Medicare Program; Comprehensive Care for Joint Replacement Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services, 41197-41316 [2015-17190]

Download as PDF Vol. 80 Tuesday, No. 134 July 14, 2015 Part III Department of Health and Human Services asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Centers for Medicare & Medicaid Services 42 CFR Part 510 Medicare Program; Comprehensive Care for Joint Replacement Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services; Proposed Rule VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\14JYP3.SGM 14JYP3 41198 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Part 510 [CMS–5516–P] RIN 0938–AS64 Medicare Program; Comprehensive Care for Joint Replacement Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Proposed rule. AGENCY: This proposed rule proposes to implement a new Medicare Part A and B payment model under section 1115A of the Social Security Act, called the Comprehensive Care for Joint Replacement (CCJR) model, in which acute care hospitals in certain selected geographic areas will receive retrospective bundled payments for episodes of care for lower extremity joint replacement or reattachment of a lower extremity. All related care within 90 days of hospital discharge from the joint replacement procedures will be included in the episode of care. We believe this model will further our goals in improving the efficiency and quality of care for Medicare beneficiaries for these common medical procedures. DATES: Comment period: To be assured consideration, comments on this proposed rule must be received at one of the addresses provided in the ADDRESSES section no later than 5 p.m. EDT on September 8, 2015. ADDRESSES: In commenting, please refer to file code CMS–5516–P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. You may submit comments in one of four ways (no duplicates, please): 1. Electronically. You may (and we encourage you to) submit electronic comments on this regulation to https:// www.regulations.gov. Follow the instructions under the ‘‘submit a comment’’ tab. 2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–5516–P, P.O. Box 8013, Baltimore, MD 21244–1850. Please allow sufficient time for mailed comments to be received before the close of the comment period. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS SUMMARY: VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 3. By express or overnight mail. You may send written comments via express or overnight mail to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–5516–P, Mail Stop C4–26–05, 7500 Security Boulevard, Baltimore, MD 21244–1850. 4. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments before the close of the comment period to either of the following addresses: a. For delivery in Washington, DC— Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445–G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201. (Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.) b. For delivery in Baltimore, MD— Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244– 1850. If you intend to deliver your comments to the Baltimore address, please call the telephone number (410) 786–7195 in advance to schedule your arrival with one of our staff members. Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period. For information on viewing public comments, we refer readers to the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Claire Schreiber, Claire.Schreiber@ cms.hhs.gov, 410–786–8939 Gabriel Scott, Gabriel.Scott@ cms.hhs.gov, 410–786–3928 SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 site as soon as possible after they have been received: https:// www.regulations.gov. Follow the search instructions on that Web site to view public comments. Comments received timely will also be available for public inspection, generally beginning approximately 3 weeks after publication of the rule, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244, on Monday through Friday of each week from 8:30 a.m. to 4:00 p.m. EDT. To schedule an appointment to view public comments, phone 1–800– 743–3951. Electronic Access This Federal Register document is also available from the Federal Register online database through Federal Digital System (FDsys), a service of the U.S. Government Printing Office. This database can be accessed via the internet at https://www.gpo.gov/fdsys/. Alphabetical List of Acronyms Because of the many terms to which we refer by acronym, abbreviation, or short form in this proposed rule, we are listing the acronyms, abbreviations and short forms used and their corresponding terms in alphabetical order. mSA Micropolitan Statistical Area ACO Accountable Care Organization ASPE Assistant Secretary for Planning and Evaluation BPCI Bundled Payments for Care Improvement CBSA Core-Based Statistical Area CMS Centers for Medicare & Medicaid Services CPT Current Procedural Terminology CCJR Comprehensive Care for Joint Replacement CSA Combined Statistical Area DME Durable Medical Equipment FFS Fee-for-service HCAHPS Hospital Consumer Assessment of Healthcare Providers and Systems HHA Home health agency HOPD Hospital outpatient department HHPPS Home Health Prospective Payment System HIQR Hospital Inpatient Quality Reporting HRRP Hospital Readmissions Reductions Program HRR Hospital Referral Region HVBP Hospital Value Based Purchasing Program ICD–9–CM International Classification of Diseases, 9th Revision, Clinical Modification IPPS Inpatient Prospective Payment System IPF Inpatient psychiatric facility IRF Inpatient rehabilitation facility LEJR Lower extremity joint replacement LOS Length of stay LTCH Long term care hospital LUPA Low Utilization Payment Adjustment E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules MAC Medicare Administrative Contractor MCC Major complications or comorbidities MSA Metropolitan Statistical Area MS–DRG Medical Severity DiagnosisRelated Group MP Malpractice NPP Nonphysician Practitioner NPRA Net Payment Reconciliation Amount OPPS Outpatient Prospective Payment System PAC Post-acute care SNF Skilled nursing facility THA Total hip arthroplasty TKA Total knee arthroplasty asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Table of Contents I. Executive Summary A. Purpose B. Summary of the Major Provisions 1. Model Overview: LEJR Episodes of Care 2. Model Scope 3. Payment 4. Similar Previous and Concurrent Models 5. Overlap With Ongoing CMS Efforts 6. Quality Measures and Reporting Requirements 7. Data Sharing Process 8. Beneficiary Protections C. Summary of Economic Effects II. Background III. Provisions of the Proposed Rule A. Proposed Definition of the Episode Initiator and Selected Geographic Areas 1. Background 2. Proposed Definition of Episode Initiator 3. Financial Responsibility for the Episode of Care 4. Proposed Geographic Unit of Selection and Exclusion of Selected Hospitals a. Overview and Options for Geographic Area Selection b. MSA Selection Methodology (1) Exclusion of Certain MSAs (2) Proposed Selection Strata (a) MSA Average Wage-adjusted Historic LEJR Episode Payments (b) MSA Population Size (c) Analysis of Strata (3) Factors Considered but Not Used in Creating Proposed Strata (4) Sample Size Calculations and the Number of Selected MSAs (5) Method of Selecting MSAs B. Episode Definition for the Comprehensive Care for Joint Replacement (CCJR) Model 1. Background 2. Clinical Dimension of Episodes of Care a. Definition of the Clinical Conditions Included in the Episode b. Definition of Related Services Included in the Episode 3. Duration of Episodes of Care a. Beginning the Episode and Beneficiary Care Inclusion Criteria b. Middle of the Episode c. End of the Episode C. Proposed Methodology for Setting Episode Prices and Paying Model Participants Under the CCJR Model 1. Background 2. Performance Years, Retrospective Episode Payment, and Two-Sided Risk Model a. Performance Period b. Proposed Retrospective Payment Methodology VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 PO 00000 c. Proposed Two-Sided Risk Model 3. Adjustments to Payments Included in Episode a. Proposed Treatment of Special Payment Provisions Under Existing Medicare Payment Systems b. Proposed Treatment of Payment for Services That Extend Beyond the Episode c. Proposed Pricing Adjustment for High Payment Episodes 4. Proposed Episode Price Setting Methodology a. Overview b. Proposed Pricing Features (1) Different Target Prices for Episodes Anchored by MS–DRG 469 vs. MS–DRG 470 (2) Three Years of Historical Data (3) Proposed Trending of Historical Data to the Most Recent Year of the Three (4) Update Historical Episode Payments for Ongoing Payment System Updates (a) Proposed Inpatient Acute Services Update Factor (b) Proposed Physician Services Update Factor (c) Proposed IRF Services Update Factor (d) Proposed SNF Services Update Factor (e) Proposed HHA Services Update Factor (f) Proposed Other Services Update Factor (5) Blend Hospital-Specific and Regional Historical Data (6) Define Regions as U.S. Census Divisions (7) Normalize for Provider-Specific Wage Adjustment Variations (8) Proposed Combination of CCJR Episodes Anchored by MS–DRGs 469 and 470 (9) Discount Factor c. Proposed Approach To Combine Pricing Features 5. Proposed Use of Quality Performance in the Payment Methodology a. Background b. Proposed Implementation of Quality Measures for Reconciliation Payment Eligibility (1) General Selection of Proposed Quality Measures (2) Proposal To Adjust the Payment Methodology for Voluntary Submission of Data for Patient-Reported Outcome Measure (3) Measure Risk-Adjustment and Calculations (4) Applicable Time Period (5) Criteria for Applicable Hospitals and Performance Scoring (a) Identification of Applicable Hospitals for the CCJR Model (b) Methodology to Determine Performance on the Quality Measures (c) Proposed Methodology To Link Quality and Payment (i) Background (ii) Alternatives Considered To Link Quality and Payment (iii) Proposal To Link Quality and Payment through Thresholds for Reconciliation Payment Eligibility 6. Proposed Process for Reconciliation a. Net Payment Reconciliation Amount b. Payment Reconciliation 7. Proposed Adjustments for Overlaps With Other Innovation Center Models and CMS Programs Frm 00003 Fmt 4701 Sfmt 4702 41199 a. Overview b. CCJR Beneficiary Overlap With BPCI Episodes c. Accounting for CCJR Reconciliation Payments and Recoupments in Other Models and Programs d. Accounting for Per Beneficiary Per Month (PBPM) Payments in the Episode Definition e. Accounting for Overlap With Shared Savings Programs and Total Cost of Care Models 8. Proposals To Limit or Adjust Hospital Financial Responsibility a. Overview b. Proposed Limit on Raw NPRA Contribution to Repayment Amounts and Reconciliation Payments (1) Proposed Limit on Raw NPRA Contribution to Repayment Amounts (2) Proposed Limit on Raw NPRA Contribution to Reconciliation Payments c. Proposed Policies for Certain Hospitals to Further Limit Repayment Responsibility d. Proposed Hospital Responsibility for Increased Post-Episode Payments 9. Proposed Appeal Procedures for Reconciliation a. Payment Processes b. Calculation Error c. Dispute Resolution (1) Limitations on Review (2) Matters Subject to Dispute Resolution. (3) Dispute Resolution Process. 10. Proposed Financial Arrangements, Beneficiary Incentives, and Proposed Program Rule Waivers and Amendments a. Financial Arrangements and Beneficiary Incentives (1) Financial Arrangements Permitted Under the CCJR Model (a) CCJR Sharing Arrangement Requirements. (b) Participation Agreements Requirements. (c) Gainsharing Payment and Alignment Payment Conditions and Restrictions. (d) Documentation and Maintenance of Records (2) Beneficiary Incentives Permitted Under the CCJR Model (3) Compliance with Fraud and Abuse Laws 11. Proposed Waivers of Medicare Program Rules a. Overview b. Post-Discharge Home Visits c. Billing and Payment for Telehealth Services d. SNF 3-Day Rule e. Waivers of Medicare Program Rules To Allow Reconciliation Payment or Recoupment Actions Resulting From the Net Payment Reconciliation Amount12. Proposed Enforcement Mechanisms D. Quality Measures and Display of Quality Metrics Used in the CCJR Model 1. Background a. Purpose of Quality Measures in the CCJR Model b. Public Display of Quality Measures in the CCJR Model 2. Proposed Quality Measures for Performance Year 1 (CY 2016) and Subsequent Years E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41200 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules a. Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550) (1) Background (2) Data Sources (3) Cohort (4) Inclusion and Exclusion Criteria (5) Risk-Adjustment (6) Calculating the Risk-Standardized Complication Rate and Performance Period b. Hospital-Level 30-day, All-Cause RiskStandardized Readmission Rate (RSRR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1551) (1) Background (2) Data Sources (3) Cohort (4) Inclusion and Exclusion Criteria (5) Risk-Adjustment (6) Calculating the Risk-Standardized Readmission Rate and Performance Period c. Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey (1) Background (2) Data Sources (3) Cohort (4) Inclusion and Exclusion Criteria (5) Case-Mix-Adjustment (6) HCAHPS Scoring (7) Performance period d. Applicable Time Period 3. Possible New Outcomes for Future Measures a. Hospital-Level Performance Measure(s) of Patient-Reported Outcomes Following Elective Primary Total Hip and/or Total Knee Arthroplasty (1) Background (2) Data Sources (3) Cohort (4) Inclusion and Exclusion Criteria (5) Outcome (6) Risk-Adjustment (if Applicable) (7) Calculating the Risk-Standardized Rate (8) Performance Period (9) Requirements for Successful Submission of THA/TKA Voluntary Data b. Measure that Captures Shared DecisionMaking Related to Elective Primary Total Hip and/or Total Knee Arthroplasty c. Future Measures Around Care Planning d. Future Considerations for Use of Electronic Health Records 4. Form, Manner and Timing of Quality Measure Data Submission 5. Proposed Display of Quality Measures and Availability of Information for the Public From the CCJR Model E. Data Sharing 1. Overview 2. Beneficiary Claims Data 3. Aggregate Regional Data 4. Timing and Period of Baseline Data 5. Frequency and Period of Claims Data Updates for Sharing BeneficiaryIdentifiable Claims Data During the Performance Period 6. Legal Permission to Share BeneficiaryIdentifiable Data F. Monitoring and Beneficiary Protection VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 1. Introduction and Summary 2. Beneficiary Choice and Beneficiary Notification 3. Monitoring for Access to Care 4. Monitoring for Quality of Care 5. Monitoring for Delayed Care G. Coordination With Other Agencies IV. Evaluation Approach A. Background B. Design and Evaluation Methods C. Data Collection Methods D. Key Evaluation Research Questions E. Evaluation Period and Anticipated Reports V. Collection of Information Requirements VI. Response to Comments VII. Regulatory Impact Analysis A. Statement of Need B. Overall Impact C. Anticipated Effects 1. Overall Magnitude of the Model and its Effects on the Market 2. Effects on the Medicare Program a. Assumptions and Uncertainties b. Analyses c. Further Consideration 3. Effects on Beneficiaries 4. Effects on Small Entities 5. Effects on Small Rural Hospitals 6. Unfunded Mandates D. Alternatives E. Accounting Statement F. Conclusion Regulations Text A. Purpose The purpose of this proposed rule is to propose the creation and testing of a new payment model called the Comprehensive Care for Joint Replacement (CCJR) Model under the authority of the Center for Medicare and Medicaid Innovation (Innovation Center or CMMI). Section 1115A of the Social Security Act (the Act) authorizes the Innovation Center to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care furnished to Medicare, Medicaid, and Children’s Health Insurance Program beneficiaries. The intent of the CCJR model is to promote quality and financial accountability for episodes of care surrounding a lower-extremity joint replacement (LEJR) or reattachment of a lower extremity procedure.1 CCJR will test whether bundled payments to acute care hospitals for LEJR episodes of care will reduce Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries. We anticipate the CCJR model being proposed would benefit Medicare beneficiaries by improving the coordination and transition of care, improving the coordination of items and services paid for through Medicare FeeFor-Service (FFS), encouraging more provider investment in infrastructure and redesigned care processes for higher quality and more efficient service delivery, and incentivizing higher value care across the inpatient and post-acute care spectrum spanning the episode of care. We propose to test CCJR for a 5 year performance period, beginning January 1, 2016, and ending December 31, 2020. Under FFS, Medicare makes separate payments to providers and suppliers for the items and services furnished to a beneficiary over the course of treatment (an episode of care). With the amount of payments dependent on the volume of services delivered, providers may not have incentives to invest in quality improvement and care coordination activities. As a result, care may be fragmented, unnecessary, or duplicative. We have previously used our statutory authority under section 1115A of the Act to test bundled payment models such as the Bundled Payments for Care Improvement (BPCI) initiative. Bundled payments for multiple services in an episode of care hold participating organizations financially accountable for an episode of care. They also allow participants to receive payment in part based on the reduction in expenditures for Medicare arising from their care redesign efforts. We believe the CCJR model being proposed would further the mission of the Innovation Center and the Secretary’s goal of increasingly paying for value and outcomes, rather than for volume,2 because it would promote the alignment of financial and other incentives for all health care providers caring for a beneficiary during an LEJR episode. In the proposed CCJR model, the acute care hospital that is the site of surgery would be held accountable for spending during the episode of care. Participant hospitals would be afforded the opportunity to earn performancebased payments by appropriately reducing expenditures and meeting certain quality metrics. They would also gain access to data and educational resources to better understand postacute care and associated spending. Payment approaches that reward providers that assume financial and performance accountability for a particular episode of care create 1 In this proposed rule, we use the term LEJR to refer to all procedures within the Medicare Severity-Diagnosis Related Groups (MS–DRGs) we propose to select for the model, including reattachment of a lower extremity, as described in section III.B. of this proposed rule. 2 Sylvia Mathews Burwell, HHS Secretary, Progress Towards Achieving Better Care, Smarter Spending, Healthier People, https://www.hhs.gov/ blog/2015/01/26/progress-towards-better-caresmarter-spending-healthier-people.html (Jan 26, 2015). I. Executive Summary PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules incentives for the implementation and coordination of care redesign between hospitals and other providers. The proposed model would require the participation of hospitals in multiple geographic areas that might not otherwise participate in the testing of bundled payments for episodes of care for LEJR procedures. Other episodebased, bundled payment models being tested by Centers for Medicare & Medicaid Services (CMS), such as the BPCI initiative, are voluntary in nature. Interested participants must apply to such models to participate. To date, we have not tested an episode payment model with bundled payments in which providers are required to participate. We recognize that realizing the full potential of new payment models will require the engagement of an even broader set of providers than have participated to date, providers who may only be reached when new payment models are applied to an entire class of providers of a service. As such, we are interested in testing and evaluating the impact of a bundled payment approach for LEJR procedures in a variety of circumstances, especially among those hospitals that may not otherwise participate in such a test. This proposed model would allow CMS to gain experience with making bundled payments to hospitals who have a variety of historic utilization patterns; different roles within their local markets; various volumes of services; different levels of access to financial, community, or other resources; and various levels of population and health provider density including local variations in the availability and use of different categories of post-acute care providers. We believe that by requiring the participation of a large number of hospitals with diverse characteristics, the proposed model would result in a robust data set for evaluation of this bundled payment approach, and would stimulate the rapid development of new evidence-based knowledge. Testing the model in this manner would also allow us to learn more about patterns of inefficient utilization of health care services and how to incentivize the improvement of quality for common LEJR procedure episodes. This learning potentially could inform future Medicare payment policy. Within this proposed rule we propose a model focused on episodes of care for LEJR procedures. We chose LEJR episodes for the proposed model because as discussed in depth in section III.C. of this proposed rule, these are high-expenditure, high utilization procedures commonly furnished to VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 Medicare beneficiaries,3 where significant variation in spending for procedures is currently observed. The high volume of episodes and variation in spending for LEJR procedures create a significant opportunity to test and evaluate the proposed model that specifically focuses on a defined set of procedures. Moreover, there is substantial regional variation in postacute care referral patterns and the intensity of post-acute care provided for LEJR patients, thus resulting in significant variation in post-acute care expenditures across LEJR episodes initiated at different hospitals. The proposed model would enable hospitals to consider the most appropriate postacute care for their LEJR patients. The proposed model additionally would offer hospitals the opportunity to better understand their own processes with regard to LEJR, as well as the processes of post-acute providers. Finally, while many LEJR procedures are planned, the proposed model would provide a useful opportunity to identify efficiencies both for when providers can plan for LEJR procedures and for when the procedure must be performed urgently. We note that we seek public comment on the proposals contained in this proposed rule, and also on any alternatives considered as well. B. Summary of the Major Provisions 1. Model Overview: LEJR Episodes of Care LEJR procedures are currently paid under the Inpatient Prospective Payment System (IPPS) through one of two Medicare Severity-Diagnosis Related Groups (MS–DRGs): MS–DRG 469 (Major joint replacement or reattachment of lower extremity with Major Complications or Comorbidities (MCC)) or MS–DRG 470 (Major joint replacement or reattachment of lower extremity without MCC). Under the proposed model, as described further in section III.B of this proposed rule, episodes would begin with admission to an acute care hospital for an LEJR procedure that is assigned to MS–DRG 3 For example, Total Hip Arthroplasty and Total Knee Arthroplasty procedures are very high volume LEJR procedures that together represent the largest payments for procedures under Medicare. Suter L, Grady JL, Lin Z et al.: 2013 Measure Updates and Specifications: Elective Primary Total Hip Arthroplasty (THA) And/Or Total Knee Arthroplasty (TKA) All-Cause Unplanned 30-Day Risk-Standardized Readmission Measure (Version 2.0). 2013. https://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/ HospitalQualityInits/Measure-Methodology.html; Bozic KJ, Rubash HE, Sculco TP, Berry DJ., An analysis of Medicare payment policy for total joint arthroplasty. J Arthroplasty. Sep 2008; 23(6 Suppl 1):133–138. PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 41201 469 or 470 upon beneficiary discharge and paid under the IPPS and would end 90 days after the date of discharge from the acute care hospital. This episode of care definition offers operational simplicity for providers and CMS. The episode would include the LEJR procedure, inpatient stay, and all related care covered under Medicare Parts A and B within the 90 days after discharge, including hospital care, postacute care, and physician services. 2. Model Scope We propose that participant hospitals would be the episode initiators and bear financial risk under the proposed CCJR model. In comparison to other health care facilities, hospitals are more likely to have resources that would allow them to appropriately coordinate and manage care throughout the episode, and hospital staff members are already involved in hospital discharge planning and post-acute care recommendations for recovery, key dimensions of high quality and efficient care for the episode. We propose to require all hospitals paid under the IPPS and physically located in selected geographic areas to participate in the CCJR model, with limited exceptions. Eligible beneficiaries who receive care at these hospitals will automatically be included in the model. We propose to select geographic areas through a stratified random sampling methodology within strata based on the following criteria: Historical wage adjusted episode payments and population size. Our proposed geographic area selection process is detailed further in section III.A of this proposed rule. 3. Payment We propose to test the CCJR model for 5 performance years. During these performance years we propose to continue paying hospitals and other providers according to the usual Medicare FFS payment systems. However, after the completion of a performance year, the Medicare claims payments for services furnished to the beneficiary during the episode, based on claims data, would be combined to calculate an actual episode payment. The actual episode payment is defined as the sum of related Medicare claims payments for items and services furnished to a beneficiary during a CCJR episode. The actual episode payment would then be reconciled against an established CCJR target price, with consideration of additional payment adjustments based on quality performance and post-episode spending. The amount of this calculation, if E:\FR\FM\14JYP3.SGM 14JYP3 41202 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS positive, would be paid to the participant hospital. This payment would be called a reconciliation payment. If negative, we would require repayment from the participant hospital. We propose Medicare would require repayment of the difference between the actual episode payments and the CCJR target price from a participant hospital if the CCJR target price is exceeded. We propose to make reconciliation payments to participant hospitals that achieve quality outcomes and cost efficiencies relative to the established CCJR target prices in all performance years of the model. We also propose to phase in the requirement that participant hospitals whose actual episode payments exceed the applicable CCJR target price pay the difference back to Medicare beginning in performance year 2. Under this proposal, Medicare would not require repayment from hospitals for performance year 1 for actual episode payments that exceed their target price in performance year 1. We also propose to limit how much a hospital can gain or lose based on its actual episode payments relative to target prices. We also propose additional policies to further limit the risk of high payment cases for all participant hospitals and for special categories of participant hospitals as described in section III.C. of this proposed rule. 4. Similar Previous and Concurrent Models This proposed model is informed by other models and demonstrations currently and previously conducted by CMS and would explore additional ways to enhance coordination of care and improve the quality of services through bundled payments. We recently announced the Oncology Care Model (OCM), a new voluntary payment model for physician practices administering chemotherapy. Under OCM, practices will enter into payment arrangements that include financial and performance accountability for episodes of care surrounding chemotherapy administration to cancer patients. We plan to coordinate with other payers to align with OCM in order to facilitate enhanced services and care at participating practices. More information on the OCM can be found on the Innovation Center’s Web site at: https://innovation.cms.gov/initiatives/ Oncology-Care/. Medicare tested innovative approaches to paying for orthopedic services in the Medicare Acute Care Episode (ACE) demonstration, a prior demonstration, and is currently testing VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 additional approaches under BPCI. Both of these models have also informed the design of the CCJR model. Under the authority of section 1866C of the Act, we conducted a 3-year demonstration, the Medicare Acute Care Episode (ACE) Demonstration. The demonstration used a prospective global payment for a single episode of care as an alternative approach to payment for service delivery under traditional Medicare FFS. The episode of care was defined as a combination of Part A and Part B services furnished to Medicare FFS beneficiaries during an inpatient hospital stay for any one of a specified set of cardiac and orthopedic MS–DRGs. The MS–DRGs tested included 469 and 470, those proposed for inclusion in the CCJR model. The discounted bundled payments generated an average gross savings to Medicare of $585 per episode for a total of $7.3 million across all episodes (12,501 episodes) or 3.1 percent of the total expected costs for these episodes. After accounting for increased post-acute care costs that were observed at two sites, Medicare saved approximately $4 million, or 1.72 percent of the total expected Medicare spending. More information on the ACE Demonstration can be found on the Innovation Center’s Web site at: https:// innovation.cms.gov/initiatives/ACE/. We are currently testing the BPCI initiative. The BPCI initiative is comprised of four related payment models, which link payments for multiple services that Medicare beneficiaries receive during an episode of care into a bundled payment. Under the initiative, entities enter into payment arrangements with CMS that include financial and performance accountability for episodes of care. Episodes of care under the BPCI initiative begin with either—(1) an inpatient hospital stay or (2) post-acute care services following a qualifying inpatient hospital stay. The BPCI initiative is evaluating the effects of episode-based payment approaches on patient experience of care, outcomes, and cost of care for Medicare FFS beneficiaries. Each of the four models tests LEJR episodes of care. While final evaluation results for the models within the BPCI initiative are not yet available, we believe that CMS’ experiences with BPCI support the design of the CCJR model. Under section 1115A(c) of the Act, the Secretary may, taking into consideration an evaluation conducted under section 1115A(b)(4) of the Act, ‘‘through rulemaking, expand (including implementation on a nationwide basis) the duration and the scope of a model that is being tested under’’ the Innovation Center’s authority. CCJR is PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 not an expansion of BPCI, and BPCI may be expanded in the future. CMS published a discussion item soliciting public comment on a potential future expansion of one or more of the models within BPCI in the CY2016 IPPS rule, 80 FR 24414 through 24418. CCJR would not be not an expansion or modification of BPCI; nor does it reflect comments received in response to the NPRM for the 2016 IPPS Rule. CCJR is a unique model that tests a broader, different group of hospitals than BPCI. It is necessary to provide CMS with information about testing bundled payments to hospitals that are required to participate in an alternative payment model. For a discussion of why we are requiring hospitals to participate in the CCJR model, see section III.A of this proposed rule. The CCJR model’s design was informed to a large degree by our experience with BPCI Model 2. BPCI’s Model 2 is a voluntary episode payment model in which a qualifying acute care hospitalization initiates a 30, 60 or 90 day episode of care. The episode of care includes the inpatient stay in an acute care hospital and all related services covered under Medicare Parts A and B during the episode, including post-acute care services. More information on BPCI Model 2 can be found on the Innovation Center’s Web site at: https:// innovation.cms.gov/initiatives/BPCIModel-2/. Further information of why elements of the OCM, the ACE Demonstration, and BPCI Model 2 were incorporated into the design of the CCJR model is discussed later in this proposed rule. 5. Overlap With Ongoing CMS Efforts We propose to exclude from participation in CCJR certain hospitals participating in the risk-bearing phase of BPCI Models 2 and 4 for LEJR episodes, as well as acute care hospitals participating in BPCI Model 1. We propose not to exclude beneficiaries in CCJR model episodes from being included in other Innovation Center models or CMS programs, such as the Medicare Shared Savings Program, as detailed later in this proposed rule. We propose to account for overlap, that is, where CCJR beneficiaries are also included in other models and programs to ensure the financial policies of CCJR are maintained and results and spending reductions are attributed to the correct model or program. 6. Quality Measures and Reporting Requirements We are proposing to adopt three hospital-level quality of care measures for the CCJR model. Those measures E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules include a complication measure, readmission measure, and a patient experience survey measure. We propose to use these measures to test the success of the model in achieving its goals under section 1115A of the Act and to monitor for beneficiary safety. We intend to publicly report this information on the Hospital Compare Web site. Additionally, we are proposing and requesting public feedback on possible voluntary submission of data to support the development of a hospital-level measure of patient-reported outcomes following an elective Primary Total Hip (THA) or Total Knee Arthroplasty (TKA). asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 7. Data Sharing Process We propose to share data with participant hospitals upon request throughout the performance period of the CCJR model to the extent permitted by the HIPAA Privacy Rule and other applicable law. We propose to share upon request both raw claims-level data and claims summary data by service line with participants. This approach would allow participant hospitals without prior experience analyzing claims to use summary data to receive useful information, while allowing those participant hospitals who prefer raw claims-level data the opportunity to analyze claims. We propose to provide hospitals with up to 3 years of retrospective claims data upon request that will be used to develop their target price, as described in section III.C of this proposed rule. In accordance with the HIPAA Privacy Rule, we would limit the content of this data set to the minimum data necessary for the participant hospital to conduct quality assessment and improvement activities and effectively coordinate care of its patient population. 8. Beneficiary Protections Under the CCJR model, beneficiaries retain the right to obtain health services from any individual or organization qualified to participate in the Medicare program. Under the CCJR model, eligible beneficiaries who receive services from a participant hospital would not have the option to opt out of inclusion in the model. We propose to require participant hospitals to supply beneficiaries with written information regarding the design and implications of this model as well as their rights under Medicare, including their right to use their provider of choice. We will also make a robust effort to reach out to beneficiaries and their advocates to help them understand the CCJR model. We also propose to use our existing authority, if necessary, to audit VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 participant hospitals if claims analysis indicates an inappropriate change in delivered services. Beneficiary protections are discussed in greater depth in section III.E. of this proposed rule. 9. Financial Arrangements and Program Policy Waivers We propose to hold participant hospitals financially responsible for CCJR LEJR episodes as participants in the model as discussed in section III.C.10.a. of this proposed rule. Specifically, only these hospital participants would be directly subject to the requirements of this proposed rule for the CCJR model. Participant hospitals would be responsible for ensuring that other providers and suppliers collaborating with the hospital on LEJR episode care redesign are in compliance with the terms and conditions of the model. Several of the proposed Medicare program policy waivers outline the conditions under which skilled nursing facilities (SNFs) and physicians could furnish and bill for certain services furnished to CCJR beneficiaries where current Medicare programs rules would not permit such billing. We draw the attention of SNFs and physicians to these proposals that are included in section III.C.10.b.(5). of this proposed rule. C. Summary of Economic Effects As shown in our impact analysis, we expect the proposed model to result in savings to Medicare of $153 million over the 5 years of the model. More specifically, in performance year 1 of the model, we estimate a Medicare cost of approximately $23 million, as we have proposed that hospitals will not be subject to downside risk in the first year of the model. As we introduce downside risk beginning in performance year 2 of the model, we estimate Medicare savings of approximately $29 million. In performance year 3 of the model, we estimate Medicare savings of $43 million. In performance years 4 and 5 of the model, as we have proposed to move from target episode pricing that is based on a hospital’s experience to target pricing based on regional experience, we estimate Medicare savings of $50 million and $53 million, respectively. Additionally, hospitals must meet or exceed specific thresholds on performance on certain quality of care measures in order to be eligible for a reconciliation payment and as the performance threshold increases in performance years 4 through 5, we estimate additional savings. As a result, we estimate the net savings to Medicare PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 41203 to be $153 million over the 5 years of the model. We anticipate there would be a broader focus on care coordination and quality improvement for LEJR episodes among hospitals and other providers within the Medicare program that would lead to both increased efficiency in the provision of care and improved quality of the care provided to beneficiaries. We note that under section 1115A(b)(3)(B) of the Act, the Secretary is required to terminate or modify a model unless certain findings can be made with respect to savings and quality after the model has begun. If during the course of testing the model it is determined that termination or modification is necessary, such actions would be undertaken through rulemaking. II. Background This proposed rule proposes the implementation of a new innovative health care payment model under the authority of section 1115A of the Act. Under the model, called the CCJR model, acute care hospitals in certain selected geographic areas will receive bundled payments for episodes of care where the diagnosis at discharge includes a lower extremity joint replacement or reattachment of a lower extremity that was furnished by the hospital. We are proposing that the bundled payment will be paid retrospectively through a reconciliation process; hospitals and other providers and suppliers will continue to submit claims and receive payment via the usual Medicare FFS payment systems. All related care covered under Medicare Part A and Part B within 90 days after the date of hospital discharge from the joint replacement procedure will be included in the episode of care. We believe this model will further our goals of improving the efficiency and quality of care for Medicare beneficiaries for these common medical procedures. III. Provisions of the Proposed Rule A. Proposed Definition of the Episode Initiator and Selected Geographic Areas 1. Background The CCJR model is different from BPCI because it would require participation of all hospitals (with limited exceptions) throughout selected geographic areas, which would result in a model that includes varying hospital types. However, a discussion of BPCI is relevant because its design informs and supports the proposed CCJR model. The BPCI model is voluntary, and under that model we pay a bundled payment for an episode of care only to entities that have E:\FR\FM\14JYP3.SGM 14JYP3 41204 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS elected to participate in the model. We are interested in testing and evaluating the impact of an episode payment approach for LEJRs in a variety of other circumstances, including among those hospitals that have not chosen to voluntarily participate because we have not tested bundled payments for these hospitals previously. This would allow CMS and participants to gain experience testing and evaluating episode-based payment for LEJR procedures furnished by hospitals with a variety of historic utilization patterns; roles within their local markets; volume of services provided; access to financial, community, or other resources; and population and health care provider density. Most importantly, participation of hospitals in selected geographic areas will allow CMS to test bundled payments without introducing selection bias such as the selection bias inherent in the BPCI model due to self-selected participation. 2. Proposed Definition of Episode Initiator In BPCI Model 2, LEJR episode initiators are either acute care hospitals where the LEJR procedure is performed or physician group practices whose physician members are the admitting or operating physician for the hospital stay. Thus, under BPCI, it is possible that only some Medicare cases that could potentially be included in an LEJR episode at a specific hospital are actually being tested in BPCI. For example, if the hospital itself is not participating as an episode initiator under BPCI, yet some physicians who admit patients to the hospital are members of physician group practices participating in BPCI, not all of the hospital’s possible LEJR episodes are tested and paid under BPCI. Under the proposed CCJR model, as described further in section III.B of this proposed rule, episodes would begin with admission to an acute care hospital for an LEJR procedure that is paid under the IPPS through Medical Severity Diagnosis-Related Group (MS–DRG) 469 (Major joint replacement or reattachment of lower extremity with MCC) or 470 (Major joint replacement or reattachment of lower extremity without MCC) and end 90 days after the date of discharge from the hospital. For the CCJR model, we propose that hospitals would be the only episode initiators. For purposes of CCJR, the term ‘‘hospital’’ means a hospital as defined in section 1886(d)(1)(B) of the Act. This statutory definition of hospital includes only acute care hospitals paid under the IPPS. Under this proposal, all acute care hospitals in Maryland would be VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 excluded from CCJR. The state of Maryland entered into an agreement with CMS, effective January 1, 2014, to participate in CMS’ new Maryland AllPayer Model. In order to implement the Maryland All-Payer Model, CMS waived certain requirements of the Act, and the corresponding implementing regulations, as set forth in the agreement between CMS and Maryland. Specifically, under the Maryland AllPayer Model, Maryland acute care hospitals are not paid under the IPPS or OPPS but rather are paid under rates set by the state. Following the model’s performance period, Maryland will transition to a new model that incorporates the full spectrum of care, not just hospital services. As such, with respect to Maryland hospitals, CMS intends to test and develop new payment and delivery approaches that can incorporate non-hospital services in a manner that accounts for Maryland’s unique hospital rate setting system and permit Maryland to develop its own strategy to incentivize higher quality and more efficient care across clinical situations within and beyond hospitals, including but not limited to LEJR episodes of care. We are proposing that payments to Maryland hospitals would be excluded in the regional pricing calculations as described in section III.C.4 of this proposed rule. We seek comment on this proposal and whether there are potential approaches for including Maryland acute care hospitals in CCJR. In addition, we seek comment on whether Maryland hospitals should be included in CCJR in the future upon any termination of the Maryland AllPayer Model. We propose to designate IPPS hospitals as the episode initiators to ensure that all Medicare FFS LEJR services furnished by participant hospitals in selected geographic areas to beneficiaries who do not meet the exclusion criteria specified in section III.B.3 of this proposed rule and are not BPCI episodes that we are proposing to exclude as outlined in this section and also in section III.C.7 of this proposed rule are included in the CCJR model. We are proposing certain exceptions to the inclusion of hospitals in the CCJR Model, as discussed in section III.C. of this proposed rule. Given that our proposal to initiate the LEJR episode begins with an admission to a hospital paid under the IPPS that results in a discharge assigned to MS–DRG 469 or 470, we believe that utilizing the hospital as the episode initiator is a straightforward approach for this model because the hospital furnishes the LEJR procedure. In addition, we are PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 interested in testing a broad model in a number of hospitals under the CCJR model in order to examine results from a more generalized payment model. Thus, we believe it is important that, in a model where hospital participation is not voluntary, all Medicare FFS LEJR episodes that begin at the participant hospital in a selected geographic area are included in the model for beneficiaries that do not meet the exclusion criteria specified in section III.B.3 of this proposed rule and are not BPCI episodes that we are proposing to exclude as outlined in this section and also in section III.C.7 of this proposed rule. This is best achieved if the hospital is the episode initiator. Finally, as described in the following sections that present our proposed approach to geographic area selection, this geographic area selection approach relies upon our definition of hospitals as the entities that initiate episodes. We seek comment on our proposal to define the episode initiator as the hospital under CCJR. 3. Financial Responsibility for the Episode of Care BPCI Model 2 participants that have entered into agreements with CMS to bear financial responsibility for an episode of care include acute care hospitals paid under the IPPS, health systems, physician-hospital organizations, physician group practices, and non-provider business entities that act as conveners by coordinating multiple health care providers’ participation in the model. Thus, our evaluation of BPCI Model 2 will yield information about how results for LEJR episodes may differ based on differences in which party bears financial responsibility for the episode of care. For the CCJR model, we propose to make hospitals financially responsible for the episode of care for several reasons. We recognize that ideally all of the providers involved in the continuum of care for Medicare beneficiaries in a 90-day post-discharge LEJR episode would work together to determine the best structure for managing the LEJR episode, develop an efficient process that leads to high quality care, track information across the episode about quality and Medicare expenditures, and align financial incentives using a variety of approaches, including gainsharing. However, because the proposed CCJR model is testing a more generalizable model by including hospitals that might not participate in a voluntary model and includes episodes initiated at a wide variety of hospitals, we believe it is E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules most appropriate to identify a single type of provider to bear financial responsibility for making repayment to CMS under the model. Hospitals play a central role in coordinating episode-related care and ensuring smooth transitions for beneficiaries undergoing LEJR procedures. Moreover, the episode always begins with an acute care hospital stay, IPPS payments for LEJRs comprise about 50 percent of Medicare payments for a 90-day episode, and the beneficiary’s recovery from surgery begins during the hospital stay. Most hospitals already have some infrastructure related to health information technology, patient and family education, and care management and discharge planning. This includes post-acute care (PAC) coordination infrastructure and resources such as case managers, which hospitals can build upon to achieve efficiencies under this episode payment model. Many hospitals also have recently heightened their focus on aligning their efforts with those of community providers to provide an improved continuum of care due to the incentives under other CMS models and programs, including Accountable Care Organization (ACO) initiatives such as the Medicare Shared Savings Program (MSSP), and the Hospital Readmissions Reduction Program (HRRP), establishing a base for augmenting these efforts under the CCJR model. In view of our proposal that hospitals be the episode initiators under this model, we believe that hospitals are more likely than other providers to have an adequate number of episode cases to justify an investment in episode management for this model. We also believe that hospitals are most likely to have access to resources that would allow them to appropriately manage and coordinate care throughout the LEJR episode. Finally, the hospital staff is already involved in discharge planning and placement recommendations for Medicare beneficiaries, and more efficient PAC service delivery provides substantial opportunities for improving quality and reducing costs under CCJR. We considered requiring treating physicians (orthopedic surgeons or others) or their associated physician group practices, if applicable, to be financially responsible for the episode of care under the CCJR Model. We expect that every Medicare beneficiary discharged with a diagnosis grouped under MS–DRG 469 or 470 would have an operating physician and an admitting physician for the hospital stay. However, the services of providers other than the hospital where the acute care VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 hospital stay for the LEJR procedure (hereinafter ‘‘the anchor hospitalization’’) occurs would not necessarily be furnished in every LEJR episode. For example, that physicians of different specialties play varying roles in managing patients during an acute care hospitalization for a surgical procedure and during the recovery period, depending on the hospital and community practice patterns and the clinical condition of the beneficiary and could not be assumed to be included in every LEJR episode. This variability would make requiring a particular physician or physician group practice to be financially responsible for a given episode very challenging. If we were to assign financial responsibility to the operating physician, it is likely that there would be significant variation in the number of relevant episodes that could be assigned to an individual person. Where the physician was included in a physician group practice, episodes could be aggregated to this group level but this would not be possible for all cases and would likely still have low volume concerns. We believe that the small sample sizes accruing to individual physician and physician group practices would make systematic care redesign inefficient and more burdensome, given that we are proposing to test all episodes occurring at hospitals selected for participation for beneficiaries that do not meet the exclusion criteria specified in section III.B.3 of this proposed rule and are not BPCI episodes that we are proposing to exclude as outlined in this section and also in section III.C.7 of this proposed rule. Finally, we note that although the BPCI initiative includes the possibility of a physician group practice as a type of initiating participant, the physician groups electing to participate in BPCI have done so because their practice structure supports care redesign and other infrastructure necessary to bear financial responsibility for episodes and is not necessarily representative of the typical group practice. In addition, most of the physician group practices in BPCI are not bearing financial responsibility, but are participating in BPCI as partners with convener organizations (discussed later in this section), which enter into agreements with CMS, on behalf of health care providers such as physician group practices, through which they accept financial responsibility for the episode of care. The infrastructure necessary to accept financial responsibility for episodes is not present across all physician group practices, and thus we do not believe it would be appropriate to designate physician PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 41205 group practices to bear the financial responsibility for making repayments to CMS under the proposed CCJR model. We seek comment on our proposal to require the hospital to bear the financial responsibility for the episodes of care under CCJR. We are proposing that hospitals will bear the financial responsibility for LEJR episodes of care under CCJR. However, because there are LEJR episodes currently being tested in BPCI Model 1, 2, 3 or 4, we believe that participation in CCJR should not be required if it would disrupt testing of LEJR episodes already underway in BPCI models. Therefore, we are proposing that IPPS hospitals located in an area selected for the model that are active Model 1 BPCI participant hospitals as of July 1, 2015 or episode initiators for LEJR episodes in the risk-bearing phase of Model 2 or 4 of BPCI as of July 1, 2015, would be excluded from participating in CCJR during the time that their qualifying episodes are included in one of the BPCI models. Likewise, we are proposing that if the participant hospital is not an episode initiator for LEJR episodes under BPCI Model 2, then LEJR episodes initiated by other providers or suppliers under BPCI Model 2 or 3 (where the surgery takes place at the participant hospital) would be excluded from CCJR. Otherwise qualifying LEJR episodes (that is, those that are not part of a Model 3 BPCI LEJR episode or a Model 2 physician group practiceinitiated LEJR episode) at the participant hospital would be included in CCJR. While we propose that the participant hospital be financially responsible for the episode of care under CCJR, we also believe that effective care redesign for LEJR episodes requires meaningful collaboration among acute care hospitals, PAC providers, physicians, and other providers and suppliers within communities to achieve the highest value care for Medicare beneficiaries. We believe it may be essential for key providers to be aligned and engaged, financially and otherwise, with the hospitals, with the potential to share financial responsibility with those hospitals. We note that all relationships between and among providers and suppliers must comply with all relevant laws and regulations, including the fraud and abuse laws and all Medicare payment and coverage requirements unless otherwise specified further later in this section and in section III.C.10 of this proposed rule. Depending on a hospital’s current degree of clinical integration, new and different contractual relationships among hospitals and other health care E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41206 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules providers may be important, although not necessarily required, for CCJR model success in a community. We acknowledge that financial incentives for other providers may be important aspects of the model in order for hospitals to partner with these providers and incentivize certain strategies to improve episode efficiency. In the BPCI initiative, participants have entered a variety of relationships with entities above the hospital level. Some of these relationships are ones where the financial risk is borne by the entity other than the hospital, such as a parent organization (known as awardee conveners) and others have managerial or other responsibility relationships with other organizations (known as facilitator conveners) but financial responsibility remains with the episode initiator . We acknowledge the important role that conveners play in the BPCI initiative with regard to providing infrastructure support to hospitals and other entities initiating episodes in BPCI. The convener relationship (where another entity assumes financial responsibility) may take numerous forms, including contractual (such as a separate for-profit company that agrees to take on a hospital’s financial risk in the hopes of achieving financial gain through better management of the episodes) and through ownership (such as when risk is borne at a corporate level within a hospital chain). However, we are proposing that for the CCJR model, we would hold only the participant hospitals financially responsible for the episode of care. This is consistent with the goal of evaluating the impact of bundled payment and care redesign across a broad spectrum of hospitals with varying levels of infrastructure and experience in entering into risk-based reimbursement arrangements. If conveners were included as participants in CCJR, we may not gain the knowledge of how a variety of hospitals can succeed in relationship with CMS in which they bear financial risk for the episode of care. We acknowledge that CCJR hospitals may wish to enter into relationships with other entities in order to manage the episode of care or distribute risk. We do not intend to restrict the ability of hospitals to enter into administrative or risk sharing arrangements related to this model. We refer readers to section III.C.10 of this proposed rule for further discussion of model design elements that may outline financial arrangements between participant hospitals and other providers and suppliers. