Providers, Hospitals, and the CJR Program – What You Need To Know!


(January 12, 2016): In our previous article on this subject, we discussed the new Comprehensive Joint Replacement program (CJR program) that CMS has initiated. Under that program, Medicare will pay approximately 800 hospitals in 67 MSAs a bundled payment to cover the costs of virtually all the care that is related to the treatment of Medicare patients receiving chronic lower joint replacements that fall within certain DRGs -- from the initial hospitalization through 90 days after discharge. The program, which begins April 1 of 2016 and lasts for five years, makes the hospital responsible for the costs of all of this care irrespective of the type of entity or individual that provides the post-discharge care, with the opportunity for the hospital to share in any savings below the price that Medicare sets if it meets certain quality metrics.

Our earlier article set forth briefly how the program operates in a broad perspective. However, the Centers for Medicare and Medicaid Services (CMS) and the Office of Inspector General (OIG) have recognized that if they are going to hold hospitals accountable for the costs of these services, they also need to provide them the ability to incentivize downstream providers to provide quality, cost-effective care to these patients. Thus, the rules permit hospitals to enter into arrangements with certain types of providers and practitioners to share in either, or both, of any bonus payments that they receive from Medicare and/or risk of loss under the CJR program. These are referred to as collaborators and include physicians, physician group practices (PGPs), skilled nursing facilities (SNFs), long-term acute care hospitals (LTACHs), inpatient rehabilitation facilities (IRFs), certain non-physician practitioners (e.g. nurses, NPs, Pas, etc.), home health agencies (HHAs), and providers and suppliers of outpatient therapy services.

CMS has set forth specific requirements for these financial arrangements in the regulations. Additionally, both CMS and OIG have provided waivers in certain areas. For example, CMS has waived certain requirements such as the three-day hospitalization requirement for Medicare coverage for SNFs, direct supervision rules for physician services to enable certain types of home visits for non-homebound patients, certain requirements for telehealth services to facilitate these collaborations, and certain incentives that hospitals are permitted to provide beneficiaries.

Additionally, the OIG has waived certain fraud and abuse laws to enable the distribution of gainsharing payments by hospitals, payments of gainsharing amounts received by a physician group practice to physician and non-physician practitioners who are members of the group, and waivers for certain patient incentives made by hospitals to Medicare beneficiaries.

With respect to collaborators, each arrangement must be set forth in a collaboration agreement that has a number of specific requirements. Among these is a requirement that the collaborator must have a compliance program that includes oversight of the collaboration agreement and compliance with the requirements of the CJR program. Hospitals similarly must update their compliance programs to include oversight of sharing arrangements and compliance with the requirements of the CJR program. The collaboration agreement must set forth certain staffing and management information, care redesign, methodologies for determining payment distribution, and others. There are various requirements for oversight, policies and procedures, documentation, manner and amount in which payments can be distributed, and participation in care redesigning for physician group practice collaborators, among other requirements.

For a physician group practice that has entered into a collaboration arrangement, there are separate requirements as to how any bonus payments that the PGP receives from the hospital will be distributed to its members. For hospitals, there are also specific requirements as to how they may provide incentives to beneficiaries that are specified in the rules. These must be “in-kind,” and may include technology items or services.

As noted, above, CMS has also provided several waivers to facilitate coordination of care. First, the regulations waive the direct supervision requirement as part of the “incident to” services for home visits to patients during the episode covered by CJR. Under this waiver, clinical staff would be able to make home visits under the general supervision of a physician or non-physician practitioner where the beneficiary did not otherwise meet the requirements for a home health agency visit, e.g. was not home bound. The waiver would allow up to nine visits during the episode and would be billed under Part B by the physician.

Second, the rules allow for the waiver of three telehealth requirements for services provided during the CJR episode. The first would waive certain geographic site requirements so that the originating site could, for example, be located in an urban area. The second would waive requirements for the originating site in order to allow a telehealth visit to originate in the beneficiary’s home. Finally, the rule allows for the waiver of selected payment provisions related to telehealth services.

Third, the rules provide for the waiver of the requirement of a three-day hospital stay for coverage of SNF services under Medicare following the initial hospitalization in a CJR episode. However, this waiver applies only in years two through five, and only for SNFs that have been rated at three stars or better under the five-star quality rating system during certain periods. These facilities will be listed as “qualifying facilities” on the CMS Website.

Finally, the rules provide for waivers of certain post-operative billing restrictions to allow for the up to nine home visits discussed, above, and the waiver of deductible and co-insurance provisions to the extent necessary to make reconciliation payments or repayments.

Under any circumstances, downstream providers including home health agencies, skilled nursing facilities, and physicians can expect hospitals subject to the program to be demanding on resource utilization quality, and price in making recommendations on placements to their patients, and in selecting strategic partners. The quality of their partners and collaborators will be a critical factor as will case management. Specific to SNFs, those receiving lower grades on the five-star rating scale will not be eligible for the waiver of the three-day hospital stay requirement during years two through five of the program. Thus, survey preparedness, management, and response to adverse survey results will become even more critical for SNFs.

The operational requirements for post-acute providers will also be similar to those placed upon providers by managed care organizations in the past. For example, SNFs will need case managers and 24-hour 7 day admissions. Both SNFs and home health agencies will need to maintain data on cost effectiveness and quality which will include such information as average length of stay for certain conditions, survey and compliance history, quality metrics, and outcomes measurement including recidivism and hospital readmission data. SNFs that have access to nurse practitioner or physician service on a 7-day, 24-hour basis will have a significant advantage in their ability to minimize hospital readmissions.

Those that wish to be collaborators will need to satisfy the requirements of the rules and also have the ability to determine the level of risk that they are willing to accept, and understand their data and capabilities so that they can properly price their services for patients who are covered by the program. They will need to understand the rules in order to be able to negotiate collaborator agreements effectively. This will include having compliance programs that meet the new regulatory requirements. They can also expect private insurers to start “piggy-backing” on the initiative if it proves to be successful for Medicare.

Liles Parker is well positioned to help providers and practitioners such as hospitals, SNFs, home health agencies, physicians and physician practice groups, and rehabilitation professionals to respond to this initiative. We have extensive experience in assisting clients with their compliance programs, development of agreements, responding to survey and audit issues, and other issues raised by the rules.

Anyone seeking additional information on the CJR program or responding to it should contact Michael Cook of the Washington, DC office of the Firm. Michael is the Co-chair of the Firm’s health care group and was at the forefront of the sub-acute care initiative in the past where providers experienced many of the same issues that they will face with the CJR program. He has more than forty years’ experience in assisting health care providers of all types with their regulatory, reimbursement, compliance, government relations, strategic planning and business issues and was an attorney for the Medicare and Medicaid programs at the beginning of his career. Michael can be reached at (202) 298-8750 (o), (202) 361-2508 (c), and at