institute a reconciliation
payment process as described in section III.C.6. of the proposed rule,
and we proposed to retrospectively calculate a participant hospital's
actual episode performance relative to its target price after the
completion of each performance year. The difference between the actual
episode spending of each CJR episode and the target price of that
episode (calculated as target price subtracted by CJR actual episode
payment) would be aggregated for all episodes initiated at a
participant hospital during each performance year. This calculation for
a participant hospital would be adjusted for post-episode payment
increases and stop gain and stop loss limits, as described in section
III.C.6.a. of the proposed rule. We proposed to use quality measure
percentiles to determine hospital eligibility to receive the
reconciliation payment and use the successful reporting of the
voluntary PRO THA/TKA data to adjust the reconciliation payment, as
described in section III.C.5. of the proposed rule. The NPRA would be
reflected in a report sent to the participant hospital called the CJR
Reconciliation Report.
We also proposed to institute appeals processes for the CJR model
that would allow participant hospitals to appeal matters related to
reconciliation and payment (that are previously discussed in this
section), as well as non-payment related issues, such as enforcement
matters detailed in section III.C.12. of this final rule.
a. Payment Processes
The proposed processes with regard to reconciliation, payment, use
of quality measures to determine payment, and stop-loss and stop-gain
policies are set forth in detail in sections III.C.5. through 8. of
this final rule. In this section, we proposed an appeals process that
will apply to the matters addressed in sections III.C.5 through 8. of
this final rule, as well as matters not related to payment or
reconciliation. These appeals processes will apply to the following
payment and reconciliation processes:
Starting with the CJR Reconciliation Report for
performance year 1, if the CJR Reconciliation Report indicates the
reconciliation amount is positive, CMS would issue a payment, in a form
and manner specified by CMS, for that amount to the awardee within 30
calendar days from the issue date of the CJR Reconciliation Report,
unless the participant hospital selects to pursue the calculation error
and reconsideration review processes, in which case payment will be
delayed as detailed later in this section.
For performance year 1, if the CJR reconciliation report
indicates a repayment amount, the participant hospital would not be
required to make payment for that amount to CMS, as we have finalized
our proposal not to hold hospitals financially responsible for negative
NPRAs for the first performance year. In addition, if it is determined
that a CJR hospital has a positive NPRA for performance year 1, and the
subsequent calculation for performance year 1 the following year, as
described in section III.C.6. of the proposed rule, determines that in
aggregate the performance year 1 NPRA and the subsequent calculation
amount for performance year 1 is a negative value (adding together the
NPRA amount from the reconciliation for performance year 1 as well as
the amount determined in the subsequent calculation, which would be
detailed on the CJR reconciliation report for performance year 2), the
hospital would only be financially responsible for a repayment amount
that would net the performance year 1 NPRA and subsequent calculation
for performance year 1 to zero. This would be true for performance year
1 only, given our proposal to begin phasing in financial responsibility
in year 2 of the model as discussed in section III.C.2.c. of the
proposed rule. For performance years 2 through 5 of the model, for
example, if there was a positive NPRA for performance year 1 for a
given hospital of $3,000, and the subsequent calculation performed in
Q2 2018 to account for claims run-out and overlaps determined a
repayment amount of $3,500 for claims incurred and overlap during
performance year 1, $3,000 would be applied to the CJR reconciliation
report for performance year 2. If the positive NPRA for performance
year 2 were $5,000, the repayment amount of $3,000 would be netted
against the $5,000, and the reconciliation payment for performance year
2 would be $2,000. Given that downside risk has been waived for
performance year 1, the remaining $500 would not be added to the CJR
reconciliation report for performance year 2. However, beginning with
the reconciliation process for performance year 3, any repayment
amounts generated through the subsequent calculation process detailed
in section III.C.6.b. of this final rule would be netted against any
repayment or reconciliation amount on the respective CJR reconciliation
reports for performance years 2, 3, 4, and 5. Starting with the
reconciliation for performance year 2, if the CJR Reconciliation Report
indicates the NPRA is negative, the participant hospital would make
payment for the absolute value of that amount to CMS within 30-calendar
days from the issue date of the CJR Reconciliation Report, in a form
and manner specified by CMS. For example, if there was a positive NPRA
for performance year 3 for a given hospital of $1,000, and the
subsequent calculation performed in Q2 2019 to account for claims run-
out and overlaps determined a repayment amount of $2,500 for claims
incurred and overlap during performance year 3, the full $2,500 would
be applied to the CJR reconciliation report for performance year 4,
subject to the stop loss/stop gain limits detailed in section III.C.8.
of this final rule. Thus, if the positive NPRA for performance year 4
were $2,000, the repayment amount of $2,500 would be netted against the
$2,000, and a repayment amount for performance year
[[Page 73409]]
4 would be $500. Where the participant hospital does not issue payment
within 30-calendar days, we will issue a demand letter requiring
payment be made immediately.
The reconciliation or repayment amount may include
adjustments, arising from matters from the previous performance year,
as necessary to account for subsequent calculations performed for
performance years that were specified in earlier CJR Reconciliation
Reports, as discussed in section III.C.6. of the proposed rule. For
example, we would potentially make determinations of additional monies
owed by Medicare to participant hospitals or vice versa in subsequent
periods based on the availability of updated Medicare administrative
data. These subsequent calculations would be contained in the
succeeding reconciliation report. For example, the subsequent
calculations applicable to performance year 1 would be contained in the
reconciliation report for performance year 2.