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 4. Proposed Geographic Unit of Selection and Exclusion of Selected Hospitals In determining which hospitals to include in the CCJR model, we considered whether the model should be limited to hospitals where a high volume of LEJRs are performed, which would result in a more narrow test on the effects of an episode-based payment, or whether to include all hospitals in particular geographic areas, which would result in testing the effects of an episode-based payment approach more broadly across an accountable care community seeking to coordinate care longitudinally across settings. Selecting certain hospitals where a high volume of LEJRs are performed may allow for fewer hospitals to be selected as model participants, but still result in a sufficient number of CCJR episodes to evaluate the success of the model. However, there would be more potential for behavioral changes that could include patient shifting and steering between hospitals in a given geographic area that could impact the test. Additionally, this approach would provide less information on testing episode payments for LEJR procedures across a wide variety of hospitals with different characteristics. Selecting geographic areas and including all IPPS hospitals in those areas not otherwise excluded due to BPCI overlap as previously described and in section III.C.7 of this proposed rule as model participants would help to minimize the risk of participant hospitals shifting higher cost cases out of the CCJR model. Moreover, in selecting geographic areas we could choose certain characteristics, stratify geographic areas according to these characteristics, and randomly select geographic areas from within each stratum. Such a stratified random sampling method based on geographic area would allow us to observe the experiences of hospitals with various characteristics, such as variations in size, profit status, and episode utilization patterns, and examine whether these characteristics impact the effect of the model on patient outcomes and Medicare expenditures within episodes of care. Stratification would also substantially reduce the extent to which the selected hospitals will differ from non-selected hospitals on the characteristics used for stratification, which would improve the statistical power of the subsequent model evaluation, improving our ability to reach conclusions about the model’s effects on episode costs and the quality of patient care. Therefore, given the authority in section 1115A(a)(5) of the PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 Act, which allows the Secretary to elect to limit testing of a model to certain geographic areas, we propose to use a stratified random sampling method to select geographic areas and require all hospitals paid under the IPPS in those areas to participate in the CCJR model and be financially responsible for the cost of the episode, with certain exceptions as previously discussed and in sections III.B.3 and III.C.7 of this proposed rule. a. Overview and Options for Geographic Area Selection In determining the geographic unit for the geographic area selection for this model, we considered using a stratified random sampling methodology to select (1) certain counties based on their CoreBased Statistical Area (CBSA) status, (2) certain zip codes based on their Hospital Referral Regions (HRR) status or (3) certain states. We address each geographic unit in turn. We considered selecting certain counties based on their CBSA status. The general concept of a CBSA is that of a core area containing a substantial population nucleus, together with adjacent communities having a high degree of economic and social integration within that core. Counties are designated as part of a CBSA when the county or counties or equivalent entities are associated with at least one core (urbanized area or urban cluster) of at least 10,000 in population, plus adjacent counties having a high degree of social and economic integration with the core as measured through commuting ties with the counties associated with the core. There are 929 CBSAs currently used for geographic wage adjustment purposes across Medicare payment systems.4 The 929 CBSAs include 388 Metropolitan Statistical Areas (MSAs), which have an urban core population of at least 50,000, and the 541 Micropolitan Statistical Areas (mSA), which have an urban core population of at least 10,000 but less than 50,000. CBSAs may be further combined into a Combined Statistical Area (CSA) which consists of two or more adjacent CBSAs (MSAs or mSAs or both) with substantial employment interchange. Counties not classified as a CBSA are typically categorized and examined at a state level. 4 As stated in the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27552) and final rule (78 FR 50586), on February 28, 2013, OMB issued OMB Bulletin No. 13–01, which established revised delineations for MSAs, mSAs, and CSAs, and provided guidance on the use of the delineations of these statistical areas. A copy of this bulletin may be obtained at https://www.whitehouse.gov/sites/ default/files/omb/bulletins/2013/b-13-01.pdf. E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules The choice of a geographical unit based on CBSA status could mean selection of a CBSA, an MSA, or a CSA. We propose basing the selection on an MSA, which we will discuss later in this section. In determining which geographic areas will be potentially subject to selection, we focused on MSAs, which is a subcategory within CBSA characterized by counties associated with an urban core population of at least 50,000. It is our intention at this time that counties not in an MSA would not be subject to the selection process. These counties not subject to selection would include the mSA counties and the counties without a core urban area of at least 10,000. These areas are largely rural areas and have a limited number of qualifying LEJR cases. Relatively few of these areas would be able to qualify for inclusion based on the minimum number of LEJR episodes in year requirement discussed later in this section. We considered, but ultimately decided against, using CSA designation instead of MSAs as a potential unit of selection. Under this scenario, we would look at how OMB classifies counties. We would first assess whether a county has been identified as belonging to a CSA, a unit which consists of adjacent MSAs or mSAs or both. If the county was not in a CSA, we would determine if it was in an MSA that is not part of a larger CSA. Counties not associated with a CSA or an MSA would be unclassified and excluded from selection. These unclassified areas would include the counties in a state that were either not a CBSA (no core area of at least 10,000) or associated with a mSA (core area of between 10,000 and 50,000) but unaffiliated with a CSA. Whether to select on the basis of CSA/ MSAs or just on MSAs was influenced by a number of factors including an assessment with respect to the anticipated degree to which LEJR patients would be willing to travel for their initial hospitalization, the extent to which surgeons are expected to have admitting privileges in multiple hospitals located in different MSAs and considerations related to the degree to which we desire to include hospitals within mSAs that are part of a larger CSA. It was believed that the anticipated risk for patient shifting and steering between MSAs within a CSA was not severe enough to warrant selecting CSAs. However, for these same reasons, we believe that selecting complete MSAs is preferable to selecting metropolitan divisions of MSAs for inclusion in the CCJR model. We use the metropolitan divisions to set VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 wage indices for its prospective payment systems. Of the 388 MSAs, there are 11 MSAs that contain multiple metropolitan divisions. For example, the Boston-Cambridge-Newton, MA–NH MSA is divided into the following metropolitan divisions: • Boston, MA. • Cambridge-Newton-Framingham, MA. • Rockingham County-Strafford County, NH. The Seattle-Tacoma-Bellevue, WA MSA is divided into the following metropolitan divisions: • Seattle-Bellevue-Everett, WA. • Tacoma-Lakewood, WA. We propose selecting entire MSAs rather than sub-divisions within an MSA. We next considered selecting hospital referral regions (HRRs). HRRs represent regional health care markets for tertiary medical care. There are 306 HRRs with at least one city where both major cardiovascular surgical procedures and neurosurgery are performed. HRRs are defined by determining where the majority of patients were referred for major cardiovascular surgical procedures and for neurosurgery.5 Compared to MSAs, HRRs are classified based on where the majority of beneficiaries within a zip code receive their hospital services for selected tertiary types of care. The resulting HRRs represent the degree to which people travel for tertiary care that generally requires the services of a major referral center and not the size of the referral network for more routine services, such as knee and hip arthroplasty procedures. In addition, because HRRs are defined based on referrals for cardiovascular surgical procedures and neurosurgery, they may not reflect referrals for orthopedic procedures. Therefore, we believe that MSAs as a geographic unit are preferable over HRRs for this model. We also considered selecting states for the CCJR model. However, we concluded that MSAs as a geographic unit are preferable over states for the CCJR model. As mentioned in section III.A.4.b of this proposed rule, we anticipate that hospitals that would otherwise be required to participate in the CCJR model would be excluded from the model because their relevant LEJR episodes are already being tested in BPCI. If we were to select states as the geographic unit, there is a potential that an entire state would need to be excluded because a large proportion of 5 The Dartmouth Atlas of Healthcare, https:// www.dartmouthatlas.org/data/region/. Accessed on April 9, 2015. PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 41207 hospitals in that state are episode initiators of LEJR episodes in BPCI. In contrast, if we excluded a specific MSA due to BPCI participation, as discussed in the next section, we could still select another MSA within that same state. Likewise, if we chose states as the geographic unit, we would automatically include hospitals in all rural areas within the state selected. If MSAs are selected for the geographic unit, we anticipate that fewer small rural hospitals would be included in the model. Using a unit of selection smaller than a state would allow for a more deliberate choice about the extent of inclusion of rural or small population areas. Selecting states rather than MSAs would also greatly reduce the number of independent geographic areas subject to selection under the model, which would decrease the statistical power of the model evaluation. Finally, MSAs straddle state lines where providers and Medicare beneficiaries can easily cross these boundaries for health care. Choosing states as the geographic unit would potentially divide a hospital market and set up a greater potential for patient shifting and steering to different hospitals under the model. The decision that the MSA-level analysis was more analytically appropriate was based on the specifics of this model and not meant to imply that other levels of selection would not be appropriate in a different model such as the proposed Home Health Value Based Purchasing (HHVBP) model. For the reasons previously discussed, we propose to require participation in the CCJR model of all hospitals, with limited exceptions as previously discussed in section III.A.2.of this proposed rule, paid under the IPPS that are physically located in a county in an MSA selected through a stratified random sampling methodology, outlined in section III.A.3.b in this proposed rule, to test and evaluate the effects of an episode-based payment approach for an LEJR episodes. We propose to determine that a hospital is located in an area selected if the hospital is physically located within the boundary of any of the counties in that MSA as of the date the selection is made. Although MSAs are revised periodically, with additional counties added or removed from certain MSAs, we propose to maintain the same cohort of selected hospitals throughout the 5 year performance period of the model with limited exceptions as described later in this section. Thus, we propose not to add hospitals to the model if after the start of the model new counties are added to one of the selected MSAs or E:\FR\FM\14JYP3.SGM 14JYP3 41208 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules remove hospitals from the model if counties are removed from one of the selected MSAs. We believe that this approach will best maintain the consistency of the participants in the model, which is crucial for our ability to evaluate the results of the model. However, we retain the possibility of adding a hospital that is opened or incorporated within one of the selected counties after the selection is made and during the period of performance. (See section III.C.of this proposed rule for discussion of how target prices will be determined for such hospitals.) Although we considered including hospitals in a given MSA based on whether the hospitals were classified into the MSA for IPPS wage index purposes, this process would be more complicated, and we could not find any compelling reasons favoring this approach. For example, we assign hospitals to metro divisions of MSAs when those divisions exist. See our previous discussion of this issue. In addition, there is the IPPS process of geographic reclassification by which a hospital’s wage index value or standardized payment amount is based on a county other than the one where the hospital is located. For the purpose of this model, it is simpler and more straightforward to use the hospital’s physical location as the basis of assignment to a geographic unit. This decision would have no impact on a hospital’s payment under the IPPS. We seek comment on our proposal to include participant hospitals for the CCJR model based on the physical location of the hospital in one of the counties included in a selected MSA. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS b. MSA Selection Methodology We propose to select the MSAs to include in the CCJR model by stratifying all of the MSAs nationwide according to certain characteristics. (1) Exclusion of Certain MSAs Prior to assigning an MSA to a selection stratum, we examined whether the MSA met specific proposed exclusion criteria. MSAs were evaluated sequentially using the following 4 exclusion criteria: First, MSAs in which fewer than 400 LEJR episodes (determined as we propose to determine episodes included in this model, as discussed in section III.B.2) occurred from July 1, 2013 through June 30, 2014 were removed from possible selection. The use of the 400 LEJR cases in a year was based on a simple one-sided power calculation to assess the number of episodes that would be needed to detect a 5 percent reduction in episode expenditures. Accordingly, cases in VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 hospitals paid under either the critical access hospital (CAH) methodology or the Maryland All-Payer Model are not included in the count of eligible episodes. This criterion removed 156 MSAs from possible selection. Second, MSAs were removed from possible selection if there were fewer than 400 non-BPCI LEJR episodes in the MSA in the reference year. For the purposes of this exclusion, the number of BPCI episodes was estimated as the number of potentially eligible cases during the reference year that occurred in acute care hospitals participating in BPCI Model 1, or in phase 2 of BPCI Models 2 or 4 as of July 1, 2015 and the number of LEJRs in 2013 and 2014 associated with these hospitals was examined. This criterion removed an additional 24 MSAs from potential selection. Third, MSAs were also excluded from possible selection if the MSA was dominated by BPCI Models 1, 2, 3, or 4 episodes to such a degree that it would impair the ability of participants in either the CCJR model or the BPCI models to succeed in the objectives of the initiative or impair the ability to set accurate and fair prices. We anticipate that some degree of overlap in the two programs will be mutually helpful for both models. There are two steps to this exclusion. First, we looked at the number of LEJR episodes at BPCI Model 1, 2 or 4 initiating hospitals and second, the number of LEJR episodes among BPCI Model 3 SNF and HHA episode initiators. We set the first cut off for this exclusion if, within an MSA, more than 50 percent of otherwise qualifying proposed CCJR episodes were in Phase 2 of BPCI Model 2 or 4 with hospital initiators. We set the second cut off for BPCI Model 3, based on if either SNF or HHA BPCI Model 3 initiating providers accounted for more than 50 percent of LEJR referrals to that provider type, the MSA would be eliminated from the possibility of selection. As a result of this third criterion, 4 additional MSAs were removed from possible selection. No MSAs were excluded based on Skilled Nursing Facility (SNF) or Health Home Agency (HHA) participation in Model 3. Finally, MSAs were removed if, after applying the previous 3 criteria they remained eligible for selection, but more than 50 percent of estimated eligible episodes during the reference year were not paid under the IPPS system. Please refer to the appenda for this proposed rule for the status of each MSA based on these exclusion criteria, available at https://innovation.cms.gov/initiatives/ ccjr/. After applying these four exclusions, 196 MSAs remained to be PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 stratified for purposes of our proposed selection methodology. (2) Proposed Selection Strata Numerous variables were considered as potential strata for classifying MSAs included in the model. However, our proposal is intended to give priority to transparency and understandability of the strata. We propose creating selection strata based on the following two dimensions: MSA average wageadjusted historic LEJR episode payments and MSA population size. (a) MSA Average Wage-adjusted Historic LEJR Episode Payments. We were interested in being able to classify and divide MSAs according to their typical patterns of care associated with LEJR episodes. As a straightforward measure of LEJR patterns of care, we selected the mean MSA episode payment, as defined in this proposed rule. MSAs vary in their average episode payments. The average episode payments in an area may vary for a variety of reasons including—1) in response to the MS–DRG mix and thus the presence of complicating conditions; 2) readmission rates; 3) practice patterns associated with type of PAC provider(s) treating beneficiaries; 4) variations of payments within those PAC providers, and 5) the presence of any outlier payments. The measure of both mean episode payments and median episode payments within the MSA was considered. We propose to stratify by mean because it would provide more information on the variation in episode payments at the high end of the range of payments. We are interested in the lower payment areas for the purpose of informing decisions about potential future model expansion. However, the CCJR model is expected to have the greatest impact in areas with higher average episode payments. The average episode payments used in this analysis were calculated based on the proposed episode definition for CCJR using Medicare claims accessed through the Chronic Conditions Warehouse for 3 years with admission dates from July 1, 2011 through June 30, 2014. Episode payments were wageadjusted using the FY 2014 hospital wage index contained in the FY 2014 IPPS Final Rule, downloaded at https:// www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ AcuteInpatientPPS/FY-2014-IPPS-FinalRule-Home-Page-Items/FY-2014-IPPSFinal-Rule-CMS-1599-F-Data-Files.html. The adjusted payment was calculated by dividing the unadjusted payment by a factor equal to the sum of 0.3 plus the E:\FR\FM\14JYP3.SGM 14JYP3 41209 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules multiplicative product of 0.7 and the wage index value of the hospital where the LEJR was performed. Episodes in the database with IPPS payments less than $4,000 for the DRG 469 or 470 case were deleted as indicating that the hospital did not receive full payment for the LEJR procedure. We also truncated the episode payment at the 99.9th percentile of the distribution ($135,000) to limit the impact of extreme outliers. (b) MSA Population Size The second dimension proposed for the CCJR selection strata is the number of persons in the MSA. In deciding how best to incorporate the dimensions of urban density and availability of medical resources, a variety of measures were considered, including overall population in the included counties, overall population in the core area of the MSA, population over the age of 65 in the MSA, the number of hospital beds and the number of Medicare FFS LEJR procedures in a year. The reason we decided to include this dimension in the strata definition is that these factors are believed to be associated with the availability of resources and variations in practice and referral patterns by the size of the healthcare market. When examined, these alternative measures were all very highly correlated with one another, which allowed the use of one of these measures to be able to substitute for the others in the definition of the stratum. From these alternative approaches, we choose to use MSA population. In operationalizing this measure, MSAs were classified according to their 2010 census population. (c) Analysis of Strata The two proposed domains, MSA population and MSA historic LEJR episode spending, were examined using a K-Means factor analysis. The purpose of this factor analysis was to inform the process of which cut points most meaningfully classify MSAs. Factor analysis attempts to identify and isolate the underlying factors that explain the data using a matrix of associations. Factor analysis is an interdependence technique. Essentially, variables are entered into the model and the factors (or clusters) are identified based on how the input variables correlate to one another. The resulting clusters of MSAs produced by this methodology suggested natural cut points for average episode payments at $25,000 and $28,500. While not intentional, these divisions correspond roughly to the 25th and 75th percentiles of the MSA distribution. Cut points based on these percentiles seemed reasonable from statistical and face validity perspectives in the sense that they created groups that included an adequate number of MSAs and a meaningful range of costs. As a result of this analysis, we propose to classify MSAs according to their average LEJR episode payment into four categories based the on the 25th, 50th and 75th percentiles of the distribution of the 196 potentially selectable MSAs. This approach ranks the MSAs relative to one another and creates four equally sized groups of 49. The population distribution was divided at the median point for the MSAs eligible for potential selection. This resulted in MSAs being divided into two equal groups of 98. The characteristics of the resulting strata are shown in Table 1. TABLE 1—SUMMARY POPULATION AND EPISODE PAYMENT STATISTICS BY MSA GROUP Payment in lowest quarter Payment in 2nd lowest quarter Payment in 3rd lowest quarter Payment in highest quarter Total eligilble MSAs with population less than median: Number of Eligible MSAs ............................................. Average of Population .................................................. Minimum MSA Population ............................................ Maximum MSA Population ........................................... Average Episode Payments ($) .................................... Minimum Episode Payments ........................................ Maximum Episode Payments ....................................... MSAs with population more than median: Number of Eligible MSAs ............................................. Average of Population .................................................. Minimum MSA Population ............................................ Maximum MSA Population ........................................... Average Episode Payments ($) .................................... Minimum Episode Payments ........................................ Maximum Episode Payments ....................................... 33 251,899 96,275 425,790 $22,994 $18,440 $24,846 19 238,562 55,274 416,257 $25,723 $24,898 $26,505 22 268,331 106,331 424,858 $27,725 $26,764 $28,679 24 254,154 96,024 428,185 $30,444 $29,091 $32,544 98 253,554 55,274 428,185 $26,410 $18,440 $32,544 16 1,530,083 464,036 4,335,391 $23,192 $16,504 $24,819 30 1,597,870 436,712 5,286,728 $25,933 $25,091 $26,754 27 1,732,525 434,972 12,828,837 $27,694 $26,880 $28,659 25 2,883,966 439,811 19,567,410 $30,291 $28,724 $33,072 98 1,951,987 434,972 19,567,410 $27,082 $16,504 $33,072 Total Eligible MSAs ............................................... 49 49 49 49 ........................ asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Note: Population and episode payment means are un-weighted averages of the MSA values within each of the eight MSA groups. Please refer to the addenda for this proposed rule for information on the non-excluded MSAs, their wage adjusted average LEJR episode spending, their population and their resultant group assignment at: https:// innovation.cms.gov/initiatives/ccjr/. (3) Factors Considered but Not Used in Creating Proposed Strata In addition to the two dimensions we are proposing to use for the selection groups previously discussed, a variety VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 of possible alternative measures and dimensions were considered. Many of these variables are considered to be important but it was believed that it was important to have a fairly straightforward and easily understandable stratum definition. Simplicity, by definition, required that only the most important variables would be used. If a market characteristic under consideration was correlated with one of the chosen dimensions or it was believed that variations in the PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 characteristic could be adequately captured by random selection within the strata, is was not prioritized for inclusion. Some of the factors considered that we are not proposing as dimensions are— • Measures associated with variation in practice patterns associated with LEJR episodes. In considering how to operationalize this measure, a number of alternatives were considered including total PAC LEJR payments in E:\FR\FM\14JYP3.SGM 14JYP3 41210 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules an MSA, percent of LEJR episodes with a SNF claim in an MSA, percent of LEJR episodes with an initial discharge to HHA, percent of LEJR episodes with an IRF claim, and percent of LEJR episodes with claims for two or more types of PAC providers; • Measures associated with relative market share of providers with respect to LEJR episodes; • Healthcare supply measures of providers in the MSA including counts of IRF beds, SNF beds, hospital beds, and number of orthopedic surgeons; • MSA level demographic measures such as; average income, distributions of population by age, gender or race, percent dually eligible, percent of population with specific health conditions or other demographic composition measures; and • Measures associated with the degree to which a market might be more capable or ready to implement care redesign activities. Examples of market level characteristics that might be associated with anticipated ease of implementation include the MSA-level EHR meaningful use levels, managed care penetration, ACO penetration and experience with other bundling efforts. It should be noted that, while these measures are proposed to be part of the selection stratus, we acknowledge that these and other market-level factors may be important to the proper understanding of the evaluation of the impact of CCJR. It is the intention that these and other measures will be considered in determining which MSAs are appropriate comparison markets for the evaluation as well as considered for possible subgroup analysis or risk adjustment purposes. The evaluation will include beneficiary, provider, and market level characteristics in how it examines the performance of this proposed model. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (4) Sample Size Calculations and the Number of Selected MSAs Analyses of the necessary sample size led us to conclude that we need to select 75 MSAs of the 384 MSAs with eligible LEJR episodes to participate in CCJR. The number and method of selection of these 75 MSAs from the 8 proposed groups is addressed in the following section. In coming to the decision to target 75 MSAs, we are proposing a conservative approach. Going below this threshold would jeopardize our ability to be confident in our results and to be able to generalize from the model to the larger national context. We discuss the assumptions and modeling that went into our proposal to test the model in 75 MSAs later in this section. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 In calculating the necessary size of the model, a key consideration was to have sufficient power to be able to detect the desired size impact. The larger the anticipated size of the impact, the fewer MSAs we would have to sample in order to observe it. However, a model sized to be able to only detect large impacts runs the risk of not being able to draw conclusions if the size of the change is less than anticipated. The measure of interest used in estimating sample size requirements for the CCJR model was wage-adjusted total episode spending. The data used for the wageadjusted total episode spending is the 3 year data pull previously described that covers LEJR episodes with admission dates from July 1, 2011 through June 30, 2014. For the purposes of the sample size calculation the impact estimate assumed we wanted to be able to detect a 2 percent reduction in wage adjusted episode spending after 1 year of experience. This amount was chosen because it is the anticipated amount of the discount we propose to apply to target prices in CCJR. The next consideration in calculating the necessary sample size is the degree of certainty we will need for the statistical tests that will be performed. In selecting the right sample size, there are two types of errors that need to be considered ‘‘false negatives’’ and ‘‘false positives’’. A false positive occurs if a statistical test concludes that the model was successful (the model saved money) when it was, in fact, not. A false negative occurs if a statistical test fails to find statistically significant evidence that the model was successful, but it was, in fact, successful. In considering the minimum sample size needs of a model, a standard guideline in the statistical literature suggests calibrating statistical tests to generate no more than a 5 percent chance of a false positive and selecting the sample size to ensure no more than a 20 percent chance of a false negative. In contrast, the proposed sample size for this project was based on a 20 percent chance of a false positive and a 30 percent chance of a false negative in order to be as conservative as was practicable. A third consideration in the sample size calculation was the appropriate unit of selection and whether it is necessary to base the calculation on the number of MSAs, the number of hospitals, or the number of episodes. As discussed later in this section, we are proposing to base the sample size calculation at the MSA level. The CCJR model is a nested comparative study, which has two key features. First, the unit of assignment (to treatment and comparison groups) is an PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 identifiable group; such groups are not formed at random, but rather through some physical, social, geographic, or other connection among their members. Second, the units of observation are members of those groups. In such designs, the major analytic problem is that there is an expectation for a positive correlation (intra-class correlation (ICC)) among observations of members of the same group (MSA). That ICC reflects an extra component of variance attributable to the group above and beyond the variance attributable to its members. This extra variation will increase the variance of any aggregate statistic beyond what would be expected with random assignment of beneficiaries or hospitals to the treatment group. In determining the necessary sample size, we need to take into consideration the degrees of freedom. As part of this process, we examined the number of beneficiaries, the number of hospitals, and the number of MSAs and the level of correlation in episode payments between each level. For example, while each beneficiary has their own episode expenditure level, there are commonalities between those expenditure amounts at the hospital level, based on hospital-specific practice and referral patterns. The number of degrees of freedom needed for any aggregate statistic is related to the number of groups (MSAs or hospitals), not the number of observations (beneficiary episodes). If we were to base the determination of the size of the model on beneficiary episodes where correlation exists, we would have an inflated false positive error rate and would overstate the impact of the model. We empirically examined the level of correlation between beneficiaries and hospitals and between hospitals and MSAs and determined that the correlation was high enough to be of concern and necessitate a MSA level unit of selection. Using the aforementioned assumptions, a power calculation was run which indicated we would need between 50 and 150 treatment MSAs to be able to reliably detect a 2 percent reduction in payments after 1 year. The lower end of this range assumes the ability of evaluation models to substantially reduce variation through risk adjustment and modeling. We anticipate that we will be able to use the conservative end of this range, but assuming that evaluation modeling can achieve ‘‘best’’ results poses a real risk to our ability to draw conclusions. We want to allow for some degree of flexibility and are thus proposing proceeding with 75 MSAs. The 75 MSA E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules number is at the 25th percentile between the 50 and 150 treatment MSA range. We narrowed the acceptable range to between 50 and 100, based on the assumption that we will be able substantial improve our estimates through modeling, and then chose a number in the middle of this reduced range. (5) Method of Selecting MSAs As previously discussed, we are seeking to choose 75 MSAs from our proposed 8 selection groups. We examined and considered a number of possible approaches including equal selection in each of the eight groups, equal selection in the four payment groups, selection proportionate to the number of MSAs in each group, and a number of approaches that differentially weighted the payment categories. After consideration, it was decided that a methodology that proportionally under-weighted more efficient MSAs and over-weighted more expensive MSAs was the most appropriate approach to fulfilling the overall priorities of this model to increase efficiencies and savings for LEJR cases while maintaining or improving the overall quality of care. This approach would make it less likely for the MSAs in the lowest spending category to be selected for inclusion. We thought this appropriate because the MSAs in the lowest expenditure areas have the least room for possible improvement and are already performing relatively efficiently compared to other geographic areas, which means that experience with the model in these areas may be relatively less valuable for evaluation purposes. At the same time, we believed it was important to include some MSAs in this group in order to assess the performance of this model in this type of circumstance. We also believe it is appropriate for higher payment areas to be disproportionately included because they are most likely to have significant room for improvement in creating efficiencies. We expect more variation in practice patterns among the more 41211 expensive areas. There are multiple ways an MSA can be more relatively expensive, including through outlier cases, higher readmission rates, greater utilization of physician services, or through PAC referral patterns. A larger sample of MSAs within the higher payment areas will allow for us to observe the impact of the CCJR model on areas with these various practice patterns in the baseline period. The proposed method of disproportionate selection between the strata is to choose 30 percent of the MSAs in the two groups in the bottom quarter percentile of the payment distribution, 35 percent of the MSAs in the two groups in the second lowest quartile, 40 percent in the third quartile, and 45 percent in the highest episode payment quartile. This proportion works out to an average of 38 percent overall, which corresponds to 75 selected MSAs out of the 196 eligible. The number of MSAs to be chosen in the eight selection groups is shown in Table 2. TABLE 2—NUMBER OF MSAS TO BE CHOSEN FROM THE EIGHT SELECTION GROUPS Payment in lowest quarter asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Selection Proportion ............................................................. Less Than Median Population (Group #) ............................ Number Eligible MSAs .................................................. Proportion x Number .................................................... Number to be selected from group .............................. More Than Median Population (Group #) ............................ Number Eligible MSAs .................................................. Proportion x Number .................................................... Number to be selected from group .............................. Total Eligible MSAs .............................................................. Number to be selected ................................................. We selected the proposed MSAs for the CCJR model through random selection. In the proposed method of selection, each MSA was assigned to one of the eight selection groups previously identified. Based on this sampling methodology, SAS Enterprise Guide 7.1 software was used to run a computer algorithm designed to randomly select MSAs from each strata. SAS Enterprise Guide 7.1 and the computer algorithm used to conduct selection represents an industrystandard for generating advanced analytics and provides a rigorous, standardized tool by which to satisfy the requirements of randomized selection. The key SAS commands employed include a ‘‘PROC SURVEYSELECT’’ statement coupled with the ‘‘METHOD=SRS’’ option used to specify simple random sampling as the sample selection method. A random number VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 Payment in 2nd lowest quarter 30% (1) 33 9.9 10 (5) 16 4.8 5 49 15 35% (2) 19 6.65 7 (6) 30 10.5 11 49 18 seed was generated for each of the eight strata by using eight number seeds corresponding to birthdates and anniversary dates of parties present in the room. The random seeds for stratum one through eight were as follows: 907, 414, 525, 621, 1223, 827, 428, 524. Note that no additional stratification was used in any of the eight groupings so as to produce an equal probability of selection within each of the eight groups. For more information on this procedure and the underlying statistical methodology, please reference SAS support documentation at: https:// support.sas.com/documentation/cdl/en/ statug/63033/HTML/default/ viewer.htm#statug_surveyselect_ sect003.htm/. We also considered a potential alternative approach to this random selection in which we would generate a starting number within SAS and then choose every third MSA PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 Payment in 3rd lowest quarter 40% (3) 22 8.8 9 (7) 27 10.8 11 49 20 Payment in highest quarter 45% (4) 24 10.8 11 (8) 25 11.25 11 49 22 Total eligible MSAs ........................ ........................ 98 ........................ 37 ........................ 98 ........................ 38 196 75 within a group starting at this point until the relevant number of MSAs were chosen. We opted to not utilize this feature for simplicity’s sake and alignment with other randomization methodologies used for CMS models. The selection of an MSA means that all hospitals that are physically located anywhere within the counties that make up the MSA are included. By definition, the entire county is included in an MSA and hospitals that are in the relevant counties will be impacted even if they are not part of the core urban area. The MSAs selected may change if the methodology changes in response to comments on the proposed methodology. Should the methodology we propose in this rule change as a result of comments received during the rulemaking process, it could result in different areas being selected for the model. In such an event, we would E:\FR\FM\14JYP3.SGM 14JYP3 41212 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules apply the final methodology and announce the selected MSAs in the final rule. Therefore we seek comment from all interested parties in every MSA on the randomized selection methodology proposed in this section. In accordance with section 1115A of the Act, we are proposing to codify these proposals in regulation in the new proposed part 510 of the Code of Federal Regulations. TABLE 3—PROPOSED MSAS INCLUDED IN THE CCJR MODEL MSA 10420 10740 11700 12020 12420 13140 13900 14500 15380 ....... ....... ....... ....... ....... ....... ....... ....... ....... 16020 ....... 16180 ....... 16740 ....... 17140 17820 17860 18580 19500 19740 20020 20500 21780 22420 22500 22660 23540 23580 24780 25420 26300 26900 ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... 28140 ....... 28660 ....... 29820 ....... 30700 ....... 31080 ....... asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 31180 31540 32780 32820 33100 ....... ....... ....... ....... ....... 33340 ....... 33700 33740 33860 34940 ....... ....... ....... ....... 34980 ....... 35300 ....... 35380 ....... VerDate Sep<11>2014 MSA Name Akron, OH. Albuquerque, NM. Asheville, NC. Athens-Clarke County, GA. Austin-Round Rock, TX. Beaumont-Port Arthur, TX. Bismarck, ND. Boulder, CO. Buffalo-Cheektowaga-Niagara Falls, NY. Cape Girardeau, MO-IL. Carson City, NV. Charlotte-Concord-Gastonia, NC-SC. Cincinnati, OH-KY-IN. Colorado Springs, CO. Columbia, MO. Corpus Christi, TX. Decatur, IL. Denver-Aurora-Lakewood, CO. Dothan, AL. Durham-Chapel Hill, NC. Evansville, IN-KY. Flint, MI. Florence, SC. Fort Collins, CO. Gainesville, FL. Gainesville, GA. Greenville, NC. Harrisburg-Carlisle, PA. Hot Springs, AR. Indianapolis-Carmel-Anderson, IN. Kansas City, MO-KS. Killeen-Temple, TX. Las Vegas-Henderson-Paradise, NV. Lincoln, NE. Los Angeles-Long Beach-Anaheim, CA. Lubbock, TX. Madison, WI. Medford, OR. Memphis, TN-MS-AR. Miami-Fort Lauderdale-West Palm Beach, FL. Milwaukee-Waukesha-West Allis, WI. Modesto, CA. Monroe, LA. Montgomery, AL. Naples-Immokalee-Marco Island, FL. Nashville-Davidson— Murfreesboro—Franklin, TN. New Haven-Milford, CT. New Orleans-Metairie, LA. 21:01 Jul 13, 2015 Jkt 235001 TABLE 3—PROPOSED MSAS INCLUDED IN THE CCJR MODEL— 2. Clinical Dimension of Episodes of Care Continued a. Definition of the Clinical Conditions Included in the Episode MSA MSA Name 35620 ....... New York-Newark-Jersey City, NY-NJ-PA. Norwich-New London, CT. Ogden-Clearfield, UT. Oklahoma City, OK. Orlando-Kissimmee-Sanford, FL. Pensacola-Ferry Pass-Brent, FL. Pittsburgh, PA. Port St. Lucie, FL. Portland-Vancouver-Hillsboro, OR-WA. Provo-Orem, UT. Reading, PA. Richmond, VA. Rockford, IL. Saginaw, MI. San Francisco-Oakland-Hayward, CA. Seattle-Tacoma-Bellevue, WA. Sebastian-Vero Beach, FL. South Bend-Mishawaka, IN-MI. St. Louis, MO-IL. Staunton-Waynesboro, VA. Tampa-St. Petersburg-Clearwater, FL. Toledo, OH. Topeka, KS. Tuscaloosa, AL. Tyler, TX. Virginia Beach-Norfolk-Newport News, VA-NC. Wichita, KS. 35980 36260 36420 36740 37860 38300 38940 38900 ....... ....... ....... ....... ....... ....... ....... ....... 39340 39740 40060 40420 40980 41860 ....... ....... ....... ....... ....... ....... 42660 42680 43780 41180 44420 45300 ....... ....... ....... ....... ....... ....... 45780 45820 46220 46340 47260 ....... ....... ....... ....... ....... 48620 ....... B. Episode Definition for the Comprehensive Care for Joint Replacement (CCJR) Model 1. Background Coordinated Quality Care-Joint Replacement is an episode payment model, focused on incentivizing health care providers to improve the efficiency and quality of care for an episode of care as experienced by a Medicare beneficiary by bundling payment for services furnished to the beneficiary for an episode of care for a specific clinical condition over a defined period of time. Key policies of such a model include the definition of episodes of care. Episodes of care have two significant dimensions—(1) a clinical dimension that describes what clinical conditions and associated services comprise the episode; and (2) a time dimension that describes the beginning, middle, and end of an episode. We present our proposals for these two dimensions of CCJR episodes in this section. PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 As discussed previously in section I.A. of this proposed rule, we have identified LEJR episodes, primarily hip and knee replacements, as the focus of this model. We believe that a straightforward approach for hospitals and other providers to identify Medicare beneficiaries in this payment model is important for the care redesign that is required for model success, as well as to operationalize the proposed payment and other model policies. The vast majority of lower extremity joint replacements (LEJRs) are furnished in the inpatient hospital setting, with a small fraction of partial knee replacements occurring in the hospital outpatient department (HOPD) setting. Most of the Current Procedural Terminology (CPT) codes that physicians report for LEJR are on the hospital Outpatient Prospective Payment System (OPPS) inpatient only list. The CY 2015 OPPS inpatient only list is Addendum E of the CY 2015 Hospital Outpatient Prospective Payment–Final Rule with Comment Period, which is available on the CMS Web site at: https://www.cms.gov/ Medicare/Medicare-Fee-for-ServicePayment/ASCPayment/ASCRegulations-and-Notices-Items/CMS1613-FC.html. Thus, under current FFS payment policy, Medicare pays hospitals for the facility services required for LEJR only when those procedures are furnished in the inpatient hospital setting. Therefore, we believe an episode payment model most appropriately focuses around an inpatient hospitalization for these major surgical procedures, as there is little opportunity for shifting the procedures under this model to the outpatient setting. We note further that LEJRs are paid for under the IPPS through the following two Medicare SeverityDiagnosis Related Groups (MS–DRGs): • MS–DRG 469 (Major joint replacement or reattachment of lower extremity with Major Complications or Comorbidities (MCC)). • MS–DRG 470 (Major joint replacement or reattachment of lower extremity without MCC). Multiple ICD–9–CM procedure codes that describe LEJR procedures and other less common lower extremity procedures group to these MS–DRGs, with their percentage distribution within the IPPS MS–DRGs 469 and 470 for the past 4 years outlined in Table 4. E:\FR\FM\14JYP3.SGM 14JYP3 41213 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules TABLE 4—DISTRIBUTION OF HOSPITAL CLAIMS FOR PROCEDURE CODES MAPPING TO MS–DRGS 469 AND 470 ICD–9–CM procedure code 81.54 81.51 81.52 81.56 00.85 00.86 00.87 84.27 84.28 ........ ........ ........ ........ ........ ........ ........ ........ ........ FY 2014 % Code descriptor Total knee replacement ............................................................................................. Total hip replacement ................................................................................................ Partial hip replacement .............................................................................................. Total ankle replacement ............................................................................................ Resurfacing hip, total, acetabulum and femoral head .............................................. Resurfacing hip, partial, femoral head ...................................................................... Resurfacing hip, partial, acetabulum ......................................................................... Lower leg or ankle reattachment ............................................................................... Thigh reattachment .................................................................................................... 57 30 12 0 0 0 0 0 N/A FY 2013 % 58 29 13 0 0 0 0 N/A N/A FY 2012 % 58 29 13 0 0 0 0 N/A N/A FY 2011 % 58 28 14 0 0 0 0 N/A 0 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Note: Percentages or claim counts with ‘‘N/A’’ had no claims. percentages of 0% represent less than 0.5% of total claims. Additionally, we note that there are various types of claims-based information available to CMS, hospitals, and other providers, that could be used to identify beneficiaries in the model who receive LEJRs, including the MS– DRGs for the acute care hospitalization for the procedure, the ICD–9–CM procedure code on the hospital claim, or the CPT code(s) reported by the orthopedic surgeon who furnishes the surgical procedure. While we could utilize ICD–9–CM procedure codes or CPT codes to identify beneficiaries included in the model, over 85 percent of procedures that group to MS–DRGs 469 and 470 are hip or knee replacements. Additionally, the hospitals that would be participating in this model receive payment under the IPPS, which is not determined by CPT codes and is based on clinical conditions and procedures that group to MS–DRGs. Finally, our review of the other low volume procedures that group to these same MS–DRGs, aside from total or partial hip and knee replacements, does not suggest that there is significant clinical or financial heterogeneity within these two MS– DRGs such that we would need to define care for included beneficiaries by ICD–9–CM procedure codes. Therefore, we propose that an episode of care in the CCJR model is triggered by an admission to an acute care hospital stay (hereinafter ‘‘the anchor hospitalization’’) paid under MS–DRG 469 or 470 under the IPPS during the model performance period. This approach offers operational simplicity for providers and CMS, and is consistent with the approach taken by the BPCI initiative to identify beneficiaries whose care is included in the LEJR episode for that model. We seek public comments on this proposal to define the clinical conditions that are the target of CCJR. