CJR-X Explained: A 20-Minute Crash Course for Orthopedic Teams

Hi there. I'm Kat Vasilakos, director of clinical insights at Force Therapeutics. And you're watching this course because you're either excited, curious, or concerned about CJRx, the most recent proposed mandatory model from CMS. CJRx, short for the comprehensive care for joint replacement expanded model, was proposed by CMS in April twenty twenty six. If it gets finalized, virtually every acute care hospital in the country becomes financially accountable for the total cost and quality of lower extremity joint replacement episodes, starting with the procedure itself and running through ninety days after discharge. In this video, I'll walk you through what CJRx is, how reconciliation works, how quality affects your payment, and more. Let's start with the basics. CJRX is a mandatory nationwide Medicare bundled payment model. It takes the original CJR model, which CMS tested from twenty sixteen to twenty twenty four in specific metropolitan statistical areas, and it expands it to nearly all eligible acute care hospitals across the United States with some notable exceptions. Importantly, CJRX would be the very first time CMS tests a mandatory episode based payment model nationwide. A very quick history on CJR performance on savings for those who are wondering. Years one through four produced roughly seventy two million dollars in cumulative savings, though the results weren't statistically significant. In year five, COVID era adjustments effectively waived downside risk, producing ninety five point four million dollars in statistically significant losses that wiped out all prior savings. Then the extension years, six and seven, swung back with a hundred and twelve point seven million dollars in net savings while maintaining quality. Those extension results are the basis for this nationwide expansion, and the CMS chief actuary has certified that CJRx would reduce or at least avoid increasing net Medicare spending. As it stands, the proposed start date for CJRx is October first twenty twenty seven. If finalized, CJRx performance years will align with the federal fiscal year, October one through September thirty, rather than calendar years used in the original CJR. Given the final inpatient rule, which governs CJRX, comes out in early August, this means hospitals will have just over a year of lead time to prepare after the final rule goes live. Some additional context for those not familiar with bundled payment models. Under CJRx, hospitals would be financially accountable for the total cost and quality of lowered extremity joint replacement or LEJR episodes that covers knee, hip, and ankle replacements. We'll cover this in more detail later on, but the simplest way to think about this is that CMS annually sets a target price for each episode type in each region. And if a hospital's actual spending is above that target, it would owe CMS a repayment. If spending is below that target, that hospital may receive a reconciliation payment depending on its composite quality score, which we will cover in a bit. There's more specifics to this process, but the concept at its core is to incentivize spending discipline and high quality care and disincentivize unnecessary care and adverse events that impact patient safety. So who is going to have to participate in CJRx? Participation is mandatory for acute care hospitals in all fifty states, DC, and US territories that meet two conditions. They initiate LEJR episodes, and they're paid under both the inpatient and outpatient prospective payment systems. That dual inpatient, outpatient requirement exists so CMS can build consistent target prices for inpatient and outpatient episodes and is a major difference compared to the original CJR that reflects the shift in sites of service and orthopedic care that has taken place over the last decade. There are some notable participation exemptions. Hospitals currently in TEAM, the transforming episode accountability model, are exempt for the duration of TEAM so as to avoid holding hospitals accountable for LEJR under two models with different methodologies at the same time. Maryland hospitals are not included because of the state's unique all payer rate setting authority, though CMS may revisit that next year when the authority expires. Critical access hospitals, rural emergency hospitals, Indian Health Service and tribal hospitals, and hospitals in the rural community hospital demonstration are also excluded because they aren't paid under both IPPS and OPPS. All in all, CJRx will likely end up covering somewhere between twenty five hundred and thirty five hundred hospitals. A CJRx episode starts with anchor hospitalization or procedure and extends to ninety days post discharge. There are six codes proposed in CJRX. On the inpatient side, MS DRGs four six nine and four seventy, which cover major hip and knee replacement with and without major complications, with four sixty nine also covering total ankle replacement. Then MS DRGs five twenty one and five twenty two, hip replacement with a principal diagnosis of hip fracture. On the outpatient side, HCPCS two seven four four seven for total knee arthroplasty and two seven one three zero for total hip. One note, outpatient total ankle arthroplasty was not included in the CJRX proposal. In terms of what services are included in a CJRX episode, meaning these are assumed to be included in the target price, Essentially, all related Medicare parts a and b services, physician services, the inpatient hospital stay, skilled nursing facility stays, home health, inpatient rehab, long term care hospitals, inpatient psych, and most outpatient services. A few things are carved out such as readmissions unrelated to the procedure, high cost drugs, new technology add on payments, and a few other specified services. Now the part that people are usually wondering about, the financial mechanics. Like we mentioned briefly, CJRx is a retrospective