CMS Issues Final Rule Implementing Mandatory Bundled Payment Program for Lower Extremity Joint Procedures

The Centers for Medicare & Medicaid Services (CMS) recently issued a final rule (Final Rule) that implements the Comprehensive Care for Joint Replacement model (CJR Model), a new bundled payment program covering certain orthopedic procedures reimbursed by Medicare. The Final Rule is effective on January 15, 2016, and the first model performance period begins on April 1, 2016. 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. CMS anticipates that the CJR Model will save Medicare $343 million over its five performance years while furthering CMS’s goal of improving the efficiency and quality of care for common medical procedures such as the CJR Procedures.

CJR Procedures are among the most common surgeries for Medicare beneficiaries, and the quality and cost of these procedures can vary greatly by provider and by region. The Final Rule aims to align 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.