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 b. Definition of Related Services Included in the Episode For purposes of this model, as in BPCI, given the frequent comorbidities experienced by Medicare beneficiaries and the generally elective nature of LEJR, we are interested in testing inclusive episodes to incentivize comprehensive, coordinated patientcentered care for the beneficiary throughout the episode. We propose to exclude only those Medicare items and services furnished during the episode that are unrelated to LEJR procedures based on clinical justification. During our experience with BPCI implementation, we reviewed a number of narrow episode definitions for LEJR episodes that were recommended by BPCI participants and other interested parties during the design phase for this project. We concluded that these narrow definitions commonly exclude many services that may be linked to the LEJR, as LEJR beneficiaries, on average, are at higher risk for more clinical problems than Medicare beneficiaries who have not recently undergone such procedures. Therefore, we propose that all CCJR episodes, beginning with the admission for the anchor hospitalization under MS–DRG 469 or 470 through the end of the proposed episode, include all items and services paid under Medicare Part A or Part B with the exception of certain exclusions as proposed in this section that are excluded because they are unrelated to the episode. The items and services ultimately included in the episode after the exclusions are applied are called related items and services. As proposed in sections III.C.4 and III.C.6 of this proposed rule, Medicare spending for related items and services would be included in the historical data used to set target prices, as well as in the calculation of actual episode spending that would be compared against the target price to assess the performance of participant hospitals. In PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 contrast, Medicare spending for unrelated items and services (excluded from the episode definition) would not be included in the historical data used to set target prices or in the calculation of actual episode spending. Related items and services included in CCJR episodes would be the following items and services paid under Medicare Part A or Part B, after the exclusions are applied: • Physicians’ services. • Inpatient hospital services (including readmissions), with certain exceptions proposed later in this section. • Inpatient psychiatric facility (IPF) services. • LTCH services. • IRF services. • SNF services. • HHA services. • Hospital outpatient services. • Independent outpatient therapy services. • Clinical laboratory services. • Durable medical equipment (DME). • Part B drugs. • Hospice. We note that under our proposed definition of related services included in the episode, the episode could include certain per-member-per-month model payments, as discussed in section III.C of this proposed rule. We propose to exclude from CCJR drugs that are paid outside of the MS– DRG, specifically hemophilia clotting factors (§ 412.115), identified through HCPCS code, diagnosis code, and revenue center on IPPS claims. Hemophilia clotting factors, in contrast to other drugs that are administered during an inpatient hospital stay and paid through the MS–DRG, are paid separately by Medicare in recognition that clotting factors are costly and essential to appropriate care for certain beneficiaries. Thus, we believe there are no efficiencies to be gained in the variable use of these high cost drugs when particular beneficiaries receive E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41214 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules LEJR procedures who have significantly different medical needs for clotting factors under an episode payment model, so we propose to exclude these high cost drugs from the actual historical episode expenditure data used to set target prices and from the hospital’s episode actual spending that is reconciled to the target price. Similarly, we propose to exclude IPPS new technology add-on payments for drugs, technologies, and services from CCJR episodes, excluding them from both the actual historical episode expenditure data used to set target prices and from the hospital’s actual episode spending that is reconciled to the target price. This proposal would apply to both the anchor hospital stay and any related readmissions during the episode. New technology add-on payments are made separately and in addition to the MS–DRG payment under the IPPS for specific new drugs technologies, and services that substantially improve the diagnosis or treatment of Medicare beneficiaries and would be inadequately paid otherwise under the MS–DRG system. Medicare pays a marginal cost factor of 50 percent for the costs to hospitals of the new drugs, technologies, or services. We do not believe it would be appropriate for the CCJR model to potentially hamper beneficiaries’ access to new technologies that are receiving new technology add-on payments or to burden hospitals who choose to use these new drugs, technologies, or services with concern about these payments counting toward episode actual expenditures. In addition, because new drugs, technologies, or services approved for the add-on payments vary unpredictably over time in their application to specific clinical conditions, we believe we should exclude IPPS new technology add-on payments from CCJR episodes. We followed a number of general principles in determining other proposed excluded services from the CCJR episodes in order to promote coordinated, high-quality, patientcentered care. Based on the broad nature of these episodes, we propose to identify excluded (unrelated) services rather than included (related) services based on the rationale that all Part A and Part B services furnished during the episode are related to the episode, unless they are unrelated based on clinical justification as described in more detail later in this section. In developing our proposals for exclusions for this model, we believe that no Part A services, other than certain excluded hospital readmissions during the VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 episode as described in this section, furnished post-hospital discharge during the episode should be excluded, as post-hospital discharge Part A services are typically intended to be comprehensive in nature. We also believe that no claims for services with diagnosis codes that are directly related to the LEJR procedure itself (for example, loosening of the joint prosthesis) based on clinical judgment, and taking into consideration coding guidelines, should be excluded. Furthermore, we believe that no claims for diagnoses that are related to the quality and safety of care furnished during the episode, especially the anchor hospitalization under MS–DRG 469 or 470, should be excluded, such as direct complications of post-surgical care during the anchor hospitalization. Examples of diagnoses that would not be excluded on this basis include surgical site infection and venous thromboembolism. Finally, we believe that no claims for services for diagnoses that are related to preexisting chronic conditions such as diabetes, which may be affected by care furnished during the episode, should be excluded. However, severe exacerbations of chronic conditions (for example, some surgical readmissions) that are unlikely to be affected by care furnished during the episode should be excluded; thus, when a beneficiary is admitted to the hospital during the episode for these circumstances, we would not consider it to be a related readmission for purposes of CCJR. We also believe that services for clinical conditions that represent acute clinical conditions not arising from an existing chronic clinical condition or complication of LEJR surgery occurring during an episode of care, which would not be covered by the previous principles about included services, should be excluded. To operationalize these principles for CCJR, we propose to exclude unrelated inpatient hospital admissions during the episode by identifying MS–DRGs for exclusion. We propose to exclude unrelated Part B services based on the ICD–9–CM diagnosis code (or their ICD– 10–CM equivalents when ICD–10–CM codes are implemented) that is the principal diagnosis code reported on claims for services furnished during the episode. More specifically, we propose to exclude specific inpatient hospital admissions and services consistent with the LEJR episode definition (also triggered by MS–DRGs 469 and 470) that is currently used in BPCI Model 2. We note that the list of exclusions was initially developed over 2 years ago for BPCI through a collaborative effort of PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 CMS staff, including physicians from medical and surgical specialties, coding experts, claims processing experts, and health services researchers. The list has been shared with thousands of entities and individuals participating in one or more phases of BPCI, and has undergone refinement over that time in response to stakeholder input about specific diagnoses or MS–DRGs for exclusion, resulting in only minimal changes over the last 2 years. Thus, the BPCI list of exclusions for LEJR procedures has been vetted broadly in the health care community; refined based on input from a wide variety of providers, researchers and other stakeholders; and successfully operationalized in the BPCI models. We are proposing its use in CCJR based on our confidence related to our several of years of experience that this definition is reasonable and workable for LEJR episodes, for both providers and CMS. With respect to the proposed inpatient hospital admission exclusions for this model, we propose that all medical MS–DRGS for readmissions be included in CCJR episodes as related services, with the exception of oncology and trauma medical MS–DRGs. We propose that admissions for oncology and trauma medical MS–DRGs be excluded from CCJR episodes. Readmissions for medical MS–DRGs are generally linked to the hospitalization for the LEJR procedure as a complication of the illness that led to the surgery, a complication of treatment or interactions with the health care system, or a chronic illness that may have been affected by the course of care. We refer readers to section III.D. of this proposed rule for background and discussion of the complication rate measure proposed for CCJR that includes common medical complications resulting from the aforementioned circumstances following LEJR procedures and that may result in related hospital readmissions. For readmissions for medical MS–DRGs, the selection of the primary diagnosis code is not clear-cut, so we generally believe they all should be included, and we strongly believe that providers should focus on comprehensive care for beneficiaries during episodes. We propose to include all disease-related surgical MS–DRGs for readmissions, such as hip/knee revision, in CCJR episodes. We also propose to include readmissions for all body system-related surgical MS–DRGs as they are generally related to complications of the LEJR procedures. An example of a readmission of this type would be for an inferior vena cava filter placement for E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules treatment of thromboembolic complications of the LEJR. We propose to exclude hospital admissions for chronic disease surgical MS–DRGs, such as prostatectomy (removal of the prostate gland), as they are unrelated to the clinical condition that led to the LEJR nor would they have been precipitated by the LEJR. Finally, we propose that hospital admissions for acute disease surgical MS–DRGs, such as appendectomy, be excluded because they are highly unlikely to be related to, or precipitated by, LEJR procedures and would not be affected by LEJR episode care redesign. With respect to the LEJR proposed diagnosis code exclusions for Part B services for this model, we propose that ICD–9–CM codes be excluded or included as a category and as identified by code ranges. We propose that disease-related diagnoses, such as osteoarthritis of the hip or knee, are included. We also propose that body system-related diagnoses are included because they relate to complications that may arise from interactions with the health care system. An example of this would be pressure pre-ulcer skin changes. Additionally, we propose that all common symptom diagnoses are included because providers have significant discretion to select these as principal diagnosis codes. We propose that acute disease diagnoses, such as severe head injury, are excluded. Finally, we propose that chronic disease diagnoses be included or excluded based on specific clinical and coding judgment as described previously with respect to the original development of the exclusions for LEJR episodes under BPCI, taking into consideration whether the condition was likely to have been affected by the LEJR procedure and recovery period and whether substantial services were likely to have been provided for the chronic condition during the episode. Thus, chronic kidney disease and cirrhosis would be included in the episode, but glaucoma and chemotherapy would be excluded. Exclusions from CCJR episodes are based on care for unrelated clinical conditions represented by MS–DRGs for readmissions during the episode and ICD–9 CM codes for Part B services furnished during the episode after discharge from the anchor hospitalization. The complete lists of proposed excluded MS–DRGs for readmissions and proposed excluded ICD–9–CM codes for Part B services is posted on the CMS Web site at https:// innovation.cms.gov/initiatives/ccjr/. We note that as CMS moves to implement ICD–10–CM we will make the CCJR exclusions that would map to VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 the final ICD–9–CM exclusions for CCJR available in the ICD–10–CM format as well. We propose that all Part A and Bcovered items and services that would not be excluded based on the exclusions list are included in the episode. Furthermore, we propose to update the exclusions list without rulemaking on an annual basis, at a minimum, to reflect annual changes to ICD–CM coding and annual changes to the MS– DRGs under the IPPS, as well as to address any other issues that are brought to our attention by the public throughout the course of the model test. We would first develop potential exclusions list revisions of MS–DRGs for readmissions and ICD–9 (or ICD–10, as applicable) diagnosis codes for Part B services based on our assessment against the following standards: • We would not exclude any items or services that are— ++ Directly related to the LEJR procedure itself (such as loosening of the joint prosthesis) or the quality or safety of LEJR care (such as post-surgical wound infection or venous thromboembolism); and ++ For chronic conditions that may be affected by the LEJR procedure or post-surgical care (such as diabetes). By this we mean that where a beneficiary’s underlying chronic condition would be affected by the LEJR procedure, or where the beneficiary’s LEJR or postLEJR care must be managed differently as a result of the chronic condition, then those items and services would be related and would be included in the episode. • We would exclude items and services for— ++ Chronic conditions that are generally not affected by the LEJR procedure or post-surgical care (such as removal of the prostate). By this we mean that where a beneficiary’s underlying chronic condition would not be affected by the LEJR procedure, or where the beneficiary’s LEJR or postLEJR care need not be managed differently as a result of the chronic condition, then those items and services would not be related and would not be included in the episode; and ++ Acute clinical conditions not arising from existing episode-related chronic clinical conditions or complications of LEJR surgery from the episode (such as appendectomy). We would post the potential revised exclusions, which could include additions to or deletions from the exclusions list, to the CMS Web site to allow for public input on our planned application of these standards, and then adopt changes to the exclusions list with posting to the CMS Web site of the PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 41215 final revised exclusions list after our consideration of the public input. We seek comment on our proposals for identifying excluded readmissions and Part B-covered items and services, as well as our proposed process for updating the exclusions list. 3. Duration of Episodes of Care a. Beginning the Episode and Beneficiary Care Inclusion Criteria While we propose to identify LEJR episodes by an acute care hospitalization for MS–DRG 469 and 470, we recognize that the beneficiary’s care for an underlying chronic condition, such as osteoarthritis, which ultimately leads to the surgical procedure, typically begins months to years prior to the surgical procedure. Because of the clinical variability leading up to the joint replacement surgery and the challenge of identifying unrelated services given the multiple chronic conditions experienced by many beneficiaries, we do not propose to begin the episode prior to the anchor hospitalization (that is, the admission that results in a discharge under MS– DRG 469 or 470). We believe the opportunities for care redesign and improved efficiency prior to the inpatient hospital stay are limited for an episode payment model of this type that focuses on a surgical procedure and the associated recovery once the decision to pursue surgery has been made, rather than an episode model that focuses on decision-making and management of a clinical condition itself (such as osteoarthritis). We propose to begin the episode with an inpatient anchor hospitalization for MS–DRG 469 or MS–DRG 470 in accordance with the methodology described. This proposal to begin the episode upon admission for the anchor hospitalization is consistent with LEJR episode initiation under Model 2 of BPCI. While we are not proposing to begin the episode prior to the inpatient hospital admission, we note that our proposed episode definition includes all services that are already included in the IPPS payment based on established Medicare policies, such as diagnostic services (including clinical diagnostic laboratory tests) and nondiagnostic outpatient services related to a beneficiary’s hospital admission provided to a beneficiary by the admitting hospital, or by an entity wholly owned or wholly operated by the admitting hospital (or by another entity under arrangements with the admitting hospital), within 3 days prior to and including the date of the beneficiary’s admission. For more E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41216 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules information on the 3-Day Payment Window payment policies, see CMS Pub. 100–04, Chapter 3, section 40.3 and Chapter 4, section 10.12. We propose that the defined population of Medicare beneficiaries whose care will be included in CCJR meet the following criteria upon admission to the anchor hospitalization. We note that these criteria are also consistent with Model 2 of BPCI, as well as most other Innovation Center models that do not target a specific subpopulation of beneficiaries. The LEJR episodes for all beneficiaries in the defined population will be included in CCJR (although certain episodes may be canceled for purposes of determining actual episode payments for reasons discussed later in this proposed rule), and we refer readers to section I.B.8 of this proposed rule for further discussion of beneficiary notification and a beneficiary’s ongoing right under CCJR to obtain health services from any individual or organization qualified to participate in the Medicare program. • The beneficiary is enrolled in Medicare Part A and Part B throughout the duration of the episode. • The beneficiary’s eligibility for Medicare is not on the basis of End Stage Renal Disease. • The beneficiary must not be enrolled in any managed care plan (for example, Medicare Advantage, Health Care Prepayment Plans, cost-based health maintenance organizations). • The beneficiary must not be covered under a United Mine Workers of America health plan, which provides healthcare benefits for retired mine workers. • Medicare must be the primary payer. Our proposal for inclusion of beneficiaries in CCJR is as broad as feasible, representing all those LEJR episodes for which we believe we have comprehensive historical Medicare payment data that allow us to appropriately include Medicare payment for all related services during the episode in order to set appropriate episode target prices. For beneficiaries whose care we propose to exclude from the model, we are unable to capture or appropriately attribute to the episode the related Medicare payments because of Medicare’s payment methodology. For example, if a beneficiary is enrolled in a Medicare Advantage plan, Medicare makes capitated payments (and providers do not submit complete claims data to CMS), so we would not have a way to identify and attribute the portion of those payments related to an LEJR episode. More information on setting bundled payment target prices VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 for episodes under CCJR is available in section III.C.4.b of this proposed rule. Including the broadest feasible array of Medicare beneficiaries’ admissions in the model would provide CMS with the most robust information about the effects of this model on expenditures and quality for beneficiaries of the widest variety of ages and comorbidities, and allow the participant hospitals the greatest opportunity to benefit financially from systematic episode care redesign because most Medicare beneficiaries undergoing an LEJR procedure will be included in the model and, therefore, subject to the policies we propose. We seek comment on our proposal on when to begin the CCJR episode, as well as to identify the care included for beneficiaries. b. Middle of the Episode We propose that once the episode begins for a beneficiary whose care is included, the episode continues until the end as described in the next section of this proposed rule, unless the episode is cancelled because the beneficiary no longer meets the same inclusion criteria proposed for the beginning of the episode at any point during the episode. When an episode is cancelled, the services furnished to beneficiaries prior to and following the episode cancellation will continue to be paid by Medicare as usual but we will not calculate actual episode spending that would otherwise under CCJR be reconciled against the target price for the beneficiary’s care (see section III.C.6 of this proposed rule). As discussed in section III.C.10.a.(3) of this proposed rule with comment period, waivers of program rules applicable to beneficiaries in CCJR episodes would apply to the care of beneficiaries who are in CCJR episodes at the time when the waiver is used to bill for a service that is furnished to the beneficiary, even if the episode is later cancelled. We believe it would be appropriate to cancel the episode when a beneficiary’s status changes during the episode such that they no longer meet the criteria for inclusion because the episode target price reflects full payment for the episode, yet we would not have full Medicare episode payment data for the beneficiary to reconcile against the target price. In addition, we propose that the following circumstances would also cancel the episode: • The beneficiary is readmitted to an acute care hospital during the episode and discharged under MS–DRG 469 or 470 (in this case, the first episode would PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 be cancelled and a new LEJR episode would begin for the beneficiary). • The beneficiary dies during the anchor hospitalization. • The beneficiary initiates an LEJR episode under BPCI Models 1, 2, 3 or 4. In the case of beneficiary death during the anchor hospitalization, we believe it would be appropriate to cancel the episode as there are limited efficiencies that could be expected during the anchor hospital stay itself. In the case of beneficiary readmission during the first CCJR episode for another LEJR (typically a planned staged second procedure), we do not believe it would be appropriate to include two episodes in the model with some time periods overlapping, as that could result in attribution of the Medicare payment for 2 periods of PAC to a single procedure. We seek comment on our proposals to cancel episodes once they have begun but prior to their end. c. End of the Episode LEJR procedures are typically major inpatient surgical procedures with significant associated morbidity and a prolonged recovery period that often is marked by significant PAC needs, potential complications of surgery, and more intense management of chronic conditions that may be destabilized by the surgery. In light of the course of recovery from LEJRs for Medicare beneficiaries, we propose that an episode in the CCJR model end 90 days after discharge from the acute care hospital in which the anchor hospitalization (for MS–DRG 469 or 470) took place. Hereinafter, we refer to the proposed CCJR model episode duration as the ‘‘90-day post-discharge’’ episode. To the extent that a Medicare payment for included services spans a period of care that extends beyond the episode duration, these payments would be prorated so that only the portion attributable to care during the fixed duration of the episode is attributed to the episode spending. We note for the vast majority of beneficiaries undergoing a hip or knee joint replacement, a 90-day postdischarge episode duration encompasses the full transition from acute care and PAC to recovery and return to activities. We believe the 90day post-discharge episode duration encourages acute care hospitals, physicians, and PAC providers to promote coordinated, quality care as the patient transitions from the inpatient to outpatient settings and the community. In proposing the 90-day postdischarge duration for LEJR episodes in CCJR, we took into consideration the literature regarding the clinical E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS experiences of patients who have undergone THA or TKA procedures. In 2007–2008, the 30-day all-cause readmission rate for primary THA among Medicare beneficiaries was 8.5 percent, while the 90-day all-cause readmission rate was 11.9 percent, indicating that while the rate of readmission begins to taper after 30 days, readmissions continue to accrue throughout this 90 day window.6 In single center studies, Schairer et al found unplanned 30-day hospital readmission rates were 3.5 percent and 3.4 percent and unplanned 90-day hospital admission rates were 4.5 percent and 6 percent for primary THA and TKA, respectively, demonstrating that the risk of readmission remains significantly elevated from 30 through 90 days post-hospital discharge.7 8 Further exploring the reasons for unplanned admission for TKAs within 90 days of a knee replacement procedure, Schairer et al found that 75 percent were caused by surgical causes such as arthrofibrosis and surgical site infection. Additional information on the common reasons for hospital readmission following TKA or THA can be obtained from The American College of Surgeons National Surgical Quality Improvement Program.9 These data identified the top ten reasons for readmission within 30 days of a hip or knee arthroplasty: • Surgical site infections (18.8 percent). • Prosthesis issues (7.5 percent). • Venous thromboembolism (6.3 percent). • Bleeding (6.3 percent). • Orthopedic related (5.1 percent). • Pulmonary (3.2 percent). • Cardiac (2.4 percent). • CNS or CVA (2.4 percent). 6 Cram P, Lu X, Kates SL, Singh JA, Li Y, Wolf BR. Total Knee Arthroplasty Volume, Utilization, and Outcomes Among Medicare Beneficiaries, 1 991–2010. JAMA. 2012;308(12):1227–1236. doi:10.1001/2012.jama.11153. 7 Schairer WW, et al. Causes and frequency of unplanned hospital readmission after total hip arthroplasty. Clin Orthop Relat Res. 2014 Feb;472(2):464–70. doi: 1 0.1007/s11999–013– 3121–5. 8 Schairer WW, et al. What are the rates and causes of hospital readmission after total knee arthroplasty? Clin Orthop Relat Res. 2014 Jan;472(1):181–7. doi: 1 0.1007/s11999–013–3030– 7. 9 Merkow RP, Ju MH, Chung JW, et al. Underlying Reasons Associated With Hospital Readmission Following Surgery in the United States. JAMA. 2015;313(5):483–495. doi:10.1001/jama.2014.18614. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 • Ileus or Obstruction (2.3 percent). • Sepsis (2.1 percent). In addition, the authors concluded that ‘‘readmissions after surgery were associated with new post-discharge complications related to the procedure and not exacerbation of prior index hospitalization complications, suggesting that readmissions after surgery are a measure of post-discharge complications.’’ Finally, with regard to the potential for readmission for joint replacement revision within a 90-day post-discharge episode, in a twelve-year study on Medicare patients conducted by Katz, et al., the risk of revision after THA remained elevated at approximately 2 percent per year for the first eighteen months and then 1 percent per year for the remainder of the followup period.10 This study suggests that a longer episode, as opposed to a shorter episode, is more likely to simulate the increased risk of revision LEJR patients face. In order to address the complication rates associated with elective primary total hip or knee arthroplasty, we developed an administrative claimsbased measure (for a detailed description of the measure see section III.D of this proposed rule). During the development of the Hospital-level RiskStandardized Complication Rate (RSCR) following elective primary THA or TKA or both, complications of elective primary total hip or knee replacement were identified to occur within specific timeframes.11 For example, analyses done during the development of the measure as well as Technical Expert Panel opinion found that—(1) mechanical complications and periprosthetic joint infection/wound infection are still attributable to the procedure for the 90 days following admission for surgery; (2) death, surgical site bleeding, and pulmonary embolism are still likely attributable to the hospital performing the procedure for up to 30 days; and (3) medical complications of acute myocardial 10 Katz JN, et al. Twelve-Year Risk of Revision After Primary Total Hip Replacement in the U.S. Medicare Population. J Bone Joint Surg Am. 2012 Oct 1 7; 94(20): 1 825–1832. doi: 1 0.2106/ JBJS.K.00569 11 Hospital Quality Initiatives. Measure Methodology. Available at: https://www.cms.gov/ Medicare/Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/MeasureMethodology.html. See Hip and Knee Arthroplasty Complications zip file under downloads. Accessed on April 10, 2015. PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 41217 infarction (AMI), pneumonia, and sepsis/septicemia/shock are more likely to be attributable to the procedure for up to 7 days. Other factors further supporting a 90day post-discharge episode duration are the elevated risk of readmission throughout this time period, as well as the fact that treatment for pneumonia is considered by American Thoracic Society guidelines to be ‘‘health careassociated’’ if it occurs up to 90 days following an acute care hospitalization of at least 2 days.12 According to the American Academy of Orthopedic Surgeons, patients undergoing total hip replacement should be able to resume most normal light activities of daily living within 3 to 6 weeks following surgery.13 In a small randomized controlled trial of two approaches to hip arthroplasty, average time to ambulation without any assistive device was 22–28 days.14 According to a 2011 systematic review of studies evaluating physical functioning following THA, patients have recovered to about 80 percent of the levels of controls by 8 months after surgery.15 We also refer readers to a study by the Assistant Secretary for Planning and Evaluation (ASPE) in the U.S Department of Health and Human Services that assessed the mean payments for acute care, PAC, and physician services grouped in the MS– DRG 470.16 In this study, CMS payment for services following an MS–DRG 470 hospitalization were concentrated within the first 30 days following discharge, with plateauing of payments between 60- or 90-days post-discharge. 12 Guidelines for the management of adults with hospital-acquired, ventilator-associated, and healthcare-associated pneumonia. American Thoracic Society, Infectious Diseases Society of America. Am J Respir Crit Care Med. 2005;171(4):388. 13 https://orthoinfo.aaos.org/ topic.cfm?topic=A00377. 14 Taunton MJ, et al. Direct Anterior Total Hip Arthroplasty Yields More Rapid Voluntary Cessation of All Walking Aids: A Prospective, Randomized Clinical Trial The Journal of Arthroplasty. Volume 29, Issue 9, Supplement, September 2014, Pages 169–172. 15 Vissers MM, et al. Recovery of Physical Functioning After Total Hip Arthroplasty: Systematic Review and Meta-Analysis of the Literature. Physical Therapy May 2011 vol. 91 no. 5 615–629. 16 Post-Acute Care Episodes Expanded Analytic File. Assistant Secretary for Planning and Evaluation. U.S. Department of Health and Human Services. April 2011. E:\FR\FM\14JYP3.SGM 14JYP3 41218 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules Finally, payment and length of stay analyses found the average length of stay in PAC during a 90-day postdischarge episode for MS–DRG 470 to be 47.3 days, indicating that a longer period post-discharge of 90 days is reasonable as a proposal to end the episode of care.17 We note that these analyses did not include any time between hospital discharge and the start of PAC. TABLE 5—COST AND LENGTH OF STAY STATISTICS FOR MS–DRG 470 FOR VARIOUS EPISODE DURATIONS Statistics for DRG 470 (2006 data) 30-day episode 60-day episode Mean Medicare spending per hospital discharge ................................. (acute+PAC+physician) ......................................................................... Mean payment for anchor hospitalization ............................................. Mean payment for PAC ........................................................................ Mean payment for physicians (during anchor hospitalization) ............. Mean payment for readmission (includes all PAC users, even if no readmission occurs during the episode). Mean length of stay (LOS) for PAC ...................................................... $18,838 ...................... $20,343 ...................... $21,125 10,463 ........................ 6,835 .......................... 1,540 .......................... 550 ............................. 10,463 ........................ 8,339 .......................... 1,540 .......................... 929 ............................. 10,463 9,122 1,540 1,242 25.5 days .................... 39.6 days .................... 47.3 days 90-day episode Other tests of bundled payment models for hip and knee replacement have used 90-day post-discharge episodes.18 We also note that despite BPCI Model 2 allowing participants a choice between 30-, 60-, or 90-day postdischarge episodes, over 86 percent of participants have chosen the 90-day post-discharge episode duration for the LEJR episode. Further, a 90-day postdischarge episode duration aligns with the 90-day global period included in the Medicare Physician Fee Schedule payment for the surgical procedure. We also considered proposing a 60day post-discharge episode duration, but the full transition of care following LEJR would exceed this window for some beneficiaries, especially those who are discharged to an institutional postacute provider initially and then 17 Analysis of Post Acute Care Episode Definitions File. https://innovation.cms.gov/ initiatives/bundled-payments/learning-area.html. 18 -Ridgely MS, et al. Bundled Payment Fails To Gain A Foothold In California: The Experience Of The IHA Bundled Payment Demonstration. Health Affairs, 33, no.8 (2014):1345–1352. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 E:\FR\FM\14JYP3.SGM 14JYP3 EP14JY15.000</GPH> asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Note: Data are per PAC user (88% of beneficiaries hospitalized under MS–DRG 470 are discharged to PAC). PAC users are defined as beneficiaries discharged to SNF, IRF, or LTCH within 5 days of discharge from the index acute hospitalization, or discharged to HHA or hospital outpatient therapy within 14 days of discharge from the index acute hospitalization. Mean LOS for PAC does not include any gap between hospital discharge date and start of PAC. Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules transition to home health or outpatient therapy services for continued rehabilitation. According to a report from ASPE on Medicare beneficiaries receiving PAC following major joint replacement in 2006, 13 percent first receive SNF services and then receive HHA services—with a total mean episode duration of 56.8 days.19 An additional 9.2 percent receive HHA services first and then receive outpatient therapy services—with a total mean episode duration of 78.7 days. Finally, 6.7 percent receive IRF services first and then HHA services (total mean length of stay 55.3 days), and 4.8 percent receive SNF services first and then outpatient therapy services (total mean length of stay 71.5 days). The remainder only receives one type of PAC. Therefore, in order to be inclusive of most possible durations of recovery, and services furnished to reach recovery, we propose the 90-day post-discharge episode duration for CCJR. We believe that beneficiaries will benefit from aggressive management and care coordination throughout this episode duration, and hospitals will have opportunities under CCJR to achieve efficiencies from care redesign during the 90-day post-discharge episode period. We seek comment on our proposal to end the episode 90 days after the date of discharge from the anchor hospitalization, as well as on the alternative we considered of ending the CCJR episode 60 days after the date of discharge. In accordance with section 1115A of the Act, we are proposing to codify these proposals in regulation in the new proposed Part 510. C. Proposed Methodology for Setting Episode Prices and Paying Model Participants under the CCJR Model 1. Background As described in section II.B of this proposed rule, we propose to use the CCJR episode payment model to incentivize participant hospitals to work with other health care providers to improve quality of care for Medicare beneficiaries undergoing LEJR procedures and post-operative recovery, while enhancing the efficiency with which that care is provided. We propose to apply this incentive by paying participant hospitals or holding them responsible for repaying Medicare based on their CCJR episode quality and Medicare expenditure performance. The following sections describe our proposals for— • How CCJR episodes would be attributed to a participant hospital; 41219 • How the reconciliation of Medicare expenditures based on actual episode spending in relation to the target price would be structured and operationalized; • How Medicare actual episode payments under existing payment systems would be compared against episode target prices; • How hospital quality of care for CCJR episodes would be compared against quality thresholds Medicare establishes under this model; • How payments to or repayment amounts from participant hospitals would be determined so that, on average, the episode target prices are paid by Medicare for CCJR episodes; and • What protections from excessive risk due to high payment cases would be in place for participant hospitals. 2. Performance Years, Retrospective Episode Payment, and Two-sided Risk Model a. Performance Period We propose that the CCJR model would have 5 performance years. The performance years would align with calendar years, beginning January 1, 2016. Table 6 includes details on which episodes would be included in each of the 5 performance years. TABLE 6—PERFORMANCE YEARS FOR CCJR MODEL Performance year Calendar year 2016 2 ........................................................................ 2017 3 ........................................................................ 2018 4 ........................................................................ 2019 5 ........................................................................ asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 1 ........................................................................ 2020 Episodes included in performance year Episodes that start on or after January cember 31, 2016. Episodes that end between January 1, clusive. Episodes that end between January 1, clusive. Episodes that end between January 1, clusive. Episodes that end between January 1, clusive. All episodes tested in this model will begin on or after January 1, 2016 and end on or before December 31, 2020. We note that this definition results in performance year 1 being shorter than the later performance years in terms of the length of time over which an anchor hospitalization could occur under the model. We also note that some episodes that begin in a given calendar year may be captured in the following performance year due to the episodes ending after December 31st (for example, episode beginning in December 2016 and ending in March 2017 would be part of performance year 2). We believe 5 years would be sufficient time to test the CCJR model and gather sufficient data to evaluate whether it improves the efficiency and quality of care for an LEJR episode of care. Having fewer than 5 performance years may not provide sufficient time or data for evaluation. The 5-year performance period is consistent with the performance period used for other CMMI models (for example, the Pioneer Accountable Care Organization (ACO) Model). 19 Examining Post Acute Care Relationships in an Integrated Hospital. Assistant Secretary for 1, 2016, and end on or before De2017, and December 31, 2017, in2018, and December 31, 2018, in2019, and December 31, 2019, in2020, and December 31, 2020, in- Planning and Evaluation. U.S. Department of Health and Human Services. February 2009. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 b. Proposed Retrospective Payment Methodology As described in section III.B of this proposed rule, we propose that an episode in the CCJR model begins with the admission for an anchor hospitalization and ends 90 days postdischarge from the anchor hospitalization, including all related services covered under Medicare Parts A and B during this timeframe, with limited exclusions and adjustments, as described in sections III.B, III.C.3, and III.C.7 of this proposed rule. The E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41220 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules episodes would be attributed to the participant hospital where the anchor hospitalization occurred. We propose to apply the CCJR episode payment methodology retrospectively. Under this proposal, all providers and suppliers caring for Medicare beneficiaries in CCJR episodes would continue to bill and be paid as usual under the applicable Medicare payment system. After the completion of a CCJR performance year, Medicare claims for services furnished to beneficiaries in that year’s non-cancelled episodes would be grouped into episodes and aggregated, and participant hospitals’ CCJR episode quality and actual payment performance would be assessed and compared against episode quality thresholds and target prices, as described in sections III.C.5 and III.C.4 of this proposed rule, respectively. After the participant hospitals’ actual episode performance in quality and spending are compared against the aforementioned episode quality thresholds and target prices, we would determine if Medicare would make a payment to the hospital (reconciliation payments), or if the hospital owes money to Medicare (resulting in Medicare repayment). The possibility for hospitals to receive reconciliation payments or be subject to repayment (note: participant hospitals would not be subject to repayment for performance year 1) is further discussed in section III.C.2.c. of this proposed rule. We considered an alternative option of paying for episodes prospectively by paying one lump sum amount to the hospital for the expected costs of the 90day episode. However, we believe such an option would be challenging to implement at this time given the payment infrastructure changes for both hospitals and Medicare that would need to be developed to pay and manage prospective CCJR episode payments. We note that a retrospective episode payment approach is currently being utilized under BPCI Model 2. We believe that a retrospective payment approach can accomplish the objective of testing episode payment in a broad group of hospitals, including financial incentives to streamline care delivery around that episode, without requiring core billing and payment changes by providers and suppliers, which would create substantial administrative burden. However, we seek comment on potential ways to implement a prospective payment approach for CCJR in future performance years of the model. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 c. Proposed Two-Sided Risk Model We propose to establish a two-sided risk model for hospitals participating in the CCJR model. We propose to provide episode reconciliation payments to hospitals that meet or exceed quality performance thresholds and achieve cost efficiencies relative to CCJR target prices established for them, as defined later in sections III.C.4 and III.C.5 of this proposed rule. Similarly, we propose to hold hospitals responsible for repaying Medicare when actual episode payments exceed their CCJR target prices in each of performance years 2 through 5, subject to certain proposed limitations discussed in section III.C.8 of this proposed rule. Target prices would be established for each participant hospital for each performance year. We propose that hospitals will be eligible to receive reconciliation payments from Medicare based on their quality and actual episode spending performance under the CCJR model in each of CCJR performance years 1 through 5. Additionally, we propose to phase in the responsibility for hospital repayment of episode actual spending if episode actual spending exceeds their target price starting in performance year 2 and continuing through performance year 5. Under this proposal in performance year 1, participant hospitals would not be required to pay Medicare back if episode actual spending is greater than the target price. We considered an episode payment structure in which, for all 5 performance years of the model, participant hospitals would qualify for reconciliation payments if episode actual spending was less than the episode target price, but would not be required to make repayments to Medicare if episode actual spending was greater than the episode target price. However, we believe not holding hospitals responsible for repaying excess episode spending would reduce the incentives for hospitals to improve quality and efficiency. We also considered starting the CCJR payment model with hospital responsibility for repaying excess episode spending in performance year 1 to more strongly align participant hospital incentives with care quality and efficiency. However, we believe hospitals may need to make infrastructure, care coordination and delivery, and financial preparations for the CCJR episode model, and that those changes can take several months or longer to implement. With this consideration in mind, we propose to begin hospitals’ responsibility for repayment of excess episode spending PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 beginning in performance year 2 to afford hospitals time to prepare, while still beginning some incentives earlier (that is, reconciliation payments in year 1) to improve quality and efficiency of care for Medicare beneficiaries. We solicit comment on the proposed incentive structure for CCJR. In an effort to further ensure hospital readiness to assume responsibility for circumstances that could lead to a hospital repaying to Medicare actual episode payments that exceed the episode target price, we propose to begin to phase in this responsibility for performance year 2, with full responsibility for excess episode spending (as proposed in this rule) applied for performance year 3 through performance year 5. To carry out this ‘‘phase in’’ approach, we propose during the first year of any hospital financial responsibility for repayment (performance year 2) to set an episode target price that partly mitigates the amount that hospitals would be required to repay (see section III.C.4.b of this proposed rule), as well as more greatly limits (as compared to performance years 3 through 5) the maximum amount a hospital would be required to repay Medicare across all of its episodes (see section III.C.8 of this proposed rule). 