bundled payment model, and it works in four steps each performance year. Before the year begins, CMS issues preliminary target price for each episode type within each US census division. An important note here, prices are regional, and every hospital in the same census division gets the same benchmark, so there's no hospital specific pricing. During the year, nothing changes operationally. Everyone keeps getting paid standard Medicare fee for service rates. At the end of the year, those preliminary prices are updated to reflect a retrospective trend factor and the realized patient case mix, which produces a final reconciliation target price. Finally, CMS compares your actual total episode spending against that reconciliation target. If you spend below target, you may earn a reconciliation payment, and both eligibility and amount depend on your quality score, which we'll get to shortly. If you spend above target, you may owe Medicare a repayment capped by stop loss limits. A critical note, a good quality score does nothing to soften your repayment obligation. CQS only impacts you if your spending is below target. Let's get into how those target prices are actually built. CMS uses average standardized episode spending for each episode type in each census division over a rolling three year baseline, with recent years weighted more heavily. Fifty percent for the most recent year, then thirty three percent, then seventeen percent. Because pricing is fully regional, CJRx is an achievement based model. So you'll basically be competing against your regional peers, and your own historical spending doesn't impact your target. On top of that baseline, CMS applies a prospective trend factor in the preliminary price, a retrospective trend factor at reconciliation capped at plus or minus three percent, and a two percent discount factor, which is Medicare's share of the savings. That's down from three percent in the original CJR model, and hospitals that have good quality scores can shrink that discount rate even further. One criticism of the original CJR was that it did not sufficiently account for the fact that some hospitals care for patient populations that are higher risk or more complex, which incurs more costs for the same episodes. So for CJRX, CMS opted to use the same methodology as team, which is much more comprehensive compared to the original CJR. This includes beneficiary level adjusters for age, HCC count, economic risk, prior post acute use, disability status, and a one hundred and eighty day look back period, plus hospital level adjusters for bed size and safety net status. A normalization factor capped at plus or minus five percent makes sure risk adjustment doesn't inflate prices. There are some additional guardrails in CJRX. For high cost outliers, episode spending is capped at the ninety ninth percentile for each episode type and region, both in the baseline and at reconciliation. So one catastrophic case doesn't have an oversized impact on the rest of your performance. For low volume protection, hospitals with fewer than thirty one LEJR episodes over the three year baseline are excluded from reconciliation entirely that year, but the baseline rose forward annually. So a growing program could become accountable in a future year. There are also the stop loss and stop gain limits. Most hospitals face a twenty percent cap on what they can owe and what they can earn calculated as a percentage of their aggregate reconciliation target. However, rural hospitals, Medicare dependent small rural hospitals, sole community hospitals, and safety net hospitals get a reduced five percent stop loss. So their downside is much more protected while their twenty percent upside stays intact. One more important note here, CMS will monitor the thirty days after each episode ends. If average post episode spending exceeds three standard deviations above the regional average, the hospital will have to repay that excess, and that repayment falls outside the stop loss limits. The idea here is to stop hospitals from delaying care until the episode clock runs out. Hospitals can also share savings with collaborators, meaning orthopedic surgeons, hospitalists, post acute providers, and other clinicians who contribute to cost and quality improvements. Those collaborators can take on downside risk too. Two important rules govern these relationships. Hospitals can't charge anyone a fee to be on a preferred provider list, and every financial arrangement has to comply with fraud and abuse law. Okay. Now let's move on to quality, an immensely important part of CJRx. Every hospital gets a composite quality score, a CQS, on a zero to twenty point scale. It does two things. It determines whether you're even eligible for a reconciliation payment, and it sets your effective discount factor. Your CQS is built from five measures across three domains. Importantly, all of them come from existing CMS quality reporting programs, so there's no new data submissions specifically for CJRx. The complications domain constitutes fifty percent of the score. It includes the hospital level risk standardized complication rate following elective primary hip and knee replacement, which captures mortality, MI, pneumonia, sepsis, pulmonary embolism, bleeding, infection, and mechanical failure from admission through ninety days. It also includes hospital visits within seven days of outpatient surgery, which captures unplanned admissions, observation stays, and ED visits. The patient experience domain carries forty percent. The HCAHPS survey on the inpatient side and the OAS CAHPS for outpatient surgery. Both surveys capture elements of patient perceptions and experience, including items like communication, responsiveness, and quality of information. The patient reported outcomes domain carries ten percent. The The TKA ProPiem, which tracks change in patient's pain, physical function, and quality of life from before surgery through one year postoperatively. Since that