If the participant hospital fails to pay CMS the amount
owed by the date indicated in the demand letter, CMS will recoup owed
monies from participant hospital's present and future Medicare payments
to collect all monies due to CMS. While we proposed that a participant
hospital may enter into financial arrangements with CJR collaborators
that allow for some risk-sharing, as discussed in section III.C. of the
proposed rule, the participant hospital would be solely liable for the
repayment of the negative repayment amount to CMS. Where the
participant hospital fails to repay CMS in full for all monies owed,
CMS would invoke all legal means to collect the debt, including
referral of the remaining debt to the United States Department of the
Treasury, pursuant to 31 U.S.C. 3711(g).
b. Calculation Error
We proposed the following calculation error process for participant
hospitals to contest matters related to payment or reconciliation, of
which the following is a non-exhaustive list: The calculation of the
participant hospital's reconciliation amount or repayment amount as
reflected on a CJR reconciliation report; the calculation of NPRA; the
calculation of the percentiles of quality measure performance to
determine eligibility to receive a reconciliation payment; and the
successful reporting of the voluntary PRO THA/TKA data to adjust the
reconciliation payment. Participant hospitals would review their CJR
reconciliation report and be required to provide written notice of any
error, in a notice of calculation error that must be submitted in a
form and manner specified by CMS. Unless the participant provides such
notice, the reconciliation report would be deemed final within 30
calendar days after it is issued, and CMS would proceed with payment or
repayment. If CMS receives a timely notice of an error in the
calculation, CMS would respond in writing within 30 calendar days to
either confirm or refute the calculation error, although CMS would
reserve the right to an extension upon written notice to the
participant hospital. We proposed that if a participant hospital does
not submit timely notice of calculation error in accordance with the
timelines and processes specified by CMS, the participant hospital
would be precluded from later contesting any of the following matters
contained in the CJR reconciliation report for that performance year:
Any matter involving the calculation of the participant hospital's
reconciliation amount or repayment amount as reflected on a CJR
reconciliation report; any matter involving the calculation of NPRA;
the calculation of the percentiles of quality measure performance to
determine eligibility to receive a reconciliation payment; and the
successful reporting of the voluntary PRO THA/TKA data to adjust the
reconciliation payment.
c. Dispute Resolution
(1) Limitations on Review
In accordance with section 1115A(d) of the Act, there is no
administrative or judicial review under sections 1869 or 1878 of the
Act or otherwise for the following:
The selection of models for testing or expansion under
section 1115A of the Act.
The selection of organizations, sites or participants to
test those models selected.
The elements, parameters, scope, and duration of such
models for testing or dissemination.
Determinations regarding budget neutrality under
subsection 1115A(b)(3) of the Act.
The termination or modification of the design and
implementation of a model under subsection 1115A(b)(3)(B) of the Act.
Decisions about expansion of the duration and scope of a
model under subsection 1115A(c) of the Act, including the determination
that a model is not expected to meet criteria described in paragraph
(1) or (2) of such subsection.
(2) Matters Subject To Dispute Resolution
We proposed that a participant hospital may appeal an initial
determination that is not precluded from administrative or judicial
review by requesting reconsideration review by a CMS official. The
request for review must be submitted for receipt by CMS within 10 days
of the notice of the initial determination, in a form and manner
specified by CMS.
(3) Dispute Resolution Process
We proposed the following dispute resolution process. First, we
proposed that only a participant hospital may utilize the dispute
resolution process. Second, in order to access the dispute resolution
process a participant hospital must have timely submitted a notice of
calculation error, as previously discussed, for any matters related to
payment. We proposed these matters would include any amount or
calculation indicated on a CJR reconciliation report, including
calculations not specifically reflected on a CJR reconciliation report
but which generated figures or amounts reflected on a CJR
reconciliation report. The following is a non-exhaustive list of the
matters we proposed would need to be first adjudicated by the
calculation error process as previously detailed: Calculations of
reconciliation or repayment amounts; calculations of NPRA; and any
calculations or percentile distribution involving quality measures that
we proposed could affect reconciliation or repayment amounts. If a
participant hospital wants to engage in the dispute resolution process
with regard to one of these matters, we proposed it would first need to
submit a notice of calculation error. Where the participant hospital
does not timely submit a notice of calculation error, we proposed the
dispute resolution process would not be available to the participant
hospital with regard to those matters for the reconciliation report for
that performance year.
If the participant hospital did timely submit a notice of
calculation error and the participant hospital is dissatisfied with
CMS's response to the participant hospital's notice of calculation
error, the hospital would be permitted to request reconsideration
review by a CMS reconsideration official. The reconsideration review
request would be submitted in a form and manner and to an individual or
office specified by CMS. The reconsideration review request would
provide a detailed explanation of the basis for the dispute and include
supporting documentation
[[Page 73410]]
for the participant hospital's assertion that CMS or its
representatives did not accurately calculate the NPRA or post-episode
spending amount in accordance with CJR rules. The following is a non-
exhaustive list of representative payment matters:
Calculations of NPRA, post-episode spending amount, target
prices or any items listed on a reconciliation report.
The application of quality measures to a reconciliation
payment, including the calculation of the percentiles thresholds of
quality measure performance to determine eligibility to receive
reconciliation payments, or the successful reporting of the voluntary
PRO THA/TKA data to adjust the reconciliation payment.
Any contestation based on the grounds that CMS or its
representative made an error in calculating or recording such amounts.