3. Adjustments to Payments Included in Episode Medicare payments during the model’s performance year for Parts A and B claims for services included in the episode definition, as discussed in section III.B of this proposed rule, would be summed together for each non-cancelled CCJR episode that occurred to create the actual episode payment amount. We propose three adjustments to this general approach for—(1) special payment provisions under existing Medicare payment systems; (2) payment for services that straddle the end of the episode; and (3) high payment episodes. We note there would be further adjustments to account for overlaps with other Innovation Center models and CMS programs; we refer readers to section III.C.7 of this proposed rule. We do not propose to adjust hospitalspecific or regional components of target prices for any Medicare repayment or reconciliation payments made under the CCJR model; CCJR repayment and reconciliation payments would be not be included per the proposed episode definition in section III.B of this proposed rule. Including reconciliation payments and Medicare repayments in target price calculations would perpetuate the initial set of target prices E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS once CCJR performance years are captured in the 3- historical-years of data used to set target prices, as proposed in section III.C.4. of this proposed rule, beginning with performance year 3 when performance year 1 would be part of the 3-historicalyears. Including any prior performance years’ reconciliations or repayments in target price calculations would approximately have the effect (excluding impact of the proposed adjustments for high payment episodes (see section III.C.3.c. of this proposed rule) and proposed limits or adjustments to hospital financial responsibility (see section III.C.8. of this proposed rule)) of Medicare paying hospitals the target price, regardless of whether the hospital went below, above, or met the target price in the prior performance years before accounting for the reconciliation payments or repayments. We intend for target prices to be based on historical patterns of service actually provided, so we do not propose to include reconciliation payments or repayments for prior performance years in target price calculations. a. Proposed Treatment of Special Payment Provisions Under Existing Medicare Payment Systems Many of the existing Medicare payment systems have special payment provisions that have been created by regulation or statute to improve quality and efficiency in service delivery. IPPS hospitals are subject to incentives under the HRRP, the Hospital Value-Based Purchasing (HVBP) Program, the Hospital-Acquired Condition (HAC) Reduction Program, and the Hospital Inpatient Quality Reporting Program (HIQR) and Outpatient Quality Reporting Program (OQR). IPPS hospitals and CAHs are subject to the Medicare EHR Incentive Program. Additionally, the majority of IPPS hospitals receive additional payments for Medicare Disproportionate Share Hospital (DSH) and Uncompensated Care, and IPPS teaching hospitals can receive additional payments for Indirect Medical Education (IME). IPPS hospitals that meet a certain requirements related to low volume Medicare discharges and distance from another hospital receive a low volume add-on payment. As mentioned in section III.B.2.b of this proposed rule, acute care hospitals may receive new technology add-on payments to support specific new technologies or services that substantially improve the diagnosis or treatment of Medicare beneficiaries and would be inadequately paid otherwise under the MS–DRG system. Also, some VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 IPPS hospitals qualify to be sole community hospitals (SCHs) or Medicare-dependent hospitals (MDHs), and they may receive enhanced payments based on cost-based hospitalspecific rates for services; whether a SCH or MDH receives enhanced payments may vary year to year, in accordance with §§ 419.43(g) and 412.108(g), respectively. Medicare payments to providers of post-acute services, including IRFs, SNFs, IPFs, HHAs, LTCHs, and hospice facilities, are conditioned, in part, on whether the provider satisfactorily reports certain specified data to CMS: the Inpatient Rehabilitation Facility Quality Reporting Program (IRF QRP), the Skilled Nursing Facility Quality Reporting Program (SNF QRP), the Inpatient Psychiatric Facility Quality Reporting Program (IPF QRP), the Home Health Quality Reporting Program (HH QRP), the Long-Term Care Hospital Quality Reporting Program (LTCH QRP), and the Hospice Quality Reporting Program. Additionally, IRFs located in rural areas receive rural add-on payments, IRFs serving higher proportions of low-income beneficiaries receive increased payments according to their low-income percentage (LIP), and IRFs with teaching programs receive increased payments to reflect their teaching status. SNFs receive higher payments for treating beneficiaries with human immunodeficiency virus (HIV). HHAs located in rural areas also receive rural add-on payments. Ambulatory Surgical Centers have their own Quality Reporting Program (ASC QRP). Physicians also have a set of special payment provisions based on quality and reporting: the Medicare EHR Incentive Program for Eligible Professionals, the Physician Quality Reporting System (PQRS), and the Physician Value-based Modifier Program. The intent of the CCJR model is not to replace the various existing incentive programs or add-on payments, but instead to test further episode payment incentives towards improvements in quality and efficiency beyond Medicare’s existing policies. Therefore, we propose that the hospital performance and potential reconciliation payment or Medicare repayment be independent of, and not affect, these other special payment provisions. We propose to exclude the special payment provisions as discussed previously when calculating actual episode payments, setting episode target prices, comparing actual episode payments with target prices, and determining whether a reconciliation PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 41221 payment should be made to the hospital or funds should be repaid by the hospital. Not excluding these special payment provisions would create incentives that are not aligned with the intent of the CCJR model. Not excluding the quality and reporting-related special payment provisions could create situations where a high-quality or reporting compliant hospital or both receiving incentive payments, or those hospitals that discharge patients to PAC providers that receive incentives for being reporting compliant, may appear to be ‘‘high episode payment’’ under CCJR. Conversely, lower quality or hospitals not complying with reporting programs or both that incur payment reduction penalties, or hospitals that discharge to PAC providers that are not reporting compliant, may appear to be ‘‘low episode payment’’ under CCJR. Such outcomes would run counter to CCJR’s goal of improving quality. Also, not excluding add-on payments for serving more indigent patients, having low Medicare hospital volume, being located in a rural area, supporting greater levels of provider training, choosing to use new technologies, and having a greater proportion of CCJR beneficiaries with HIV from CCJR actual episode payment calculations may inappropriately result in hospitals having worse episode payment performance. Additionally, not excluding enhanced payments for MDHs and SCHs may result in higher or lower target prices just because these hospitals received their enhanced payments in one historical year but not the other, regardless of actual utilization. We believe the proposed approach of excluding special payment provisions would ensure a participant hospital’s actual episode payment performance is not artificially improved or worsened because of payment reduction penalties or incentives or enhanced or add-on payments, the effects of which we are not proposing to test with CCJR. In addition to the various incentive, enhanced, and add on payments, sequestration came into effect for Medicare payments for discharges on or after April 1, 2013, per the Budget Control Act of 2011 and delayed by the American Taxpayer Relief Act of 2012. Sequestration applies a 2 percent reduction to Medicare payment for most Medicare FFS services. Similar to the previously discussed incentive, enhanced, and add-on payments, we intend CCJR to be independent of the introduction and potential future elimination of sequestration. We do not intend to have participant hospitals’ episodes appear to be ‘‘low payment’’ E:\FR\FM\14JYP3.SGM 14JYP3 41222 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS episodes relative to historical data, for part of which sequestration may not have been in effect, just because of an across-the-board Medicare payment reduction through sequestration. Therefore, we propose to account for the effects of sequestration when calculating actual episode payments, setting episode target prices, comparing actual episode payments with target prices, and determining whether a reconciliation payment should be made to the hospital or hospitals should repay Medicare. In order to operationalize the exclusion of the various special payment provisions in calculating episode expenditures, we propose to apply the CMS Price (Payment) Standardization Detailed Methodology described on the QualityNet Web site at https://www.qualitynet.org/dcs/Content Server?c=Page&pagename=QnetPublic %2FPage%2FQnetTier4&cid= 1228772057350. This pricing standardization approach is the same as used for the HVBP program’s Medicare spending per beneficiary metric. We solicit comment on this proposed approach to treating special payment provisions in the various Medicare payment systems. b. Proposed Treatment of Payment for Services That Extend Beyond the Episode As we proposed a fixed 90-day postdischarge episode as discussed in section III.B of this proposed rule, we believe there would be some instances where a service included in the episode begins during the episode but concludes after the end of the episode and for which Medicare makes a single payment under an existing payment system. An example would be a beneficiary in a CCJR episode who is admitted to a SNF for 15 days, beginning on Day 86 postdischarge from the anchor CCJR hospitalization. The first 5 days of the admission would fall within the episode, while the subsequent 10 days would fall outside of the episode. We propose that, to the extent that a Medicare payment for included episode services spans a period of care that extends beyond the episode, these payments would be prorated so that only the portion attributable to care during the episode is attributed to the episode payment when calculating actual Medicare payment for the episode. For non-IPPS inpatient hospital (for example, CAH) and inpatient PAC (for example, SNF, IRF, LTCH, IPF) services, we propose to prorate payments based on the percentage of actual length of stay (in days) that falls within the episode window. Prorated VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 payments would also be similarly allocated to the 30-day post-episode payment calculation in section III.C.8.e. of this proposed rule. In the prior example, one-third of the days in the 15day length of stay would fall within the episode window, so under the proposed approach, one-third of the SNF payment would be included in the episode payment calculation, and the remaining two-thirds (because the entirety of the remaining payments fall within the 30 days after the episode ended) would be included in the post-episode payment calculation. For HHA services that extend beyond the episode, we propose that the payment proration be based on the percentage of days, starting with the first billable service date (‘‘start of care date’’) and through and including the last billable service date, that fall within the CCJR episode. Prorated payments would also be similarly allocated to the 30-day post-episode payment calculation in section III.C.8.e of this proposed rule. For example, if the patient started receiving services from an HHA on day 86 after discharge from the anchor CCJR hospitalization and the last billable home health service date was 55 days from the start of home health care date, the HHA claim payment amount would be divided by 55 and then multiplied by the days (5) that fell within the CCJR episode. The resulting, prorated HHA claim payment amount would be considered part of the CCJR episode. Services for the prorated HHA service would also span the entirety of the 30 days after the CCJR episode spends, so the result of the following calculation would be included in the 30-day post-episode payment calculation: HHA claim payment amount divided by 55 and then multiplied by 30 days (the number of days in the 30-day post-episode period that fall within the prorated HHA service dates). There may also be instances where home health services begin prior to the CCJR episode start date, but end during the CCJR episode. In such instances, we would also prorate HHA payments based on the percentage of days that fell within the episode. Because these services end during the CCJR episode, prorated payments for these services would not be included in the 30-day post-episode payment calculation discussed in section III.C.8.e. of this proposed rule. For example, if the patient’s start of care date for a home health 60-day claim was February 1, the anchor hospitalization was March 1 through March 4 (with the CCJR episode continuing for 90 days after March 4), and the patient resumed home care on PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 March 5 with the 60-day home health claim ending on April 1 (that is, April 1 was the last billable service date), we would divide the 60-day home health claim payment amount by 60 and then multiply that amount by the days from the CCJR admission through April 1 (32 days) to prorate the HHA payment. This proposed prorating method for HHA claims is consistent with how partial episode payments (PEP) are paid for on home health claims. For IPPS services that extend beyond the episode (for example, readmissions included in the episode definition), we propose to separately prorate the IPPS claim amount from episode target price and actual episode payment calculations as proposed in section III.C.8 of this proposed rule, called the normal MS–DRG payment amount for purposes of this proposed rule. The normal MS–DRG payment amount would be pro-rated based on the geometric mean length of stay, comparable to the calculation under the IPPS PAC transfer policy at §§ 412.4(f) and as published on an annual basis in Table 5 of the IPPS/LTCH PPS Final Rules. Consistent with the IPPS PAC transfer policy, the first day for a subset of MS–DRGs (indicated in Table 5 of the IPPS/LTCH PPS Final Rules) would be doubly weighted to count as 2 days to account for likely higher hospital costs incurred at the beginning of an admission. If the actual length of stay that occurred during the episode is equal to or greater than the MS–DRG geometric mean, the normal MS–DRG payment would be fully allocated to the episode. If the actual length of stay that occurred during the episode is less than the geometric mean, the normal MS– DRG payment amount would be allocated to the episode based on the number of inpatient days that fall within the episode. If the full amount is not allocated to the episode, any remainder amount would be allocated to the 30 day post-episode payment calculation discussed in section III.C.8.e of this proposed rule. The proposed approach for prorating the normal MS– DRG payment amount is consistent with the IPPS transfer per diem methodology. The following is an example of prorating for IPPS services that extend beyond the episode. If beneficiary has a readmission for MS–DRG 493—lower extremity and humerus procedures except hip, foot, and femur, with complications—into an IPPS hospital on the 89th day after discharge from a CCJR anchor hospitalization, and is subsequently discharged after a length of stay of 5 days, Medicare payment for this readmission would be prorated for inclusion in the episode. Based on Table E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 5 of the IPPS/LTCH PPS Final Rule for FY 2015, the geometric mean for MS– DRG 493 is 4 days, and this MS–DRG is indicated for double-weighting the first day for proration. This readmission has only 2 days that falls within the episode, which is less than the MS–DRG 493 geometric mean of 4 days. Therefore, the normal MS–DRG payment amount associated with this readmission would be divided by 4 (the geometric mean) and multiplied by 3 (the first day is counted as 2 days, and the second day contributes the third day), and the resulting amount is attributed to the episode. The remainder one-fourth would be captured in the post-episode spending calculation discussed in section III.C.8 of this proposed rule. If the readmission occurred on the 85th day after discharge from the CCJR anchor hospitalization, and the length of stay was 7 days, the normal MS–DRG payment amount for the admission would be included in the episode without proration because length of stay for the readmission falling within the episode (6 days) is greater than or equal to the geometric mean (4 days) for the MS–DRG. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 We considered an alternative option of including the full Medicare payment for all services that start during the episode, even if those services did not conclude until after the episode ended, in calculating episode target prices and actual payments. Previous research on bundled payments for episodes of PAC services noted that including the full payment for any claim initiated during the fixed episode period of time will capture continued service use. However, prorating only captures a portion of actual service use (and payments) within the bundle. 20 As discussed in section III.B of this proposed rule, the CCJR model proposes an episode length that extends 90 days post-discharge, and Table 5 in section III.B.3.c. of this proposed rule demonstrates that the average length of stay in PAC during a 90-day episode with a MS–DRG 470 anchor hospitalization is 47.3 days. Therefore, the length of the episode under CCJR (90 days) should be sufficient to capture the vast majority of service use within the episode, even if payments for some services that extend beyond the episode duration are 20 https://aspe.hhs.gov/health/reports/09/pace pifinal/report.pdf. PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 41223 prorated and only partly attributed to the episode. c. Proposed Pricing Adjustment for High Payment Episodes Given the broad proposed LEJR episode definition and 90-day postdischarge episode duration proposed for CCJR, we want to ensure that hospitals have some protection from the variable repayment risk for especially high payment episodes, where the clinical scenarios for these cases each year may differ significantly and unpredictably. We do not believe the opportunity for a hospital’s systematic care redesign of LEJR episodes has significant potential to impact the clinical course of these extremely disparate high payment cases. The BPCI Model 2 uses a generally similar episode definition as proposed for CCJR and the vast majority of BPCI episodes being tested for LEJR are 90 days in duration following discharge from the anchor hospitalization. Similarly, we believe the BPCI distribution of Model 2 90-day LEJR episode payment amounts as displayed in Figure 1 provides information that is relevant to policy development regarding CCJR episodes. E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules As displayed, the mean episode payment amount is approximately $26,000. Five percent of all episodes are paid at two standard deviations above the mean payment or greater, an amount that is slightly more than 2 times the mean episode payment amount. While these high payment cases are relatively uncommon, we believe that incorporation of the full Medicare payment amount for such high payment episodes in setting the target price and correspondingly in Medicare’s aggregate actual episode payment that is compared to the target price for the episode may lead in some cases to excessive hospital responsibility for these episode expenditures. This may be especially true when hospital responsibility for repayment of excess episode spending is introduced in performance year 2. The hospital may have limited ability to moderate spending for these high payment cases. Our proposal to exclude IPPS new technology add-on payments and VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 separate payment for clotting factors for the anchor hospitalization from the episode definition limits excessive financial responsibility under this model of extremely high inpatient payment cases that could result from costly hospital care furnished during the anchor hospitalization. However, we believe an additional pricing adjustment in setting episode target prices and calculating actual episode payments is necessary to mitigate the hospital responsibility for the actual episode payments for high episode payment cases resulting from very high Medicare spending within the episode during the period after discharge from the anchor hospitalization, including for PAC, related hospital readmissions, and other items and services related to the LEJR episode. Thus, in order to limit the hospital’s responsibility for the aforementioned high episode payment cases, we propose to utilize a pricing adjustment for high payment episodes that would incorporate a high payment ceiling at PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 two standard deviations above the mean episode payment amount in calculating the target price and in comparing actual episode payments during the performance year to the target prices. Specifically, when setting target prices, we would first identify for each anchor MS–DRG in each region (discussed further in section III.C.4 of this proposed rule) the episode payment amount that is two standard deviations above the mean payment in the historical dataset used (discussed further in section III.C.4 of this proposed rule). Any such identified episode would have its payment capped at the MS–DRG anchor and regionspecific value that is two standard deviations above the mean, which would be the ceiling for purposes for calculating target prices. We note that the calculation of the historical episode high payment ceiling for each region and MS–DRG anchor would be performed after other steps, including removal of effects of special payment E:\FR\FM\14JYP3.SGM 14JYP3 EP14JY15.001</GPH> asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41224 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules provisions and others described in section III.C.4.c. of this proposed rule. When comparing actual episode payments during the performance year to the target prices, episode payments for episodes in the performance year would also be capped at two standard deviations above the mean. The high episode payment ceiling for episodes in a given performance year would be calculated based on MS–DRG anchorspecific episodes in each region. We discuss further how the high episode payment ceiling would be applied when comparing episode payments during the performance year to target prices in section III.C.6. of this proposed rule. While this approach generally lowers the target price slightly, it provides a basis for reducing the hospital’s responsibility for actual episode spending for high episode payment cases during the model performance years. When performing the reconciliation for a given performance year of the model, we would array the actual episode payment amounts for all episodes being tested within a single region, and identify the regional actual episode payment ceiling at two standard deviations above the regional mean actual episode payment amount. If the actual payment for a hospital’s episode exceeds this regional ceiling, we would set the actual episode payment amount to equal the regional ceiling amount, rather than the actual amount paid by Medicare, when comparing a hospital’s episode spending to the target price. Thus, a hospital would not be responsible for any actual episode payment that is greater than the regional ceiling amount for that performance year. We propose to adopt this policy for all years of the model, regardless of the reconciliation payment opportunity or repayment responsibility in a given performance year, to achieve stability and consistency in the pricing methodology. We believe this proposal provides reasonable protection for hospitals from undue financial responsibility for Medicare episode spending related to the variable and unpredictable course of care of some Medicare beneficiaries in CCJR episodes, while still fully incentivizing increased efficiencies for approximately the 95 percent of episodes for which we estimate actual episode payments to fall below this ceiling.21 We seek comment on our proposal to apply a pricing adjustment in setting target prices and 21 Medicare FFS Parts A and B claims, CCJR episodes as proposed, between October 1, 2013 and September 30, 2014. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 reconciling actual episode payments for high payment episodes. 4. Proposed Episode Price Setting Methodology a. Overview Whether a participant hospital receives reconciliation payments or is made responsible to repay Medicare for the CCJR model will depend on the hospital’s quality and actual payment performance relative to episode quality thresholds and target prices. Quality performance and thresholds are further discussed in section III.C.5. of this proposed rule, and the remainder of this section will discuss the proposed approach to establishing target prices. We propose to establish CCJR target prices for each participant hospital. For episodes beginning in performance years 1, 3, 4, and 5, a participant hospital would have eight target prices, one for each of the following: • MS–DRG 469 anchored episodes that were initiated between January 1 and September 30 of the performance year, if the participant hospital successfully submits data on the voluntary patient reported outcome measure proposed in section III.C.5. of this proposed rule. • MS–DRG 470 anchored episodes that were initiated between January 1 and September 30 of the performance year, if the participant hospital successfully submits data on the proposed voluntary patient reported outcome measure. • MS–DRG 469 anchored episodes that were initiated between October 1 and December 31 of the performance year, if the participant hospital successfully submits data on the proposed voluntary patient-reported outcome measure. • MS–DRG 470 anchored episodes that were initiated between October 1 and December 31 of the performance year, if the participant hospital successfully submits data on the proposed voluntary patient-reported outcome measure. • MS–DRG 469 anchored episodes that were initiated between January 1 and September 30 of the performance year, if the participant hospital does not successfully submit data on the voluntary patient-reported outcome measure. • MS–DRG 470 anchored episodes that were initiated between January 1 and September 30 of the performance year, if the participant hospital does not successfully submit data on the proposed voluntary patient-reported outcome measure. • MS–DRG 469 anchored episodes that were initiated between October 1 PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 41225 and December 31 of the performance year, if the participant hospital does not successfully submit data on the proposed voluntary patient-reported outcome measure. • MS–DRG 470 anchored episodes that were initiated between October 1 and December 31 of the performance year, if the participant hospital does not successfully submit data on the proposed voluntary patient-reported outcome measure. For episodes beginning in performance year 2, a participant hospital would have 16 target prices. These would include the same combinations as for the other 4 performance years, but one set for determining potential reconciliation payments, and the other for determining potential Medicare repayment amounts, as part of the phasing in of two-sided risk discussed later in this section. Further discussion on our proposals for different target prices for MS–DRG 469 versus MS–DRG 470 anchored episodes, for episodes initiated between January 1 and September 30 versus October 1 and December 31, and for participant hospitals that do and do not successfully submit data on the proposed patient-reported outcome measure can be found in sections III.C.4.b and III.C.5. of this proposed rule. We intend to calculate and communicate episode target prices to participant hospitals prior to the performance period in which they apply (that is, prior to January 1, 2017, for target prices covering episodes initiated between January 1 and September 30, 2017; prior to October 1, 2017 for target prices covering episodes initiated between October 1 and December 31, 2017). We believe prospectively communicating prices to hospitals will help them make any infrastructure, care coordination and delivery, and financial refinements they may deem appropriate to prepare for the new episode target prices. The proposed approach to setting target prices incorporates the following features: • Set different target prices for episodes anchored by MS–DRG 469 versus MS–DRG 470 to account for patient and clinical variations that impact hospitals’ cost of providing care. • Use 3 years of historical Medicare payment data grouped into episodes of care according to the episode definition proposed in section III.B. of this proposed rule, hereinafter termed historical CCJR episodes. The specific set of 3- historical-years used would be updated every other performance year. E:\FR\FM\14JYP3.SGM 14JYP3 41226 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules • Apply Medicare payment system (for example, IPPS, OPPS, IRF PPS, SNF, PFS, etc.) updates to the historical episode data to ensure we incentivize hospitals based on historical utilization and practice patterns, not Medicare payment system rate changes that are beyond hospitals’ control. Because different Medicare payment system updates become effective at two different times of the year, we would calculate separate target prices for episodes initiated between January 1 and September 30 versus October 1 and December 31. • Blend together hospital-specific and regional historical CCJR episode payments, transitioning from primarily provider-specific to completely regional pricing over the course of the 5 performance years, to incentivize both historically efficient and less efficient hospitals to furnish high quality, efficient care in all years of the model. Regions would be defined as each of the nine U.S. Census divisions. • Normalize for provider-specific wage adjustment variations in Medicare payment systems when combining provider-specific and regional historical CCJR episodes. Wage adjustments would be reapplied when determining hospital-specific target prices. • Pool together CCJR episodes anchored by MS DRGs 469 and 470 to use a greater historical CCJR episode volume and set more stable prices. • Apply a discount factor to serve as Medicare’s portion of reduced expenditures from the CCJR episode, with any remaining portion of reduced Medicare spending below the target price potentially available as reconciliation payments to the participant hospital where the anchor hospitalization occurred. Further discussion on each of the individual features can be found in section III.C.4.b. of this proposed rule. In section III.C.4.c. of this proposed rule, we also provide further details on the proposed sequential steps to calculate target prices and how each of the pricing features would fit together. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS b. Proposed Pricing Features (1) Different Target Prices for Episodes Anchored by MS–DRG 469 Versus MS– DRG 470 For each participant hospital we propose to establish different target prices for CCJR episodes initiated by MS–DRG 469 versus MS–DRG 470. MS– DRGs under the IPPS account for some of the clinical and resource variations that exist and that impact hospitals’ cost of providing care. Specifically, MS–DRG 469 is defined to identify, and provide VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 hospitals a higher Medicare payment to reflect the higher hospital costs for, hip and knee procedures with major complications or comorbidities. Therefore, we propose to calculate separate target prices for each participant hospital for CCJR episodes with MS–DRG 469 versus MS–DRG 470 anchor hospitalizations. We considered adjusting the episode target prices by making adjustments or setting different prices based on patientspecific clinical indicators (for example, comorbidities). However, we do not believe there is a sufficiently reliable approach that exists suitable for CCJR episodes beyond MS–DRG-specific pricing, and there is no current standard on the best approach. At the time of developing this proposed rule Tennessee, Ohio, and Arkansas are launching multi-payer (including Medicaid and commercial payers, excluding Medicare) bundles and include hip and knee replacement as an episode 22 23 24. These states’ hip and knee episode definitions and payment models are consistent with, though not the same as, the proposed CCJR episode described in this proposed rule. However, each of these three states uses different risk adjustment factors. This variation across states supports our belief that there is currently no standard risk adjustment approach widely accepted throughout the nation that could be used under CCJR, a model that would apply to hospitals across multiple states. Therefore, we are not proposing to make adjustments based on patient-specific clinical indicators. We also considered making price adjustments based on the participant hospital’s average Hierarchical Condition Category (HCC) score for patients with anchor CCJR hospitalizations. The CMS–HCC risk adjustment model quantifies a beneficiary’s risk by examining the beneficiary’s demographics and historical claims data and predicting the beneficiary’s total expenditures for Medicare Parts A and B in an upcoming year. However, the CMS–HCC risk adjustment model’s intended use is to 22 Tennessee Health Care Innovation Initiative. https://www.tn.gov/HCFA/strategic.shtml. Accessed on April 16, 2015. 23 Ohio Governor’s Office of Health Transformation. Transforming Payment for a Healthier Ohio, June 8, 2014. https:// www.healthtransformation.ohio.gov/ LinkClick.aspx?fileticket=TDZUpL4aSI%3d&tabid=138, Accessed on April 16, 2014. 24 Total Joint Replacement Algorithm Summary, Arkansas Health Care Payment Improvement Initiative, November 2012. https:// www.paymentinitiative.org/referenceMaterials/ Documents/TJR%20codes.pdf. Accessed on April 17, 2015. PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 pay Medicare Advantage (MA) plans appropriately for their expected relative costs. For example, MA plans that disproportionately enroll the healthy are paid less than they would have been if they had enrolled beneficiaries with the average risk profile, while MA plans that care for the sickest patients are paid proportionately more than if they had enrolled beneficiaries with the average risk profile. The CMS–HCC risk adjustment model is prospective. It uses demographic information (that is, age, sex, Medicare/Medicaid dual eligibility, disability status) and a profile of major medical conditions in the base year to predict Medicare expenditures in the next year.25 As previously noted, the CMS–HCC risk adjustment model is used to predict total Medicare expenditures in an upcoming year, and may not be appropriate for use in predicting expenditures over a shorter period of time, such as the CCJR episode, and may not be appropriate in instances where its use is focused on lower extremity joint replacements. Therefore, since we have not evaluated the validity of HCC scores for predicting Medicare expenditures for shorter episodes of care or for specifically lower extremity joint replacement beneficiaries, we are not proposing to risk adjust the target prices using HCC scores for the CCJR model. We also considered making adjustments or setting different prices for different procedures, such as different prices or adjustments for hip versus knee replacements, but we do not believe there would be substantial variation in episode payments for these clinical scenarios to warrant different prices or adjustments. Moreover, Medicare IPPS payments, which account for approximately 50 percent 26 of CCJR episode expenditures, do not differentiate between hip and knee procedures, mitigating procedurespecific variation for the anchor hospitalization. Furthermore, there are no widely accepted clinical guidelines to suggest that PAC intensity would vary significantly between knee and hip replacements. We seek comment on our proposal to price episodes based on the MS–DRG for the anchor hospitalization, without further risk adjustment. 25 Pope, C. et al., Evaluation of the CMS–HCC Risk Adjustment Model Final Report. Report to the Centers for Medicare & Medicaid Services under Contract Number HHSM–500–2005–00029I. RTI International. Research Triangle Park, NC. March, 2011. 26 Medicare FFS Parts A and B claims, CCJR episodes, as proposed in this rule, between October 2013 and September 2014. E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules (2) Three Years of Historical Data We propose to use 3 years of historical CCJR episodes for calculating CCJR target prices. The set of 3historical-years used would be updated every other year. Specifically— • Performance years 1 and 2 would use historical CCJR episodes that started between January 1, 2012 and December 31, 2014; • Performance years 3 and 4 would use historical episodes that started between January 1, 2014 and December 31, 2016; and • Performance year 5 would use episodes that started between January 1, 2016 and December 31, 2018. We considered using fewer than 3 years of historical CCJR episode data, but we are concerned with having sufficient historical episode volume to reliably calculate target prices. We also considered not updating the historical episode data for the duration of the model. However, we believe that hospitals’ target prices should be regularly updated on a predictable basis to use the most recent available claims data, consistent with the regular updates to Medicare’s payment systems, to account for actual changes in utilization. We are not proposing to update the data annually, given the uncertainty in pricing this could introduce for participant hospitals. We also note that the effects of updating hospital-specific data on the target price could be limited as the regional contribution to the target price grows, moving to two-thirds in performance year 3 when the first historical episode data update would occur. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (3) Proposed Trending of Historical Data to the Most Recent Year of the Three We acknowledge that some payment variation may exist in the 3 years of historical CCJR episodes due to updates to Medicare payment systems (for example, IPPS, OPPS, IRF PPS, SNF PPS, etc.) and national changes in utilization patterns. Episodes in the third of the 3 historical years may have higher average payments than those from the earlier 2 years because of Medicare payment rate increases over the course of the 3 historical years. We do not intend to have CCJR incentives be affected by Medicare payment system rate changes that are beyond hospitals’ control. In addition to the changes in Medicare payment systems, average episode payments may change year over year due to national trends reflecting changes in industry-wide practice patterns. For example, readmissions for all patients, including those in CCJR episodes, may decrease nationally due VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 to improved industry-wide surgical protocols that reduce the chance of infections. We do not intend to provide reconciliation payments to (or require repayments from) hospitals for achieving lower (or higher) Medicare expenditures solely because they followed national changes in practice patterns. Instead, we aim to incentivize hospitals based on their hospitalspecific inpatient and PAC delivery practices for LEJR episodes. To mitigate the effects of Medicare payment system updates and changes in national utilization practice patterns within the 3 years of historical CCJR episodes, we propose to follow an approach similar to what is done in BPCI Model 2 and apply a national trend factor to each of the years of historical episode payments. Specifically, we propose to inflate the 2 oldest years of historical episode payments to the most recent year of the 3 historical years described in section III.C.4.b.(2) of this proposed rule. We propose to trend forward each of the 2 oldest years using the changes in the national average CCJR episode payments. We also propose to apply separate national trend factors for episodes anchored by MS–DRG 469 versus MS–DRG 470 to capture any MS– DRG-specific payment system updates or national utilization pattern changes. For example, when using CY 2012–2014 historical episode data to establish target prices for performance years 1 and 2, under our proposal we would calculate a national average MS–DRG 470 anchored episode payment for each of the 3 historical years. The ratio of the national average MS–DRG 470 anchored episode payment for CY 2014 to that of CY 2012 would be used to trend 2012 MS–DRG 470 anchored episode payments to CY 2014. Similarly, the ratio of the national average MS–DRG 470 anchored episode payment for CY 2014 to that of CY 2013 would be used to trend 2013 episode payments to CY 2014. The aforementioned process would be repeated for MS–DRG 469 anchored episodes. Trending CY 2012 and CY 2013 data to CY 2014 would capture updates in Medicare payment systems as well as national utilization pattern changes that may have occurred. We considered adjusting for regional trends in utilization, as opposed to national trends. However, we believe that any Medicare payment system updates and significant changes in utilization practice patterns would not be region-specific but rather be reflected nationally. We seek comment on our proposal to nationally trend historical data to the PO 00000 Frm 00031 Fmt 4701 Sfmt 4702 41227 most recent year of the 3 being used to set the target prices. (4) Update Historical Episode Payments for Ongoing Payment System Updates We propose to prospectively update historical CCJR episode payments to account for ongoing Medicare payment system (for example, IPPS, OPPS, IRF PPS, SNF, PFS, etc.) updates to the historical episode data and ensure we incentivize hospitals based on historical utilization and practice patterns, not Medicare payment system rate changes that are beyond hospitals’ control. Medicare payment systems do not update their rates at the same time during the year. For example, IPPS, the IRF prospective payment system, and the SNF payment system apply annual updates to their rates effective October 1, while the hospital outpatient prospective payment system (OPPS) and Physician Fee Schedule (PFS) apply annual updates effective January 1. To ensure we appropriately account for the different Medicare payment system updates that go into effect on January 1 and October 1, we propose to update historical episode payments for Medicare payment system updates and calculate target prices separately for episodes initiated between January 1 and September 30 versus October 1 and December 31 of each performance year. The target price in effect as of the day the episode is initiated would be the target price for the whole episode. Note that in performance year 5, the second set of target prices would be for episodes that start and end between and including October 1 and December 31 because the fifth performance period of the CCJR model would end on December 31, 2020. Additionally, a target price for a given performance year may apply to episodes included in another performance year. For example, an episode initiated in November 2016, and ending in February 2017 would have a target price based on the second set of 2016 target prices (for episodes initiated between October 1 and December 31, 2016), and it would be captured in the CY 2017 performance year (performance year 2) because it ended between January 1 and December 31, 2017. We refer readers to section III.C.3.c. of this proposed rule for further discussion on the definition of performance years. We propose to update historical CCJR episode payments by applying separate Medicare payment system update factors each January 1 and October 1 to each of the following six components of each hospital’s historical CCJR payments: • Inpatient acute. E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41228 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules • Physician. • IRF. • SNF. • HHA. • Other services. A different set of update factors would be calculated for January 1 through September 30 versus October 1 through December 31 episodes each performance year. The six update factors for each of the aforementioned components would be hospital-specific and would be weighted by the percent of the Medicare payment for which each of the six components accounts in the hospital’s historical episodes. The weighted update factors would be applied to historical hospital-specific average payments to incorporate ongoing Medicare payment system updates. A weighted update factor would be calculated by multiplying the component-specific update factor by the percent of the hospital’s historical episode payments the component represents, and summing together the results. For example, let us assume 50 percent of a hospital’s historical episode payments were for inpatient acute care services, 15 percent for physician services, 35 percent for SNF services, and 0.0 percent for the remaining services. Let us also assume for this example that the update factors for inpatient acute care services, physician services, and SNF services are 1.02, 1.03, and 1.01, respectively. The weighted update factor in this example would be the following: (0.5 * 1.02) + (0.15 * 1.03) + (0.35 * 1.01) = 1.018. The hospital in this example would have its historical average episode payments multiplied by 1.018 to incorporate ongoing payment system updates. The specific order of steps, and how this step fits in with others, is discussed further in section III.C.4.c. of this proposed rule. Each of a hospital’s six update factors would be based on how inputs have changed in the various Medicare payment systems for the specific hospital. Additional details on these update factors will be discussed later in this section. Region-specific update factors for each of the aforementioned components and weighted update factors would also be calculated in the same manner as the hospital-specific update factors. Instead of using historical episodes attributed to a specific hospital, region-specific update factors would be based on all historical episodes initiated at any CCJR eligible hospital within the region. For purposes of this rule, CCJR eligible hospitals are defined as hospitals that VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 were paid under IPPS and not a participant in BPCI Model 1 or in the risk-bearing period of Models 2 or 4 for LEJR episodes, regardless of whether or not the MSAs in which the hospitals are located were selected for inclusion in the CCJR model. CCJR episodes initiated at a CCJR eligible hospital will for purposes of this rule be referred to as CCJR episodes attributed to that CCJR eligible hospital. We considered an alternative option of trending the historical episode payments forward to the upcoming performance year using ratios of national average episode payment amounts, similar to how we propose to trend the 2 oldest historical years forward to the latest historical year for historical CCJR episode payments in section III.C.4.b.(3) of this proposed rule. Using ratios of national average episode payment amounts would have the advantage of also capturing changes in national utilization patterns in addition to payment system updates between the historical years and the performance year. However, such an approach would need to be done retrospectively, after average episode payments can be calculated for the performance year, because it would rely on the payments actually incurred in the performance period, data for which would be not be available before the performance period. While the proposed approach of using component-specific update factors may be more complicated than the aforementioned alternative, we believe the additional complication is outweighed by the value to hospitals of knowing target prices before the start of an episode for which the target price would apply. We seek comment on this proposed approach of updating historical episode payments for ongoing Medicare payment system changes. We do not propose to separately and prospectively apply an adjustment to account for changes in national utilization patterns between the historical and performance years. If a prospective adjustment factor for national utilization pattern changes were applied, it may only be meaningful in performance years 2 and 4, when the historical data used to calculate target prices would not be updated, but another year of historical data would be available. In any of the other 3 performance years, the latest available historical year of data would already be incorporated into the target prices. Given that we propose to refresh the historical data used to calculate target prices every 2 years, we do not believe an additional adjustment factor to PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 account for national practice pattern changes is necessary to appropriately incentivize participant hospitals to improve quality of care and reduce episode payments. (a) Proposed Inpatient Acute Services Update Factor The proposed inpatient acute services update factor would apply to payments for services included in the episode paid under the IPPS. This would include payments for the CCJR anchor hospitalization, but not payments for related readmissions at CAHs during the episode window. Payments for related readmissions at CAHs would be captured under the update factor for other services in section III.C.4.b.(f) of this proposed rule. The update factor applied to the inpatient acute services component of each participant hospital and region’s historical average episode payments would be based on how inputs for the Medicare IPPS have changed between the latest year used in the historical 3 years of episodes and the upcoming performance period under CCJR. We propose to use changes in the following IPPS inputs to calculate the inpatient acute services update factor: IPPS base rate and average of MS–DRG weights, as defined in the IPPS/LTCH Final Rules for the relevant years. The average MS– DRG weight would be specific to each participant hospital and region to account for hospital and region-specific inpatient acute service utilization patterns. Hospital-specific and regionspecific average MS–DRG weights would be calculated by averaging the MS–DRG weight for all the IPPS MS– DRGs included in the historical episodes attributed to each participant hospital and attributed to CCJR eligible hospitals in the region, respectively; including MS–DRGs for anchor admissions as well as those for subsequent readmissions that fall within the episode definition. Expressed as a ratio, the inpatient acute services adjustment factor would equal the following: • The numerator is based on values applicable for the upcoming performance period (PP) for which a target price is being calculated. • The denominator is based on values applicable at the end of the latest historical year used in the target price (TP) calculations. Therefore, the proposed inpatient acute services update factor formula is shown as— E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules (c) Proposed IRF Services Update Factor The proposed IRF services update factor apply to payments for services included in the episode paid under the Medicare inpatient rehabilitation facility prospective payment system (IRF PPS). We propose to use changes in the IRF Standard Payment Conversion Factor, an input for the IRF PPS and defined in the IRF PPS Final Rule for the relevant years, to update Medicare • The numerator is based on values applicable for the upcoming performance period (PP) for which a target price is being calculated. • The denominator is based on values applicable at the end of the latest historical year used in the target price (TP) calculations: Therefore, the proposed IRF services update factor formula is shown as used in the historical 3 years of episodes and the upcoming performance period under CCJR. The average RUG–IV CaseMix Adjusted Federal Rates would be specific to each participant hospital and region to account for hospital and region-specific SNF service utilization patterns. Hospital-specific and regionspecific average RUG–IV Case-Mix Adjusted Federal Rates would be calculated by averaging the RUG–IV Case-Mix Adjusted Federal Rates for all SNF services included in the historical episodes attributed to each participant hospital and attributed to CCJR eligible hospitals in the region, respectively. We note that the RUG–IV Case-Mix Adjusted Federal Rate may vary for the same RUG, depending on whether the SNF was categorized as urban or rural. Expressed as a ratio, the SNF services update factor would equal the following: • The numerator is based on values applicable for the upcoming performance period (PP) for which a target price is being calculated. • The denominator is based on values applicable at the end of the latest year used in the target price (TP) calculations: Therefore, the proposed SNF services update factor formula is shown as EP14JY15.003</GPH> The proposed SNF services update factor would apply to payments for services included in the episode and paid under the SNF PPS, including payments for SNF swing bed services. The update factor applied to the SNF services component of each participant hospital and region’s historical average episode payments would be based on how average Resource Utilization Group (RUG–IV) Case-Mix Adjusted Federal Rates for the Medicare SNF PPS (defined in the SNF PPS Final Rule) have changed between the latest year payments for IRF services provided in the episode. The IRF Standard Payment Conversion Factor is the same for all IRFs and IRF services, so there is no need to account for any hospital-specific or region-specific IRF utilization patterns; each participant hospital and region would use the same IRF services update factor. Expressed as a ratio, the IRF PPS update factor would equal the following: VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4725 E:\FR\FM\14JYP3.SGM 14JYP3 EP14JY15.002</GPH> asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (d) Proposed SNF Services Update Factor multiplying each proportion by the relevant GPCI. Expressed as a ratio, the physician services update factor would equal the following: • The numerator is based on GPCI values applicable for the upcoming performance period (PP) for which a target price is being calculated. • The denominator is based on GPCI applicable at the end of the latest year used in the target price (TP) calculations. Therefore, the proposed physician services update factor formula is shown as— EP14JY15.005</GPH> The proposed physician services update factor would apply to payments for services included in the episode paid under the Medicare PFS for physician services. We propose to use changes in the following PFS inputs to calculate the physician services update factor of each participant hospital and region’s historical average episode payments: RVUs; work, practice expense, and malpractice liability geographic practice cost indices (GPCIs); and national conversion factor, as defined in the PFS Final Rule for the relevant years. Hospital-specific and region-specific RVU-weighted GPCIs would be calculated to account for hospital and region-specific physician service utilization patterns. Hospitalspecific and region-specific RVUweighted GPCIs would be calculated by taking the proportion of RVUs for work, practice expense, and malpractice liability for physician services included in the historical episodes and attributed to each participant hospital and attributed to CCJR eligible hospitals in the region, respectively, and EP14JY15.004</GPH> (b) Proposed Physician Services Update Factor 41229 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules (e) Proposed HHA Services Update Factor The proposed HHA services update factor would apply to payments for services included in the episode and paid under the HH PPS, but exclude payments for Low Utilization Payment Adjustment (LUPA) claims (claims with four or fewer home health visits) because they are paid differently and would instead be captured in the update factor for other services in section III.C.4.b.(f) of this proposed rule. The update factor applied to the home health services component of each participant hospital and region’s historical average episode payments would be based on how inputs for the asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (f) Proposed Other Services Update Factor The other services update factor would apply to payments for services included in the episode and not paid under the IPPS, PFS, IRF PPS, or HHA PPS (except for LUPA claims). This component would include episode payments for home health LUPA claims and CCJR related readmissions at CAHs. For purposes of calculating the other services update factor, we propose to use the Medicare Economic Index (MEI), a measure developed by CMS for measuring the inflation for goods and services used in the provision of physician services.27 We would calculate the other services update factor as the percent change in the MEI between the latest year used in the TP calculation and its projected value for the upcoming performance period. Because MEI is not hospital or regionspecific, each participant hospital and region would use the same other services update factor. (5) Blend Hospital-specific and Regional Historical Data We propose to calculate CCJR episode target prices using a blend of hospitalspecific and regional historical average CCJR episode payments, including CCJR episode payments for all CCJR eligible hospitals in the same U.S. Census division as discussed further in section III.C.4.b.(6) of this proposed rule. Specifically, we propose to blend two27 Medicare Market Basket Data. https:// www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/ MedicareProgramRatesStats/ MarketBasketData.html. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 Medicare HH PPS have changed between the latest year used in the historical 3 years of episodes and the upcoming performance period under CCJR. We propose to use changes in the HH PPS base rate and average of home health resource group (HHRG) case-mix weight, inputs for the HHA PPS and defined in the HHA PPS Final Rule for the relevant years, to calculate the home health services update factor. The average HHRG case-mix weights would be specific to each participant hospital and region to account for hospital and region-specific home health service utilization patterns. Hospital-specific and region-specific HHA services update factors would be calculated by averaging the HHRG case-mix weights for all home health payments (excluding LUPA claims) included in the historical episodes attributed to each participant hospital and attributed to CCJR eligible hospitals in the region, respectively. Expressed as a ratio, the HHA adjustment factor would equal the following: • The numerator is based on values applicable for the upcoming performance period (PP) for which a target price is being calculated. • The denominator is based on values applicable at the end of the latest historical year used in the target price (TP) calculations. Therefore, the proposed HHA services update factor formula is shown as— thirds of the hospital-specific episode payments and one-third of the regional episode payment to set a participant hospital’s target price for the first 2performance years of the CCJR model (CY 2016 and CY 2017). For performance year 3 of the model (CY 2018), we propose to adjust the proportion of the hospital-specific and regional episode payments used to calculate the episode target price from two-thirds hospital-specific and onethird regional to one-third hospitalspecific and two-thirds regional. Finally, we propose to use only regional historical CCJR episode payments for performance years 4 and 5 of the model (CY 2019 and CY 2020) to set a participant hospital’s target price, rather than a blend between the hospitalspecific and regional episode payments. The specific order of steps, and how this step fits in with others, is discussed further in section III.C.4.c. of this proposed rule. We welcome comment on the appropriate blend between hospital-specific and regional episode payments and the change in that blend over time. We considered establishing episode target prices using only historical CCJR hospital-specific episode payments for all 5 performance years of the model (that is, episode payments for episodes attributed to the participant hospital, as previously described in section III.C.2. of this proposed rule). Using hospitalspecific historical episodes may be appropriate in other models such as BPCI Model 2 where participation is voluntary and setting a region-wide target price could lead to a pattern of selective participation in which inefficient providers decline to participate, undermining the model’s ability to improve the efficiency and quality of care delivered by those providers, while already-efficient providers receive windfall gains even if they do not further improve efficiency. Because CCJR model participants will be required to participate in the model, solely using hospital-specific historical episode data is not necessary to avoid this potential concern. Furthermore, using only hospital-specific historical CCJR episode payments may provide little incentive for hospitals that already cost-efficiently deliver high quality care to maintain or further improve such care. These hospitals could receive a relatively low target price because of their historical performance but have fewer opportunities for achieving additional efficiency under CCJR. They would not receive reconciliation payments for maintaining high quality and efficiency, while other hospitals that were less efficient would receive reconciliation payments for improving, even if the less historically efficient hospitals did not reach the same level of high quality and efficiency as the more historically efficient hospitals. Using only hospital-specific historical CCJR episode payments may also not be sufficient to curb inefficient care or overprovision of services for hospitals with historically high CCJR episode payments. In such instances, using hospital-specific historical episode payments for the CCJR model could result in Medicare continuing to pay an excessive amount for episodes of care provided by inefficient hospitals, and inefficient hospitals would stand to PO 00000 Frm 00034 Fmt 4701 Sfmt 4702 E:\FR\FM\14JYP3.SGM 14JYP3 EP14JY15.006</GPH> 41230 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules benefit from making only small improvements. Thus, we do not propose to set target prices based solely on hospital-specific data for any performance years of the model. We considered establishing the episode target price using only historical CCJR regional episode payments for all 5 performance years of the model. Though regional target pricing would reward the most efficient hospitals for continuing to provide high quality and cost efficient care, we are concerned about providing achievable incentives under the model for hospitals with high historical CCJR average episode payments. We believe a lower regional price for such hospitals would leave them with little financial incentive in performance year 1, especially without any responsibility to repay payments in excess of the target price as described in section III.C.3. of this proposed rule. Thus, we do not propose to set target prices solely on regional data for the entire duration of the model. Therefore, we propose initially to blend historical hospital-specific and regional-historical episode payments and then transition to using regionalonly historical episode payments in establishing target prices to afford early and continuing incentives for both historically efficient and less efficient hospitals to furnish high quality, efficient care in all years of the model. Our proposal more heavily weights a hospital’s historical episode data in the first 2 years of the model (two-thirds hospital-specific, one-third regional), providing a reasonable incentive for both currently efficient and less efficient hospitals to deliver high quality and efficient care in the early stages of model implementation. Beginning in performance year 3, once hospitals have engaged in care redesign and adapted to the model parameters, we propose to shift to a more heavily weighted regional contribution (one-third hospital-specific, two-thirds regional in performance year 3) and ultimately to a regional target price for performance years 4 and 5. We believe that by performance year 4, setting target prices based solely on regional historical data would be feasible because hospitals would have had 3 years under this model to more efficiently deliver high quality care, thereby reducing some of the variation across hospitals. We believe transitioning to regional only pricing in the latter years of the model would provide important information about the reduction in unnecessary variation in LEJR episode utilization patterns within a region that can be achieved. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 We believe transitioning to regionalonly pricing in the latter years of the model may provide valuable information regarding potential pricing strategies for successful episode payment models that we may consider for expansion in the future. As discussed previously, substantial regional and hospital-specific variation in Medicare LEJR episode spending currently exists for beneficiaries with similar demographic and health status, so we are proposing that the early CCJR model years will more heavily weight historical hospital-specific experience in pricing episode for a participant hospital. Once the hospital has substantial experience with care redesign, we expect that unnecessary hospital-specific variation in episode spending will be minimized so that regional-only pricing would be appropriate as we have proposed. We note that, like episode payment under the CCJR model, Medicare’s current payment systems make payments for bundles of items and services, although of various breadths and sizes depending on the specific payment system. For example, the IPPS pays a single payment, based on national prices with geography-specific labor cost adjustments, for all hospital services furnished during an inpatient hospital stay, such as nursing services, medications, medical equipment, operating room suites, etc. Under the IPPS, the national pricing approach incentivizes efficiencies and has, therefore, led to a substantial reduction in unnecessary hospital-specific variation in resource utilization for an inpatient hospital stay. On the other hand, the episode payment approach being tested under BPCI Model 2 relies solely on provider-specific pricing over the lifetime of the model, assuming the number of episode cases is sufficient to establish a reliable episode price, an approach that has potential limitations were expansion to be considered. Thus, we believe our proposal for CCJR will provide new, important information regarding pricing for even larger and broader bundles of services once unnecessary provider-specific variation has been minimized that would supplement our experience with patterns and pricing under existing payment systems and other episode payment models. We expect that testing of CCJR will contribute further information about efficient Medicare pricing strategies that result in appropriate payment for providers’ resources required to furnish high quality, efficient care to beneficiaries who receive LEJR procedures. This is PO 00000 Frm 00035 Fmt 4701 Sfmt 4702 41231 essential information for any consideration of episode payment model expansion, including nationally, in the future, where operationally feasible and appropriate pricing strategies, including provider-specific, regional, and national pricing approaches would need to be considered. We propose an exception to the blended hospital-specific and regional pricing approach for hospitals with low historical CCJR episode volume. We propose to define hospitals with low CCJR episode volume as those with fewer than 20 CCJR episodes in total across the 3-historical-years used to calculate target prices. We believe calculating the hospital-specific component of the blended target price for these historically low CCJR episode volume hospitals may be subject to a high degree of statistical variation. Therefore, for each performance year, we propose to use 100 percent regional target pricing for participant hospitals who have fewer than twenty historical CCJR episodes in the 3-historical-years used to calculate target prices, as described in section III.C.4.b.(2) of this proposed rule. We note that the 3-historical-years used to calculate target prices would change over the course of the model, as described in section III.C.4.b.(2) of this proposed rule, and when that happens, the twenty episode threshold would be applied to the new set of historical years. If all IPPS hospitals nationally participated (for estimation purposes, only) in CCJR, we estimate about 5 percent of hospitals would be affected by this proposed low historical CCJR episode volume provision. 28 A minimum threshold of twenty episodes is almost equal to the minimum number of admissions required in the Medicare HRRP. HRRP payment adjustment factors are, in part, determined by procedure/conditionspecific readmission rates for a hospital. HRRP requires at least 25 procedure/ condition-specific admissions to calculate the procedure/conditionspecific readmission rate and to be included in the hospital’s overall HRRP payment adjustment factor. Though the proposed minimum threshold of twenty episodes is slightly less than the 25 admissions required for HRRP, we believe that because we would not be calculating infrequent events such as readmissions, we can achieve a stable price with slightly fewer episodes. We also propose an exception to the blended hospital-specific and regional 28 Medicare FFS Parts A and B claims, CCJR episodes, as proposed in this rule, between October 2013 and September 2014. E:\FR\FM\14JYP3.SGM 14JYP3 41232 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules described in this section. For participant hospitals with new CCNs that are new hospitals altogether, we propose to use the approach previously described in this section for hospitals with fewer than 20 CCJR episodes across the 3 historical years used to calculate target prices. In other cases, due to an organizational change a hospital may experience a change to an already existing CCN during the 24 months prior to the beginning of, or during, the performance year for which target prices are being calculated. For example, one hospital with a CCN may merge with a second hospital assigned a different CCN, and both hospitals would then be identified under the single CCN of the second hospital. While there may be more than 20 CCJR episodes under the second hospital’s CCN in total across the 3 historical years used to calculate target prices, in this scenario our use of only those cases under the second hospital’s CCN in calculating hospitalspecific historical payments would fail to meet our general principle of incorporating into target prices all the historical episodes that would represent our best estimate of CCJR historical payments for these now merged hospitals. In this scenario, we propose to calculate hospital-specific payments for the remaining single CCN (originally assigned to the second hospital only) using the historical episodes attributed to both previously existing hospitals. These hospital-specific historical payments would then be blended with the regional historical payments according to the approach previously described in this section in order to determine the episode price for the merged hospitals bearing a single CCN. We seek comment on this proposed approach for blending hospital-specific and regional historical payments. We considered using states, HRRs, and the entire U.S. as alternative options to U.S. Census divisions in defining the region used in blending provider-specific and regional historical episode data for calculating target prices. However, HRR definitions are specifically based on referrals for cardiovascular surgical procedures and neurosurgery, and may not reflect referral patterns for orthopedic procedures. Using the entire U.S. would not account for substantial current regional variation in utilization, which is significant for episodes that often involve PAC use, such as lower extremity joint replacement procedures 31. Finally, we considered 29 There are four census regions—Northeast, Midwest, South, and West. Each of the four census regions is divided into two or more ‘‘census divisions’’. Source: https://www.census.gov/geo/ reference/gtc/gtc_census_divreg.html. Accessed on April 15, 2015. 30 https://www.eia.gov/consumption/commercial/ censusmaps.cfm. 31 Hussey PS, Huckfeldt P, Hirshman S, Mehrotra A. Hospital and regional variation in Medicare VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4702 (6) Define Regions as U.S. Census Divisions In all 5 performance years we propose to define ‘‘region’’ as one of the nine U.S. Census divisions 29 in Figure3. E:\FR\FM\14JYP3.SGM 14JYP3 EP14JY15.007</GPH> asabaliauskas on DSK5VPTVN1PROD with PROPOSALS pricing approach for participant hospitals that received new CMS Certification Numbers (CCNs) during the 24 months prior to the beginning of, or during, the performance year for which target prices are being calculated. These participant hospitals with new CCNs may have formed due to a merger between or split from previously existing hospitals, or may be new hospitals altogether. As a general principle, we aim to incorporate into the target prices all the historical episodes that would represent our best estimate of CCJR historical payments for these participant hospitals with new CCNs. For participant hospitals with new CCNs that formed from a merger between or split from previously existing hospitals, we propose to calculate hospital-specific historical payments using the episodes attributed to the previously existing hospitals. These hospital-specific historical payments would then be blended with the regional historical payments according to the approach previously Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules component of blended target prices, we propose to normalize for wage index differences in historical episode payments when calculating and blending the regional and hospitalspecific components of blended target prices. Calculating blended target prices from historical CCJR episodes would help ensure we incentivize hospitals based on historical utilization and practice patterns, not Medicare payment system rate changes that are beyond hospitals’ control. We propose to normalize for providerspecific wage index variations using the IPPS wage index applicable to the anchor hospitalization (that is, the IPPS wage index used in the calculation of the IPPS payment for the anchor hospitalization). The anchor hospitalization accounts for approximately 50 percent of the total episode expenditures, and the IPPS wage index is applied to IPPS payments in a similar manner as wage indices for other Medicare payment systems are applied to their respective payments.32 Therefore, we propose that the IPPS wage index applicable to the anchor hospitalization for each historical episode be used to normalize for wage index variations in historical episode payments across hospitals when calculating blended target prices. We propose to specifically perform this normalization using the wage normalization factor (0.7 * IPPS wage index + 0.3) to adjust the labor-related portion of payments affected by wage indices. The 0.7 approximates the labor share in IPPS, IRF PPS, SNF, and HHA Medicare payments. We would normalize for provider-specific wage index variations by dividing a hospital’s historical episode payments by the wage normalization factor. We propose to reintroduce the hospital-specific wage variations by multiplying episode payments by the wage normalization factor when calculating the target prices for each participant hospital, as described in section III.C.4.c. of this proposed rule. When reintroducing the hospitalspecific wage variations, the IPPS wage index would be the one that applies to the hospital during the period for which target prices are being calculated (for example, FY 2016 wage indices for the target price calculations for episodes that begin between January 1 and September 30, 2016). The specific order of steps, and how this step fits in with others, is discussed further in section III.C.4.c. of this proposed rule. We seek comment on our proposal to normalize for wage index differences using participant hospitals’ wage indices in order to calculate blended target prices. A hospital-specific pooled historical average episode payment would be calculated by multiplying the hospital’s hospital weight by its combined historical average episode payment (sum of MS–DRG 469 and 470 anchored historical episode payments divided by the number of MS–DRG 469 and 470 historical episodes). The calculation of the hospital weights and the hospital-specific pooled historical average episode payments would be comparable to how case mix indices are used to generate case mix- payment for inpatient episodes of care [published online April 13, 2015]. JAMA Intern Med. doi:10.1001/jamainternmed.2015.0674. 32 Medicare FFS Parts A and B claims, CCJR episodes, as proposed in this rule, between October 2013 and September 2014. (7) Normalize for Provider-Specific Wage Adjustment Variations We note that some variation in historical CCJR episode payments across hospitals in a region may be due to wage adjustment differences in Medicare’s payments. In setting Medicare payment rates, Medicare typically adjusts facilities’ costs attributable to wages and wage-related costs (as estimated by the Secretary from time to time) by a factor (established by the Secretary) reflecting the relative wage level in the geographic area of the facility or practitioner (or the beneficiary residence, in the case of home health and hospice services) compared to a national average wage level. Such adjustments are essential for setting accurate payments, as wage levels vary significantly across geographic areas of the country. However, having the wage level for one hospital influence the regionalcomponent of hospital-specific and regional blended target prices for another hospital with a different wage level would introduce unintended pricing distortions not based on utilization pattern differences. In order to preserve how wage levels affect provider payment amounts, while minimizing the distortions introduced when calculating the regional- VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4702 (8) Proposed Combination of CCJR Episodes Anchored by MS–DRGs 469 and 470 We propose to pool together CCJR episodes anchored by MS–DRGs 469 and 470 for target price calculations to use a greater historical CCJR episode volume and set more stable target prices. We note that we would still calculate separate target prices for episodes anchored by MS–DRGs 469 versus 470, described later in this section. To pool together MS–DRG 469 and 470 anchored episodes, we propose to use an anchor factor and hospital weights. The anchor factor would equal the ratio of national average historical MS–DRG 469 anchored episode payments to national average historical MS–DRG 470 anchored episode payments. The national average would be based on episodes attributed to any CCJR eligible hospital. The resulting anchor factor would be the same for all participant hospitals. For each participant hospital, a hospital weight would be calculated using the following formula, where episode counts are participant hospital-specific and based on the episodes in the 3 historical years used in target price calculations: E:\FR\FM\14JYP3.SGM 14JYP3 EP14JY15.008</GPH> using states as regions but were concerned that doing so would not allow for sufficient LEJR episode volume to set stable regional components of target prices, especially for participant hospitals in small states. We believe U.S. Census divisions provide the most appropriate balance between very large areas with highly disparate utilization patterns and very small areas that would be subject to price distortions due to low volume or hospital-specific utilization patterns. We seek comment on our proposal to define a region as the U.S. Census division for purposes of the regional component of blended target prices under CCJR. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41233 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41234 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules adjusted Medicare payments. The hospital weight essentially would count each MS–DRG 469 triggered episode as more than one episode (assuming MS– DRG 469 anchored episodes have higher average payments than MS–DRG 470 anchored episodes) so that the pooled historical average episode payment, and subsequently the target price, is not skewed by the hospital’s relative breakdown of MS–DRG 469 versus 470 anchored historical episodes. The hospital-specific pooled historical average payments would be modified by blending and discount factors, as described in section III.C.4.c. of this proposed rule. Afterwards, the hospital-specific pooled calculations would be ‘‘unpooled’’ by setting the MS–DRG 470 anchored episode target price to the resulting calculations, and by multiplying the resulting calculations by the hospital weight to produce the MS–DRG 469 anchored target prices. We would calculate region-specific weights and region-specific pooled historical average payments following the same steps proposed for hospitalspecific weights and hospital-specific pooled average payments. Instead of grouping episodes by the attributed hospital as is proposed for hospitalspecific calculations, region-specific calculations would group together episodes that were attributed to any CCJR eligible hospital located within the region. The hospital-specific and regionspecific pooled historical average payments would be blended together as discussed in section III.C.4.b.(3) of this proposed rule. The specific order of steps, and how this step fits in with others, is discussed further in section III.C.4.c. of this proposed rule. We considered an alternative option of independently setting target prices for MS–DRG 470 and 469 anchored episodes without pooling them. However, hospital volume for MS–DRG 469 was substantially less than for MS– DRG 470. In 2013 across all IPPS hospitals, there were more than 10 times as many MS–DRG 470 anchored episodes as compared to MS–DRG 469 anchored episodes. 33 In the same analysis, the median number of episodes for a hospital with at least 1 episode for the MS–DRG anchored episode was more than 80 for MS–DRG 470 anchored episodes, though fewer than 10 for MS–DRG 469 anchored episodes. Calculating target prices for MS–DRG 469 anchored episodes separately for each participant hospital may result in too few historical episodes 33 Source: CCW Part A and Part B claims for CCJR episodes beginning in CY 2013. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 to calculate reliable target prices. We also considered pooling together MS– DRG 469 and 470 anchored episodes without any anchor factor or hospital weights. However, internal analyses suggest that average episode payments for these two MS–DRG anchored episodes significantly differed; CCJR episodes initiated by MS–DRG 469 had payments almost twice as large as those initiated by MS–DRG 470.34 This difference is reasonable given that Medicare IPPS payments differ for MS– DRG 469 and 470 admissions, and inpatient payments comprise approximately 50 percent of CCJR episode payments. Thus, pooling together MS–DRG 469 and 470 anchored episodes without any anchor factor or hospital weights would introduce distortions due only to case-mix differences. (9) Discount Factor When setting an episode target price for a participant hospital, we propose to apply a discount to a hospital’s hospitalspecific and regional blended historical payments for a performance period to establish the episode target price that would apply to the participant hospital’s CCJR episodes during that performance period and for which the hospital would be fully, or partly, accountable for episode spending in relationship to the target price, as discussed in section III.C.3. of this proposed rule. We expect participant hospitals to have significant opportunity to improve the quality and efficiency of care furnished during episodes in comparison with historical practice, because this model would facilitate the alignment of financial incentives among providers caring for beneficiaries throughout the episode. This discount would serve as Medicare’s portion of reduced expenditures from the CCJR episode, with any episode expenditure below the target price potentially available as reconciliation payments to the participant hospital where the anchor hospitalization occurred. We propose to apply a 2 percent discount for performance years 1 through 5 when setting the target price. We believe that applying a 2 percent discount in setting the episode target price allows Medicare to partake in some of the savings from the CCJR model, while leaving considerable opportunity for participant hospitals to achieve further episode savings below the target price that they would be paid as reconciliation payments, assuming they meet the 34 Medicare FFS Parts A and B claims, CCJR episodes, as proposed in this rule, between October 2013 and September 2014. PO 00000 Frm 00038 Fmt 4701 Sfmt 4702 quality requirements as discussed in section III.C.5 of this proposed rule. The proposed 2 percent discount is similar to the range of the discounts used for episodes in the Medicare Acute Care Episode (ACE) demonstration.35 In the Medicare ACE, a demonstration program that included orthopedic procedures such as those included in CCJR, participant hospitals negotiated with Medicare discounts of 2.5 to 4.4 percent of all Part A orthopedic services and 0.0 to 4.4 percent of all Part B orthopedic services during the inpatient stay (excluding PAC). Hospitals received the discounted payment and reported that they were still able to achieve savings.36 We believe there is similar, if not potentially more, opportunity for savings in the CCJR payment model because it includes acute inpatient, as well as PAC, an area of episode spending that accounts for approximately 25 percent of CCJR episode payments and exhibits more than 2 times the episode payment variation 37 than that of acute inpatient hospitalization.38 We believe that with the proposed 2 percent discount, participant hospitals have an opportunity to create savings for themselves as well as Medicare, while also maintaining or improving quality of care for beneficiaries. The proposed 2 percent discount also matches the discount used in the BPCI Model 2 90-day episodes, and is less than the discount used in BPCI Model 2 30-day and 60-day episodes (3 percent). Hundreds of current BPCI participants have elected to take on responsibility for repayment in BPCI Model 2 with a 2 to 3 percent discount. Because many BPCI participants volunteered to participate in a bundled payment model with a discount, we believe that a discount percent that is within, and especially a discount of 2 percent that is at the lower end of, the BPCI discount range would allow CCJR 35 IMPAQ International. Evaluation of the Medicare Acute Care Episode (ACE) Demonstration: Final Evaluation Report. Columbia, MD: IMPAQ International; May 2013. https://downloads.cms.gov/ files/cmmi/ACE-EvaluationReport-Final-5-2-14.pdf. Accessed April 1 6, 2015. 36 IMPAQ International. Evaluation of the Medicare Acute Care Episode (ACE) Demonstration: Final Evaluation Report. Columbia, MD: IMPAQ International; May 2013. https://downloads.cms.gov/ files/cmmi/ACE-EvaluationReport-Final-5-2-14.pdf. Accessed April 1 6, 2015. 37 Variation for purposes of this calculation refers to standard deviation of inpatient and institutional post-acute episode payments as a percentage of average inpatient and post-acute episode payments, respectively. 38 Medicare FFS Parts A and B claims, CCJR episodes, as proposed in this rule, between October 2013 and September 2014. E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules participant hospitals to create savings for both themselves and Medicare. As mentioned previously in section III.C.3. of this proposed rule, we propose to phase in the financial responsibility of hospitals for repayment of actual episode spending that exceeds the target price starting in performance year 2. In order to help hospitals transition to taking on this responsibility, we propose to apply a reduced discount of one percent in performance year 2 for purposes of determining the hospital’s responsibility for excess episode spending, but maintain the 2 percent discount for purposes of determining the hospital’s opportunity to receive reconciliation payment for actual episode spending below the target price. For example, under this proposal in performance year 2, a hospital that achieves CCJR actual episode payments below a target price based on a 2 percent discount would retain savings below the target price, assuming the quality thresholds for reconciliation payment eligibility are met (discussed in section III.C.5. of this proposed rule) and the proposed performance year stop-gain limit (discussed in section III.C.8. of this proposed rule) does not apply. Medicare would hold responsible for repayment hospitals whose CCJR actual episode payments exceed a target price based on a one percent discount, assuming the proposed performance year 2 stop-loss limit (discussed in section III.C.8. of this proposed rule) does not apply. Hospitals that achieve CCJR actual episode payments between a 2 percentdiscounted target price and 1 percentdiscounted target price would neither receive reconciliation payments nor be held responsible for repaying Medicare. The decision on which percentdiscounted target price applies will be made by evaluating actual episode payments in aggregate after the completion of performance year 2, and the same percent-discounted target price would apply to all episodes that are initiated in performance year 2. We propose to apply this reduced one percent discount for purposes of hospital repayment responsibility only in performance year 2 and apply the 2 percent discount for excess episode spending repayment responsibility for performance years 3 through 5. Under this proposal, the discount for determination of reconciliation payment for episode actual spending below the target price would not deviate from 2 percent through performance years 1 through 5. In section III.C.5. of this proposed rule, we propose voluntary submission of data for a patient-reported outcome VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 measure. We propose to incent participant hospitals to submit data on this measure by reducing the discount percentage by 0.3 percentage points for successfully submitting data, as defined in section III.D. of this proposed rule. By successfully submitting data on this metric for episodes ending in performance years 1, 2, 3, 4, and or 5, we would adjust the discount percentage in the corresponding year(s) as follows: • For episodes beginning in performance year 2, set the discount percentage in a range from 2 percent to 1.7 percent for purposes of determining the hospital’s opportunity to receive reconciliation payment for actual episode spending below the target price, and set the discount percentage in a range from 1 percent to 0.7 percent for purposes of determining the amount the hospital would be responsible for repaying Medicare for actual episode spending above the target price. • For episodes beginning in performance years 3 through 5, set the discount percentage in a range from 2 percent to 1.7 percent for purposes of reconciliation payment and Medicare repayment calculations. The determination of whether the hospital successfully submitted data on the patient-reported outcome measure cannot be made until after the performance year ends and data is reported. Therefore, participant hospitals would be provided target prices for both scenarios whether the successfully submit data or not and such determination will happen at the time of payment reconciliation (discussed further in section III.C.6. of this proposed rule). We seek comment on our proposed discount percentage of 2 percent for CCJR episodes, our proposal to reduce the discount to 1 percent on a limited basis in performance year 2, and our proposal to reduce the discount by 0.3 percentage points for successfully reporting patient-reported outcomes data in the corresponding year. c. Proposed Approach to Combine Pricing Features In section III.C.4.(b) of this proposed rule we discuss the various features we propose to incorporate into our approach to set target prices. We refer readers to that section for more information on rationale and alternatives considered for each feature. In this section we discuss how the different pricing features, as well as the episode definition (section III.B. of this proposed rule) and adjustments to payments included in the episodes (section III.C.3. of this proposed rule), PO 00000 Frm 00039 Fmt 4701 Sfmt 4702 41235 would fit together and be sequenced to calculate CCJR episode target prices for participant hospitals. As previously discussed in sections III.C.4.a and III.C.4.b of this proposed rule, we propose to calculate sixteen target prices for performance year 2, and eight target prices for each of the other 4 performance years. The following steps would be used to calculate MS–DRG 469 and 470 anchored episode target prices for both January 1 through September 30 and October 1 through December 31 each performance year. The output of each step would be used as the input for the subsequent step, unless otherwise noted. • Calculate historical CCJR episode payments for episodes that were initiated during the 3- historical-years (section III.C.4.b.(2) of this proposed rule) for all CCJR eligible hospitals for all Medicare Part A and B services included in the episode. We note that specific PBPM payments may be excluded from historical episode payment calculations as discussed in section III.C.7.d. of this proposed rule. • Remove effects of special payment provisions (section III.C.3.a. of this proposed rule). • Prorate Medicare payments for included episode services that span a period of care that extends beyond the episode (section III.C.3.b of this proposed rule.). • Normalize for hospital-specific wage adjustment variation by dividing the episodes outputted in step (3) by the hospital’s corresponding wage normalization factor described in section III.C.4.b.(7) of this proposed rule. • Trend forward 2 oldest historical years of data to the most recent year of historical data. As discussed in section III.C.4.b.(3) of this proposed rule, separate national trend factors would be applied to episodes anchored by MS– DRG 469 versus MS–DRG 470. • Cap high episode payment episodes with a region and MS–DRG anchorspecific high payment ceiling as discussed in section III.C.3.c. of this proposed rule, using the episode output from the previous step. • Calculate anchor factor and participant hospital-specific weights (section III.C.4.b.(8) of this proposed rule) using the episode output from the previous step to pool together MS–DRG 469 and 470 anchored episodes, resulting in participant hospital-specific pooled historical average episode payments. Similarly, calculate regionspecific weights to calculate regionspecific pooled historical average episode payments. We have posted region-specific pooled historical average E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41236 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules episode payments on the CCJR proposed rule Web site at https:// innovation.cms.gov/initiatives/ccjr/. • Calculate participant hospitalspecific and region-specific weighted update factors as described in section III.C.4.b.(4) of this proposed rule. Multiply each participant hospitalspecific and region-specific pooled historical average episode payment by its corresponding participant hospitalspecific and region-specific weighted update factors to calculate participant hospital-specific and region-specific updated, pooled, historical average episode payments. • Blend together each participant hospital-specific updated, pooled, historical average episode payment with the corresponding region-specific updated, pooled, historical average episode payment according to the proportions described in section III.C.4.b.(5) of this proposed rule. Participant hospitals that do not have the minimum episode volume across the historical 3 years would use 0.0 percent and 100 percent as the proportions for hospital and region, respectively. • Reintroduce hospital-specific wage variations by multiplying the participant hospital-specific blended, updated, and pooled historical average episode payments by the corresponding hospital-specific wage normalization factor, using the hospital’s IPPS wage index that applies to the hospital during the period for which target prices are being calculated (section III.C.4.b.(7) of this proposed rule). • Multiply the appropriate discount factor, as discussed in section III.C.4.b.(9) of this proposed rule to each participant hospital’s wage-adjusted, blended, updated, and pooled historical average episode payment. For performance years 1, 3, 4, and 5, two discount factors would be used, one if the hospital successfully submits data on the patient-reported outcomes measure proposed in section III.C.5 of this proposed rule, and one if the hospital does not successfully submit the data. For performance year 2, 4 discount factors would be used to account for the 4 combinations of the following: a) whether or not the hospital successfully submits data on the patient-reported outcomes measure; and b) for the different discount factors proposed for purposes of calculating reconciliation payments vs. calculating repayment amounts. The result of this calculation would be the participant hospital-specific target prices for MS– DRG 470 anchored episodes. • Multiply participant hospitals’ target prices for MS–DRG 470 anchored episodes by the anchor factor (section VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 III.C.4.b.(8) of this proposed rule) to calculate hospitals’ target prices for MS– DRG 469 anchored episodes. The aforementioned steps would be used to calculate target prices for episodes that begin between January 1 and September 30, as well as for episodes that begin between October 1 and December 31, for each performance year. The target price calculations for the two different time periods each performance year would differ by the IPPS wage index used in step (11) and the update factors used in step (8). By following these eight steps, we would calculate eight target prices for each participant hospital for performance years 1, 3, 4, and 5, and 16 target prices for performance year 2. We refer readers to section III.C.4.b. of this proposed rule for further details on each of the specific steps. We seek comment on the proposed approach to sequence and fit together the different pricing features, the episode definition (section III.B. of this proposed rule), and adjustments to payments included in the episodes (section III.C.3. of this proposed rule) to calculate CCJR episode target prices for participant hospitals. 5. Proposed Use of Quality Performance in the Payment Methodology a. Background Over the past several years Medicare payment policy has moved away from FFS payments unlinked to quality and towards payments that are linked to quality of care. Through the Affordable Care Act, we have implemented specific IPPS programs like the HVBP (subsection (o) of section 1886 of the Act), the Hospital Acquired Conditions Reduction Program (HACRP) (subsection (q) of section 1886) and the HRRP (subsection (p) of section 1886), where quality of care is linked with payment. We have also implemented the MSSP, an accountable care organization program that links shared savings payment to quality performance. Since the implementation of the HRRP in October 2012, readmission rates for various medical conditions like THA and TKA (THA/TKA) have improved. Trend analyses show a decrease in readmission rates and specifically with THA/TKA risk-standardized readmissions rates (RSRR) from 5.4 percent (July 2010-June 2011) to 4.8 percent (July 2012-June 2013).39 39 Hospital Quality Initiatives. CMS Hospital Quality Chartbook 2014. Available at: https:// www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospitalQualityInits/ Downloads/Medicare-Hospital-Quality-Chartbook2014.pdf . Accessed April 21, 2015. PO 00000 Frm 00040 Fmt 4701 Sfmt 4702 Additionally, hospital THA/TKA RSCR decreased from 3.4 percent (April 2010 through March 2011) to 3.1 percent (April 2012 through March 2013). Despite the downward trend of THA/ TKA RSRRs and RSCRs, the wide dispersion in these readmission rates suggests there is still room for hospitals to improve their performance on these measures as illustrated by a THA/TKA RSRR distribution of 2.8 to 9.4 percent (July 2010-June 2013) and a THA/TKA RSCR distribution of 1.5 to 6.4 percent (April 2010-March 2013). We believe that the CCJR Model provides another mechanism for hospitals to improve quality of care, while also achieving cost efficiency. Incentivizing high-value care through episode-based payments for LEJR procedures is a primary objective of CCJR. Therefore, incorporating quality performance into the episode payment structure is an essential component of the CCJR model. We also believe that the financial opportunity proposed in section III.C.3. of this proposed rule provides the appropriate incentives necessary to reward a participant hospital’s achievement of episode savings when the savings are greater than the discounted target price. For the reasons stated previously, we believe it is important for the CCJR model to link the financial reward opportunity with achievement in quality of care for Medicare beneficiaries undergoing LEJR. As discussed in section III.C of this proposed rule, which outlines the payment structure for the CCJR model, each participant hospital will have target prices calculated for MS–DRG 469 and 470 anchored episodes; each anchored episode includes an anchor hospitalization for an LEJR procedure and a 90–day period after the date of discharge from the anchor hospitalization. These episode target prices represent expected spending all related Part A and Part B spending for such episodes, with a discount. Hospitals who achieve actual episode spending below a target price for a given performance period would be eligible for a reconciliation payment from CMS, subject to the proposed stop-gain limit policy as discussed in section III.C.8. of this proposed rule. In the next section of this proposed rule, we propose quality performance standards that must also be met in order for a hospital to be eligible to receive a reconciliation payment under CCJR. Specifically, we describe our proposal to include a performance measure result threshold on select outcomes-based quality measures as a requirement for participants to receive a reconciliation payment if actual episode spending is E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules less than the target price under CCJR in a performance year, in addition to a payment adjustment for successful reporting of a voluntary measure in development. Beginning in performance year one and continuing throughout the duration of the model, we propose to make reconciliation payments only to those CCJR hospital participants that meet or exceed a minimum measure result threshold. We also discuss an alternative approach to determining CCJR reconciliation payment eligibility and adjusting payment based on a quality score developed from performance on three outcomes-based quality measures and success in reporting the voluntary measurement in development. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS b. Proposed Implementation of Quality Measures for Reconciliation Payment Eligibility In section III.D. of this proposed rule we propose three measures to assess quality of care of the hospitals participating in the CCJR Model. We also propose voluntary data submission for a patient-reported outcome measure. In this section we propose using three measures to determine eligibility for a reconciliation payment, as well as propose rewarding hospitals that voluntarily submit data for the patientreported outcome measure. We also discuss an alternative approach to determining reconciliation payment eligibility and adjusting payment based on a composite quality score calculated from the three required outcome measures and success on reporting voluntary data on the patient-reported outcome measure. (1) General Selection of Proposed Quality Measures The CCJR model is designed to provide financial incentives to improve coordination of care for beneficiaries that we expect to lead to avoidance of post-surgical complications and hospital readmissions, as well as to improve patient experience through care redesign and coordination. Furthermore, we acknowledge that achievement of savings while ensuring high-quality care for Medicare FFS beneficiaries in LEJR episodes will require close collaboration among hospitals, physicians, PAC providers, and other providers. In order to encourage care collaboration among multiple providers of patients undergoing THA and TKA, we propose three measures, as described in detail in section III.D.2. of this proposed rule, to determine hospital quality of care and to determine eligibility for a reconciliation payment under the CCJR model. The VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 measures we are proposing are as follows: • Hospital-level 30-day, all-cause RSRR following elective primary THA and/or TKA (NQF #1551), an administrative claims-based measure. • Hospital-level RSCR following elective primary THA and/or TKA (NQF #1550), an administrative claims-based measure. • HCAHPS Survey measure. Beginning in performance year 1 and continuing throughout the duration of the model, we propose to make reconciliation payments only to those CCJR participant hospitals that meet or exceed a minimum performance threshold on the measures previously listed. We propose that hospitals must meet or exceed the measure reporting thresholds and other requirements described in section III.C and III.D. of this proposed rule on all three measures in order to be eligible for a reconciliation payment. These three outcome measures were chosen due to their: (1) Alignment with the goals of the CCJR model; (2) hospitals’ familiarity with the measures due to their use in other CMS hospital quality programs, including programs that tie payment to performance such as HVBP and HRRP; and (3) assessment of CMS priorities to improve the rate of LEJR complications and readmissions, while improving patient experience. We believe the three quality measures we propose for reconciliation payment eligibility reflect these goals and accurately measure hospitals’ level of achievement on such goals. (2) Proposal To Adjust the Payment Methodology for Voluntary Submission of Data for Patient-Reported Outcome Measure During our consideration of quality metrics for the CCJR model, we examined the feasibility of linking voluntary data submission of patientreported outcomes, beyond the current three required measures proposed in section III.D.2. of this proposed rule for use in the model, with the possibility of incentivizing participant hospitals under the episode payment model to participate in this voluntary submission of data. We specifically examined potential patient-reported outcome measures since this type of outcome measure aligns with the CCJR model goal of improving LEJR episode quality of care, including a heightened emphasis on patient-centered care where patients provide meaningful input to their care. Furthermore, the availability of patient reported outcome data would provide additional PO 00000 Frm 00041 Fmt 4701 Sfmt 4702 41237 information on a participant hospital’s quality performance, especially with respect to a patient’s functional status, beyond the current three required measures proposed in section III.D.2. of this proposed rule for use in the model. We note that we have a measure in development, the Hospital-Level Performance Measure(s) of PatientReported Outcomes Following Elective Primary THA or TKA measure or both (hence forth referred to as ‘‘THA/TKA patient-reported outcome-based measure’’), that would support the National Quality Strategy domain of patient and family engagement, and could capture meaningful information that would not otherwise be available on patient outcomes that are related to the quality of LEJR episodes under CCJR. We believe that incorporating this measure into CCJR by adjusting the payment methodology for successful voluntary data submission on the THA/ TKA patient-reported outcome-based measure (henceforth referred to as ‘‘THA/TKA voluntary data’’) would provide participant hospitals with valuable information on functional outcomes that would assist them in assessing an important patient-centered outcome, engaging other providers and suppliers in care redesign for LEJR episodes, as well as provide them with the potential for greater financial benefit from improved LEJR episode efficiencies. We do not believe it would be appropriate at this time to hold any participant hospitals financially accountable for their actual THA/TKA voluntary data, as we have proposed for the three required measures described in section III.C.5.b.(2) of this proposed rule. Instead, we propose to adjust the episode payment methodology for participant hospitals that successfully submit THA/TKA voluntary data by reducing the discount percentage used to set the target price from 2.0 percent to 1.7 percent of expected episode spending based on historical CCJR episode data, hereinafter referred to as the voluntary reporting payment adjustment. The proposed payment policies with respect to reconciliation payment eligibility and the discount percentage based on hospital voluntary data submission are summarized in Table 7 for performance years 3 through 5 where hospitals have full repayment responsibility. The specific percentages that would apply for purposes of the repayment amount and reconciliation payment are outlined for performance years 1 and 2 in the discussion that follows. E:\FR\FM\14JYP3.SGM 14JYP3 41238 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules TABLE 7—RECONCILIATION PAYMENT ELIGIBILITY AND DISCOUNT PERCENTAGE INCLUDED IN THE TARGET PRICE FOR EACH PARTICIPANT HOSPITAL BASED ON QUALITY PERFORMANCE IN PERFORMANCE YEARS 3–5 1.7%/eligible .................................. 2.0%/eligible .................................. Does not meet thresholds for one or more of 3 required quality measures Meets thresholds for all 3 required quality measures Successfully submits THA/TKA voluntary data ....................................... Does not successfully submit THA/KA voluntary data ........................... asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Discount percentage included in target price/reconciliation payment eligibility We refer readers to section III.D.3. of this proposed rule for further discussion of the THA/TKA patient-reported outcome-based measure and our proposed definition of successful reporting. In addition, we refer readers to section III.C.4.b.(9) of this proposed rule for discussion of the proposed discount of 2.0 percent (without the voluntary reporting payment adjustment) to establish the target price. We believe that a voluntary reporting payment adjustment of 0.3 percent of expected episode spending would, on average, cover the participant hospitals’ additional administrative costs of voluntarily reporting patient risk variables and patient-reported reported function for outcome calculation. We estimate the value of this discount reduction, on average, to be about $75 per LEJR episode at a participant hospital, which we believe would be sufficient to pay hospitals for the resources required to survey beneficiaries pre- and post-operatively about functional status and report this information required for measure development to CMS. We also believe that voluntary reporting on this patientreported outcome measure is integral to implementation of the CCJR model, as it will allow us to further develop and evaluate the measure for potential use in this model in the future as a measure of quality that is important and not captured in any other available measures. The voluntary reporting payment adjustment would be available for all years of the model, unless we find the measure to be unfeasible or have adequately developed the measure such that continued voluntary data collection is no longer needed for measure development during the course of the model. In those situations, we would notify participant hospitals that the voluntary reporting payment adjustment was no longer available as we would cease collecting the data. When we provide the episode target price to each participant hospital at 2 times during the performance year, we would provide different target prices reflecting the 2.0 percent and 1.7 percent discounts. At the time of reconciliation for the performance year, VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 we would determine which participant hospitals successfully reported the THA/TKA voluntary data for that performance year. The effects of this voluntary reporting payment adjustment would vary for each year of the model, depending on the proposed reconciliation payment and repayment policies for that performance year. For hospitals that achieved successful reporting of the THA/TKA voluntary data in performance year 3, 4, or 5,we would use the target price reflecting the 1.7 percent discount (compared with the 2.0 percent discount for nonreporting or unsuccessfully reporting hospitals) to calculate the hospital’s reconciliation payment or repayment amount. Based on this comparison, consistent with the proposal described in section III.C.6. of this proposed rule, we would make a reconciliation payment if actual episode spending is less than the target price (and the thresholds for reconciliation payment eligibility are met for the three required quality measures) or make participant hospitals responsible for repaying Medicare if actual episode spending exceeds the target price. For performance year 2, when repayment responsibility is being phased-in, for participant hospitals with successful THA/TKA voluntary data reporting, we would use a target price reflecting the 1.7 percent discount (compared with the 2.0 percent discount for nonreporting or unsuccessfully reporting hospitals) to determine if actual episode spending was below the target price, whereupon the participant hospital would receive a reconciliation payment if the quality thresholds on the three required measures are met. In order to help hospitals transition to taking on repayment responsibility, we propose to apply a reduced discount of 0.7 percent for successful THA/TKA voluntary data reporting hospitals (compared with 1.0 percent for nonreporting or unsuccessfully reporting hospitals) in performance year 2 for purposes of determining the hospital’s repayment responsibility for excess episode spending. For performance year 1, when there is no repayment responsibility, for participant hospitals with successful THA/TKA voluntary data reporting, we would use a target price reflecting the PO 00000 Frm 00042 Fmt 4701 Sfmt 4702 1.7%/ineligible. 2.0%/ineligible. 