measure becomes mandatory in the outpatient quality program in twenty twenty eight, CMS has proposed using the inpatient Pro PM to assess all LEJR episodes regardless of setting in the meantime. A few scoring rules to note. Any hospital that falls below the thirtieth percentile on any measure receives zero points for that measure. And if you have no reportable value, you're assigned the fiftieth percentile by default. And your overall CQS blends the inpatient and outpatient subscores weighted by your actual volume split between the two settings. So how does CQS impact reconciliation? Here's the tier structure. Score seventeen point one or higher, and you're in the excellent tier where your discount drops to zero. Score between twelve point one and seventeen for the good, and it's one percent. Between six point one and twelve is acceptable at the base two percent. Score six point o or below, below acceptable, and you become ineligible for any reconciliation payment even if you beat your target. And in every tier, if you overspend, you will still owe repayment. I want to repeat that one point. If your composite quality score or CQS is below the acceptable threshold, you would not be eligible for a reconciliation payment at all. In contrast, under team, a poor CQS would merely reduce the amount of reconciliation you would receive. So you're observing CMS make care quality a more important factor in hospitals' financial calculus in real time, and there's no reason to think that CMS will not look to raise that bar for what counts as acceptable over time since they have been moving in this direction for a while now. One big philosophical change, there are no improvement points in CJRX. The original CJR model rewarded year over year improvement. CJRX scores entirely on absolute achievement against the national distribution of all IPPS eligible hospitals. CMS' reasoning is that this promotes sustained quality accountability since short term gains can reflect random variation or case mix shifts rather than genuine clinical improvement. So as you can see, there's plenty of risk in CJRX, but there are also some waivers that matter. First, the skilled nursing facility or SNF three day rule waiver. Normally, Medicare requires a three day inpatient stay before it covers skilled nursing. CJRX waives that requirement, so LEJR patients can move to a SNF after fewer than three inpatient days with full part a coverage. But there is a catch. The receiving SNF needs a CMS star rating of three stars or better for at least seven of the prior twelve months, and CMS will publish a quarterly list of qualifying facilities. If you discharge to a nonqualifying SNF without providing the required discharge planning notice, your hospital has to cover the cost of the noncovered stay. If you provide the notice and the patient chooses a nonqualifying SNF anyway, the liability shifts to the patient. Second, telehealth flexibility. CJRx waives the geographic and originating site restrictions during the ninety day episode so clinicians can deliver EM services via telehealth directly to patients at home. It also proposes new home visit telehealth G codes, g x x twelve through g x x fifteen, aligned with CPT ninety nine thousand two hundred twelve through ninety nine thousand two hundred fifteen and paid comparably to office based visits. For level four and five visits, licensed clinical staff must be physically present in the patient's home, or the physician has to document why that wasn't needed. Finally, post discharge home visits, a waiver that team lacked and CJRX carries forward from the original CJR model. It continues the waiver of the incident to supervision rule, letting licensed clinical staff furnish home assessment and care coordination visits under a physician's general supervision with no requirement for the physician to be physically present. You get up to nine visits per ninety day episode billed with a CJRx specific g code at roughly fifty dollars each for beneficiaries who don't qualify for home health. These visits can cover clinical assessment, fall prevention, medication reconciliation, functional monitoring, and connections to community services, all of which supports safe discharge to home and reduces reliance on costlier institutional post acute settings. One billing note, the g code can't be billed during any thirty day period already covered by transitional care management code. So where does this leave you if CJRX is finalized? If your hospital does joint replacements and falls outside team, Maryland, and the excluded categories, you will be held accountable. Full downside risk from day one, competing against regional benchmarks with your quality score gating your upside. During the original CJR, we worked with many different hospitals that were mandated to participate, and all those hospitals will tell you. Even though it was challenging, the lessons learned from the CJR process have dramatically improved how joint replacements are delivered today. The hospitals that will succeed under CJRX are the ones that master a standardized ninety day episode, reducing variation between sites and surgeons, preventing complications and readmissions, getting appropriate patients home safely rather than into institutional post acute care and hitting the quality thresholds, including patient reported outcomes that unlock better discount tiers. That's exactly what Force Therapeutics was built for, engaging patients across the full episode with provider prescribed education, virtual physical therapy, and remote monitoring, automating PROMs collection across diverse populations, flagging at risk patients in real time so care teams can intervene before an ER visit or readmission, and giving service line leaders the tools and care intelligence necessary to identify care redesign opportunities. If you have questions for our team or wanna talk through what CJRx readiness looks like for your organization, please reach out. Thanks for watching.