Comprehensive Care for Joint Replacement Model Tool Kit

Hip and knee replacement is the most common inpatient surgery for Medicare beneficiaries and can require a long recovery and rehabilitation. The Centers for Medicare and Medicaid Services (CMS) estimates that in 2014 there were more than 400,000 procedures, costing more than $7 billion for the hospitalizations alone. With such a large expenditure and estimates that this utilization will continue to grow, CMS began to assess the quality and cost of care for these procedures and recognized that there is great variability across the country in complications, readmissions, infection rates, lengths of stay and many other patient outcomes. This large variability in patient outcomes results in tremendous variation in Medicare payment for this procedure. CMS indicated that the average total Medicare expenditure for surgery, hospitalization and recovery ranges from $16,500 to $33,000 across geographic areas.

It is CMS’ belief that this range can be attributed to the fragmented healthcare that its beneficiaries receive. This fragmented care is the result of the medical/surgical/rehabilitation teams not coordinating their care across different care settings.

By coordinating the care between providers for these hip and knee replacement patients, CMS believes it will achieve multiple goals including:

  1. improve the surgical outcomes;
  2. reduce total Medicare expenditures and
  3. work toward the Department of Health and Human Services goal of ultimately shifting 50% of Medicare Fee-For-Service payments into value based alternative payment models by the end of 2018.

With this background, on November 15, 2015, the Centers for Medicare and Medicaid Services (CMS) released final regulations implementing the Comprehensive Care for Joint Replacement (CJR) model. This toolkit will provide information on the CJR model. For those practices that are required to participate in this bundled payment model, this toolkit will describe which patient populations are subject to the model, the implications for the anesthesia practice and how to prepare for the implementation. It will also be useful information for those anesthesiologists who are currently not subject to this requirement, providing information about this model of care and reimbursement as a way to prepare for other bundled and alternative payment models.

The CJR Model is a five-year mandatory bundled payment program for hip and knee replacements (DRGs 469/470) which holds hospitals financially accountable for the quality and cost of a comprehensive joint replacement episode of care while creating incentives to increase the coordination of care among hospitals, physicians and post-acute care providers.

The CJR model consists of approximately 5 performance years. The performance period for the model began April 1, 2016 and will end on December 31, 2020.

All Inpatient Prospective Payment (IPPS) hospitals located in the 67 designated metropolitan service areas (MSAs) are required to participate in the model and will be financially accountable for the quality and cost of care during the entire episode of care with limited exceptions such as participation in Model 1, 2 or 4 of the Bundled Payments for Care Improvement (BPCI) initiative for the lower extremity joint replacement episode.

It should be noted that hospitals already participating in other Center for Medicare and Medicaid Innovation models and CMS programs such as the Medicare Shared Savings Program (MSSP) and other accountable care organization models will still be required to participate in this model.

CMS has identified 794 hospitals that will be required to participate in the CJR model. To determine if your hospital is included on this list visit the CMS website.

All Medicare patients with an admission to a participant hospital who are discharged under MS-DRG 469 Major joint replacement or reattachment of lower extremity with major complications or comorbidities or MS-DRG 470 Major joint replacement or reattachment of lower extremity without major complications or comorbidities are subject to the CJR Model.

The episode includes all related items and services paid under Medicare Part A and Part B for all Medicare Fee-for Service beneficiaries from the beginning of the beneficiary’s admission through 90 days following hospital discharge including hospice services.

Hospitals and providers will continue to be paid by Medicare under its existing payment policies.  However, following each performance year, CMS will compare actual expenditures to their established target price*. If the participating hospital’s expenditures are lower than CMS’ established target price, the hospital will be eligible for a reconciliation payment. If the participating hospital’s expenditures are higher than CMS’ established target price, the hospital will be required to pay CMS a percentage of the difference.

Example #1

A participating hospital with expenditures below the target price and meeting a minimum quality composite score may earn up to 5 percent of their target price in Performance Years 1 and 2, 10 percent in Performance Year 3 and 20 percent in Performance Years 4 and 5.

Example #2

A participating hospital with actual expenditures above the target price must pay Medicare up to 5 percent of their target price in Performance Year 2, 10 percent in Performance Year 3 and 20 percent in Performance Years 4 and 5.

See table below:


Performance Year 1

Performance Year 2

Performance Year 3

Performance Year 4

Performance Year 5

Time period

April 1 - December 31, 2016

January 1 - December 31, 2017

January 1 - December 31, 2018

January 1 - December 31, 2019

January 1 - December 31, 2020

Gain Standard Limit






Stop-Loss Standard Limit






*Each participating hospital will be provide its own specific target price for Medicare patients discharged under MS-DRG 469 and MS DRG 470. These target prices will be risk stratified by the presence of a hip fracture.

CMS will develop a composite quality score for each participating hospital based on 1.) voluntary reporting of designated total hip arthroplasty (THA) /total knee arthroplasty (TKA) patient-reported outcomes and limited risk variable data and 2.) hospital specific performance and improvement in two mandatory quality measures:

  • Hospital–level risk standardized complication rate following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1550)
  • Hospital Consumer Assessment of Healthcare Providers and Systems Survey (NQF #0166)

This composite score will be used to determine 1.) the hospital’s ability to receive a reconciliation payment if the hospital’s actual expenditures are below its established target price and 2.) the amount of quality incentive payment that may be made to the hospital.