1.7 percent discount (compared with the 2.0 percent discount for nonreporting or unsuccessfully reporting hospitals) to determine if actual episode spending was below the target price, whereupon the participant hospital would receive a reconciliation payment if the quality thresholds on the three required measures are met. We believe this proposed voluntary reporting payment adjustment provides the potential for increased financial benefit for participant hospitals due to a higher target price (that reflects a lower discount percentage) that successfully report the measure. Participant hospitals that successfully report the voluntary data would be subject to a lower repayment amount (except for performance year 1 when hospitals have no repayment responsibility) or a higher reconciliation payment (assuming the thresholds are met on the three required measures for reconciliation payment eligibility), than hospitals that do not successfully report the voluntary data. In general, participant hospitals that meet the performance thresholds for the three required quality measures and reduce actual episode spending below the target price, as well as successfully report the THA/TKA voluntary data, would be eligible to retain an additional 0.3 percent of the reduced episode expenditures relative to participant hospitals that successfully report the three required quality measures but do not report voluntary data, funds which would offset additional administrative costs that the participant hospitals would incur in reporting on the measure. Additionally, for performance years 2–5 where participant hospitals have payment responsibility, participant hospitals with increased actual episode spending above the target price would not be required to repay 0.3 percent of the increased episode expenditures (relative to participant hospitals that do not report voluntary data), funds that would offset additional administrative costs that the participant hospitals would incur in reporting on the measure. These costs would include the hospital staff time required for training on the measure, as well as then gathering and reporting on multiple patient risk variables from LEJR episode E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules beneficiaries’ medical records and locating beneficiaries and administering via phone survey questions on functional status, which would also then be reported to CMS. Thus, we expect that the proposal would encourage reporting by a number of participant hospitals, and it has the potential to benefit those hospitals that successfully report on the measure. Therefore, this proposal could financially benefit reporting hospitals that would also collect valuable information on patient functional outcomes that could inform their LEJR care redesign. While this measure remains in development from our perspective to ensure translation of data across care settings and the respective hospital communities during the 90-day post-discharge episode of care, participant hospitals would gain anecdotal, locally relevant information regarding the patient-reported outcomes of their own patients that could inform participant hospitals’ continuous quality improvement efforts. We considered two alternative options to adjust the CCJR payment methodology by modifying the required quality measure thresholds for reconciliation payment eligibility for those participant hospitals that successfully submit the THA/TKA voluntary data. First, we considered adjusting the threshold that hospitals must meet on the three required quality measures for reconciliation payment eligibility if reduced episode spending is achieved from the unadjusted 30th percentile threshold to the adjusted 20th percentile threshold for performance years 1, 2, and 3, and from the unadjusted 40th percentile to the adjusted 30th percentile for performance years 4 and 5. Second, we considered only requiring hospitals to meet the 30th percentile threshold on two of three outcome measures for performance years 1, 2, and 3, and the 40th percentile threshold on two of three outcome measures for performance years 4 and 5. These options would provide the opportunity for some participant hospitals, specifically those that missed the unadjusted percentile for one or more of the three required quality measures by a specified margin, to receive reconciliation payments if actual episode spending was less than the target price. However, these options could benefit only a subset of participant hospitals that successfully reported the THA/TKA voluntary data. For the majority of participant hospitals that we expect would meet the unadjusted thresholds for all three VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 required measures, these options do not provide any incentive to voluntarily report the data because the hospitals would not benefit from voluntarily reporting the additional measure. We decided not to propose either of these options to adjust the CCJR payment methodology for participant hospitals that voluntarily report data on the new measure because the limited benefit could result in few hospitals choosing to report on the measure, thereby limiting our progress in developing the measure. We note that these two considered options and our proposal are not mutually exclusive. We seek comment on the proposed voluntary reporting payment adjustment of reducing the discount percentage from 2.0 percent to 1.7 percent for CCJR participant hospitals that voluntarily and successfully report on the THA/ TKA voluntary data. Given our interest in robust hospital participation in reporting on the THA/TKA voluntary data under CCJR, we are specifically interested in information on the additional resources and their associated costs that hospitals would incur to report THA/TKA voluntary data, as well as the relationship of these costs to the potential financial benefit participant hospitals could receive from the proposed reduced discount of 1.7 percent. Based on such information, we would consider whether a change from the proposed discount factor reduction due to successful voluntary data submission would be appropriate. We also seek comment on whether the alternative payment methodology adjustments considered, or combination of adjustments, would more appropriately incentivize CCJR participant hospitals to submit THA/ TKA voluntary data. We believe that development of the THA/TKA patientreported outcome measure would benefit from reporting by a broad array of participant hospitals, including those that currently deliver high quality, efficient LEJR episode care and those that have substantial room for improvement on quality and or costefficiency. Furthermore, in light of our interest in encouraging CCJR participant hospital THA/TKA voluntary data reporting, we also considered alternative approaches to collect this information or provide hospitals with funds to help cover their associated administrative costs other than adjustments to the CCJR model payment methodology. One alternative would be for hospitals to collect and report on patient pre-operative information collected 0 to 90 days before surgery, while CMS would engage a contractor to collect and report PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 41239 the post-operative information collected 9 to 12 months after surgery. This approach would reduce some of the administrative burden of collection and reporting on hospitals, although participant hospitals would need to provide CMS with certain beneficiary information, including contact information that would be needed for a CMS contractor to contact the beneficiary at a later date. We seek comment on this alternative, including whether hospitals would incur significant additional administrative costs to report on the data prior to surgery and how CMS could best provide funds to offset some of those costs, through an adjustment to the CCJR payment methodology or other means. We also seek comment on the information participant hospitals would need to provide to CMS so a CMS contractor could collect and report the post-operative data, and the most efficient ways for hospitals to provide this information to us. Finally, we considered an approach that would provide hospitals with separate payment outside of an adjustment to the CCJR payment methodology to specifically assist in covering their administrative costs of reporting THA/ TKA voluntary data, in order to achieve robust hospital participation in reporting. We seek comment on the hospital administrative costs that would be incurred for reporting, as well as on approaches we could take to ensure that hospitals achieved successful reporting under such an approach if separate payment was made. Finally, we are interested in comments regarding the comparative strength of these various alternatives in encouraging hospitals to participate in reporting THA/TKA voluntary data. For a detailed description of this measure see section III.D.3 of this proposed rule (3) Measure Risk-Adjustment and Calculations All three proposed outcome measures are risk-adjusted and we refer readers to section III.D.2 of this proposed rule for a full discussion of these measures and risk-adjustment methodologies. We believe that risk-adjustment for patient case-mix is important when assessing hospital performance based on patient outcomes and experience and understanding how a given hospital’s performance compares to the performance of other hospitals with similar case-mix. (4) Applicable Time Period We propose to use a 3-year rolling performance or applicable period for the E:\FR\FM\14JYP3.SGM 14JYP3 41240 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules Hospital-level 30-day, all-cause RSRR following elective primary THA and/or TKA (NQF #1551) and the Hospitallevel RSCR following elective primary THA and/or TKA (NQF #1550) measures. We also specifically propose to align with the HIQR program’s 3-year rolling performance period for the RSSR and RSCR measures since we believe that a 3-year performance period yields the most consistently reliable and valid measure results (FY 2015 IPPS/LTCH 70 FR 50208 through 50209). For the HCAHPS Survey measure, we propose to follow the same performance period as in the HIQR program (FY 2015 IPPS/ LTCH Final rule 79 FR 50259). HCAHPS scores are created from 4 consecutive quarters of survey data; publicly reported HCAHPS results are also based on 4 quarters of data. For the voluntary data collection for the proposed THA/ TKA patient-reported outcome-based performance measure, the optimal reporting time period has not been determined. Therefore, we propose defining the applicable time period as 12 month intervals that may begin between July 1, 2016 and December 31, 2016, and continue in subsequent performance years for a total of four or fewer performance periods. Participant hospitals will submit required data to CMS in a mechanism similar to the data submission process for the HIQR program within sixty days of the end of each 12 month period. As described in section III.C.5.b.(3) of this proposed rule, the proposed voluntary reporting payment adjustment of reducing the discount percentage from 2.0 percent to 1.7 percent for CCJR participant hospitals that successfully report on the THA/TKA voluntary data would begin in year 2 and also apply to subsequent years of the model. (5) Criteria for Applicable Hospitals and Performance Scoring (a) Identification of Participant Hospitals for the CCJR Model As discussed in section III.A.2 of this proposed rule, all CCJR participant hospitals would be IPPS hospitals. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (b) Methodology to Determine Performance on the Quality Measures To determine performance on the quality measures, we propose to calculate measure results for all three measures as outlined in the Quality Measures section III.D.2 of this proposed rule. Performance on the three measures for the CCJR model participant hospitals would be compared to the national distribution of measure results for each of these measures obtained through the HIQR program. The HIQR VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 program is an IPPS program in which public reporting is a focus of the program for the nation’s acute care hospitals, and we propose using the absolute value of the CCJR model participant hospital’s result to determine if that participant hospital is eligible for a reconciliation payment. In essence we intend to take the HIQR program measure results (also posted publicly) for the proposed measures, identify the threshold as outlined in section III.C.5.b.(3) of this proposed rule, and apply the thresholds also outlined in section III.C.5.b.(7) of this proposed rule. We believe it is reasonable to use the HIQR program distribution of measure results to identify a measure result threshold because—(1) the hospitals in the HIQR program represent most acute care hospitals in the nation; (2) the CCJR model participant hospitals are a subset of the hospitals in the HIQR program; and (3) the expectation that the CCJR model participant hospitals meet a measure result threshold based on a national distribution of measure results will encourage the CCJR model participant hospitals to strive to attain measure results consistent with or better than hospitals across the nation. For a detailed description of how we will determine the measure result thresholds for consideration of a reconciliation payment adjustment see section III.C.5.b.(3) and III.C.7.of this proposed rule. We would not want to encourage CCJR model participant hospitals to strive for measure results or quality of care performance that may be lower than the national measure results. Given that the CCJR participant hospitals are a subset of the HIQR program participant hospitals, they are familiar with these three measures and may have put into place processes that will help to improve quality of care in the LEJR patient population. Finally, once the measure results are calculated, we propose to use these results to determine eligibility for reconciliation payment, which is discussed in detail in the next section. To be considered to have successfully reported the voluntary data collection and submission for the THA/TKA voluntary data, we propose that successfully reporting will mean participant hospitals must meet all of the following: • Submit the data elements listed in section III.D.3.a.(2) of this proposed rule. • Data elements listed in section III.D.3.a.(2) of this proposed rule must be submitted on at least 70 percent of their eligible elective primary THA/TKA patients (patients eligible for pre- PO 00000 Frm 00044 Fmt 4701 Sfmt 4702 operative THA/TKA voluntary data submission are those described in section III.D.3.a.(3)of this proposed rule); patients eligible for post-operative THA/TKA voluntary data submission are those described in section III.D.3.a(3) of this proposed rule and also having a THA/TKA procedure date during the anchor hospitalization at least 366 days prior to the end of the data collection period. Therefore, hospitals are not expected to collect and submit post-operative THA/TKA voluntary data on patients who are fewer than 366 days from the date of surgery. • THA/TKA voluntary data submission must occur within 60 days of the end of the most recent 12 month period. Hospitals meeting these three standards, and have successfully submitted THA/TKA voluntary data, will be eligible for the proposed voluntary reporting payment adjustment of reducing the discount percentage from 2.0 percent to 1.7 percent for CCJR participant hospitals that voluntarily and successfully report on the THA/ TKA voluntary data. Encouraging collection and submission of the THA/ TKA voluntary data through the CCJR model will increase availability of patient-reported outcomes to both participant hospitals that collect and submit data on their own patients in the model (and their patients as well); further development of an outcomes measure that provides meaningful information on patient-reported outcomes for THA/TKA procedures that are commonly furnished to Medicare beneficiaries; provide another quality measure that may be incorporated into the CCJR model policy linking quality to payment in future performance years, pending successful development of the measure; and inform the quality strategy of future payment models. Collecting data on at least 70 percent of hospital’s eligible THA/TKA patients would provide sufficiently representative data to allow for development and testing of the THA/TKA patient-reported outcome-based performance measure. We invite public comment on the proposal to calculate measure results for all three measures as outlined in the Quality Measures section III.D.2 of this proposed rule. We also seek public comment on our proposal for hospitals to meet three requirements, previously outlined, in order to be considered as successfully submitting THA/TKA voluntary data. E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules (c) Proposed Methodology To Link Quality and Payment (i) Background In proposing a methodology for linking payment for LEJR episodes to quality under this model, we considered several alternatives. Specifically, we considered making reconciliation payments to hospitals tied to achievement and improvement in quality performance or, alternatively, establishing minimum quality performance thresholds for selected quality measures from the beginning of the model or a later year, which would reward achievement but not necessarily improvement. While we propose in section III.C.5.b.(6)(c) of this proposed rule to establish minimum thresholds for participant hospital performance on three selected quality measures for reconciliation payment eligibility each performance year from the beginning of the model, we also discuss in detail an alternative we considered, which would make quality incentive payments related to hospital achievement and improvement on the basis of a composite quality score developed for each performance year. The composite quality score would affect reconciliation payment eligibility and change the effective discount included in the target price experienced by a participant hospital at reconciliation. Similar to the proposal described in section III.C.5.b.(6)(c) of this proposed rule, the alternatives considered would require a determination of participant hospital performance on all three required quality measures, described in section III.D. of this proposed rule, based on the national distribution of hospital measure result performance, but instead of identifying the participant hospital’s performance percentile for comparison with a threshold requirement, we would do so for purposes of assigning points toward a hospital composite quality score. Both the hospital-level 30-day, all cause RiskStandardized Readmission Rate (RSRR) following elective primary THA and/or TKA (NQF #1551) measure and the hospital-level Risk-Standardized Complication Rate (RSCR) following elective primary THA and/or TKA (NQF #1550) measure directly yield rates for which a participant hospital performance percentile could be determined and compared to the national distribution in a straightforward manner. As discussed in section III.D.2.c.of this proposed rule, we propose to use the HCAHPS Linear Mean Roll Up (HLMR) score calculated using the HCAHPS Survey (NQF #1661) measure. Once the HLMR scores are calculated, the participant hospital performance percentile could also be determined and compared to the national distribution in a straightforward manner. In addition, the alternatives considered would account for the successful submission of voluntary THA/TKA data on the patient-reported outcome measure, as discussed in section III.C.5.b.(2) of this proposed rule, in the calculation of the composite quality score. 41241 (ii) Alternatives Considered To Link Quality and Payment We considered assigning each participant hospital a composite quality score, developed as the sum of the individual quality measure scores described later in this section, which were set to reflect the intended weights for each of the quality measures and the successful submission of THA/TKA voluntary data in the composite quality score. The participant hospital’s composite quality score would affect reconciliation payment eligibility and could also provide the opportunity for quality incentive payments under the CCJR model. Each quality measure would be assigned a weight in the composite quality score and possible scores for the measures would be set to reflect those weights. A composite quality score for each performance year would be calculated for each participant hospital based on its own performance that would affect reconciliation payment eligibility and the hospital’s opportunity to receive quality incentive payments under the model. The composite quality score would also change the effective discount included in the target price experienced by the hospital at reconciliation for that performance year. We would weigh participant hospital performance on each of the three measures and successful submission of voluntary THA/TKA data according to the measure weights displayed in Table 8. TABLE 8—QUALITY MEASURE WEIGHTS IN COMPOSITE QUALITY SCORE Weight in composite quality score % Quality measure asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Hospital-level 30-day, all-cause RSRR following elective primary THA and/or TKA (NQF #1551) ................................................... Hospital-level RSCR following elective primary THA and/or TKA (NQF #1550) ................................................................................ HCAHPS survey (NQF #1661) ............................................................................................................................................................ Voluntary THA/TKA data submission on patient-reported outcome measure .................................................................................... We would assign the lowest weight of 10 percent to the successful submission of THA/TKA data on the patientreported outcome measure because these data represent a hospital’s meaningful participation in advancing the quality measurement of LEJR patient-reported outcomes but not actual outcome performance for LEJR episodes under the CCJR model. We believe the three required measures that represent LEJR outcomes deserve higher weights in the composite quality score. We would assign a modest weight of 20 percent to the readmissions measure VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 because, while we believe that readmissions are an important quality measure for LEJR episodes, the episode payment methodology under the model already provides a strong financial incentive to reduce readmissions that otherwise would contribute significantly to greater actual episode payments. Furthermore, hospitals generally have already made significant strides over the past several years in reducing readmissions due to the inclusion of this measure in other CMS hospital programs that make payment adjustments based on performance on PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 20 40 30 10 this measure. We believe that a higher weight than 20 percent would overvalue the contribution of readmissions performance as an indicator of LEJR episode quality in calculating the composite quality score. Furthermore, other CMS hospital programs may also make a payment adjustment based on hospital performance on the readmissions measure so we would not want this measure to also strongly influence reconciliation payment eligibility and the opportunity for quality incentive payments under the CCJR model. We would assign a higher E:\FR\FM\14JYP3.SGM 14JYP3 41242 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules weight of 30 percent to the HCAHPS survey measure because we believe that incorporating this quality measure, which reflects performance regarding patients’ perspectives on care, including communication, care transitions, and discharge information, is a highly meaningful outcome measure of LEJR episode quality under the CCJR model. However, we do not propose to assign the HCAHPS survey measure the highest weight of the four measures, as the measure is not specific to LEJR episode care, but rather to all clinical conditions treated by participant hospitals. Finally, we would assign the highest weight, 40 percent, to the complications measure. We believe this measure should be weighted the most because it is specific to meaningful outcomes for primary THA and TKA that are the major procedures included in LEJR episodes under the CCJR model. The measure includes important complications of LEJR episodes, such as myocardial infarction, pneumonia, surgical site bleeding, pulmonary embolism, death, mechanical joint complications, and joint infections occurring within various periods of time during the LEJR episode. LEJR episodes under the CCJR model are broadly defined so that reducing complications should be a major focus of care redesign that improves quality and efficiency under this model, yet because complications may not be as costly as readmissions, the payment incentives under the model do not as strongly target reducing complications as reducing readmissions. We seek comment on this weighting of the individual quality scores in developing a composite quality score for each participant hospital. Under such an approach, we would first score individually each participant hospital on the Hospital-level 30-day, all-cause RSRR using the elective primary THA and/or TKA (NQF #1551) measure; Hospital-level RSCR following using the elective primary THA and/or TKA (NQF #1550) measure; and HCAPHS survey (NQF #1661) measure based on the participant hospital’s performance percentile as compared to the national distribution of hospitals’ measure performance, assigning scores according to the point values displayed in Table 9 These individual measure scores have been set to reflect the measure weights included in Table 9 so they can ultimately be summed without adjustment in calculating the composite quality score. TABLE 9—INDIVIDUAL SCORING FOR THREE REQUIRED QUALITY MEASURES Complications measure quality score (points) Performance percentile asabaliauskas on DSK5VPTVN1PROD with PROPOSALS ≥90th ........................................................................................................................... ≥80th and <90th .......................................................................................................... ≥70th and <80th .......................................................................................................... ≥60th and <70th .......................................................................................................... ≥50th and <60th .......................................................................................................... ≥40th and <50th .......................................................................................................... ≥30th and <40th .......................................................................................................... <30th ........................................................................................................................... Given the current national distribution of hospital performance on these measures, we believe that small point increments related to higher measure performance deciles would be the most appropriate way to assign more points to reflect meaningfully higher quality performance on the measures. The absolute differences for each decile among the three measures reflect the intended weight of the measure in the composite quality score. We would assign any low volume participant hospital without a reportable value for the measure to the 50th performance percentile of the measure, so as not to disadvantage a participant hospital based on its low volume alone because that hospital may in actuality provide high quality care. These three measures are well-established measures in use under CMS hospital programs, so we do not believe that scores below the 30th percentile reflect quality performance such that they should be assigned any individual quality measure score points for LEJR episodes under CCJR. However, we also considered reducing scores incrementally across the bottom three deciles in order to provide greater VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 8.00 7.40 6.80 6.20 5.60 5.00 4.40 0.00 incentives for quality improvement for hospitals that may not believe they can attain the 30th performance percentile on one or more of the three measures and to avoid creating a ‘‘cliff’’ at the 30th performance percentile. We seek comment on this scoring approach to the three required quality measures. Additionally, we would assign a measure quality score of one point for participant hospitals that successfully submit THA/TKA voluntary data and 0 points for participant hospitals that do not successfully submit these data. Because we would not use the actual THA/TKA voluntary data on the patient-reported outcome measure in assessing LEJR episode quality performance under the model, we propose this straightforward binary approach to scoring the submission of THA/TKA voluntary data for the patient-reported outcome measure development. We note that the MSSP utilizes a similar scoring and weighting methodology, which is described in detail in the CY2011 Shared Savings Program Final Rule (see § 425.502). The HVBP and HACRP programs also utilize PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 HCAHPS survey quality score (points) 6.00 5.55 5.10 4.65 4.20 3.75 3.30 0.00 Readmissions measure quality score (points) 4.00 3.70 3.40 3.10 2.80 2.50 2.20 0.00 a similar scoring methodology, which applies weights to various measures and assigns an overall score to a hospital (79 FR 50049 and 50102). We would sum the score on the three quality measures and the score on successful submission of THA/TKA voluntary data to calculate a composite quality score for each participant hospital. Then we would incorporate this score in the model payment methodology by first, requiring a minimum composite quality score for reconciliation payment eligibility if the participant hospital’s actual episode spending is less than the target price and second, by making quality incentive payments that change the effective discount percentage included in the target price experienced by the hospital in the reconciliation process. The payment policies we would apply are displayed in Tables 10, 11, and 12 for the performance years of the model. Under the CCJR model as proposed, there is no participant hospital repayment responsibility in performance year 1 and this responsibility begins to be phased-in in E:\FR\FM\14JYP3.SGM 14JYP3 41243 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules performance year 2, with full implementation in performance year 3. TABLE 10—PERFORMANCE YEAR 1: RELATIONSHIP OF COMPOSITE QUALITY SCORE TO RECONCILIATION PAYMENT ELIGIBILITY AND THE EFFECTIVE DISCOUNT PERCENTAGE EXPERIENCED AT RECONCILIATION Composite quality score Eligible for reconciliation payment Eligible for quality incentive payment Effective discount percentage for reconciliation payment ≤5.00 .................................... >5.00 and ≤9.25 .................. >9.25 and ≤15.20 ................ >15.20 ................................. No ...................................... Yes ..................................... Yes ..................................... Yes ..................................... No ...................................... No ...................................... Yes ..................................... Yes ..................................... 3.0 3.0 2.0 1.5 Effective discount percentage for repayment amount Not Not Not Not applicable. applicable. applicable. applicable. TABLE 11—PERFORMANCE YEAR 2: RELATIONSHIP OF COMPOSITE QUALITY SCORE TO RECONCILIATION PAYMENT ELIGIBILITY AND THE EFFECTIVE DISCOUNT PERCENTAGE EXPERIENCED AT RECONCILIATION Composite quality score Eligible for reconciliation payment Eligible for quality incentive payment ≤5.00 ........................................... >5.00 and ≤9.25 ......................... >9.25 and ≤15.20 ....................... >15.20 ......................................... No ............................................... Yes ............................................. Yes ............................................. Yes ............................................. Effective discount percentage for reconciliation payment Effective discount percentage for repayment amount 3.0 3.0 2.0 1.5 2.0 2.0 1.0 0.5 No ............................................... No ............................................... Yes ............................................. Yes ............................................. TABLE 12—PERFORMANCE YEARS 3–5: RELATIONSHIP OF COMPOSITE QUALITY SCORE TO RECONCILIATION PAYMENT ELIGIBILITY AND THE EFFECTIVE DISCOUNT PERCENTAGE EXPERIENCED AT RECONCILIATION Eligible for reconciliation payment Eligible for quality incentive payment ≤5.00 ........................................... >5.00 and ≤9.25 ......................... >9.25 and ≤15.20 ....................... >15.20 ......................................... asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Composite quality score No ............................................... Yes ............................................. Yes ............................................. Yes ............................................. Effective discount percentage for reconciliation payment Effective discount percentage for repayment amount 3.0 3.0 2.0 1.5 3.0 3.0 2.0 1.5 No ............................................... No ............................................... Yes ............................................. Yes ............................................. Under this approach, the CCJR model discount included in the target price without consideration of the composite quality score would be 3.0 percent, not the 2.0 percent described under our payment proposal in section III.C.4.b.(9) of this proposed rule. We believe that a discount percentage of 3.0 percent without explicit consideration of episode quality is reasonable as it is within the range of discount percentages included in the ACE demonstration and it is the Model 2 BPCI discount factor for 30 and 60 day episodes, where a number of BPCI participants are testing LEJR episodes subject to the 3.0 percent discount factor. Hospitals that provide high quality episode care would have the opportunity to receive quality incentive payments that would reduce the effective discount percentage as displayed in Tables 10, 11, and 12. Depending on the participant hospital’s actual composite quality score, quality incentive payments could be valued at 1.0 percent to 1.5 percent of the hospital’s benchmark episode price (that VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 is, of the expected episode spending prior to application of the discount factor to calculate a target price). Under this methodology, we would require hospitals to achieve a minimum composite quality score of greater than 5.00 to be eligible for a reconciliation payment if actual episode spending was less than the target price. Participant hospitals with below acceptable quality performance reflected in a composite quality score less than or equal to 5.00 would not be eligible for a reconciliation payment if actual episode spending was less than the target price. A level of quality performance that is below acceptable would not affect participant hospitals’ repayment responsibility if actual episode spending exceeds the target price. We believe that excessive reductions in utilization that lead to low actual episode spending and that could result from the financial incentives of an episode payment model would be limited by a requirement that this minimum level of LEJR episode quality be achieved for reconciliation PO 00000 Frm 00047 Fmt 4701 Sfmt 4702 payments to be made. This policy would encourage hospitals to focus on appropriate reductions or changes in utilization to achieve high quality care in a more efficient manner. Therefore, these hospitals would be ineligible to receive a reconciliation payment if actual episode spending was less than the target price. For hospitals with composite quality scores of less than or equal to 5.00, we also considered a potential alternative approach. Under this approach, we would still permit this group of hospitals to receive reconciliation payments but would impose a quality penalty that would reduce their effective discount percentage to 4.0 percent for purposes of calculating the reconciliation payment or recoupment amount in performance years 3 through 5, 4.0 percent for calculating the reconciliation payment and 3.0 percent for calculating the repayment amount in performance year 2, and 4.0 percent for calculating the reconciliation payment in performance year 1 where participant E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41244 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules hospitals have no repayment responsibility. A potential advantage of this approach is that it would provide stronger incentives for quality improvement for participant hospitals with low performance on quality, even if they did not expect to be able to reduce actual episode spending below the target price. In addition, this approach would provide financial incentives to improve the efficiency of care even for hospitals that did not expect to meet the minimum quality score for reconciliation payment eligibility, while still providing strong incentives to provide high-quality care. The disadvantage of this approach is that it could provide reconciliation payments even to hospitals that did not achieve acceptable quality performance. Participant hospitals with an acceptable composite quality score of >5.00 and ≤9.25 would be eligible for a reconciliation payment if actual episode spending was less than the target price because their quality performance was at the acceptable level established for the CCJR model. They would not be eligible for a quality incentive payment at reconciliation because their episode quality performance, while acceptable, was not good or excellent. Therefore, these hospitals would be eligible to receive a reconciliation payment if actual episode spending was less than the target price. Participant hospitals with a good composite quality score of >9.25 and ≤15.20 would be eligible for a quality incentive payment at reconciliation if actual episode spending was less than the target price because their quality performance exceeded the acceptable level required for reconciliation payment eligibility under the CCJR model. In addition, they would be eligible for a quality incentive payment at reconciliation for good quality performance that equals 1.0 percent of the participant hospital’s benchmark price, thereby changing the effective discount percentage included in the target price experienced by the hospital at reconciliation. Thus, participant hospitals achieving this level of quality for LEJR episodes under CCJR would either have less repayment responsibility (that is, the quality incentive payment would offset a portion of their repayment responsibility) or receive a higher payment (that is, the quality incentive payment would add to the reconciliation payment) at reconciliation than they would have otherwise based on a comparison of actual episode spending to the target price that reflects a 3.0 percent discount. Therefore, these hospitals VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 would be eligible to receive a reconciliation payment if actual episode spending was less than the target price and would also receive a quality incentive payment. Finally, hospitals with an excellent composite score quality score of >15.20 would be eligible to receive a reconciliation payment if actual episode spending was less than the target price because their quality performance exceeded the acceptable level required for reconciliation payment eligibility under the CCJR model. In addition, they would be eligible for a higher quality incentive payment at reconciliation for excellent quality performance that equals 1.5 percent of the participant hospital’s benchmark price, thereby changing the effective discount percentage included in the target price experienced by the hospital at reconciliation. Thus, participant hospitals achieving this level of quality for LEJR episodes under CCJR would either have less repayment responsibility (that is, the quality incentive payment would offset a portion of their repayment responsibility) or receive a higher payment (that is, the quality incentive payment would add to the reconciliation payment) at reconciliation than they would have otherwise based on a comparison of actual episode spending to the target price that reflects a 3.0 percent discount. Therefore, these hospitals would be eligible to receive a reconciliation payment if actual episode spending was less than the target price and would also receive a quality incentive payment. Under this methodology, the proposed stop-loss and stop-gain limits discussed in section III.C.8 of this proposed rule would not change. We believe this approach to quality incentive payments based on the composite quality score could have the effect of increasing the alignment of the financial and quality performance incentives under the CCJR model to the potential benefit of participant hospitals and their collaborators as well as CMS, although it would substantially increase the complexity of the methodology to link quality and payment. We seek comment on this alternative approach to basing reconciliation payment eligibility and quality incentive payments on the participant hospital’s composite quality score under the CCJR model, as well as the composite quality scoring ranges applicable to the respective payment policies. While we describe in detail this alternative considered to link quality to payment under CCJR, we are not PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 proposing this methodology for several reasons. First, the MSSP and HVBP program utilize many more measures than we are proposing for the CCJR model. For example, the MSSP incorporates thirty three measures across four quality domains (79 FR 67916 and 67917). The range of measures in the MSSP and the HVBP program lends itself to a scoring approach, which can account for many measures and allows providers to achieve a high score despite performing well on some measures but achieving lower performance on others. There is a detailed description of the MSSP scoring methodology in the 2011 Shared Savings Program Final rule (76 FR 67895 through 67900). We believe that given the more limited set of measures chosen for the CCJR model, a scoring approach such as the alternative described in this section could diminish the importance of each measure. Use of a scoring approach would not allow hospital performance on two different outcomes to be easily reviewed and understood with respect to the impact of individual measure performance on Medicare’s actual payment for the episode under the model. Second, we believe the measures proposed for this model represent goals of clinical care that should be achievable by all hospitals participating in the model that heighten their focus on these measures, especially the readmissions and complications measures, for LEJR episodes based on the financial incentives in the model. Finally, we believe that a methodology that assesses performance based on absolute values of a specific set of measures that are already in use, as we are proposing for the CCJR model, is the most appropriate methodology to provide achievable and predictable quality targets for participant hospitals on measures that monitor the most meaningful quality of care outcomes in a model where some acute care hospitals that might not choose to participate in a voluntary model are also included. Our proposed method as discussed in the next section reflects our expectation that hospitals achieve a certain level of performance on measures to ensure that hospitals provide high-quality care under the model. Finally, we also considered an approach whereby participant hospitals would not be penalized with regard to their eligibility for reconciliation payments in CCJR for failure to meet the specified thresholds for the quality measures in performance year 1 of the model; in other words, we would delay the proposal described in the next E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules section to performance year 2 rather than beginning in performance year 1. We considered calculating participant hospital performance on the required measures for the model, and, if actual episode spending was less than the target price, the participant hospital would receive a full reconciliation payment of savings achieved beyond the target price, regardless of performance on the quality measures. However, we do not believe this would be appropriate for the CCJR model, given that two of the measures are administrative claimsbased and thus impose no additional reporting burden on hospitals; rather, these two measures are established measures in existing CMS quality programs, and a central goal of the model is improving care for Medicare beneficiaries in LEJR episodes. We note that the HCAHPS survey measure is also an established measure in HIQR and would not impose additional reporting burden on hospitals. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (iii) Proposal To Link Quality and Payment Through Thresholds for Reconciliation Payment Eligibility For the reasons outlined in the previous section, we do not propose to use similar methodologies to other CMS programs that would tie CCJR episode reconciliation payment eligibility and reconciliation payment and Medicare repayment amounts to a composite quality score on specified quality measures, but as discussed later in this section, we instead propose to simply assess performance or achievement on a quality measure by setting a measure result threshold for each measure beginning in performance year 1 of the model. The CCJR measure result threshold would be based on the measure results from the HIQR program, a nationallyestablished program, and would use its national distribution of measure results. These are the same measure results posted on Hospital Compare or in the Hospital Compare downloadable database (https://data.medicare.gov/ data/hospital-compare) for the HIQR program. We refer readers to the earlier discussion of the HIQR Program, which utilizes measures to assess most acute care hospitals in the nation. Determining the CCJR model target thresholds are discussed in the next section. As previously described, the CCJR model proposes the following three required measures to assess LEJR episode quality of care: • Hospital-level 30-day, all-cause RSRR following elective primary THA and/or TKA (NQF #1551). VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 • Hospital-level RSCR following elective primary THA and/or TKA (NQF #1550). • HCAHPS survey (NQF #0166). We also propose to make a voluntary reporting payment adjustment for CCJR participant hospitals who successfully and voluntarily submit data for the THA/TKA patient-reported outcomebased performance measure (henceforth referred to as ‘‘THA/TKA voluntary data’’) as described in sections III.C.5.b.(3) and III.D.3.a.(2) of this proposed rule. We propose that participant CCJR hospitals must meet or surpass a specified threshold for each required measure beginning for performance year 1 of the model in order to be eligible for a reconcilation payment if actual episode payments are less than the target price. The calculation of the HCAHPS survey measure is described in section III.D.2.c.of this proposed rule. We propose to use the individual measure results calculated as specified in section III.D. of this proposed rule for the three required measures to determine hospital eligibility for reconciliation payment for each performance year of the CCJR model. Also, as discussed in section III.C.4 of this proposed rule, which outlines the payment structure for the CCJR model, target prices for MS–DRG 470 anchored episodes and for MS–DRG 469 anchored episodes will be calculated for hospitals participating in the model for an episode of care extending 90-days after discharge from the anchor hospitalization. Participant hospitals that achieve actual episode payment below the specified target price for a given performance period would be eligible for a reconciliation payment, provided that the participant hospital also met episode quality thresholds on the three required measures for the performance period. We propose to use the following quality criterion to determine if a participant hospital qualifies for a reconciliation payment based on the episode quality thresholds on the three required measures: The hospital’s measure result is at or above the 30th percentile of the national hospital measure results calculated for all HIQR-program participant hospitals for each of the three required measures for each performance period (for a detailed description of how we determined the performance period and reconciliation payment eligibility, see section III.C.5. of this proposed rule). Using HIQR program’s 3 year rolling period as outlined in section III.D.2.a.(6) and III.D.2.b.(6) of this proposed rule, if a participant hospital performed at or above the 30th percentile of all HIQR PO 00000 Frm 00049 Fmt 4701 Sfmt 4702 41245 program hospitals for each of the three required measures and if actual episode payment was less than the target price for the specified performance year, we would make a reconciliation payment to the hospital. Failure to achieve the threshold on one or more measures would result in the participant hospital not receiving a reconciliation payment regardless of whether the actual episode payment was less than the target price for that performance period. We propose that for hospitals with insufficient volume to determine performance on an individual measure, these hospitals will be considered to be performing at the threshold level and their results will be publicly posted with all other participant hospitals’ measure results (for a detailed summary of public reporting, see section III.D.5. of this proposed rule). We do not believe it would be appropriate to potentially penalize high quality, efficient hospitals due to their low volume, given that meeting the required quality measure thresholds is required for reconciliation payment eligibility. We also propose for performance years 4 and 5 to increase the measure result threshold to the 40th percentile. We believe that increasing the measure result threshold to the 40th percentile would encourage participants to strive for continued quality improvement throughout the 5 performance years of the model. We seek comment on our proposal to make a reconciliation payment to a participant hospital that achieves actual episode spending below the target price for a performance year and performs at or above the 30th percentile of HIQR program participant hospitals for all three required quality measures in performance years 1 through 3 or the 40th percentile in performance years 4 and 5, as well as our proposal to consider low volume hospitals to be performing at the threshold level. We propose to require hospitals to meet the threshold for all three measures for the following reasons. The measures chosen for this model are fully developed, NQF-endorsed, and implemented measures in CMS IPPS programs. These measures are also publicly reported on the Hospital Compare Web site. Hospitals are familiar with the complications and readmissions quality measures and with the HCAHPS Survey, as they are currently included in HIQR, HVBP, and HRRP (79 FR 50031, 50062, 50208, 50209 and 50259), and we believe that there is minimal additional administrative burden for hospitals. All three measures are widely utilized nationally; thus, a nationally-based E:\FR\FM\14JYP3.SGM 14JYP3 41246 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules threshold is an appropriate benchmark. In addition, the goal of the CCJR model is LEJR episode care redesign that includes effective care coordination and management of care transitions. Strategies to prevent and efficiently manage post-procedure complications and hospital readmissions following an LEJR procedure are consistent with the goals of the model; a hospital cannot succeed in this model without engaging in care redesign efforts that would address aspects of care included in these measures. Failure to perform successfully on these key quality measures (defined by meeting the minimum thresholds) would indicate that hospitals are not achieving quality consistent with the goals of the model to specifically incentivize greater improvement on these measures than hospitals not participating in the CCJR model, and should not be eligible to receive a reconciliation payment from Medicare even if reduced episode spending is achieved. Finally, the approach we propose is consistent with CMS’ goal of moving hospitals and other providers to value-based payment that ties payment to quality. In the 5 performance years of this model, performance on quality measures would only be applied to determining eligibility for a reconciliation payment; quality measures would not be used to determine participant hospitals’ financial responsibility, except for the proposed voluntary reporting payment adjustment described in described in section III.C.5.b.(3) of this proposed rule. In essence, participant hospitals’ responsibility to repay Medicare the difference between their target price and their actual episode payment, should actual episode payments exceed the target price, would not be impacted by performance on quality measures. Finally, we propose to increase the measure result thresholds for the final 2 performance years of the model, to ensure that CCJR participant hospitals continue to maintain a high level of quality performance or improve performance on these measures as they gain experience with implementation of this payment model. More specifically, we propose that in order for a participant hospital to receive a reconciliation payment for actual episode spending that is less than the target price for performance years 4 and 5, the participant hospital’s measure result must be at or above the 40th percentile of the national hospital measure results calculated for all HIQRprogram participant hospitals for each of the three required measures for each performance period. As previously noted, we propose to use the most recently available HCAHPS 4-quarter roll-up to calculate the HLMR. We believe that holding the participant hospitals to a set measure result threshold for the first 3 years, and increasing this threshold for performance years 4 and 5, emphasize the need to maintain and improve quality of care while cost efficiencies are pursued. We seek comment on our proposed approach to incorporating quality performance into eligibility for reconciliation payments under the CCJR model for participant hospitals. Table 13 displays the proposed thresholds that participant hospitals must meet on the various measures over the 5 model performance years. TABLE 13—PROPOSED THRESHOLDS FOR REQUIRED QUALITY MEASURES TO DETERMINE PARTICIPANT HOSPITAL RECONCILIATION PAYMENT ELIGILBITY OVER 5 YEARS PY1 threshold PY2 threshold PY3 threshold PY4 threshold Hospital-level 30-day, all-cause RSRR following elective primary THA and/or TKA (NQF #1551). Hospital-level RSCR following elective primary THA and/or TKA (NQF #1550). HCAHPS survey (NQF #0166) asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Measure 30th percentile ........ 