Where the matter is unrelated to payment, such as termination from
the model, the participant hospital need not submit a notice of
calculation error. We proposed to require the participant hospital to
timely submit a request for reconsideration review, in a form and
manner to be determined by CMS. Where such request is timely received,
we proposed CMS would process the request as discussed later in this
section.
We proposed that the reconsideration review would be an on-the-
record review (a review of briefs and evidence only). The CMS
reconsideration official would make reasonable efforts to notify the
hospital in writing within 15 calendar days of receiving the
participant hospital's reconsideration review request of the date and
time of the review, the issues in dispute, the review procedures, and
the procedures (including format and deadlines) for submission of
evidence (the ``Scheduling Notice''). The CMS reconsideration official
would make reasonable efforts to schedule the review to occur no later
than 30 calendar days after the date of the Scheduling Notice. The
provisions at Sec. 425.804(b), (c), and (e) will apply to reviews
conducted pursuant to the reconsideration review process for CJR. The
CMS reconsideration official would make reasonable efforts to issue a
written determination within 30 days of the review. The determination
would be final and binding.
We solicited comment on our proposals related to appeals rights
under this model. The two-step appeal process for payment matters--(1)
Notice of calculation error, and (2) reconsideration review--is used
broadly in other CMS models. We sought comment on whether we should
develop an alternative appeal process. We are also interested in
whether there should be appeal rights for reductions or eliminations of
NPRA as a result of enforcement actions, as discussed in section
III.C.12. of the proposed rule, and if so, whether the process for such
appeals should differ from the processes proposed here.
The following is a summary of the comments received and our
responses.
Comment: The comments we received on the calculation error process
varied widely. Multiple commenters were supportive of the process,
including commenters that have experience in BPCI, in which an
identical calculation error process is used. A majority of the comments
recommended that CMS extend the timeframe for appeals under the
calculation error process. Commenters indicated that they appreciated
CMS providing details of an appeal procedure, but many suggested that
the 30-day timeframe for submission of a notice of calculation error is
too short. Some commenters offered proposals for longer periods;
specifically, we received separate comments indicating that 45 days, 60
days, or 180 days would be acceptable timeframes. With regard to the
proposal to allow for 180 days, multiple commenters noted that this
timeframe is similar to the timeframe afforded hospitals to appeal
adjustments in the Medicare Cost Report. Multiple commenters also noted
that a longer timeframe for notices of calculation error may benefit
participant hospitals in providing additional time to identify and
understand calculation errors.
Response: We appreciate these comments and are sympathetic to the
requests from commenters for more time to review reconciliation reports
and submit notices of calculation error. We agree with commenters that
providing additional time may benefit some participant hospitals in
identifying and understanding calculation errors. We are committed to
paying participant hospitals accurately and correctly and believe that
the calculation error process serves an important function in achieving
that goal.
CMS uses the following processes for appeals that we are finalizing
in section III.C.9. of this final rule. The procedures for processing
and issuing reconciliation payments and repayments require that we
submit the payment files for participant hospitals to the payment
systems in batches. CMS uses these processes for several reasons. It is
administratively more efficient to continue to use MACs to issue
payments to all providers and suppliers that furnish services to
beneficiaries during a CJR episode, so as not to disrupt the timing of
FFS payments that providers and suppliers normally receive. For
reconciliation payments and repayments, CMS has developed a process for
processing these payments, which is used for other CMS models. This
current process is the result of a substantial number of infrastructure
changes to payment and recoupment procedures that were made over a
period of several years. As a result, we believe it is appropriate to
utilize those processes for the CJR model, given that the challenges
associated with establishing these processes, as well as the fact that
they were created for other CMS models.
The effect of these processes is that the batches are sent at
specified intervals. The first batch is sent after the calculation
error timeframe closes. The second batch is sent after CMS has
responded to the notices of calculation error of participant hospitals
and those hospitals choose to not proceed with the dispute resolution
process detailed in section III.C.9.b.(3) of this final rule. The final
batch is sent after CMS has adjudicated all of the reconsideration
reviews for those participant hospitals that selected to utilize the
dispute resolution process.
Given these processes, any extension in the timeframe allowed for
submission of notices of calculation error delays payment not only to
participant hospitals that choose to utilize the calculation error and
dispute resolution processes, but even those participant hospitals that
choose not to engage in these processes. As such, we believe the need
for extending the deadline for submission of notices of calculation
error should be balanced with CMS' goal to issue reconciliation
payments and repayments promptly, as an extension for these submissions
would delay the processing of reconciliation payments for all
participant hospitals for a significant period of time. However, we
acknowledge the commenters' concerns and the need for participant
hospitals to have adequate time to analyze and prepare notices of
calculation error.
