The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.

The Comprehensive Care for Joint Replacement (CCJR) Program: Are You Prepared?

By David Jackson/Thursday, September 17, 2015

Hip and knee replacements are a very common surgery for Medicare beneficiaries. In 2013, Medicare paid more than $7 billion in hospitalization costs alone for more than 400,000 beneficiaries’ knee and hip replacements. While incentives for hospitals to avoid post-surgery readmissions or extended rehabilitation resulting from complications exist, the quality and cost of care for these hip and knee replacement surgeries still vary widely among providers.


To address this variability in cost and quality, Centers for Medicare & Medicaid Services (CMS) has proposed the Comprehensive Care for Joint Replacement (CCJR) Program; the first mandatory bundled payment model in the U.S. The five-year program begins on January 1, 2016 and hospitals in 75 selected Metropolitan Statistical Areas (MSAs) are required to take responsibility for quality and total spending over a 90-day period for elective and urgent joint replacement procedures. CMS expects to save more than $175 million over the course of the five-year program.


The goal of this program is to encourage hospitals, physicians, and post-acute care providers to work together to achieve the Institute for Healthcare Improvement (IHI) triple aim: better quality, decreased cost, and improved patient satisfaction across an episode of care. While the CCJR model is similar to the current CMMI Bundled Payments for Care Improvement (BPCI) demonstration, there are key differences in the proposed CMS rule.


First, the proposed CCJR Model will hold participant hospitals financially accountable for the quality and cost of a CCJR episode of care for Medicare beneficiaries. Second, a target price will be set for each hospital prior to the start of each performance period. Depending on the participant hospital’s quality and episode cost performance, the hospital may be financially rewarded or penalized by Medicare. Finally unlike the CMMI BPCI program, in which a hospital succeeds based on its ability to reduce the cost of an episode from historical levels, success under the CCJR program relies on a health system’s ability to become and remain an efficient provider of joint replacement episodes in a region.


To be prepared to succeed under the new CCJR model, organizations must undertake an evaluation of their current capabilities and practice patterns and identify the gaps they need to address to manage and coordinate care effectively across the targeted joint replacement episodes.


Truven Health experts suggest that CCJR participant hospitals evaluate their approach from three perspectives:


1.     Quantitatively, by examining financial risk and opportunity

a.     Analyze historical utilization and spending trends

b.    Compare a hospital’s historical utilization against regional benchmarks

c.     Trend forward historic results using current internal data

d.    Forecast financial win-loss


2.     Qualitatively, by examining clinical and operational capabilities

a.     Orthopedic service line structure and leadership

b.    Physician alignment

c.     Care coordination and management capabilities

d.    Post-acute provider network

e.     Information and analytic capabilities


3.     Comprehensively, by prioritizing the most critical activities and investments a hospital should undertake for both short and long-term success under the CCJR program


For more information about how Truven Health can help you prepare for your CCJR participation, please call 1.800.525.9083, option 4 or email us at ProviderSolutions@truvenhealth.com.

David Jackson
Senior Consulting Manager


CMMI Releases Updated Baseline Pricing for Bundled Payments

By David Jackson/Saturday, June 14, 2014
David Jackson imageOn May 1, 2014, the Center for Medicare & Medicaid Innovation (CMMI) released Model 2 and Model 3 Mock Reconciliation Results for Q2 2013 to provider organizations going at risk under Phase II of the Bundled Payments for Care Improvement Initiative (BPCI). While the results shared were intended to be informational and to help awardees better understand the reconciliation process, reported changes in baseline target prices raised a few eyebrows across the community of BPCI stakeholders. CMMI notified participants that the 2012 baseline prices were different than previously reported to awardees in August of 2013 due to changes in baseline episodes assigned to participants. Specifically, those participants who had entered into risk agreements (Phase II) have precedence over not risk bearing (Phase I) participants in assignment of episodes. However, there were also notable changes in case mix weights, historic trend factors and risk track thresholds for the 2010 – 2012 baseline period. The combined impact of these changes may significantly impact  2012 baseline target prices. Depending on the direction and magnitude of impact, the financial savings or loss projections for a given participant may change. We recommend all participants revisit those initial projections as part of their work to create a process for ongoing reconciliation.

Many of the BCPI stakeholders were under the impression that target prices reported in August 2013 were in essence “locked in,” so they were surprised to see some target prices driven down, in some cases significantly, for key higher volume DRGs, as we observed for major joint replacement surgeries. Lower than expected target prices ultimately mean lower than expected hard-earned savings a participant may recoup as a result of care redesign and coordination efforts.

According to CMMI representatives, upon advice from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS), CMMI switched from deriving national historic episode statistics from a national random sample of 7,000 cases per DRG to the entire national universe of all Original Medicare episodes. The switch in national baseline episodes altered the historic trend factors, case mix weights, and risk track trim points affecting calculated target price, in some cases unfavorably. CMMI has commented that this degree of change was unexpected, but is a one-time occurrence and is not expected to change to this degree in the future. CMMI will continue to utilize the national episode universe baseline. While the shift to a national universe for establishing trend is positive, we believe CMS should consider an additional change to exclude participants from the trend calculation. Furthermore, we believe participants should anticipate substantial variation in quarterly financial results especially for low volume episodes and plan accordingly.

On the plus side, CMMI is making strides in providing greater resources to support participants through more frequent engagement and development of feedback mechanisms to help them understand how they stand in comparison to other episode initiators participating in the BPCI program. CMMI has established dedicated representatives, who will each work with approximately 25 awardees, to schedule regular discussions. They hope to have additional feedback mechanisms available for the first reconciliation time frame. In the meantime, to help drive success, it’s important for all BCPI participants to stay proactively engaged with CMMI and express their concerns and needs around information.

As organizations attempt to predict the financial success and the impact on their relationships with other participating providers through gain sharing or other business arrangements, they must keep track of many moving parts. Target prices will continue to be a moving target and CMMI will only be able to provide the final target prices quarterly, along with each retrospective reconciliation period. So it's important for the BCPI community to establish internal forecasting processes and request additional information, for example, historic quarter to quarter trend factors to better assess potential pricing volatility. CMS has invested heavily in providing data that when used to its full potential, can help facilitate positive transformation.

But it’s imperative for participants to monitor the impact of changes or clarification to BPCI program policies and to provide feedback. We encourage you to share your thoughts with CMMI. The e-mail address for feedback and questions regarding the BPCI program is BundledPayments@cms.hhs.gov.

David Jackson
Senior Consulting Manager