30th percentile ........ 30th percentile ........ 40th percentile ........ 40th percentile. 30th percentile ........ 30th percentile ........ 30th percentile ........ 40th percentile ........ 40th percentile. 30th percentile ........ 30th percentile ........ 30th percentile ........ 40th percentile ........ 40th percentile. We seek comment on our proposed methodology to utilize quality measure performance in the payment methodology for CCJR, as well as the proposed thresholds for participant hospital reconciliation payment eligibility over the performance years of the model. As discussed in section III.C.5.c.(3) of this proposed rule, we also believe that hospitals that choose to submit THA/ TKA voluntary data should have the potential to benefit financially through an adjustment to the payment methodology of the model. We propose a voluntary reporting payment adjustment for hospitals that successfully submit the THA/TKA voluntary data by reducing the discount percentage incorporated into the target price from 2.0 percent to 1.7 percent. This voluntary reporting payment adjustment would start in performance year 1 and would be available through VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 performance year 5 of the model for each year that the hospital successfully reports THA/TKA voluntary data. As proposed, reporting THA/TKA voluntary data would not affect eligibility for a reconciliation payment if actual episode payments are less than the target price. Participant hospitals would still need to meet the 30th or 40th percentile threshold, as applicable to the given performance year, on all three required quality measures (Table 13). We considered, but are not proposing, two other alternatives to adjust the payment methodology for participant hospitals that successfully report the THA/TKA voluntary data as described in section III.C.5.c.(3) of this proposed rule. These alternatives would change the threshold percentile for the three required quality measures or, alternatively, reduce the number of required measures in which the PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 PY5 threshold threshold must be met provided that successful THA/TKA voluntary data were reported for a performance year. First, we considered reducing the threshold for reconciliation payment eligibility that participant hospitals must meet on the three required quality measures from the 30th percentile threshold to the 20th percentile threshold for performance years 1, 2, and 3, and from the 40th percentile to the 30th percentile for performance year. Second, we considered only requiring hospitals to meet the 30th percentile threshold on two of three outcome measures for performance years 1, 2, and 3, and the 40th percentile threshold on two of three outcome measures in performance years 4 and 5. Under both of these alternatives, the eligibility for reconciliation payments could change based on the THA/TKA voluntary data. We seek comment on these alternative payment methodology E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules adjustments that could impact reconciliation payment eligibility, unlike the proposed voluntary reporting payment adjustment. We note that the other alternative approaches to encouraging THA/TKA voluntary data reporting for CCJR beneficiaries as discussed in section III.C.5.c.(3) of this proposed rule that would not require adjustments to the CCJR payment methodology would also not affect reconciliation payment eligibility. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 6. Proposed Process for Reconciliation This section outlines our proposals on how we intend to reconcile aggregate related Medicare payments for a hospital’s beneficiaries in CCJR episodes during a performance year against the applicable target price in order to determine if reconciliation payment (or Medicare repayment, beginning in performance year 2) is applicable under this model. We refer readers to section III.B of this proposed rule for our proposed definition of related services for lower extremity joint replacement episodes under CCJR, to section III.C.2.a. of this proposed rule for our proposed definition of performance years, and to section III.C.4 of this proposed rule for our proposed approach to establish target prices. a. Net Payment Reconciliation Amount After the completion of a performance year, we propose to retrospectively calculate a participant hospital’s actual episode performance based on the episode definition. We note that episode payments for purposes of the CCJR model would exclude the effects of special payment provisions under existing Medicare payment systems (section III.C.3.a. of this proposed rule), be subject to proration for services that extend beyond the episode (section III.C.3.b. of this proposed rule), and exclude PBPM payments for programs and models specified in section III.C.7.d. of this proposed rule. Some episodes may be excluded entirely from the CCJR model due to overlap with BPCI episodes, as discussed in section III.C.7.b. of this proposed rule. Finally, actual episode payments calculated for purposes of CCJR would be capped at anchor MS–DRG and region-specific high episode payment ceilings (section III.C.3.c. of this proposed rule). We would apply the high episode payment ceiling policy to episodes in the performance year similarly to how we propose to apply it to historical episodes (section III.C.4.c. of this proposed rule). Episode payments for episodes attributed to CCJR eligible hospitals would be divided by the wage normalization factor, using the IPPS VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 wage index applicable to the anchor admission, and for each MS–DRG anchor and region, the high episode payment ceiling would be calculated as two standard deviations above the mean. Any actual episode payment amount above the high payment ceiling would be capped at said ceiling. After applying the cap, wage variations would be reapplied to episodes by multiplying them by the same wage normalization factor, using the IPPS wage index applicable to the anchor admission. Each participant hospital’s actual episode payment performance would be compared to its target prices. We note that, as discussed in section III.C.4. of this proposed rule, a participant hospital would have multiple target prices for episodes ending in a given performance year, based on the MS– DRG anchor (MS–DRG 469 versus MS– DRG 470), the performance year when the episode was initiated, when the episode was initiated within a given performance year (January 1 through September 30 of the performance year, October 1 through December 31 of the performance year, October 1 through December 31 of the prior performance year), and whether the participant hospital successfully submitted THA/ TKA voluntary data. The applicable target price for each episode would be determined using the aforementioned criteria, and the difference between each CCJR episode’s actual payment and the relevant target price (calculated as target price subtracted by CCJR actual episode payment) would be aggregated for all episodes for a participant hospital within the performance year, representing the raw Net Payment Reconciliation Amount (NPRA). This amount would be adjusted per the steps discussed later in this section, creating the NPRA. The NPRA would include adjustments to account for post-episode payment increases (section III.C.8.e. of this proposed rule). The NPRA would also include adjustments for stop-loss and stop-gain limits (section III.C.8.b. of this proposed rule), after adjustments are made for the aforementioned postepisode payment increases. Any NPRA amount greater than the proposed stopgain limit would be capped at the stopgain limit, and any NPRA amount less than the proposed stop-loss limit would be capped at the stop-loss limit. We do not propose to include any CCJR reconciliation payments or repayments to Medicare under this model for a given performance year in the NPRA for a subsequent performance year. We want to incentivize providers to provide high quality and efficient care in all years of the model. If PO 00000 Frm 00051 Fmt 4701 Sfmt 4702 41247 reconciliation payments for a performance year are counted as Medicare expenditures in a subsequent performance year, a hospital would experience higher Medicare expenditures in the subsequent performance year as a consequence of providing high quality and efficient care in the prior performance year, negating some of the incentive to perform well in the prior year. Therefore, we propose to not have the NPRA for a given performance year be impacted by CCJR Medicare repayments or reconciliation payments made in a prior performance year. However, as discussed in section III.C.6.b, during the following performance year’s reconciliation process, we propose to account for additional claims run-out and overlap from the prior performance year, and net that amount with the subsequent performance year’s NPRA to determine the reconciliation or repayment amount for the current reconciliation. b. Payment Reconciliation We propose to reconcile payments retrospectively through the following reconciliation process. We would reconcile a participant hospital’s CCJR actual episode payments against the target price 2 months after the end of the performance year. More specifically, we would capture claims submitted by March 1st following the end of the performance year and carry out the NPRA calculation as described previously to make a reconciliation payment or hold hospitals responsible for repayment, as applicable, in quarter 2 of that calendar year. To address issues of overlap with other CMS programs and models that are discussed in section III.C.7. of this proposed rule, we also propose that during the following performance year’s reconciliation process, we would calculate the prior performance year’s episode spending a second time to account for final claims run-out, as well as overlap with other models as discussed in section III.C.7 of this proposed rule. This would occur approximately 14 months after the end of the prior performance year. As discussed later in this section, the amount from this calculation, if different from zero, would be applied to the NPRA for the subsequent performance year in order to determine the amount of the payment Medicare would make to the hospital or the hospital’s repayment amount. We note that the subsequent reconciliation calculation would be applied to the previous calculation of NPRA for a performance year to ensure the stop loss and stop gain limits discussed in section E:\FR\FM\14JYP3.SGM 14JYP3 41248 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules III.C.8. of this proposed rule are not exceeded for a given performance year. For the performance year 1 reconciliation process, we would calculate a participant’s NPRA, as described above, and if positive, the hospital would receive the amount as a reconciliation payment from Medicare. If negative, the hospital would not be responsible for repayment to Medicare, consistent with our proposal to phase in financial responsibility beginning in performance year 2. Starting with the CCJR reconciliation process for performance year 2, in order to determine the reconciliation or repayment amount, the amount from the subsequent reconciliation calculation would be applied to the NPRA. If the amount is positive, and if the hospital meets the quality thresholds for that performance year (discussed further in section III.C.5. of this proposed rule), the hospital would receive the amount as a reconciliation payment from Medicare. If the amount is negative, Medicare would hold the participant hospital responsible for repaying the absolute value of the repayment amount following the rules and processes for all other Medicare debts. Note that given our proposal to not hold participant hospitals financially responsible for repayment for the first performance year, during the reconciliation process for performance year 2 only, the subsequent calculation amount (for performance year 1) would be compared against the performance year 1 NPRA to ensure that the sum of the NPRA calculated for performance year 1 and the subsequent reconciliation calculation for year 1 is not less than zero. For performance years 2 through 5, though, Medicare would hold the participant hospital responsible for repaying the absolute value of the repayment amount following the rules and processes for all other Medicare debts. This reconciliation process would account for overlaps between the CCJR model and other CMS models and programs as discussed in section III.C.7 of this proposed rule, and would also involve updating performance year episode claims data. For example, for performance year 1 for the CCJR model in 2016, we would capture claims submitted by March 1st, 2017, and reconcile payments for participant hospitals approximately 6 months after the end of the performance year in quarter 2 of calendar year 2017. We would carry out the subsequent calculation in the following year in quarter 2 of calendar 2018, simultaneously with the reconciliation process for the second performance year, 2017. Table 14 provides the proposed reconciliation timeframes for the model. Lastly, we propose that the reconciliation payments to or repayments from the participant hospital would be made by the Medicare Administrative Contractor (MAC) that makes payment to the hospital under the IPPS. This approach is consistent with BPCI Model 2 operations. We believe our proposed approach balances our goals of providing reconciliation payments in a reasonable timeframe, while being able to account for overlap and all Medicare claims attributable to episodes. We believe that pulling claims 2 months after the end of the performance year provides sufficient claims run-out to conduct the reconciliation in a timely manner, given that our performance year includes episodes ending, not beginning, by December 31st. We note that in accordance with the regulations at § 424.44 and the Medicare Claims Processing Manual (Pub. L. 100–04), Chapter 1, Section 70, Medicare claims can be submitted no later than 1 calendar year from the date of service. We recognize that by pulling claims 2 months after the end of the performance year to conduct reconciliation, we would not have complete claims runout. However, we believe that the 2 months of claims run out would be an accurate reflection of episode spending and consistent with the claims run-out timeframes used for reconciliation in other payment models, such as BPCI Models 2 and 3. The alternative would be to wait to reconcile until we have full claims run out 12 months after the end of the performance year, but we are concerned that this approach would significantly delay earned reconciliation payments under this model. Because we propose to conduct a second calculation to account for overlap with other CMS models and programs, we can incorporate updated claims data with 14 months run out at that time. However, we do not expect that the updated data should substantially, in and of itself, affect the reconciliation results assuming hospitals and other providers furnishing services to Medicare beneficiaries in CCJR episodes follow usual patterns of claims submission and do not alter their billing practices due to this model. TABLE 14—PROPOSED TIMEFRAME FOR RECONCILIATION IN CCJR Model performance year Year 1* ........ Year 2 .......... Year 3 .......... asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Year 4 .......... Year 5 .......... Model performance period Reconciliation payment or repayment Second calculation to address overlaps and claims run-out Episodes ending March 31, 2016 to December 31, 2016. Episodes ending January 1, 2017 through December 31, 2017. Episodes ending January 1, 2018 through December 31, 2018. Episodes ending January 1, 2019 through December 31, 2019. Episodes ending January 1, 2020 through December 31, 2020. March 1, 2017 ....... Q2 2017 .......... March 1, 2018 ....... Q2 2018 March 1, 2018 ....... Q2 2018 .......... March 1, 2019 ....... Q2 2019 March 1, 2019 ....... Q2 2019 .......... March 2, 2020 ....... Q2 2020 March 2, 2020 ....... Q2 2020 .......... March 1, 2021 ....... Q2 2021 March 1, 2021 ....... Q2 2021 .......... March 1, 2022 ....... Q2 2022 * Note that the reconciliation for Year 1 would not include repayment responsibility from CCJR hospitals. VerDate Sep<11>2014 Second calculation adjustment to reconciliation amount Reconciliation claims submitted by 21:01 Jul 13, 2015 Jkt 235001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4702 E:\FR\FM\14JYP3.SGM 14JYP3 41249 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules 7. Proposed Adjustments for Overlaps With Other Innovation Center Models and CMS Programs a. Overview We acknowledge that there may be circumstances where a Medicare beneficiary in a CCJR episode may also be assigned to an ACO participating in the MSSP or otherwise accounted for in a payment model being tested by the Innovation Center. Current or forthcoming programs and models with potential overlap with CCJR are displayed in Table 15. For purposes of this proposed rule, ‘‘total cost of care’’ models refer to models in which episodes or performance periods include participant financial responsibility for all Part A and Part B spending, as well as some Part D spending in select cases. We use the term ‘‘shared savings’’ in this proposed rule to refer to models in which the payment structure includes a calculation of total savings and CMS and the model participants each retain a particular percentage of that savings. We note that there exists the possibility for overlap between CCJR episodes and shared savings models such as the Pioneer ACO Model, other total cost of care models such as the Oncology Care Model (OCM), other Innovation Center payment models such as BPCI, and other models or programs that incorporate per-beneficiary-per-month fees or other payment structures. TABLE 15—CURRENT PROGRAMS AND MODELS WITH POTENTIAL OVERLAP WITH PROPOSED CCJR MODEL Shared savings? Program/model Brief description Pioneer ............................................................................. Medicare Shared Savings Program (MSSP) ................... Next Generation ACO ...................................................... Comprehensive Primary Care initiative (CPCi) ............... ACO shared savings program ......................................... ACO shared savings program ......................................... ACO shared savings program ......................................... Pays primary care providers for improved and comprehensive care management. Multi-payer model for advanced primary care practices, or ‘‘medical homes’’. Bundled payment program for acute or post-acute services or both. Multi-payer model for oncology physician group practices. ACO for ESRD Medicare beneficiaries ........................... Model targeting prevention of heart attack and stroke ... Hospice concurrent care model ....................................... Multi-payer Advanced Primary Care Practice (MAPCP) Bundled Payments for Care Improvement (BPCI) .......... Oncology Care Model (OCM) .......................................... asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Comprehensive ESRD Care Initiative (CEC) .................. Million Hearts ................................................................... Medicare Care Choices Model ........................................ Four different issues may arise in such overlap situations that must be addressed under CCJR. First, beneficiaries in CCJR episodes could also be part of BPCI Model 2 or 3 LEJR episodes, and the clinical services provided as part of each episode may overlap entirely or in part. Second, CCJR reconciliation payments and Medicare repayments that are made under Part A and B and attributable to a specific beneficiary’s episode may be at risk of not being accounted for by other models and programs when determining the cost of care under Medicare for that beneficiary. Third, some Innovation Center models make PBPM payments to entities for care coordination and other activities, either from the Part A or B Trust or both, or from the Innovation Center’s own appropriation (see section 1115A(f) of the Act). These payments may occur during a CCJR episode. Finally, there could be instances when the expected Medicare savings for a CCJR beneficiary’s episode is not achieved by Medicare because part of that savings is paid back to the hospital or another entity under a shared savings program or other model in which the beneficiary is also included. We seek comment on our proposals to account for overlap with other models, including VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 those listed in Table 15 as well as other CMS models or programs. b. CCJR Beneficiary Overlap With BPCI Episodes BPCI is an episode payment model testing LEJR episodes, as well as 47 other episodes, in acute or PAC or both (Models 1, 2, 3 or 4). As discussed in section III.A. of this proposed rule, we propose to exclude from selection for participation in the CCJR payment model those geographic areas where 50 percent or more of LEJR episodes are initiated at acute care hospitals testing the LEJR episode in BPCI in Models 1, 2 or 4 as of July 1, 2015. In that same section, we propose that acute care hospitals in selected geographic areas participating in BPCI under Model 1 (acute care only) and those participating as episode initiators for the LEJR episode in Model 2 (acute and PAC from 30 to 90 days post-discharge) or Model 4 (prospective episode payment for the LEJR anchor hospital stay and related readmissions for 30 days post-discharge) be excluded from CCJR. While we believe these proposals will mitigate the overlap of CCJR beneficiaries with BPCI episodes, there may still be instances of model overlap that we need to account for under CCJR. PO 00000 Frm 00053 Fmt 4701 Sfmt 4702 Per-beneficiaryper-month (PBPM) payments? Yes Yes Yes Yes ........ ......... ........ ......... No. No. No. Yes. Yes ........ Yes. No .......... No. No .......... Yes. Yes ......... No .......... No .......... No. Yes. Yes. These include circumstances when a beneficiary is admitted to a participating CCJR hospital for an LEJR procedure where the beneficiary would also be in a BPCI Model 2 episode under a physician group practice that would initiate the episode under BPCI. In another example, a beneficiary discharged from an anchor hospitalization under CCJR could enter a BPCI Model 2 LEJR episode at another hospital for a phased second joint replacement procedure or enter a BPCI Model 3 LEJR episode upon initiation of PAC services at a BPCI post-acute provider episode initiator for the LEJR episode. Similarly, a beneficiary in a BPCI Model 2 or Model 3 LEJR episode could be admitted to a CCJR participant hospital for a phased second joint replacement. In all such scenarios in which there is overlap of CCJR beneficiaries with any BPCI LEJR episodes, we propose that the BPCI LEJR episode under Models 1, 2, 3, or 4 take precedence and we would cancel (or never initiate) the CCJR episode. Because the cancellation (or lack of initiation) would only occur for overlap with BPCI LEJR episodes, we expect that the participant hospital and treating physician would generally be aware of the beneficiary’s care pathway that E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41250 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules would cancel or not initiate the CCJR episode. Therefore, we would exclude the CCJR episode from the CCJR participant hospital’s reconciliation calculations where we compare actual episode payments to the target price under the CCJR model. If we were to allow both CCJR and BPCI LEJR episodes to overlap, we would have no meaningful way to apply the payment policies in two models with overlapping care redesign interventions and episodes. Participants in BPCI have an expectation that eligible episodes will be part of the BPCI model test, whereas based on our proposal CCJR participants would be aware that episodes may be canceled when there is overlap with BPCI episodes as previously discussed in this section. We aim to preserve the integrity of ongoing model tests without introducing major modifications (that is, CCJR episode precedence) that could make evaluation of existing models more challenging. We considered that there may also be instances of overlap between CCJR and BPCI Model 3 LEJR episodes where our proposal to give precedence to all BPCI episodes could lead to undesirable patient steering because the BPCI Model 3 episode does not begin until care is initiated at an episode-initiating PAC provider. It could be possible for a participating CCJR hospital to purposefully guide a beneficiary to a BPCI Model 3 LEJR episode initiating PAC provider to exclude that beneficiary’s episode from CCJR. We considered giving precedence to the CCJR episode in overlap with Model 3 beneficiaries because the CCJR episode begins with admission for the anchor hospitalization and thus includes more of the episode services. However, we believe the steering opportunities would be limited due to the preservation of beneficiary choice of provider in this model (as discussed in section III.E. of this proposed rule). As outlined in section III.E. of this proposed rule, CCJR hospitals must provide patients with a complete list of all available PAC options. Moreover, BPCI Model 3 postacute providers are actively involved in the decision to admit patients to their facilities. As episode initiators in BPCI, such providers are subject to monitoring and evaluation under that model and would be vigilant about not engaging in steering themselves or spurred by other providers. Nevertheless, we will monitor CCJR hospitals to ensure steering or other efforts to limit beneficiary access or move beneficiaries out of the model are not occurring (see section III.F. of this proposed rule). VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 We seek comment on the proposed approach to address overlap between CCJR and BPCI episodes. c. Accounting for CCJR Reconciliation Payments and Repayments in Other Models and Programs Under CCJR, we would annually, as applicable, make reconciliation payments to or receive repayments from participating CCJR hospitals based on their quality performance and Medicare expenditures, as described in section III.C.6. of this proposed rule. While we propose that these reconciliation payments or repayments would be handled by MACs, the calculation of these amounts would be done separately before being sent through the usual Medicare claims processing systems. Nevertheless, it is important that other models and programs in which providers are accountable for the total cost of care be able to account for the full Medicare payment, including CCJRrelated reconciliation payments and repayments as described in section III.C.6. of this proposed rule, for beneficiaries who are also in CCJR episodes. Accordingly, it is necessary to have beneficiary-specific information on CCJR-related reconciliation payments and repayments available when those models and programs make their financial calculations. Thus, in addition to determining reconciliation payments and repayments for the participant hospitals in the CCJR model, we propose to also calculate beneficiaryspecific reconciliation payment or repayment amounts for CCJR episodes to allow for those other programs and models, as their reconciliation calculation timeframes permit, to determine the total cost of care for overlapping beneficiaries. We would perform the reconciliation calculations for CCJR hospitals and make information about the CCJR reconciliation or repayment amounts available to other programs and models, such as MSSP and Pioneer ACO, that begin reconciliation calculations after CCJR. For example, this strategy is currently in place to account for overlaps between beneficiaries aligned to Pioneer and MSSP ACOs and BPCI model beneficiaries. Beneficiary-specific reconciliation payment or repayment amounts are loaded into a shared repository for use during each program or model’s respective reconciliations. However, we note that we would not make separate payments to, or collect repayments from, participating CCJR hospitals for each individual episode, but, instead, propose to make a single aggregate reconciliation payment or repayment determination for all PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 episodes for a single performance year, as discussed in section III.C.6. of this proposed rule. As described in section III.C.6 of this proposed rule on the Proposed Process for Reconciliation, we propose to conduct reconciliation based on claims data available 2 months after the end of the performance year and a second calculation based on claims data available 14 months after the end of a performance year to account for claims run-out and potential overlap with other models. The rationale for this reconciliation process is to be able make payments to, and recoup payments from, CCJR participant hospitals in a timely manner and to be able to account for overlaps in other models and programs. In addition, the timing of the reconciliation was determined giving consideration to when the other total cost of care models conduct their reconciliations so that when they perform their financial calculations, they will have the information necessary to account for beneficiaryspecific payments/repayments made under the CCJR model. We intend to report beneficiary-specific payments and repayment amounts made for the CCJR model in the CMS Master Database Management System that generally holds payments/repayment amounts made for CMS models and programs. Other total cost of care models and programs can use the information on CCJR payment/repayment amounts reported in the Master Database Management System in their financial calculations such as in their baseline or benchmark calculations or reconciliations, to the extent that is consistent with their policies. We seek comment on our proposed approach to ensuring that the full CCJR episode payment for a beneficiary is accounted for when performing financial calculations for other total cost of care and episode-based payment models and programs. d. Accounting for PBPM Payments in the Episode Definition There are currently five CMS models that pay PBPM payments to providers for new or enhanced services as displayed in Table 15. These PBPM payments vary as to their funding source (Medicare Trust Funds or Innovation Center appropriation), as well as to their payment methodology. In general, these PBPM payments are for new or enhanced provider or supplier services that share the goal of improving quality of care overall and reducing Medicare expenditures for services that could be avoided through improved care coordination. Some of E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules these PBPM payments may be made for services furnished to a beneficiary that is in another Innovation Center model at the that same time that the beneficiary is in a CCJR LEJR episode, but the clinical relationship of services paid by the PBPM payments to the CCJR episode will vary. For purposes of CCJR, we consider clinically related those services paid by PBPMs that are for the purpose of care coordination and care management of any beneficiary diagnosis or hospital readmission not excluded from the CCJR episode definition, as discussed in section III.B.2 of this proposed rule. We would determine whether the services paid by PBPM payments are excluded from the CCJR episode on a model by model basis based on their funding source and clinical relationship to CCJR episodes. If we determine a model’s PBPM payments are for new or enhanced services that are clinically related to the CCJR episode and the PBPM payment is funded through the Medicare Part A or B Trust Fund, we would include the services paid by the PBPM payment to the extent they otherwise meet the proposed episode definition for the CCJR model. That is, we would include the clinically related services paid by a PBPM payment if the services would not otherwise be excluded based on the principal diagnosis code on the claim, as discussed in section III.B.2 of this proposed rule. The PBPM payments for clinically related services would not be excluded from the historical CCJR episodes used to calculate target prices when the PBPM payments are present on Part A or Part B claims, and they would not be excluded from calculation of episode actual expenditures during the performance period. PBPM model payments that we determine are clinically unrelated would be excluded, regardless of the funding mechanism or diagnosis codes on claims for those payments. We note that in the case of PBPM model payments, principal diagnosis codes on a Part B claim (which are used to identify exclusions from CCJR episodes, as discussed in section III.B.), would not denote the only mechanism for exclusion of a service from the CCJR episode. All such PBPM model payments we determine are clinically unrelated would be excluded as discussed in this proposal. Finally, all services paid by PBPM payments funded through the Innovation Center’s appropriation under section 1115A of the Act would be excluded from CCJR episodes, without a specific determination of their clinical relationship to CCJR episodes. We VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 believe including such PBPM payments funded under the Innovation Center’s appropriation and not included on claims would be operationally burdensome and could significantly delay any reconciliation payments and repayments for the CCJR model. In addition, because these services are not paid for from the Medicare Part A or B Trust Fund, we are not confident that they would be covered by Medicare under existing law. Therefore, we believe the services paid by these PBPM payments are most appropriately excluded from CCJR episodes. Our proposal for the treatment of services paid through model PBPM payments in CCJR episodes would pertain to all existing models with PBPM payments, as well as future models and programs that incorporate PBPM payments. We believe that this proposal is fully consistent with our goal of including all related Part A and Part B services in the CCJR episodes, as discussed in section III.B.2. of this proposed rule. Under this proposal, only one of the four existing models displayed in Table 15 include services paid by PBPM payments that would not be excluded from CCJR episodes. The MAPCP model makes PBPM payments that are funded through the Trust Fund for new or enhanced services that coordinate care, improve access, and educate patients with chronic illnesses. We expect these new or enhanced services to improve quality and reduce spending for services that may have otherwise occurred, such as hospital readmissions, and consider them to be clinically related to CCJR episodes because the PBPM payments would support care coordination for medical diagnoses that are not excluded from CCJR episodes. Thus, we propose that services paid by PBPM payments under the MAPCP model not be excluded from CCJR episodes to the extent they otherwise meet the proposed episode definition. While the OCM model will pay for new or enhanced services through PBPM payments funded by the Medicare Part B Trust Fund, we do not believe these services are clinically related to CCJR episodes. The OCM model incorporates episodebased payment initiated by chemotherapy treatment, a service generally reported with ICD–9–CM codes that are specifically excluded from the proposed CCJR episode definition in section III.B.2. of this proposed rule. We believe the care coordination and management services paid by OCM PBPM payments would be focused on chemotherapy services and their complications, so the services would be clinically unrelated to CCJR PO 00000 Frm 00055 Fmt 4701 Sfmt 4702 41251 episodes. Therefore, we propose that services paid by PBPM payments under the OCM model be excluded from CCJR episodes. Similarly, we propose to exclude services paid by PBPM payments under the Medicare Care Choices model, because the model’s focus on palliative care for beneficiaries with a terminal illness means the PBPM payments would pay for services that are clinically unrelated to CCJR episodes. The services paid by PBPM payments under this model would commonly pertain to diagnoses that are excluded from the proposed CCJR episode definition. Finally, new or enhanced services paid by PBPM payments under the Comprehensive Primary Care initiative (CPCi) are paid out of the Innovation Center’s appropriation and thus would be excluded from CCJR episodes according to this proposal. We acknowledge there may be new models not included Table 15 that could incorporate a PBPM payment for new or enhanced services. We would plan to make our determination about whether services paid by a new model PBPM payment that is funded under the Medicare Trust Funds are clinically related to CCJR episodes through the same subregulatory approach that we are proposing to use to update the episode definition (excluded MS–DRGs and ICD–9–CM diagnosis codes). We would assess each model’s PBPM payment to determine if it would be primarily used for care coordination or care management services for excluded clinical conditions under the LEJR episode definition for CCJR based on the standards we propose to use to update the episode definition that are discussed in section III.B.2 of this proposed rule. If we determine that the PBPM payment would primarily be used to pay for services to manage an excluded clinical condition, we would exclude the PBPM payment from the CCJR episode on the basis that it pays for unrelated services. If we determine that the PBPM payment could primarily be used for services to manage an included clinical condition, we would include the PBPM payment in the CCJR episode if the diagnosis code on the claim for the PBPM payment was not excluded from the episode, following our usual process for determining excluded claims for Part B services in accordance with the episode definition discussed in section III.C.2 of this proposed rule. We would post our proposed determination about whether the PBPM payment would be included in the episode to the CMS Web site to allow for public input on our planned application of these standards, and then adopt changes to E:\FR\FM\14JYP3.SGM 14JYP3 41252 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS the overlap list with posting to the CMS Web site of the final updated list after our consideration of the public input. We seek comment on our proposals to account for Innovation Center model PBPM payments under CCJR. e. Accounting for Overlap With Shared Savings Programs and Total Cost of Care Models In addition to the Medicare Shared Savings Program (MSSP) under section 1899 of the Act, there are several ACO and other Innovation Center models that make or will make, once implemented, providers accountable for total cost of care over 6 to 12 months, including the Pioneer ACO Model, Next Generation ACO, Comprehensive ESRD Care (CEC) Model, CPCi, OCM, and the Multi-payer Advanced Primary Care Practice (MAPCP) Demonstration. Some of these are shared savings models (or programs, in the case of MSSP), while others are not shared savings but hold participating providers accountable for the total cost of care during a defined episode of care, such as OCM. Note that as discussed in section III.C.7.a. of this proposed rule, for purposes of this proposed rule, ‘‘total cost of care’’ models refer to models in which episodes or performance periods include participant financial responsibility for all Part A and Part B spending, as well as some Part D spending in select cases. Each of these payment models holds providers accountable for the total cost of care over the course of an extended period of time or episode of care by applying various payment methodologies. We believe it is important to simultaneously allow beneficiaries to participate in broader population-based and other total cost of care models, as well as episode payment models that target a specific episode of care with a shorter duration, such as CCJR. Allowing beneficiaries to receive care under both types of models may maximize the potential benefits to the Medicare Trust Funds and participating providers and suppliers, as well as beneficiaries. Beneficiaries stand to benefit from care redesign that leads to improved quality for LEJR episodes of care even while also receiving care under these broader models, while entities that participate in other models and programs that assess total cost of care stand to benefit, at least in part, from the cost savings that accrue under CCJR. For example, a beneficiary receiving an LEJR procedure may benefit from a hospital’s care coordination efforts with regard to care during the inpatient hospital stay. The same beneficiary may be attributed to a primary care physician affiliated with VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 an ACO who is actively engaged in coordinating care for all of the beneficiary’s clinical conditions throughout the entire performance year, beyond the 90-day post-discharge LEJR episode. We propose that a beneficiary could be in a CCJR episode, as defined in section III.B. of this proposed rule, by receiving an LEJR procedure at a CCJR hospital, and also attributed to a provider participating in a model or program in Table 15. For example, a beneficiary may be attributed to a provider participating in the Pioneer ACO model for an entire performance year, as well as have a CCJR episode during the ACO’s performance year. Each model incorporates a reconciliation process, where total included spending during the performance period or episode are calculated, as well as any potential savings achieved by the model or program. Given that we are proposing to allow for such beneficiary overlap, we believe it is important to account for savings under CCJR and the other models and programs with potential overlap in order that CMS can apply the respective individual savings-related payment policies of the model or program, without attributing the same savings to more than one model or program. We believe that when overlap occurs, it is most appropriate to attribute Medicare savings accrued during the CCJR time period (hospital stay plus 90 days post-discharge) to CCJR to the extent possible. The CCJR episode has a shorter duration and is initiated by a major surgical procedure, requiring an inpatient hospitalization. In contrast, the total cost of care models listed in Table 15 incorporate 6 to 12 month performance periods for participants and, in general, have a broader focus on beneficiary health. Our intention is to ensure that CCJR episodes are attributed the full expected savings to Medicare to the extent possible. As such, we propose the following policies to ensure that other models are able to account for the reconciliation payments paid to CCJR hospitals to the extent possible prior to performing their own reconciliation calculations and that, in all appropriate circumstances, the CCJR model or the other model would make an adjustment for savings achieved under the CCJR model and partially paid back through shared savings/performance payments under other initiatives to ensure that the full CCJR model savings to Medicare is realized. We propose that the total cost of care calculations under non-ACO total cost of care models would be adjusted to the PO 00000 Frm 00056 Fmt 4701 Sfmt 4702 extent feasible to account for beneficiaries that are aligned to participants in the model and whose care is included in CCJR in order to ensure that the savings to Medicare achieved under CCJR (the discount percentage) are not paid back under these other models through shared savings or other performance-based payment. Thus, the non-ACO total cost of care models would adjust their calculations to ensure the CCJR discount percentage is not paid out as savings or other performance-based payment to the other model participants. As previously discussed, we believe that the efficiencies achieved during the CCJR episode should be credited to the entity that is closest to that care for the episode of care in terms of time, location, and care management responsibility, rather than the broader entity participating in a total cost of care model that spans a longer duration. We propose that the non-ACO total cost of care models to which this policy would apply would include CPCi, OCM, and MAPCP. We seek comment on our proposal to account for overlap with those non-ACO total cost of care models and any other current or forthcoming models. We propose a different policy for accounting for overlap with MSSP and other ACO models. We note that given the operational complexities and requirements of the MSSP reconciliation process, it is not feasible for MSSP to make an adjustment to account for the discount to Medicare under a CCJR episode under existing program rules and processes. Additionally, for programmatic consistency among ACO models and programs, given that our ACO models generally are tested for the purpose of informing future potential changes to MSSP, we believe that the ACO model overlap adjustment policy should be aligned with the MSSP policy. Thus, we propose that under CCJR, we would make an adjustment to the reconciliation amount if available to account for any of the applicable discount for an episode resulting in Medicare savings that is paid back through shared savings under MSSP or any other ACO model, but only when a CCJR participant hospital also participates in the ACO and the beneficiary in the CCJR episode is also aligned to that ACO. This adjustment would be necessary to ensure that the applicable discount under CCJR is not reduced because a portion of that discount is paid out in shared savings to the ACO and thus, indirectly, back to the hospital. However, we propose not to make an adjustment under CCJR when a E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS beneficiary receives an LEJR procedure at a participant hospital and is aligned to an ACO in which the hospital is not participating. While this proposal would leave overlap unaccounted for in such situations, we do not believe it would be appropriate to hold responsible for repayment the hospital that managed the beneficiary during the episode through a CCJR adjustment, given that the participant hospital may have engaged in care redesign and reduced spending during the CCJR episode. The participant hospital may be unaware that the beneficiary is also aligned to an ACO. However, we recognize that as proposed this policy would allow an unrelated ACO full credit for the Medicare savings achieved during the episode. The evaluation of the CCJR model, as discussed in section IV of this proposed rule, would examine overlap in such situations and the potential effect on Medicare savings. We note that our proposed policy as outlined in this proposed rule would entail CCJR reclaiming from the participant hospital any discount percentage paid out as shared savings for MSSP or ACO models only when the hospital is an ACO participant and the beneficiary is aligned with that ACO, while other total cost of care models such as CPCi would adjust for the discount percentage in their calculations. While it is operationally feasible for smaller total cost of care models in testing, such as CPCi, to make an adjustment to account for any CCJR discount percentage paid out as sharing savings or other performance-based payments, the operational complexities and requirements of the large permanent Medicare ACO program, MSSP, make it infeasible for that program to make an adjustment in such cases, and we believe that other ACO models in testing that share operating principles with the MSSP should follow the same policies as the CCJR MSSP adjustment for certain overlapping ACO beneficiaries. As the landscape of CMS models and programs changes, we may revisit this policy through future rulemaking. We seek comment on our proposals for adjustments to account for overlap between CCJR and shared savings programs and total cost of care models. 