Therefore, we believe that a longer timeframe for submission of the
calculation error form is appropriate for the CJR model, given that CMS
is reconciling on an annual basis, as opposed to quarterly for the BPCI
initiative. Given that participant hospitals in CJR are likely have a
larger subset of data to review on their annual reconciliation reports
than their BPCI counterparts who receive quarterly reconciliation
reports, we believe it is
[[Page 73411]]
prudent for CMS to allow additional time for participant hospitals to
review their reconciliation reports for calculation errors. We agree
with the commenters who suggested that 45 days would allow sufficient
time for participant hospitals to review reconciliation reports, and if
they choose, submit notices of calculation error. We believe that 45
days is the appropriate timeframe to allow for this process, as it
responds to the requests for more time than our proposal of 30 days,
but does not seriously delay payment of reconciliation payments, in the
way in which a submission timeframe of 180 days would do. We considered
the recommendations for 60 days, but we rejected these recommendations
because we note that the calculation error form represents the first
step in a two-step appeals process. Where a participant hospital
submits a calculation form and is dissatisfied with CMS' response, the
dispute resolution option is available to the participant hospital via
a reconsideration review request. Upon receipt of a reconsideration
review request, the date of such a review would be scheduled by CMS
approximately 130 days from the issue date of the reconciliation
report. Thus, we believe that the option for reconsideration review, at
a much later date, provides participant hospitals with adequate
additional time to analyze the date on reconciliation reports, that a
60-day submission deadline for the calculation error form is
unnecessary. Finally, we believe that extending this period to 45 days
appropriately balances the goal of CMS to process reconciliation
payments on a timely basis with the needs of participant hospitals to
have adequate time to review their reconciliation reports and submit
notices of calculation error.
Final Decision: After consideration of the public comments we
received, we are finalizing the proposal with one modification to allow
participant hospitals 45 days to submit a calculation error form. We
are finalizing our proposal to process and issue reconciliation
payments and collect repayments as described in section III.C.6. of
this final rule, and to allow for an optional appeals process, as
previously described in this section, in which participant hospitals
may submit a calculation error form, as well as have an opportunity to
engage in dispute resolution.
With regard to the calculation error process, we are finalizing our
proposal with one modification. Participant hospitals may submit a
calculation error form to contest matters related to payment or
reconciliation, of which the following is a non-exhaustive list: The
calculation of the participant hospital's reconciliation amount or
repayment amount as reflected on a CJR reconciliation report; the
calculation of NPRA; the calculation of the percentiles of quality
measure performance to determine eligibility to receive a
reconciliation payment; and the successful reporting of the voluntary
PRO THA/TKA data to adjust the reconciliation payment. Upon receipt of
its CJR reconciliation report, the participant hospital may choose to
submit a calculation error form. The form must be submitted in a form
and manner specified by CMS. Unless the participant provides such
notice, the reconciliation report will be deemed final within 45
calendar days after it is issued, and CMS will proceed with payment or
repayment. If CMS receives a timely notice of an error in the
calculation, CMS will respond in writing within 30 calendar days to
either confirm or refute the calculation error, although CMS reserves
the right to an extension upon written notice to the participant
hospital. If a participant hospital does not submit timely notice of
calculation error in accordance with the timelines and processes
specified by CMS, the participant hospital is precluded from later
contesting any of the following matters contained in the CJR
reconciliation report for that performance year: any matter involving
the calculation of the participant hospital's reconciliation amount or
repayment amount as reflected on a CJR reconciliation report; any
matter involving the calculation of NPRA; the calculation of the
percentiles of quality measure performance to determine eligibility to
receive a reconciliation payment; and the successful reporting of the
voluntary PRO THA/TKA data to adjust the reconciliation payment.
With regard to the dispute resolution process, we are finalizing
our proposal without modification. In accordance with section 1115A(d)
of the Act, there is no administrative or judicial review under
sections 1869 or 1878 of the Act or otherwise for the following:
The selection of models for testing or expansion under
section 1115A of the Act.
The selection of organizations, sites or participants to
test those models selected.
The elements, parameters, scope, and duration of such
models for testing or dissemination.
Determinations regarding budget neutrality under
subsection 1115A(b)(3) of the Act.
The termination or modification of the design and
implementation of a model under subsection 1115A(b)(3)(B of the Act.
Decisions about expansion of the duration and scope of a
model under subsection 1115A(c), including the determination that a
model is not expected to meet criteria described in paragraph (1) or
(2) of such subsection.
We are also finalizing our proposal without modification regarding
the matters subject to dispute resolution, and the process CMS will use
to adjudicate dispute resolution matters. Thus, a participant hospital
may appeal an initial determination that is not precluded from
administrative or judicial review by requesting reconsideration review
by a CMS official. The request for review must be submitted for receipt
by CMS within 10 days of the notice of the initial determination, in a
form and manner specified by CMS. Only a participant hospital may
utilize the dispute resolution process.
In order to access the dispute resolution process, a participant
hospital must timely submit a calculation error form, as previously
discussed, for any matters related to payment. These matters include
any amount or calculation indicated on a CJR reconciliation report,
including calculations not specifically reflected on a CJR
reconciliation report but which generated figures or amounts reflected
on a CJR reconciliation report. The following is a non-exhaustive list
of the matters that we are requiring must be first adjudicated by the
calculation error process as previously detailed: Calculations of
reconciliation or repayment amounts; calculations of NPRA; and any
calculations or percentile distribution involving quality measures that
we proposed could affect reconciliation or repayment amounts. If a
participant hospital wants to engage in the dispute resolution process
with regard to one of these matters, the participant hospital must
first submit a calculation error form. Where the participant hospital
does not timely submit a calculation error form, the dispute resolution
process is not available to the participant hospital with regard to
those matters for the reconciliation report for that performance year.
If the participant hospital does timely submit a calculation error
form and the participant hospital is dissatisfied with CMS's response
to the participant hospital's calculation error form, the hospital is
permitted to request reconsideration review by a CMS reconsideration
official. The reconsideration review request must be submitted in a
form and manner and to
[[Page 73412]]
an individual or office specified by CMS. The reconsideration review
request must provide a detailed explanation of the basis for the
dispute and include supporting documentation for the participant
hospital's assertion that CMS or its representatives did not accurately
calculate the NPRA or post-episode spending amount in accordance with
CJR rules. The following is a non-exhaustive list of representative
payment matters:
Calculations of NPRA, post-episode spending amount, target
prices or any items listed on a reconciliation report.
