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Ready or Not:  Here Comes the Joint Replacement Program
February 10, 2016

On April 1, 2016, approximately 800 hospitals nationwide will be mandatorily enrolled in the new CMS Comprehensive Care for Joint Replacement (CJR) program.  Essentially, all urban and suburban hospitals in 67 metropolitan areas, which are performing 400 or more of these cases per year, are included.  This sweeping change also impacts the physicians, skilled nursing facilities (SNFs), intermediate rehabilitation facilities (IRFs), home health agencies and other providers and suppliers treating Medicare beneficiaries who have lower extremity (hips, knees, ankles, etc.) replacements and other major leg procedures.

Under this program, CMS establishes a target budget for each hospital, representing the total amount CMS expects to spend for each of these CJR program cases, under both Medicare Part A and B, from the time the patient is admitted to the hospital for the procedure, until 90 days after discharge.  Then, CMS continues to pay the hospital, physicians, SNFs, IRFs, etc. under the existing Medicare fee for service system.  However, CMS will compare its actual expenditures for CJR program patients at each hospital to the target budget for that hospital, and the hospital will either receive a share of any savings compared to the target budgets (subject to achieving quality metrics), or owe a share of any cost overruns.  Notably, hospitals will not be required to make repayments for the first year, to allow them to gain experience as they transition to the program, however, they have the opportunity to receive up to 5% in shared savings the first year, if they have everything in place by April 1, 2016. 

To help hospitals achieve cost savings and meet quality objectives, they can enter into agreements with the physicians, SNFs, IRFs and other providers and suppliers who treat CJR program beneficiaries (CJR Collaborators) to help hospitals redesign and improve their patient care, and allow the hospitals to share the program’s financial risks and rewards with their CJR Collaborators.  To facilitate these arrangements between hospitals and their CJR Collaborators, a “waiver” of the Stark law and the federal anti-kickback law has been issued that will immunize certain “CJR Collaborator Agreements” from scrutiny under these fraud and abuse laws, so long as they meet the detailed requirements contained in the CJR Program Waiver.  (The waiver also allows providers to furnish certain in-kind items and services to beneficiaries, to encourage adherence to treatment plans and other CJR program goals).

With the clock running down toward the April 1, 2016 start date, we are working with many of our clients to develop CJR program compliance policies, procedures and checklists, review and revise proposed agreements and forms, and develop “CJR Collaborator Agreements.”

If you have any questions about the CJR program, please contact Charles Oppenheim in Los Angeles at 310.551.8111; Mark Reagan or Ben Durie in San Francisco at 415.875.8500; or Bill Eck in Washington, D.C. at 202.580.7700.

For media inquiries, please contact Barrett McBride at bmcbride@health-law.com or 916.456.5855.