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Palmer Hamilton

By: Palmer Hamilton on November 18th, 2015

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It's Official: CMS Finalizes Mandatory Bundled Episodes Initiative

bundled episodes  |  CMS

As expected, the Centers for Medicare & Medicaid Services (CMS) finalized the Comprehensive Care for Joint Replacement (CJR) model, which will hold hospitals accountable for the total quality of care they deliver to Medicare beneficiaries for hip and knee replacements from surgery through recovery. The announcement came in a news release on Monday.

The final ruling cements the commitment to quality patient outcomes and a more connected approach with bundled episodes that takes into account post acute care.


“Today, we are embarking on one of the most important steps we will take to improve the quality and value of care for hundreds of thousands of Americans who have hip and knee replacements through Medicare every year,” said Health and Human Services Secretary Sylvia M. Burwell.  “By focusing on episodes of care, rather than a piecemeal system, we provide hospitals and physicians an incentive to work together to deliver the best care possible to patients.”

There were several changes made to the original proposal, after CMS reviewed more than 400 comments from the public. The big ones are:

  • Start date: The original start date of January 1, 2016 has been moved back three months to April 1. While some hospitals pushed for a 2017 start date, this appears to be a compromise to allow hospitals more time to prepare.
  • Mandatory Metroplitian Statistical Areas (MSA's): While the original proposal called for 75 MSA's to participate in the program, the final ruling calls for 67. Some regions were ommitted because they are already voluntarily participating in the Bundled Payments for Care Improvement (BPCI) initiative.
  • Payment: In response to requests for a lower stop-loss limit to allow hospitals more time to gain experience under the new model, CMS is finalizing a policy for:
    • No repayment responsibility in performance in year 1
    • A stop-loss limit of 5 percent in performance in year 2
    • A stop-loss limit of 10 percent in performance in year 3
    • A stop-loss limit of 20 percent in performance in years 4 and 5 for participating hospitals other than rural hospitals, Medicare-dependent hospitals, rural referral centers, and sole community hospitals
    • A phased-in approach for repayment responsibility with a reduced discount percentage for repayment responsibility in years 2 and 3

More information is available here from CMS.

What are your thoughts on the final announcement?

About Palmer Hamilton

Palmer Hamilton has over 25 years of healthcare experience with hospitals and insurers. He has a BA in English from VMI as well as an MBA from Wake Forest University, and he served as a Captain in the US Army. He has spoken at several HFMA events and has been published as well. His experience includes most aspects of the Revenue Cycle, and he is currently product manager for Online Analytics, a web-based solution for healthcare finance benchmarking.