The application of quality measures to a reconciliation
payment, including the calculation of the percentiles thresholds of
quality measure performance to determine eligibility to receive
reconciliation payments, or the successful reporting of the voluntary
PRO THA/TKA data to adjust the reconciliation payment.
Any contestation based on the grounds that CMS or its
representative made an error in calculating or recording such amounts.
Lastly, we are finalizing our proposal without modification that
the reconsideration review is an on-the-record review (a review of
briefs and evidence only). The CMS reconsideration official will make
reasonable efforts to notify the hospital in writing within 15 calendar
days of receiving the participant hospital's reconsideration review
request of the date and time of the review, the issues in dispute, the
review procedures, and the procedures (including format and deadlines)
for submission of evidence (the ``Scheduling Notice''). The CMS
reconsideration official will make reasonable efforts to schedule the
review to occur no later than 30 calendar days after the date of the
Scheduling Notice. The provisions at Sec. 425.804(b), (c), and (e)
will apply to reviews conducted pursuant to the reconsideration review
process for CJR. The CMS reconsideration official will make reasonable
efforts to issue a written determination within 30 days of the review.
The determination will be final and binding.
This modification is set forth in Sec. 510.310(a)(1). The
remainder of the proposal is finalized as proposed and set forth in
Sec. 510.310.
10. Financial Arrangements and Beneficiary Incentives
a. Financial Arrangements
As previously noted, in the proposed rule we stated our belief that
given the financial incentives of episode payment in CJR, participant
hospitals in the model might want to engage in financial arrangements
to share reconciliation payments or hospital internal cost savings or
both, as well as responsibility for repaying Medicare, with providers
and suppliers making contributions to the hospital's episode
performance on spending and quality. Such arrangements would allow the
participant hospitals to share all or some of the reconciliation
payments they may be eligible to receive from CMS, or the participant
hospital's internal cost savings that result from care for
beneficiaries during a CJR episode. Likewise, such arrangements could
allow the participant hospitals to share the responsibility for the
funds needed to repay Medicare with providers and suppliers engaged in
caring for CJR beneficiaries, if those providers and suppliers have a
role in the hospital's episode spending or quality performance. We use
the term ``CJR collaborator'' to refer to such providers and suppliers,
who we proposed may include the following:
SNFs.
HHAs.
LTCHs.
IRFs.
PGPs.
Physicians, nonphysician practitioners, and providers or
suppliers of therapy services.
We stated our belief that CJR collaborators should have a role in
the participant hospital's episode spending or quality performance.
Accordingly, we proposed that the CJR collaborator would directly
furnish related items or services to a CJR beneficiary during the
episode and/or specifically participate in CJR model LEJR episode care
redesign activities, such as attending CJR meetings and learning
activities; drafting LEJR episode care pathways; reviewing CJR
beneficiaries' clinical courses; developing episode analytics; or
preparing reports of episode performance under the direction of the
participant hospital or a CJR collaborator that directly furnishes
related items and services to CJR beneficiaries. We also stated that in
addition to playing a role in the participant hospital's episode
spending or quality performance, physician, nonphysician, and PGP CJR
collaborators must directly furnish services to CJR beneficiaries in
order to receive a gainsharing payment as result of their financial
arrangement with the participant hospital. We sought comment on our
proposed definition of CJR collaborators, as well as our proposed
definition of a provider's or supplier's role in the participant
hospital's episode spending or quality performance.
We proposed that certain financial arrangements between a
participant hospital and a CJR collaborator be termed a ``CJR sharing
arrangement,'' and that the terms of each CJR sharing arrangement be
set forth in a written agreement between the participant hospital and
the CJR collaborator. We proposed to use the term ``Participation
Agreement'' to refer to such agreements. We proposed that a ``CJR
sharing arrangement'' would be a financial arrangement contained in a
Participation Agreement to share only the following: (1) CJR
reconciliation payments (as that term is defined in section III.C. of
the proposed rule); (2) the participant hospital's internal cost
savings (as that term is defined later in this section); and (3) the
participant hospital's responsibility for repayment to Medicare, as
discussed later in this section. Where a payment from a participant
hospital to a CJR collaborator is made pursuant to a CJR sharing
arrangement, we proposed to define that payment as a ``gainsharing
payment.'' A gainsharing payment may only be only composed of the
following: (1) Reconciliation payments; (2) internal cost savings; or
(3) both. Where a payment from a CJR collaborator to a participant
hospital is made pursuant to a CJR sharing arrangement, we proposed to
define that payment as an ``alignment payment.'' We proposed that CJR
sharing arrangements that provide for alignment payments would not
relieve the participant hospital of its ultimate responsibility for
repayment to CMS. Many of the programmatic requirements discussed later
in this final rule for gainsharing payments and alignment payments are
similar to those in Model 2 of the BPCI initiative.
