In January 2016, the Centers for Medicare & Medicaid Services (CMS) finalized the somewhat controversial, mandatory Comprehensive Care for Joint Replacement Model (CJR Model), which is a bundled payment program covering certain orthopedic procedures reimbursed by Medicare. The final rule implementing the CJR Model is effective on January 15, 2016, and the first model performance period begins on April 1, 2016. With the CJR Model, CMS aims to align various providers’ financial incentives by establishing a bundled payment system for CJR Procedures conducted in acute care hospitals located in 67 metropolitan statistical areas (MSAs) across the country. Among the MSAs chosen to participate are New Haven-Milford, Connecticut; Norwich-New London, Connecticut; and New York-Newark-Jersey City, New York-New Jersey-Pennsylvania.

Under the CJR Model, acute care hospitals in certain geographic areas (Participant Hospitals) will receive bundled payments for episodes of care associated with a lower extremity joint replacement or a reattachment of a lower extremity (collectively, a CJR Procedure). The CJR Model aims to improve the efficiency and quality of care for Medicare beneficiaries, from initial hospitalization through recovery, by incentivizing improvement of coordination and transition of care, as well as encouraging provider investment in infrastructure and redesigned care processes across the inpatient and post-acute care spectrum. The CJR Model holds Participant Hospitals financially responsible for the quality and cost of a CJR Procedure, from admission until 90 days following a patient’s discharge. Participant Hospitals may enter into sharing arrangements with key providers to incentive low-cost, high-quality care across the continuum of a patient’s care for a CJR Procedure. To further the sharing arrangements, CMS and the OIG issued three fraud and abuse waivers Participating Hospitals may utilize.

The CJR Model phases in a two-sided risk model over five performance years, such that Participant Hospitals will be eligible to receive bonus payments if they generated savings over a certain amount, but will be responsible for making repayments to CMS if they exceeded the target payment amount.