Yes, the participating hospitals will be able to establish financial arrangements or gainshare with specified types of providers and suppliers including:

  • Skilled nursing facilities
  • Long-term care hospitals
  • Home health agencies
  • Inpatient rehabilitation facilities
  • Physician and non-physician practitioners
  • Outpatient therapy providers

These collaborators must furnish services directly to the patient and must be involved in the care redesign process. These arrangements should allow participating hospitals to share reconciliation payments, internal cost savings, and the responsibility for payments to CMS, pursuant to the policies stipulated in the Final Rule, with these providers and entities. It should be noted that these gainsharing payments cannot exceed 50% of the respective Medicare fee-for-service payment for an applicable CJR service for an individual collaborator.

Further, participating in the CJR model does not limit the ability for these hospitals to partner with or form accountable care organizations as well.

All financial arrangements must comply with all applicable laws and regulations.

CJR and Anesthesiology

Yes, the regulation requiring the implementation of the CJR model is relevant to these anesthesiologists because they are members of the care team of these patients within these identified hospitals. Because the work of the anesthesiologist is so critical to the financial and surgical outcomes identified as part of this regulation, their participation in this implementation process is necessary.  Without the voice of the anesthesiologist, assumptions will be made which could result in not only patient care suffering, but also an increase in overall costs either through charges for services rendered or through the repayment that would need to be made to CMS for not complying with the goals of the CJR regulation. To help meet the goals of the CJR regulation, avoid repayment to CMS, and be eligible to receive incentive payments, anesthesiologists will need to work collaboratively with their administrative and surgical colleagues to coordinate care across the entire perioperative continuum.

For all of the Inpatient Prospective Payment hospitals located within the identified 67 MSAs, participation means compliance with the CJR regulation. It means that these hospitals, within the performance years, will have the opportunity to receive a financial incentive or be subject to a CMS repayment. It also means for those who act sooner than later to implement this model within their institution, there is more time to work out any issues with not achieving desirable quality composite scores or decreasing expenditures below specified targets as there is no downside risk in the first performance year. 

If your institution has been identified to participate in the CJR program, there are several key next steps that you should consider:

  1. Educate yourself on the regulation – It is important to understand the regulation in its entirety.  You can access information on the CJR Model on the CMS website at the following link:
  2. Gather data – Talk with your department heads and hospital administrators about gathering data on your organization’s current performance. This data should include outcome data (length of stay, readmission rate, complication rate, infection rate, etc.) as well as charge data (services provided during all operative periods up to 90 days post-op). This data will allow you to get a better understanding of your current status and help identify potential areas for improvement.
  3. Collaborate intra- and inter-departmentally – Share the data with your colleagues within your department and with your colleagues across the organization to learn about how they are preparing for success under the program. Discuss the current performance and identify areas for improvement and efficiencies.  Determine mechanisms that would address these identified areas. Discuss potential collaborators of the care team such as skilled nursing facilities, post-acute care centers, etc.  It is critical that anesthesiologists are part of the conversation because if they are not, assumptions will be made on their behalf that could create unrealistic expectations about the services they provide.

The CJR regulation is just the beginning. CMS has indicated on several occasions that they intend to shift the percentage of Medicare payments currently paid through fee-for-service to value-based payment models, like the CJR program. In fact by 2018, the Department of Health and Human Services hopes to achieve the goal of shifting 50% of Medicare Fee-For-Service payments into value-based models. It is clear that whether or not your institution has been mandated to participate in CJR, this type of model of payment is not going away. Thus, anesthesiologists must educate themselves on this new environment not only as it relates to CJR but also as it relates to all surgical services and perioperative care that they provide. They must become familiar with the goals of CMS not only because Medicare is transitioning to this model of payment, but also because other payors are likely to follow suit. For anesthesiologists to participate in these models and have impact on overall quality, safety and costs of care, they must wield their voice in the development of these comprehensive care plans for surgical patients within their institutions. Anesthesiologists have to be viewed as an active and collaborative member of the surgical team because it is only by working together that these outcomes will be achieved.

One approach that can help prepare anesthesiologist to be an active and collaborative participants in bundled payment programs is for the practice to participate in the  Perioperative Surgical Home Learning Collaborative.  In 2014 the American Society of Anesthesiologists® (ASA®) partnered with Premier, Inc., a leading health care improvement company, to establish a national learning collaborative to develop, pilot and evaluate the Perioperative Surgical Home (PSH) model – a patient-centric, team-based system of coordinated care that guides patients through the entire surgical experience, from the decision to undergo surgery to discharge and beyond.

The First Learning Collaborative
The first iteration of the PSH Learning Collaborative brought together 44 national leading health care organizations from across the country to define and pilot the PSH model, measure its impact and develop innovative payment models to support it. Through active collaboration and shared learning, the founding members of the collaborative demonstrated that the PSH is an innovative model of care with the potential to drive meaningful and lasting change in perioperative costs, outcomes and experiences for patients nationwide. The first PSH Learning Collaborative ended November 30, 2015 and resulted in the development of 64 PSH pilots.

The Second Learning Collaborative
Building on this success, ASA and Premier will launch a second iteration of the PSH Learning Collaborative on April 1, 2016 that will run for two years. Recognizing the importance for participating in alternative payment models such as the Bundled Payments for Care Improvement (BPCI), Comprehensive Care for Joint Replacement (CJR), the Medicare Shared Savings Program (MSSP) and Accountable Care Organization (ACO), the PSH Learning Collaborative 2.0 will focus on compatible PSH implementation strategies and tactics to be successful. These strategies and tactics will also be synergistic with any health system approach to population health.