CJR sharing arrangements must be solely related to the
contributions of the CJR collaborators to care redesign that achieve
quality and efficiency improvements under this model for CJR
beneficiaries. All gainsharing payments or alignment payments between
participant hospitals and CJR collaborators resulting from these
arrangements must be auditable by HHS, as discussed later in this
section, to ensure their financial and programmatic integrity. We
emphasized that any CJR collaborator that receives a gainsharing
payment or makes an alignment payment must have furnished services
included in the episode to CJR beneficiaries. Furthermore, the payment
arrangements for gainsharing payments or alignment payments contained
in a CJR sharing arrangement must be actually and proportionally
related to
[[Page 73413]]
the care of beneficiaries in a CJR episode, and the CJR collaborator
must be contributing to the care redesign strategies of the participant
hospital.
We considered whether CJR collaborators should be termed
``participants'' in this model, or whether the term ``participant''
should refer only to the participant hospitals located in MSAs selected
for participation. If CJR collaborators are participants in the model,
we proposed that their activities with regard to CJR beneficiaries
would be regulated directly by CMS. However, if CJR collaborators are
not participants, but rather are participating entities and individuals
in the CJR model through signed agreements with participant hospitals,
their activities with regard to CJR beneficiaries would be governed by
the Participation Agreement between a CJR collaborator and a
participant hospital. Given the large number of potential CJR
collaborators, the expected varied nature of their respective
arrangements with participant hospitals, and the potential
administrative burden in reporting information to CMS, we believed the
activities of CJR collaborators with regard to CJR beneficiaries would
be best managed by participant hospitals. As we discussed earlier in
this final rule, one justification for proposing that acute care
hospitals be the provider type financially responsible under the CJR
model is the position of the hospital with respect to other providers
and suppliers, in terms of coordinating care for CJR beneficiaries.
Given that position, we proposed that where participant hospitals enter
into Participation Agreements that contain CJR sharing arrangements,
the participant hospital must also be responsible for ensuring that
those providers and suppliers comply with the terms and requirements of
the proposed rule. We sought comments on this proposal; specifically,
whether CJR collaborators should be termed participants in this model
and subject to the applicable requirements, or whether the
responsibility for compliance with the model's requirements is better
managed by participant hospitals. We were particularly interested in
comments that address the advantages and disadvantages of making CJR
collaborators participants in the model, and whether there are certain
provider or supplier types that CMS should consider including as
``participants'' in the model.
The following discussion outlines our proposed requirements and
responsibilities of participant hospitals that engage in such CJR
sharing arrangements. In the proposed rule, we stated our belief that
these proposed requirements and responsibilities are essential to
ensuring that all CJR sharing arrangements are for the sole purpose of
aligning the financial incentives of collaborating providers and
suppliers with those of the participant hospital toward the CJR model
goals of improved LEJR episode care quality and efficiency. We believed
that the rationale for and details of these arrangements must be
documented and auditable by HHS, with a direct connection to the
arrangements and the participant hospital's episode performance.
Finally, we believed that the proposed limitations to the arrangements,
as described later in this section, are necessary to ensure the
integrity of the CJR model by minimizing incentives for problematic
behaviors, such as patient steering. We sought comments on all proposed
requirements regarding CJR sharing arrangements.
With respect to whether certain entities or individuals should be
prevented from participating in the CJR model, either as participant
hospitals or CJR collaborators, we considered whether CMS should
conduct screening for program integrity purposes. Many CMS models
conduct screening during the application process and periodically
thereafter. These screenings examine provider and supplier program
integrity history, including any history of Medicare program exclusions
or other sanctions and affiliations with individuals or entities that
have a history of program integrity issues. Where a screening reveals
that a provider or supplier has a history of program integrity issues
or affiliations with individuals or entities that have a history of
program integrity issues, we may remove that provider or supplier from
the model. We utilize these screening processes for many CMS models,
including the BPCI initiative.
For several reasons, in the proposed rule we stated our belief that
this type of screening for participant hospitals would be inapplicable
to the CJR model. Most importantly, this model seeks to evaluate the
performance in the model of hospitals located in a particular MSA. We
believed it is important that all hospitals that meet the criteria for
participation in the model be included. Further, in section III.F. of
the proposed rule we proposed that CMS would evaluate the quality of
care and institute beneficiary protections via a monitoring plan that
in ways that would go beyond some of the efforts of previous or
existing CMS models. We solicited comments on this proposal, including
whether screening of participant hospitals or CJR collaborators might
be appropriate or useful in aiding HHS' program integrity efforts and
identifying untrustworthy parties or parties with program integrity
history problems.
(1) CJR Sharing Arrangement Requirements
We proposed that each CJR sharing arrangement must include and set
forth in writing at a minimum--
A specific methodology and accounting formula for
calculating and verifying internal cost savings, if the participant
hospital elects to share internal cost savings through gainsharing
payments with CJR collaborators. We proposed to define internal cost
savings as the measurable, actual, and verifiable cost savings realized
by the participant hospital resulting from care redesign undertaken by
the participant hospital in connection with providing items and
services to beneficiaries within specific CJR episodes of care.
