Like it or not, the Centers for Medicare & Medicaid Services (CMS) is showing a strong commitment to moving forward with its focus on hospitals’ quality and care improvement as the basis for payment.  In November, CMS published the final rule for the Comprehensive Care for Joint Replacement (CJR) model (November 16, 2015), as well as a proposed rule that would revise the discharge planning conditions of participation (CoPs) for hospitals, including critical access hospitals.

CJR Final Rule

Under the CJR model, participation will be mandatory, effective April 1, 2016, for almost 800 hospitals across the country, divided into 67 geographic areas. North Carolina has four geographic areas affected: Asheville, Charlotte-Concord-Gastonia, Durham-Chapel Hill, and Greenville. A listing of the participant hospitals in these four geographic areas can be found here. Participant hospitals will be held financially accountable for the quality and cost of care provided to Medicare fee-for-service beneficiaries for lower-extremity joint replacement procedures and recovery, including all hip and knee replacement surgeries, for the 90-day period following hospital discharge (episode). Lower-extremity joint replacements are the most commonly performed Medicare inpatient surgery, with predictions showing continued growth in utilization. The quality and cost of care for an inpatient stay that results in a Diagnostic-Related Group (DRG) of 469 or 470, along with all related care provided during the episode, will be measured and adjusted using a retroactive bundled payment. The payment model and phases of the CJR model will extend for five performance years, concluding on December 31, 2020.

Responding to nearly 400 comments filed following the publication of the proposed rule, CMS delayed the initial start date from January 1, 2016, to April 1, 2016, as well as implemented certain target pricing on the DRGs affected, a weighted methodology for quality and patient satisfaction in determining incentive payments, and stop-loss and stop-gain limits to protect both hospitals and CMS.  Waivers for certain fraud and abuse authorities were issued jointly by CMS and the United States Department of Health and Human Services (HHS) Office of Inspector General (OIG) concurrently with the CJR final rule.  Those waivers, which include waivers for specified arrangements involving comprehensive care for hip and knee joint replacement model participants, can be found here.

Participant hospitals are encouraged to enter into financial arrangements in the form of collaborator agreements and/or sharing arrangements with post-acute care (PAC) providers and others related to gainsharing payments for CJR, distributions of payments from a group practice following payment by a hospital, and certain patient engagement incentives made to beneficiaries.  All of these payments align with CMS’s shift in focus to incentivize hospitals and PAC providers to work together, with the goal of improving quality of care provided to patients.

For additional information, please see the CMS Fact Sheet – CJR Model here and the CJR Final Rule Text found in the Federal Register here.

Discharge Planning Requirements Proposed Rule

In the discharge planning CoPs proposed rule issued by CMS on November 3, 2015, CMS is clearly focusing on improving health outcomes and reducing health care costs by decreasing patient complications and avoidable hospital readmissions with more robust discharge planning requirements. Consistent with the CJR final rule summarized above, CMS intends for the new requirements to increase communication between providers, patients, and families/caregivers in the discharge planning process by incorporating patient goals and utilizing quality and resource-use data to help patients select their PAC provider. The proposed CoPs rule at 42 C.F.R. § 482.43 recommends six new standards, which contain more specific requirements with necessary, precise measures that must be undertaken by a hospital prior to a patient’s discharge or transfer to a PAC setting.  All these measures require the discharge plans to focus on specific patient-centered goals, preferences and needs.  Interested stakeholders may file comments until January 3, 2016.

The CMS News Release Information concerning the proposed CoPs rule can be found here, and the CoPs Proposed Rule Text has been printed in the Federal Register here.

These particular rules, along with other ongoing CMS payment initiatives, should put hospitals on alert that CMS is determined to utilize quality and resource-use data to improve health outcomes and reduce health care costs in the hospital and PAC settings.  Whether or not your hospital facility is named as part of any current CMS mandatory program, all signs point to CMS continuing to expand its focus on quality-based initiatives. Hospital leadership and experienced legal counsel should closely review all related policies, procedures, facility practices, and arrangements to ensure full, continued compliance.