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February 2016


Not Fooling This Time: CJR Bundled Payments Begin April 1 for Covered Hospitals Nationwide






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Gerald A. Niederman


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The promotion of “value not volume” in the health care delivery system is an important theme of the Affordable Care Act and many related efforts to reform the American health care system. In this context, Health and Human Services (HHS) Secretary Burwell has stressed the agency’s intent to move significant amounts of Medicare reimbursement away from a conventional fee for service (FFS) system to alternative payment methodologies, which concurrently improve the quality of patient care.1

Now, HHS’ Nov. 24, 2015, promulgation of a final rule involving the “Comprehensive Care for Joint Replacement Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services” (80 CFR 226, commonly known as the “CJR” program) has accelerated Medicare’s promotion of systemic delivery and payment reform away from FFS by mandating bundled payments for common surgeries in many communities.

Starting April 1, 2016, the hospital-specific processes and activities required under CJR include:

  • Updating a hospital’s existing compliance program to assure review and monitoring of gainsharing and alignment arrangements under CJR
  • Requiring Governing Body (i.e., Board of Directors or Trustees) oversight concerning CJR participation
  • Adopting hospital policies for the appropriate selection of CJR collaborators, including selection criteria related to quality performance
  • Requiring that physician group practice collaborators do tangibly contribute to a hospital’s CJR care redesign activities
  • Delineating in the collaboration agreement an acceptable methodology to determine and verify the hospital’s internal cost savings related to care redesign undertaken with collaborators, as permitted
  • Specifying quality criteria for use in determining available gainsharing payments
  • Assuring adherence to other related compliance obligations.

The broad contours of the CJR program — which mandates participation by all Medicare enrolled hospitals performing knee and hip replacements in the 67 selected Metropolitan Statistical Areas (MSAs) listed in Table 1 — are outlined in the full PDF of this alert.

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1 See (Jan. 26, 2015).













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