Internal cost savings would not include savings realized by any
individual or entity that is not the participant hospital. Each CJR
sharing arrangement must include specific methodologies for accruing
and calculating internal cost savings of the participant hospital,
where the hospital intends to share internal cost savings through a CJR
sharing arrangement. The specific methodologies for accruing and
calculating internal cost savings must be transparent, measurable, and
verifiable in accordance with Generally Accepted Accounting Principles
(GAAP) and Government Auditing Standards (The Yellow Book). The
methodology must set out the specific care redesign elements to be
undertaken by the participant hospital or the CJR collaborator or both;
A description of the methodology and accounting formula
for calculating the percentage or dollar amount of a reconciliation
payment received from CMS that will be paid as a gainsharing payment
from the participant hospital to the CJR collaborator;
A description of the methodology, frequency or dates of
distribution, and accounting formula for distributing and verifying any
and all gainsharing payments;
A description of the arrangement between the participant
hospital and the CJR collaborator regarding alignment payments, where
the hospital and CJR collaborator agree through a CJR sharing
arrangement to share risk for repayment amounts due to CMS, as
reflected on a CJR reconciliation report. The description of this
arrangement must include safeguards to ensure that such alignment
payments are made solely for
[[Page 73414]]
purposes related to sharing responsibility for funds needed to repay
Medicare in the CJR model. This description should also include a
methodology, frequency of payment, and accounting formula for payment
and receipt of any and all alignment payments;
A provision requiring the participant hospital to recoup
gainsharing payments paid to CJR collaborators if gainsharing payments
were based on the submission of false or fraudulent data;
Plans regarding care redesign, changes in care
coordination or delivery that are applied to the participant hospital
or CJR collaborators or both, and any description of how success will
be measured;
Management and staffing information, including type of
personnel or contactors that will be primarily responsible for carrying
out changes to care under the model;
The participant hospital must maintain records identifying
all CJR collaborators, and the participant hospital's process for
determining and verifying the eligibility of CJR collaborators to
participate in Medicare; and
All CJR sharing arrangements must require compliance, from
both the participant hospital and the CJR collaborator, with the
policies regarding beneficiary notification set forth in section III.F.
of the final rule.
With respect to these requirements for Participation Agreements and
CJR sharing arrangements, we considered whether we should require
participant hospitals and CJR collaborators to periodically report this
information to CMS for purposes of enforcement of these proposed
regulations. However, we are mindful of the administrative burden in
reporting this information as well as the challenges associated with
creating a universal collection tool that would account for all the
various iterations of financial arrangements into which participant
hospitals and CJR collaborators may enter. We sought comment on this
proposal as well as whether CMS should require participant hospitals
and CJR collaborators to periodically report data such as: Gainsharing
payments and/or alignment payments distributed and received; name and
identifier (NPI, CCN, TIN) of all CJR collaborators; and any other
relevant information related to Participation Agreements and CJR
sharing arrangements that would assist HHS with enforcement of these
regulations.
We solicited comments about all of the requirements set out in the
preceding discussion, including whether additional or different
safeguards would be needed to ensure program integrity, protect against
abuse, and ensure that the goals of the model are met.
(2) Participation Agreement Requirements
We proposed that the Participation Agreement must obligate the
parties to comply, and must obligate the CJR collaborator to require
any of its employees, contractors or designees to comply, without
limitation, with the following requirements:
Each individual's or entity's participation in the CJR
sharing arrangement is voluntary and without penalty for
nonparticipation.
Any gainsharing payments made pursuant to a CJR sharing
arrangement must be made only from the participant hospital to the CJR
collaborator with whom the participant hospital has signed a
Participation Agreement containing a CJR sharing arrangement.
Additionally, we proposed to require the following for all CJR sharing
arrangements between a participant hospital and a CJR collaborator that
is a PGP:
+ Where a gainsharing payment is made to a CJR collaborator that is
a PGP, all monies contained in such a gainsharing payment must be
shared only with physician or nonphysician practitioners that furnished
a service to a CJR beneficiary during an episode of care in the
calendar year from which the Net Payment Reconciliation Amount (NPRA),
as that term is defined in section III.C.6. of this final rule, or
internal cost savings was generated, either or both of which are the
only permitted sources of funds for a gainsharing payment. We further
proposed that each CJR sharing arrangement between a participant
hospital and a CJR collaborator that is a PGP must stipulate that the
PGP may not retain any portion of a gainsharing payment or distribute,
by any method, any portion of a gainsharing payment to physician or
nonphysician practitioners who did not furnish a service to a CJR
beneficiary during an episode of care in the calendar year from which
the NPRA or internal cost savings was generated.
Any alignment payments made pursuant to a CJR sharing
arrangement may be made only to the participant hospital from the
entity or individual with whom the participant hospital has signed a
Participation Agreement containing a CJR sharing arrangement.
Each CJR sharing arrangement must require that the CJR
collaborator be in compliance with all Medicare provider enrollment
requirements at Sec. 424.500 et seq., including having a valid and
active TIN or NPI.
Any internal cost savings or reconciliation payments that
the participant hospital seeks to share through CJR sharing
arrangements must meet the requirements set forth in the final CJR rule
(as finalized) and be administered by the participant hospital in
accordance with GAAP. In no event may the participant hospital
distribute any amounts pursuant to a CJR sharing arrangement that are
not comprised of either internal cost savings or a reconciliation
payment, as those terms are defined in this final rule. All amounts
determined to be internal cost savings by the participant hospital must
reflect actual, internal cost savings achieved by the participant
hospital through implementation of care redesign elements identified
and documented by the participant hospital. In no case may internal
cost savings reflect ``paper'' savings from accounting conventions or
past investment in fixed costs.
Any alignment payments that the participant hospital
receives through a CJR sharing arrangement must meet the requirements
set forth in the final CJR rule (as finalized) and be administered by
the participant hospital in accordance with GAAP.
CJR sharing arrangements must not include any amounts that
are not alignment payments or gainsharing payments.
Further, we proposed that each Participation Agreement--
++ Between the participant hospital and a CJR collaborator must
obligate the CJR collaborator to provide the participant hospital and
HHS access to the CJR collaborator's records, information, and data for
purposes of monitoring and reporting and any other lawful purpose.
