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CJR Model Cuts Care Costs for Medicare Beneficiaries

October 3, 2019 BY Rachel Grande

CJR Model Cuts Care Costs for Medicare Beneficiaries

In April 2016, the Centers for Medicare and Medicaid Services (CMS) introduced the Comprehensive Care for Joint Replacement (CJR) model to increase quality and cost efficiency for Medicare beneficiaries undergoing two of the most common inpatient procedures: hip and knee replacements.

CJR is a five-year model designed to test whether episode-based bundled payments and quality measurement for lower extremity joint replacements (LEJR) can cut down costs and improve patient outcomes. In January 2013, CMS experimented with a similar model called the Bundled Payments for Care Improvement (BPCI) initiative, which tested a wider sample of clinical episodes. Bundled payments are an alternative to fee-for-service reimbursement where a single CMS payment covers all the care a patient may receive throughout their course of treatment. The goal of this system is to reduce overall healthcare costs, and incentivize increased care coordination among hospitals, physicians, and post-acute care providers.

Hospitals participating in CJR

When the CJR model was launched in 2016, participation was mandatory for all Inpatient Prospective Payment System (IPPS) providers located within the 67 Metropolitan Statistical Areas (MSAs) selected for testing—with as many as 800 hospitals participating. At the end of the second performance year, involvement became voluntary for care centers in 33 of the participating MSAs and for all rural and low volume providers.

Fig 1 Map from Definitive Healthcare’s Expert Premium Content platform. Data as of 09/04/2019.

Participation in the model has almost halved since this change was finalized in 2017. According to recent Definitive Healthcare data, a total of 488 hospitals are participating in the CJR model through the program’s end in December 2020.

How CJR reimbursement works

The CJR episode is initiated by admission to an acute care facility for an LEJR procedure and ends 90 days after date of discharge from the hospital where surgery was performed. This “anchor” hospital, as it’s called, is accountable for the quality and cost of beneficiary care during the entire post-discharge recovery period.  

There are four different episodes of care under CJR, determined by the initiating diagnosis-related group—in this case, either DRG 469 or DRG 470—as well as whether the patient has a hip fracture.

    • DRG 469
      Major joint replacement or reattachment of lower extremity with major complications or comorbidities (MCC)
    • DRG 470
      Major joint replacement or reattachment of lower extremity without major complications or comorbidities (MCC)

LEJR procedures were selected for testing in this model because historically, hip and knee replacement procedures are among the most utilized and have high expenditures with significant variation in spending—particularly in post-acute care. The ultimate aim of the CJR model is to provide an opportunity for providers to identify efficiencies for both planned and urgent LEJR procedures by transferring financial risk to the hospital.

Trending decrease in average cost per CJR episode  

In June 2019, CMS published their Performance Year Two Evaluation Report for the CJR model, and the results show an overall decrease in average cost per episode from just the first to the second performance year.

CJR episode trends by DRG

Fig 2 Chart from Definitive Healthcare’s Expert Premium Content platform, using data extracted from CMS as of 09/04/2019.  

Between 2016 and 2017, cases of DRG 470—replacement or reattachment without major complications or comorbidities—without a hip fracture had the greatest decrease in average cost per episode, at just over 3 percent reduction. These cases also saw the second highest increase in number of episodes at a 1.8 percent rise. Cases of DRG 469—replacement or reattachment of lower extremity with major complications or comorbidities—with a hip fracture had the biggest increase in number of episodes, from 7,392 in 2016 to 7,575 in 2017, for a 2.5 percent rise in occurrence.

Cost per episode decrease by region

DRG 470 without a hip fracture not only had the largest decrease in average cost per episode between 2016 and 2017, but also saw the greatest total number of episodes in the same time frame. At a regional level, South Atlantic hospitals have the most episodes of DRG 470 with just over 70,000 cases. Cost per episode is highest in New England area hospitals—with an average price tag of $21,418 per case—while the Middle Atlantic region has seen the biggest decrease in cost per episode at nearly 4 percent.

Fig 3 Map from Definitive Healthcare’s Expert Premium Content platform, using data extracted from CMS as of 09/04/2019. 

On a more granular level, it’s interesting to note that the same top four hospitals—Hospital for Special Surgery (New York, NY), New England Baptist Hospital (Boston, MA), Evanston Hospital (Evanston, IL) and Mayo Clinic St. Mary’s Campus (Rochester, MN)—reported the highest volume of DRG 470 without hip fracture episodes in both the first and second performance years.  

Though this model has prompted a decrease in overall cost per CJR episode, there are some outlying facilities that have not followed this trend. In the CJR program, the nationwide average cost per episode for DRG 470 without a hip fracture is about $17,600—a notable drop from the $18,200 average cost in 2016. In reviewing the hospitals with the highest average cost per episode and filtering out facilities with ten or fewer cases, four facilities were found to have an average cost per episode of $50,000 or greater. The University of Maryland Medical Center (Baltimore, MD) has the highest cost at $68,670 per episode, followed by Crescent Medical Center Lancaster (Lancaster, TX) at $66,223 per episode.

Learn More

Interested in learning more about how CMS participation impacts your business? Definitive Healthcare tracks CJR and other CMS program performance for more than 8,800 U.S. hospitals and health systems. Sign up for a free trial today to see how you can:

  • Target ideal client facilities
  • Segment your market by program performance, financial, clinical, and quality metrics
  • Analyze historical market trends
  • Identify key decision-makers and opinion leaders

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