CMS Finalizes Mandatory Hip and Knee Bundling Program

Karen Morris in Clinical & Quality

NYSHFA received the information below from Mark Parkinson, President/CEO of AHCA/NCAL.

Today CMS finalized a new rule establishing the Comprehensive Care for Joint Replacement (CJR) program, a mandatory bundled payment program for hip and knee replacement procedures affecting providers in 67 defined Metropolitan Statistical Areas (MSAs) throughout the country.

CJR Program Summary

Under this model, the hospital in which the hip or knee replacement procedure takes place will be accountable for the costs and quality of related care from the time of the surgery through 90 days after hospital discharge -- what is called an "episode" of care. Depending on the hospital's quality and cost performance during the episode, the hospital will either earn a financial reward or, beginning with the second performance year, be required to repay Medicare for a portion of the spending above an established target. This payment structure gives hospitals an incentive to work with physicians, home health agencies, skilled nursing facilities, and other providers to manage costs across providers and settings as well as make sure beneficiaries receive the coordinated care they need.

Notable Changes from the Proposed Rule

The final rule includes a few notable changes from what CMS originally proposed. First, the Agency is delaying implementation of the program from January 1 to April 1, 2016, allowing providers an extra four months to prepare for implementation of the program.

Second, CMS reduced the number of affected MSAs from 75 to 67. The now excluded MSAs are:

  • Colorado Springs, CO
  • Medford, OR
  • Evansville, IN-KY
  • Richmond, VA
  • Fort Collins, CO
  • Rockford, IL
  • Las Vegas-Henderson-Paradise, NV
  • Virginia Beach-Norfolk-Newport News, VA-NC

And finally, CMS is easing the transition period for providers to begin taking downside risk in years two and three of the program.

CMS also made a modification to its policy governing which providers would be eligible for a waiver of the SNF three-day rule. Originally, skilled nursing providers must have had a rating of three or more stars under the CMS Five-Star Quality Rating System in order to qualify for a SNF three-day waiver. In the final rule, CMS modified this requirement so that skilled nursing centers that have a rating of three stars or higher for at least seven of the preceding 12 months will qualify for the waiver. Providers will be able to apply for a waiver of the SNF three-day stay requirement beginning in year two of the program.

AHCA's Next Steps

In the coming weeks, AHCA staff will be developing a toolkit of resources for members who are impacted by the new program.

Although CMS did not accommodate our request for post-acute facilities to hold the bundle under this model, we are pleased that CMS has indicated they may consider, through future rulemaking, other episode of care models in which post-acute care providers are financially responsible for the costs of care.

We will continue to keep you informed as new information becomes available.


Mark Parkinson


Karen Morris, RN, MS
Director, Clinical & Quality Services
518-462-4800 x15