Records, information, and data regarding the CJR sharing arrangement
must have sufficient detail to verify compliance with all material
terms of the CJR sharing arrangement and the terms of the CJR model;
++ Must require the participant hospital and the CJR collaborator
to include in their compliance programs specific oversight of their
Participation Agreements and compliance with the requirements of the
CJR model;
++ If the participant hospital or CJR collaborator does not have a
compliance program, each party must create one and incorporate the
provisions described in this part in that program;
++ Must require compliance, from both the participant hospital and
the CJR collaborator, with the policies regarding beneficiary
notification set
[[Page 73415]]
forth in section III.F.2. of this final rule; and
++ Must require the board or other governing body of the
participant hospital to have responsibility for overseeing the
participant hospital's participation in the model, its arrangements
with CJR collaborators, its payment of gainsharing payments and receipt
of alignment payments, and its use of beneficiary incentives in the CJR
model.
Participation Agreements must require all CJR
collaborators to comply with any evaluation, monitoring, compliance,
and enforcement activities performed by HHS or its designees for the
purposes of operating the CJR model.
Each Participation Agreement must require the CJR
collaborator to permit site visits from CMS, or one of its designees,
for purposes of evaluating the model.
We solicited comments about all of the requirements set out in the
preceding discussion, including whether additional or different
safeguards would be needed to ensure program integrity, protect against
abuse, and ensure that the goals of the model are met.
(3) Gainsharing Payment and Alignment Payment Conditions and
Restrictions
We proposed the following conditions and restrictions concerning
gainsharing payments and alignment payments made pursuant to a CJR
sharing arrangement:
No entity or individual, whether or not a party to a
Participation Agreement, may condition the opportunity to give or
receive gainsharing payments in CJR on the volume or value of past or
anticipated referrals or other business generated to, from, or among a
participant hospital, any CJR collaborators, and any individual or
entity affiliated with a participant hospital or CJR collaborator.
Participant hospitals would not be required to share
reconciliation payments, internal cost savings, or responsibility for
repayment to CMS with other providers and suppliers. However, where a
participant hospital elects to engage in those activities, we proposed
that such activities be limited to the provisions prescribed in the
proposed rule.
We proposed that gainsharing payments must be distributed
on an annual basis, and are required to meet the following criteria:
++ Must be clearly identified and comply with all provisions in the
proposed rule, as well as all applicable laws, statutes, and rules;
++ Must not be a loan, advance payments, or payments for referrals
or other business; and
++ Must be made by electronic funds transfer (EFT).
We proposed that alignment payments from a CJR
collaborator to a participant hospital may be made at any interval, and
are required to meet the following criteria:
++ Must be clearly identified and comply with all provisions in the
proposed rule, as well as all applicable laws, statutes, and rules;
++ Must not be issued, distributed, or paid prior to the
calculation by CMS of a reconciliation report reflecting a negative
NPRA;
++ Must not be a loan, advance payments, or payments for referrals
or other business; and
++ Must be made by EFT.
We proposed that each CJR sharing arrangement stipulate
that any CJR collaborator that is subject to any action involving
noncompliance with the provisions of the proposed rule, engaged in
fraud or abuse, providing substandard care, or have other integrity
problems not be eligible to receive any gainsharing payments related to
NPRA generated during the time that coincides with the action involving
any of the issues previously listed until the action has been resolved
in a forum or manner that constitutes a final determination, either by
the state or federal court of last resort, as applicable, or by CMS,
HHS, or its designees.
No entity or individual, whether or not a party to a
Participation Agreement, may condition the opportunity to make or
receive alignment payments in CJR on the volume or value of past or
anticipated referrals or other business generated to, from, or among a
participant hospital, any CJR collaborators, and any individual or
entity affiliated with a participant hospital or CJR collaborator.
In a calendar year, the aggregate amount of the total
gainsharing payments distributed by the participant hospital that are
derived from a CJR reconciliation payment may not exceed the amount of
the reconciliation payment that the participant hospital received from
CMS.
In a calendar year, the aggregate amount of the total
alignment payments received by the participant hospital may not exceed
50 percent of the participant hospital's repayment amount due to CMS.
If no repayment amount is due, then no alignment payments may be
received by the participant hospital.
We proposed that the participant hospital must retain at
least 50 percent of its responsibility for repayment to CMS, pursuant
to the repayment amount reflected in each annual reconciliation report,
under the CJR model. Given that the participant hospital will be
responsible for developing and coordinating care redesign strategies in
response to its participation in the CJR model, we believed it is
important that the participant hospital retain a significant portion of
its responsibility for repayment to CMS. For example, upon receipt of a
reconciliation report indicating that the participant hospital owes
$100 to CMS, the participant hospital would be permitted to receive no
greater than $50 in alignment payments, in the aggregate, from its CJR
collaborators.
Further, we proposed that a CJR sharing arrangement must
limit the amount a single CJR collaborator may make in alignment
payments to a single participant hospital. We proposed that a single
CJR collaborator not make an alignment payment to a participant
hospital that represents an amount greater than 25 percent of the
repayment amount reflected on the participant hospital's annual
reconciliation report. For example, upon receipt of a reconciliation
report indicating that the participant hospital owes $100 to CMS, the
participant hospital would be permitted to receive no more than $25 in
an alignment payment from a single entity or individual who is a CJR
collaborator of the participant hospital.