8. Proposals To Limit or Adjust Hospital Financial Responsibility a. Overview As discussed in section III.A of this proposed rule, we propose designating as the financially responsible providers in CCJR all acute care hospitals paid under the IPPS that are located in the selected geographic areas for this test of VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 90-day post-discharge LEJR episodes, with the exception of some hospitals that we propose to exclude because of participation in BPCI (Models 1, 2, or 4) for LEJR episodes. We are interested in ensuring a broad test of episode payment for this clinical condition among different types of hospitals, including those who may not otherwise choose to participate in an episode payment model. Many of the participant hospitals would likely be key service providers in their communities for a variety of medical and surgical conditions extending well beyond orthopedic procedures. We want to gain experience with this model before extending it to hospitals in uncommon circumstances. In addition, we acknowledge that hospitals designated for participation in CCJR currently vary with respect to their readiness to function under an episode payment model with regard to their organizational and systems capacity and structure, as well as their beneficiary population served. Some hospitals may more quickly be able to demonstrate high quality performance and savings than others, even though we propose that the episode target prices be based predominantly on the hospital’s own historical episode utilization in the early years of CCJR. We also note that providers may be incentivized to excessively reduce or shift utilization outside of the CCJR episode, even with the quality requirements discussed in section III.C.5 of this proposed rule. In order to mitigate any excessive repayment responsibility for hospitals or reduction or shifting of care outside the episode, especially beginning in performance year 2 of the model when we propose to begin to phase in responsibility for repaying Medicare for excess episode spending, we propose several specific policies that are also referenced in section III.C.6.b. of this proposed rule. b. Proposed Limit on to Raw NPRA Contribution to Repayment Amounts and Reconciliation Payments (1) Proposed Limit on Raw NPRA Contribution to Repayment Amounts When hospital repayment responsibility begins in the second performance year of CCJR, under this proposed rule, hospitals would be required to repay Medicare for episode expenditures that are greater than the applicable target price. As discussed in the section III.C.3.c of this proposed rule regarding our proposed pricing adjustment for high payment episodes, hospitals participating in CCJR would not bear financial responsibility for PO 00000 Frm 00057 Fmt 4701 Sfmt 4702 41253 actual episode payments greater than a ceiling set at two standard deviations above the mean regional episode payment. Nevertheless, hospitals would begin to bear repayment responsibility beginning in performance year 2 for those episodes where actual episode expenditures are greater than the target price up to the level of the regional episode ceiling. In aggregate across all episodes, the money owed to Medicare by a hospital for actual episode spending above the applicable target price could be substantial if a hospital’s episodes generally had high payments. As an extreme example, if a hospital had all of its episodes paid at two standard deviations above the mean regional episode payment, the hospital would need to repay Medicare a large amount of money, especially if the number of episodes was large. To limit a hospital’s overall repayment responsibility for the raw NPRA contribution to the repayment amount under this model, we propose a 10 percent limit on the raw NPRA contribution to the repayment amount in performance year 2 and a 20 percent limit on the raw NPRA contribution to the repayment amount in performance year 3 and subsequent years. Hereinafter we refer to these proposed repayment limits as stop-loss limits. In performance year 2 as we phase in repayment responsibility, the hospital would owe Medicare under the proposed CCJR payment model no more than 10 percent of the hospital’s target price for the anchor MS–DRG multiplied by the number of the hospital’s CCJR episodes anchored by that MS–DRG during the performance year, for each anchor MS–DRG in the model. Ten percent provides an even transition with respect to maximum repayment amounts from performance year 1, where the hospital bears no repayment responsibility, to the proposed stop-loss limit in performance years 3 through 5 of 20 percent. In performance years 3 through 5 when repayment responsibility is fully phased in, no more than 20 percent of the hospital’s target price for the MS–DRG multiplied by the number of the hospital’s CCJR episodes with that MS– DRG in that performance year would be owed by the hospital to Medicare under the proposed CCJR payment model. The proposed stop-loss percentage of 20 percent would be symmetrical in performance years 3 through 5 with the proposed limit on the raw NPRA contribution to reconciliation payments discussed in the following section. We believe that a stop-loss limit of 20 percent is appropriate when the hospital bears full repayment responsibility, E:\FR\FM\14JYP3.SGM 14JYP3 41254 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS based on our assessment of the changes in practice pattern and reductions in quality of care that could lead to significant repayment responsibility under the CCJR model, as compared to historical LEJR episode utilization. We estimate that the IPPS payment for the anchor hospital stay makes up approximately 50 percent of the episode target price, and we expect that the anchor hospital stay offers little opportunity for efficiencies to be achieved by reducing Medicare expenditures. In contrast, we expect significant episode efficiencies could be achieved in the 90 days following discharge from the anchor hospital stay through reductions in related hospital readmissions and increased utilization of appropriate lower intensity PAC providers, specifically increased utilization of home health services and outpatient therapy and reduced utilization of SNFs and IRFs. Hospital readmissions and facility-based PAC increase the typical Medicare episode payment by 30 to 45 percent over episodes that do not include these services. The proposed 20 percent stop- VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 loss limit related to the total episode payment corresponds to approximately 40 percent of episode payment for the post-discharge period only, where the major opportunities for efficiency through care redesign occur. Thus, taking into consideration the historical patterns used to set target prices, we believe it is reasonable to hold participant hospitals responsible for repayment of actual episode spending that is up to 20 percent greater than the target price. If a participant hospital’s repayment amount due to the raw NPRA would otherwise have exceeded the stop-loss limit of 20 percent (comparable to 40 percent of Medicare payment for the post-discharge period), the hospital’s episodes would include much poorer episode efficiency as compared to the hospital’s historical episodes, with large proportions of episodes including related readmissions and facility-based PAC, costly services that we do not expect to be necessary for most beneficiaries whose care is wellcoordinated and appropriate throughout a high quality LEJR episode. PO 00000 Frm 00058 Fmt 4701 Sfmt 4702 The following hypothetical example illustrates how the proposed stop-loss percentage would be applied in a given performance year for the episodes of a participant hospital. In performance year 3, a participant hospital had ten episodes triggered by MS–DRG 469, with a target price for these episodes of $50,000. The hospital’s episode actual spending for these ten episodes was $650,000. The hospital’s raw NPRA that would otherwise be $150,000 ((10 × $50,000)¥$650,000) would be capped at the 20 percent stop-loss limit of $100,000 (.2 × 10 × $50,000) so the hospital would owe CMS $100,000, rather than $150,000. In performance year 3, the same participant hospital also has 100 episodes triggered by MS– DRG 470, with a target price for these episodes of $25,000. The hospital’s episode actual spending for these 100 episodes was $2,800,000. The hospital’s raw NPRA would be $300,000 ((100 × $25,000)¥$2,800,000), an amount that would be due to CMS in full as it would not be subject to the 20 percent stop-loss limit of $500,000 (.2 × 100 × $25,000). E:\FR\FM\14JYP3.SGM 14JYP3 As illustrated in Figure 4 where we display results from our national model for the proposed CCJR performance year 2 policies when the phase-in of repayment responsibility begins and under the assumption that utilization remains constant, we estimate that the 10 percent stop-loss limit would impact the amount of repayment due to the raw NPRA for about 11 percent of hospitals. For performance year 3, the 20 percent stop-loss limit would affect significantly fewer hospitals, only about 3 percent. We note that the stop-loss limit for years 3 through 5 where repayment responsibility is fully implemented is consistent with the BPCI Model 2 policy. While Figure 3 assumes no change in utilization patterns, under the model test we expect that the proposed stop-loss limits could actually affect a smaller percentage of hospitals in each performance year because we expect LEJR episode care redesign incentivized by the model’s financial opportunities to generally reduce unnecessary VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 utilization, thereby reducing actual episode spending and, correspondingly, any associated repayment amounts due to the raw NPRA. We note that we would include any post-episode spending amount due to Medicare according to the policy proposed in section III.C.8.d of this proposed rule in assessing the total repayment amount due to the raw NPRA against the stoploss limit for the performance year to determine a hospital’s total payment due to Medicare, if applicable. We seek comment on our proposal to adopt a 10 percent stop-loss limit in performance year 2 and 20 percent stoploss limit in performance year 3 and beyond in CCJR as hospital repayment responsibility for excess episode spending above the target price is phased in and then maintained in the model. PO 00000 Frm 00059 Fmt 4701 Sfmt 4702 41255 (2) Proposed Limit on Raw NPRA Contribution to Reconciliation Payments We believe a limit on reconciliation payments for CCJR would be appropriate for several reasons. Due to the proposed nature of the CCJR model during performance year 1, when hospitals have no repayment responsibility for excess episode spending above the target price, CMS bears full financial responsibility for Medicare actual episode payments for an episode that exceed the target price, and we believe our responsibility should have judicious limits. Therefore, we believe it would be reasonable to cap a hospital’s reconciliation payment due to the raw NPRA as a percentage of episode payment on the basis of responsible stewardship of CMS resources. In addition, we note that beginning in performance year 1, participant hospitals would be eligible for reconciliation payments due to the NPRA if actual episode expenditures are E:\FR\FM\14JYP3.SGM 14JYP3 EP14JY15.009</GPH> asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41256 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules less than the target price, assuming the proposed quality thresholds are met. This proposal for reconciliation payments due to the NPRA provides a financial incentive to participant hospitals from the beginning of the model to manage and coordinate care throughout the episode with a focus on ensuring that beneficiaries receive the lowest intensity, medically appropriate care throughout the episode that results in high quality outcomes. Therefore, we also believe it would be reasonable to cap a hospital’s reconciliation payment due to the raw NPRA based on concerns about potential excessive reductions in utilization under the CCJR model that could lead to beneficiary harm. In determining what would constitute an appropriate reconciliation payment limit due to the raw NPRA, we believe it should provide significant opportunity for hospitals to receive reconciliation payments for greater episode efficiency that includes achievement of quality care and actual episode payment reductions below the target price, while avoiding creating significant incentives for sharply reduced utilization that could be harmful to beneficiaries. Thus, for all 5 performance years of the model, we propose a limit on the raw NPRA contribution to the reconciliation payment of no more than 20 percent of the hospital’s target prices for each MS– DRG multiplied by the number of the hospital’s episodes for that MS–DRG. Hereinafter we refer to this proposed reconciliation payment limit as the stopgain limit. This proposed stop-gain limit is parallel to the 20 percent stop-loss limit proposed for performance year 3 and beyond. We believe that a parallel stop-gain and stop-loss limit is important to provide proportionately similar protections to CMS and participant hospitals for their financial responsibilities under CCJR, as well as to protect the health of beneficiaries. As illustrated in Figure 3 where we display results from our national model for the proposed CCJR performance year 2 policies under the assumption that utilization remains constant, we estimate that the 20 percent stop-gain limit would impact the reconciliation payment amount due to the raw NPRA of almost no hospitals. We note that a stop-gain limit of 20 percent is consistent with BPCI Model 2 policy. While Figure 3 assumes no change in utilization patterns, under the model test we expect that the proposed stopgain limit could actually affect a few hospitals in each performance year because we expect LEJR episode care redesign incentivized by the model’s financial opportunities to generally VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 reduce unnecessary utilization, thereby reducing actual episode spending and, correspondingly, increasing any associated reconciliation payment amounts due to the raw NPRA. Nevertheless, we believe the proposed stop-gain limit of 20 percent provides substantial opportunity for hospitals to achieve savings over the target price without excessive reductions in utilization, and those savings would be paid back to hospitals fully in most cases without being affected by the stopgain limit. We seek comment on our proposal to adopt a 20 percent stop-gain limit for all performance years of CCJR. We note that we plan to monitor beneficiary access and utilization of services and the potential contribution of the stop-gain limit to any inappropriate reduction in episode services. We refer readers to section III.F. of this proposed rule for our proposals on monitoring and addressing hospital performance under CCJR. c. Proposed Policies for Certain Hospitals To Further Limit Repayment Responsibility As discussed in section III.C.3. of this proposed rule, we propose that participant hospitals would be subject to repayment responsibility for episode actual spending in excess of the applicable target price beginning in performance year 2. Hospitals participating in CCJR would not be responsible for actual episode payments greater than a ceiling set at two standard deviations above the mean regional episode payment as described earlier in this section. Additionally, we propose a 10 percent limit on the raw NPRA contribution to the repayment mount in performance year 2 and a 20 percent limit on the raw NPRA contribution to the repayment amount in performance year 3 and beyond, as described in the previous section of this proposed rule. Though our proposals provide several safeguards to ensure that participant hospitals have limited repayment responsibility due to the raw NPRA, we are proposing additional protections for certain groups of hospitals that may have a lower risk tolerance and less infrastructure and support to achieve efficiencies for high payment episodes. Specifically, we are proposing additional protections for rural hospitals, SCHs, Medicare Dependent Hospitals and Rural Referral Centers (RCCs). We note that these categories of hospitals often have special payment protections or additional payment benefits under Medicare because we recognize the importance of preserving Medicare beneficiaries’ access to care from these hospitals. In MedPAC’s PO 00000 Frm 00060 Fmt 4701 Sfmt 4702 Report to the Congress in June 2012, MedPAC examined issues related to rural Medicare beneficiaries and found that ‘‘The primary objective of rural special payments is to ensure that Medicare does its part to support the financial viability of rural providers that are necessary for beneficiaries’ access to care. Some form of special payments will be needed to maintain access in areas with low population density where providers inevitably have low patient volumes and lack economies of scale.’’ 40 We propose that a rural hospital would have additional protections under the stop-loss limit proposal. For the purpose of this model, we are proposing to define a rural hospital as an IPPS hospital that is either located in a rural area in accordance with § 412.64(b) or in a rural census tract within an MSA defined at § 412.103(a)(1) or has reclassified to rural in accordance with § 412.103 Such rural hospitals would have additional protections under the stop-loss limit proposal. Consistent with the findings in MedPAC’s June 2012 Report to the Congress, we believe rural hospitals may have a lower risk tolerance and less infrastructure and support to achieve efficiencies for high payment episodes, particularly if they are the rural hospital is the only hospital in an area. Our preliminary analysis examining national spending for MS–DRGs 469 and 470 from October 1, 2013 to September 30, 2014 showed that MS– DRGs 469 and 470 cases represent a slightly higher proportion of cases and spending for rural hospitals than the national average (for example, MS–DRG 470 episode spending represents 12 percent of IPPS spending for rural hospitals and represents 9 percent of IPPS spending nationally).41 Additionally, our analysis on the distribution of national spending of MS–DRGs 469 and 470 episodes by service type (that is inpatient, outpatient, SNF, Home Health, Physician Part B, DME), found that on average, inpatient services account for the most spending for an MS–DRGs 469 and 470 episode (53 percent of spending for an MS–DRG 469 episode and 55 percent of spending for MS–DRG 470 episode). SNF services account for 27 percent of spending for MS–DRG 469 and 18 percent of spending for MS–DRG 470. The spending distribution for all rural IPPS hospitals also differs from the 40 MedPAC Report to Congress June 2012, Chapter 5, page 121. 41 Medicare FFS Parts A and B claims, CCJR episodes as proposed, between October 1, 2013 and September 30, 2014. E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules national average. For rural hospitals, inpatient services for CCJR episodes account for more spending than the national average (56 percent for MS– DRG 469 and 57 percent for MS–DRG 470 for rural hospitals) and SNF spending is higher than the national average (29 percent for MS–DRG 469 and 21 percent for MS–DRG 470 for rural hospitals). It is evident that this category of hospitals has different spending patterns than the national average. Furthermore, hospitals in rural areas often face other unique challenges. Rural hospitals may be the only source of healthcare services for beneficiaries living in rural areas, and beneficiaries have limited alternatives should rural hospitals be subject to financial changes under this model. Additionally, because rural hospitals may be in areas with fewer providers including fewer physicians and PAC facilities, rural hospitals may have more limited options in coordinating care and reducing spending while maintain quality of care under this model. We believe that urban hospitals may not have similar concerns as they are often in areas with many other providers and have greater opportunity to develop efficiencies under this model. Given that rural hospitals have different episode spending patterns, have different challenges in coordinating care and reducing cost than urban hospitals and serve as a primary access to care for beneficiaries, we believe that we should have a more protective stop-loss limit policy as described later in this section. Additionally, we propose to provide additional protections for SCHs as defined in § 412.92, Medicare Dependent Hospitals as defined in § 412.108 and RRCs as defined in § 412.96. Hospitals paid under the IPPS can qualify for SCH status if they meet one of the following criteria: • Located at least 35 miles from other like hospitals. • Located in a rural area, located between 25 and 35 miles from other like hospitals, and no more than 25 percent of residents or Medicare beneficiaries who become hospital inpatients in the hospital’s service area are admitted to other like hospitals located within a 35mile radius of the hospital or the hospital has fewer than 50 beds and would meet the 25 percent criterion if not for the fact that some beneficiaries or residents were forced to seek specialized care outside of the service area due to the unavailability of necessary specialty services at the hospital. • Hospital is rural and located between 15 and 25 miles from other like hospitals but because of local VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 topography or periods of prolonged severe weather conditions, the other like hospitals are inaccessible for at least 30 days in each of 2 out of 3 years. • Hospital is rural and the travel time between the hospital and the nearest like hospital is at least 45 minutes. If an IPPS hospital qualifies to be a SCH, the hospital can be paid the higher of the federal payment rate paid to IPPS hospitals or a cost-based hospitalspecific rate as described in § 412.78. Under OPPS, a rural SCH can receive a 7.1 percent add on payment for most services with certain exceptions, in accordance with § 419.43(g). These criteria to qualify for SCH status demonstrate that SCHs are likely to be the sole hospital in an area. Furthermore, additional payments provided under Medicare FFS for SCHs, demonstrates Medicare’s interest in ensuring these hospitals are able to provide services to the Medicare beneficiaries who may have limited access to providers in their area. As a result, we believe that we should provide SCHs additional protections from hospital responsibility for repayment in this model. We note that we propose to exclude these add-on payments for SCHs, as described in section III.C.3.a of this proposed rule. MDHs are defined as a hospital that meets the following criteria: • Located in a rural area. • Has 100 beds or less. • Is not a SCH. • Sixty percent of the hospital’s inpatient days or discharges were attributable to individuals entitled to Medicare Part A benefits during specified time periods as provided in § 412.108. MDHs also qualify for special additional payments under the IPPS where an MDH can receive the higher of a payment under the federal standard rate for IPPS hospitals or the payment under federal standard rate for IPPS hospitals plus 75 percent of the difference in payments between a cost based hospital-specific rate and the federal standard rate as described in § 412.108(c). These criteria demonstrate that MDHs are small, rural hospitals that have a high Medicare case mix percentage and receive additional payments under the IPPS to ensure financial stability and preserve beneficiary access to care to these hospitals. Thus, we believe these factors demonstrate that we should provide additional safeguards from hospital responsibility for repayment in order to preserve access to care. We note that we propose to exclude these payment enhancements for MDHs, as described PO 00000 Frm 00061 Fmt 4701 Sfmt 4702 41257 in section III.C.3.a. of this proposed rule. RRCs are defined as IPPS hospitals with at least 275 beds that meet the following criteria: • Fifty percent of the hospital’s Medicare patients are referred from other hospitals or from physicians who are not on the staff of the hospital. • At least 60 percent of the hospital’s Medicare patients live more than 25 miles from the hospital. • At least 60 percent of all services the hospital furnishes to Medicare patients are furnished to patients who live more than 25 miles from the hospital. If a hospital does not meet the criteria described previously, a hospital can also qualify for RRC status if a hospital meets the following criteria: • For specified period of time, the hospital has a case-mix that equals the lower of the median case mix index (CMI) value for all urban hospitals nationally; or the median CMI value for urban hospitals located in its region, excluding those hospitals receiving indirect medical education payments. • Its number of discharges is at least— ++ 5,000 (or 3,000 for an osteopathic hospital); or ++ The median number of discharges for urban hospitals in the census region in which it is located, set by the CMS through IPPS rulemaking. • Additionally, a hospital must meet one of the following criteria: ++ More than 50 percent of its active medical staff are specialists who meet the conditions specified at § 412.96(c)(3). ++ At least 60 percent of all discharges are for inpatients who reside more than 25 miles from the hospital. ++ At least 40 percent of all inpatients treated are referred from other hospitals or from physicians who are not on the hospital’s staff. As an RRC, a hospital can qualify for several additional payments under the IPPS. For example, an RRC is not subject to the 12 percent cap on Medicare Disproportionate Share Hospital payments that a rural hospital would otherwise be subject to, in accordance with § 412.106(d). Although RRCs are larger and have a higher Medicare patient mix, they often serve as the sole provider to treat higher acuity cases, as demonstrated by the RRC qualification criteria. As a result of these unique characteristics of these hospitals, RRCs can receive additional payments under Medicare FFS. Thus, it is also important to provide additional protections for RRCs such that participation in this model does not E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41258 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules result in significant financial loss that may reduce access for Medicare beneficiaries. For these reasons, we propose a stoploss limit of 3 percent of episode payments for these categories of hospitals in performance year 2 and a stop-loss limit of 5 percent of episode payments for performance years 3 through 5. More specifically, in performance year 2, a rural hospital, SCH, RRC or MDH that is a participant hospital would owe Medicare due to the raw NPRA no more than 3 percent of the hospital’s target price for the anchor MS–DRG multiplied by the number of the hospital’s CCJR episodes with that anchor MS–DRG in the performance year. Additionally, in performance years 3 through 5, a rural hospital, SCH, RRC or MDH that is a participant hospital would owe Medicare due to the raw NPRA no more than 5 percent of the hospital’s target price for the anchor MS–DRG multiplied by the number of the hospital’s CCJR episodes with that anchor MS–DRG in the performance year. We believe a different stop-loss limit policy is warranted given the different spending patterns and the unique hospital characteristics for these groups of hospitals as described earlier. We believe this proposal strikes an appropriate balance between protecting hospitals that often serve as the only access of care for Medicare beneficiaries and having these hospitals meaningfully participate in the model. We note that this proposal does not impact the proposed stop-gain policy for these categories of hospitals. Rural hospitals, SCHs, MDHs and RRCs still have the opportunity to participate in full gains at 20 percent similar to other hospitals. Hospitals can apply for SCH, MDH and RRC status through their MACs and Regional Office at any time. MACs maintain the list of SCHs, MDHs, and RRCs in the CMS Provider Specific File, which they update on a quarterly basis. The special hospital designations recorded in the Provider Specific File are used in Medicare claims pricing to ensure that these hospitals are paid according to their special hospital designation. Additionally, CMS can identify which hospitals are considered rural for the purpose of this policy, using the Provider Specific File to identify physical geographic location of a hospital and the MACs to identify whether an urban hospital has reclassified to rural under 42 CFR 412.103 or located in a rural census tract of an MSA defined under 42 CFR 412.103(a)(1). Thus, we propose to identify rural hospitals, MDHs, SCHs and RRCs at the time of reconciliation using the Provider Specific File updated VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 in December of the end of the performance year and information from the MACs, and those hospitals would be subject to the 3 percent stop-loss limit policy for that performance year 2, and 5 percent stop-loss limit policy in performance years 3 through 5. For example, to identify the hospitals that would receive a 3 percent stop-loss limit for performance year 2, we would use the Provider Specific File updated in December 2017. We note that the special Medicare payment designation of MDH status has been extended through FY 2017 by legislation under the Medicare Access and CHIP Reauthorization Act of 2015. As a result, the proposed additional protections for hospital responsibility for repayment for MDHs would only apply to the extent that MDH status exists under Medicare. In other words, should MDH expire on or after September 30, 2017, we would not identify hospitals as MDHs to receive the 5-percent stop-loss limit policy for performance year 3. Though MDH status is set to expire after the third quarter of 2017, we would still identify MDHs to receive the 3-percent stop loss limit policy for all of performance year 2. We note that we also considered excluding rural hospitals, SCHs, MDHs and RRCs from the CCJR model altogether due to our concerns of placing significant responsibility for actual episode payment above the target price on these hospitals. Additionally, we were also concerned that from an evaluation perspective, we would not have sufficient sample size of CCJR episodes from these categories of hospitals to have significant results of how these groups of hospitals perform under this model. We weighed our reasons for excluding these hospitals with the potential qualitative information we would gain from payment innovation tests on rural hospitals in this model. We concluded that because the CCJR model strives to test episode payment for a broad variety of hospitals, it would be preferable to include these hospitals in the CCJR model and provide additional protections from a large repayment responsibility. We welcome public comment on our proposed stop-loss limit for rural hospitals, SCHs, MDHs and RRCs and on our alternative consideration to exclude these hospitals entirely from the CCJR model. d. Proposed Hospital Responsibility for Increased Post-Episode Payments We noted that while the proposed CCJR episode would extend 90-days post-discharge from the anchor hospitalization, some hospitals may have an incentive to withhold or delay PO 00000 Frm 00062 Fmt 4701 Sfmt 4702 medically necessary care until after an episode ends to reduce their actual episode payments. We do not believe this would be likely, especially given the relatively long episode duration. However, in order to identify and address such inappropriate shifting of care, we propose to calculate for each performance year the total Medicare Parts A and B expenditures in the 30day period following completion of each episode for all services covered under Medicare Parts A and B, regardless of whether or not the services are included in the proposed episode definition (section III.B of this proposed rule), as is consistent with BPCI Model 2. Because we base the proposed episode definition on exclusions, identified by MS–DRGs for readmissions and ICD–9– CM diagnosis codes for Part B services as discussed in section III.B. of this proposed rule, and Medicare beneficiaries may typically receive a wide variety of related (and unrelated) services during the CCJR episode that extends 90 days following discharge from the anchor hospitalization, there is some potential for hospitals to inappropriately withhold or delay a variety of types of services until the episode concludes, without attending carefully to the episode definition, especially for Part B services where diagnosis coding on claims may be less reliable. This inappropriate shifting could include both those services that are related to the episode (for which the hospital would bear financial responsibility as they would be included in the actual episode spending calculation) and those that are unrelated (which would not be included in the actual episode spending calculation), because a hospital engaged in shifting of medically necessary services outside the episode for potential financial reward may be unlikely to clearly distinguish whether the services were related to the episode or not in the hospital’s decisions. This calculation would include prorated payments for services that extend beyond the episode as discussed in section III.C.3.b. of this proposed rule. Specifically, we would identify whether the average 30-day postepisode spending for a participant hospital in any given performance year is greater than three standard deviations above the regional average 30-day postepisode spending, based on the 30-day post-episode spending for episodes attributed to all CCJR eligible hospitals in the same region as the participant hospital. We propose that beginning in performance year 2, if the hospital’s average post-episode spending exceeds E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules this threshold, the participant hospital would repay Medicare for the amount that exceeds such threshold, subject to the stop-loss limits proposed elsewhere in this proposed rule. We seek comment on this proposal to make participant hospitals responsible for making repayments to Medicare based on high spending in the 30 days after the end of the episode and for our proposed methodology to calculate the threshold for high post-episode spend. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 9. Proposed Appeal Procedures Under the CCJR model, we propose that we would determine target prices for episodes of care using the methodology described in section III.C. of this proposed rule. We propose to institute a reconciliation payment process as described in section III.C.6, of this proposed rule, and we propose to retrospectively calculate a participant hospital’s actual episode performance relative to its target price after the completion of each performance year. The difference between the actual episode spending of each CCJR episode and the target price of that episode (calculated as target price subtracted by CCJR actual episode payment) would be aggregated for all episodes initiated at a participant hospital during each performance year. This calculation for a participant hospital would be adjusted for post-episode payment increases and stop gain and stop loss limits, as described in section III.C.6.a. of this proposed rule. We propose to use quality measure percentiles to determine hospital eligibility to receive the reconciliation payment and use the successful reporting of the voluntary PRO THA/TKA data to adjust the reconciliation payment, as described in section III.C.5. of this proposed rule. The NPRA would be reflected in a report sent to the participant hospital called the CCJR Reconciliation Report. We also propose to institute appeals processes for the CCJR model that would allow participant hospitals to appeal matters related to reconciliation and payment (that are previously discussed in this section), as well as non-payment related issues, such as enforcement matters detailed in section III.C.12. a. Payment Processes The proposed processes with regard to reconciliation, payment, use of quality measures to determine payment, and stop-loss and stop-gain policies are set forth in detail in sections III.C.5–8. In this section, we propose an appeals processes that will apply to the matters addressed in sections III.C.5–8, as well as matters not related to payment or VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 reconciliation. These appeals processes will apply to the following payment and reconciliation processes: • Starting with the CCJR Reconciliation Report for performance year 1, if the CCJR Reconciliation Report indicates the reconciliation amount is positive, CMS would issue a payment, in a form and manner specified by CMS, for that amount to the awardee within 30 calendar days from the issue date of the CCJR Reconciliation Report, unless the participant hospital selects to pursue the calculation error and reconsideration review processes, in which case payment will be delayed as detailed later in this section. • For performance year 1, if the CCJR reconciliation report indicates a repayment amount, the participant hospital would not be required to make payment for that amount to CMS, as we have proposed not to hold hospitals financially responsible for negative NPRAs for the first performance year. In addition, if it is determined that a CCJR hospital has a positive NPRA for performance year 1, and the subsequent calculation for performance year 1 the following year, as described in section III.C.6. of this proposed rule, determines that in aggregate the performance year 1 NPRA and the subsequent calculation amount for performance year 1 is a negative value (adding together the NPRA amount from the reconciliation for performance year 1 as well as the amount determined in the subsequent calculation, which would be detailed on the CCJR reconciliation report for performance year 2), the hospital would only be financially responsible for a repayment amount that would net the performance year 1 NPRA and subsequent calculation for year 1 to zero. This would be true for performance year 1 only, given our proposal to begin phasing in financial responsibility in year 2 of the model as discussed in section III.C.2.c. of this proposed rule. For performance years 2 through 5 of the model, for example, if the NPRA for performance year 1 for a given hospital were $3,000, and the subsequent calculation performed in Q2 2018 to account for claims run-out and overlaps determined a repayment amount of $3,500 for claims incurred and overlap during performance year 1, $3,000 would be applied to the CCJR reconciliation report for performance year 2. If the NPRA for performance year 2 were $5,000, the repayment amount of $3,000 would be netted against the $5,000, and the reconciliation payment for performance year 2 would be $2,000. Given that downside risk has been waived for performance year 1, the remaining $500 would not be added to PO 00000 Frm 00063 Fmt 4701 Sfmt 4702 41259 the CCJR reconciliation report for performance year 2. However, beginning with the reconciliation process for performance year 3, any repayment amounts generated through the subsequent calculation process detailed in section III.C.6.b. would be netted against any repayment or reconciliation amount on the respective CCJR reconciliation reports for performance years 2, 3, 4, and 5. Starting with the reconciliation for performance year 2, if the CCJR Reconciliation Report indicates the NPRA is negative, the participant hospital would make payment for the absolute value of that amount to CMS within 30-calendar days from the issue date of the CCJR Reconciliation Report, in a form and manner specified by CMS. Where the participant hospital does not issue payment within 30-calendar days, we will issue a demand letter requiring payment be made immediately. • The reconciliation or repayment amount may include adjustments, arising from matters from the previous performance year, as necessary to account for subsequent calculations performed for performance years that were specified in earlier CCJR Reconciliation Reports, as discussed in section III.C.6. of this proposed rule. For example, we would potentially make determinations of additional monies owed by Medicare to participant hospitals or vice versa in subsequent periods based on the availability of updated Medicare administrative data. These subsequent calculations would be contained in the succeeding reconciliation report. For example, the subsequent calculations applicable to performance year 1 would be contained in the reconciliation report for performance year 2. • If the participant hospital fails to pay CMS the amount owed by the date indicated in the demand letter, CMS will recoup owed monies from participant hospital’s present and future Medicare payments to collect all monies due to CMS. While we propose that a participant hospital may enter into financial arrangements with CCJR collaborators that allow for some risksharing, as discussed in section III.C. of this proposed rule, the participant hospital would be solely liable for the repayment of the negative repayment amount to CMS. Where the participant hospital fails to repay CMS in full for all monies owed, CMS would invoke all legal means to collect the debt, including referral of the remaining debt to the United States Department of the Treasury, pursuant to 31 U.S.C. 3711(g). E:\FR\FM\14JYP3.SGM 14JYP3 41260 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules b. Calculation Error We propose the following calculation error process for participant hospitals to contest matters related to payment or reconciliation, of which the following is a non-exhaustive list: The calculation of the participant hospital’s reconciliation amount or repayment amount as reflected on a CCJR reconciliation report; the calculation of NPRA; the calculation of the percentiles of quality measure performance to determine eligibility to receive a reconciliation payment; and the successful reporting of the voluntary PRO THA/TKA data to adjust the reconciliation payment. Participant hospitals would review their CCJR reconciliation report and be required to provide written notice of any error, in a calculation error form that must be submitted in a form and manner specified by CMS. Unless the participant provides such notice, the reconciliation report would be deemed final within 30 calendar days after it is issued, and CMS would proceed with payment or repayment. If CMS receives a timely notice of an error in the calculation, CMS would respond in writing within 30 calendar days to either confirm or refute the calculation error, although CMS would reserve the right to an extension upon written notice to the participant hospital. We propose that if a participant hospital does not submit timely notice of calculation error in accordance with the timelines and processes specified by CMS, the participant hospital would be precluded from later contesting any of the following matters contained in the CCJR reconciliation report for that performance year: any matter involving the calculation of the participant hospital’s reconciliation amount or repayment amount as reflected on a CCJR reconciliation report; any matter involving the calculation of NPRA; the calculation of the percentiles of quality measure performance to determine eligibility to receive a reconciliation payment; and the successful reporting of the voluntary PRO THA/TKA data to adjust the reconciliation payment. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS c. Dispute Resolution (1) Limitations on Review In accordance with section 1115A(d) of the Act, there is no administrative or judicial review under sections 1869 or 1878 of the Act or otherwise for the following: • The selection of models for testing or expansion under section 1115A of the Act. • The selection of organizations, sites or participants to test those models selected. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 • The elements, parameters, scope, and duration of such models for testing or dissemination. • Determinations regarding budget neutrality under subsection 1115A(b)(3). • The termination or modification of the design and implementation of a model under subsection 1115A(b)(3)(B). • Decisions about expansion of the duration and scope of a model under subsection 1115A(c), including the determination that a model is not expected to meet criteria described in paragraph (1) or (2) of such subsection. (2) Matters Subject to Dispute Resolution We propose that a participant hospital may appeal an initial determination that is not precluded from administrative or judicial review by requesting reconsideration review by a CMS official. The request for review must be submitted for receipt by CMS within 10 days of the notice of the initial determination. Initial determinations that are not precluded from administrative or judicial review would include the involuntary termination of a participant hospital’s participation in the CCJR model. (3) Dispute Resolution Process We propose the following dispute resolution process. First, we propose that only a participant hospital may utilize the dispute resolution process. Second, in order to access the dispute resolution process a participant hospital must have timely submitted a calculation error form, as previously discussed, for any matters related to payment. We propose these matters would include any amount or calculation indicated on a CCJR reconciliation report, including calculations not specifically reflected on a CCJR reconciliation report but which generated figures or amounts reflected on a CCJR reconciliation report. The following is a non-exhaustive list of the matters we propose would need to be first adjudicated by the calculation error process as previously detailed: calculations of reconciliation or repayment amounts; calculations of NPRA; and any calculations or percentile distribution involving quality measures that we propose could affect reconciliation or repayment amounts. If a participant hospital wants to engage in the dispute resolution process with regard to one of these matters, we propose it would first need to submit a calculation error form. Where the participant hospital does not timely submit a calculation error form, we propose the dispute resolution process would not be available to the participant PO 00000 Frm 00064 Fmt 4701 Sfmt 4702 hospital with regard to those matters for the reconciliation report for that performance year. If the participant hospital did timely submit a calculation error form and the participant hospital is dissatisfied with CMS’s response to the participant hospital’s notice of calculation error, the hospital would be permitted to request reconsideration review by a CMS reconsideration official. The reconsideration review request would be submitted in a form and manner and to an individual or office specified by CMS. The reconsideration review request would provide a detailed explanation of the basis for the dispute and include supporting documentation for the participant hospital’s assertion that CMS or its representatives did not accurately calculate the NPRA or postepisode spending amount in accordance with CCJR rules. The following is a nonexhaustive list of representative payment matters: • Calculations of NPRA, post-episode spending amount, target prices or any items listed on a reconciliation report. • The application of quality measures to a reconciliation payment, including the calculation of the percentiles thresholds of quality measure performance to determine eligibility to receive reconciliation payments, or the successful reporting of the voluntary PRO THA/TKA data to adjust the reconciliation payment. • Any contestation based on the grounds that CMS or its representative made an error in calculating or recording such amounts. Where the matter is unrelated to payment, such as termination from the model, the participant hospital need not submit a calculation error form. We propose to require the participant hospital to timely submit a request for reconsideration review, in a form and manner to be determined by CMS. Where such request is timely received, we propose CMS would process the request as discussed later in this section. We propose that the reconsideration review would be an on-the-record review (a review of briefs and evidence only). The CMS reconsideration official would make reasonable efforts to notify the hospital in writing within 15 calendar days of receiving the participant hospital’s reconsideration review request of the date and time of the review, the issues in dispute, the review procedures, and the procedures (including format and deadlines) for submission of evidence (the ‘‘Scheduling Notice’’). The CMS reconsideration official would make reasonable efforts to schedule the E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules review to occur no later than 30 days after the date of the Scheduling Notice. The provisions at § 425.804(b), (c), and (e) (as in effect on the publication date of this proposed rule) would apply to reviews conducted pursuant to the reconsideration review process for CCJR. The CMS reconsideration official would make reasonable efforts to issue a written determination within 30 days of the review. The determination would be final and binding. We solicit comment on our proposals related to appeals rights under this model. The two-step appeal process for payment matters—(1) calculation error form, and (2) reconsideration review—is used broadly in other CMS models. We seek comment on whether we should develop an alternative appeal process. We are also interested in whether there should be appeal rights for reductions or eliminations of NPRA as a result of enforcement actions, as discussed in section III.C.12 of this proposed rule, and if so, whether the process for such appeals should differ from the processes proposed here. In accordance with section 1115A of the Act, we are proposing to codify these proposals in regulation in the new proposed part 510 of the CFR. 10. Proposed Financial Arrangements and Beneficiary Incentives asabaliauskas on DSK5VPTVN1PROD with PROPOSALS a. Financial Arrangements and Beneficiary Incentives As discussed earlier in this proposed rule, we propose that CCJR would be a retrospective episode payment model, under which Medicare payments for services included in an episode of care would continue to be made to all providers and suppliers under the existing payment systems, and episode payment would be based on later reconciliation of episode actual spending under those Medicare payment systems to the episode target price. If the episode actual spending is less than the target price, the participant hospital would receive a reconciliation payment, assuming quality performance thresholds are met and the stop-gain threshold is not exceeded. If the episode actual spending exceeds the target price, beginning in performance year 2 hospitals would repay the difference to Medicare up to the stop-loss threshold. We believe that participant hospitals may wish to enter into financial arrangements with providers and suppliers caring for beneficiaries in CCJR episodes in order to align the financial incentives of those providers and suppliers with the model goals of improving quality and efficiency for LEJR episodes. For example, given that VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 the proposed episode duration is 90 days following discharge from the anchor hospital stay and the episodes are broadly defined (see section III.B of this proposed rule), many providers and suppliers other than the participant hospital will furnish related services to beneficiaries during episodes. Those providers and suppliers may include physicians, physician group practices, skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), long term care hospitals (LTCHs), outpatient therapy providers, and others. We expect that participant hospitals will identify key providers and suppliers for CCJR beneficiaries in their communities and then establish close partnerships with them to assist the hospital in redesigning care for LEJR episodes to improve quality and efficiency, coordinating and managing care for beneficiaries, monitoring episode performance, and refining care pathways. These providers and suppliers may invest substantial time and other resources in these activities, yet they would neither be the direct recipients of any reconciliation payments from Medicare, nor directly responsible for repaying Medicare for excess episode spending. Therefore, we believe it is possible that a participant hospital that may receive a reconciliation payment from Medicare or may need to repay Medicare may want to enter into financial arrangements with other providers and suppliers to share risks and rewards under CCJR. In addition to providers and suppliers with which the participant hospital may want to enter into financial arrangements to share risks and reward, we expect that participant hospitals may choose to engage with organizations that are neither providers nor suppliers to assist with matters such as: episode data analysis; local provider and supplier engagement; care redesign planning and implementation; beneficiary outreach; CCJR beneficiary care coordination and management; monitoring participant hospital compliance with the terms and conditions of the CCJR model; or other model-related activities. These organizations may play important roles in a hospital’s plans to implement the CCJR model based on the experience these organizations may bring to the hospital’s successful participation in the model, such as prior experience with bundled payment initiatives, care coordination expertise, familiarity with the local community, and knowledge of Medicare claims data. We expect that all relationships established between PO 00000 Frm 00065 Fmt 4701 Sfmt 4702 41261 participant hospitals and these organizations for purposes of the CCJR model would only be those permitted under existing law and regulation, including any relationships that would include the participant hospital’s sharing of CCJR model risks and rewards with these organizations. We would expect that all of these relationships would solely be based on the level of engagement of the organization’s resources to directly support the participant hospitals’ CCJR model implementation. Additionally, because the proposed broadly defined LEJR episodes extend 90-days post-discharge from the anchor hospital stay, we believe that participant hospitals caring for CCJR beneficiaries may want to offer beneficiary incentives to encourage beneficiary adherence to recommended treatment and active patient engagement in recovery. Such incentives should be closely related to the provision of high quality care during the episode and advance a clinical goal for a CCJR beneficiary, and should not serve as inducements to beneficiaries to seek care from the participant hospital or other specific suppliers and providers. Such incentives may help participant hospitals reach their quality and efficiency goals for CCJR episodes, while benefitting beneficiaries’ health and the Medicare Trust Fund if hospital readmissions and complications are reduced while recovery continues uninterrupted or accelerates. (1) Financial Arrangements Under the CCJR Model As previously noted, we believe that given the financial incentives of episode payment in CCJR, participant hospitals in the model may want to engage in financial arrangements to share reconciliation payments or hospital internal cost savings or both, as well as responsibility for repaying Medicare, with providers and suppliers making contributions to the hospital’s episode performance on spending and quality. Such arrangements would allow the participant hospitals to share all or some of the reconciliation payments they may be eligible to receive from CMS, or the participant hospital’s internal cost savings that result from care for beneficiaries during a CCJR episode. Likewise, such arrangements could allow the participant hospitals to share the responsibility for the funds needed to repay Medicare with providers and suppliers engaged in caring for CCJR beneficiaries, if those providers and suppliers have a role in the hospital’s episode spending or quality performance. We propose to use the term ‘‘CCJR collaborator’’ to refer to E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41262 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules such providers and suppliers, who may include the following: • SNFs. • HHAs. • LTCHs. • IRFs. • Physician Group Practices (PGPs). • Physicians, nonphysician practitioners, and outpatient therapy providers. We believe that CCJR collaborators should have a role in the participant hospital’s episode spending or quality performance. Accordingly, we propose that the CCJR collaborator would directly furnish related items or services to a CCJR beneficiary during the episode and/or specifically participate in CCJR model LEJR episode care redesign activities, such as attending CCJR meetings and learning activities; drafting LEJR episode care pathways; reviewing CCJR beneficiaries’ clinical courses; developing episode analytics; or preparing reports of episode performance, under the direction of the participant hospital or another CCJR collaborator that directly furnishes related items and services to CCJR beneficiaries. Note that we propose later in this section a limit on Gainsharing Payments (as that term is defined later in this section) to physician or nonphysician CCJR collaborators, as well as to physician group practices, related to PFS payments for services furnished to CCJR beneficiaries. Therefore, in addition to playing a role in the participant hospital’s episode spending or quality performance, physician, nonphysician, and physician group practice CCJR collaborators must additionally directly furnish services to CCJR beneficiaries in order to receive a Gainsharing Payment as result of their financial arrangement with the participant hospital. We seek comment on our proposed definition of CCJR collaborators, as well as our proposed definition of a provider’s or supplier’s role in the participant hospital’s episode spending or quality performance. We propose that certain financial arrangements between a participant hospital and a CCJR collaborator be termed a ‘‘CCJR Sharing Arrangement,’’ and that the terms of each CCJR Sharing Arrangement be set forth in a written agreement between the participant hospital and the CCJR collaborator. We propose to use the term ‘‘Participation Agreement’’ to refer to such agreements. We propose that a ‘‘CCJR Sharing Arrangement’’ would be a financial arrangement contained in a Participation Agreement to share only the following: (1) CCJR reconciliation payments (as that term is defined in section III.C of this proposed rule); (2) VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 the participant hospital’s internal cost savings (as that term is defined later in this section); and (3) the participant hospital’s responsibility for repayment to Medicare, as discussed later in this section. Where a payment from a participant hospital to a CCJR collaborator is made pursuant to a CCJR Sharing Arrangement, we propose to define that payment as a ‘‘Gainsharing Payment.’’ A Gainsharing Payment may only be only composed of the following: (1) Reconciliation payments; (2) internal cost savings; or (3) both. Where a payment from a CCJR collaborator to a participant hospital is made pursuant to a CCJR Sharing Arrangement, we propose to define that payment as an ‘‘Alignment Payment.’’ We propose that CCJR Sharing Arrangements that provide for Alignment Payments would not relieve the participant hospital of its ultimate responsibility for repayment to CMS. Many of the programmatic requirements discussed later in this proposed rule for Gainsharing Payments and Alignment Payments are similar to those in Model 2 of the BPCI initiative. The CCJR Sharing Arrangements between participant hospitals and CCJR collaborators must be solely related to the contributions of the CCJR collaborators to care redesign that achieve quality and efficiency improvements under this model for CCJR beneficiaries. All Gainsharing Payments or Alignment Payments between participant hospitals and CCJR collaborators resulting from these arrangements must be auditable by HHS, as discussed later in this section, to ensure their financial and programmatic integrity. We emphasize that any CCJR collaborator that receives a Gainsharing Payment or makes an Alignment Payment must have furnished services included in the episode to CCJR beneficiaries. Furthermore, the payment arrangements for Gainsharing Payments or Alignment Payments contained in a CCJR Sharing Arrangement must be actually and proportionally related to the care of beneficiaries in a CCJR episode, and the CCJR collaborator must be contributing to the care redesign strategies of the participant hospital. We considered whether CCJR collaborators should be termed ‘‘participants’’ in this model, or whether the term ‘‘participant’’ should refer only to the participant hospitals located in MSAs selected for participation. If CCJR collaborators are participants in the model, we propose that their activities with regard to CCJR beneficiaries would be regulated directly by CMS. However, if CCJR collaborators are not participants, but rather are participating PO 00000 Frm 00066 Fmt 4701 Sfmt 4702 entities and individuals in the CCJR model through signed agreements with participant hospitals, their activities with regard to CCJR beneficiaries would be governed by the Participation Agreement between a CCJR collaborator and a participant hospital. Given the large number of potential CCJR collaborators, the expected varied nature of their respective arrangements with participant hospitals, and the potential administrative burden in reporting information to CMS, we believe the activities of CCJR collaborators with regard to CCJR beneficiaries would be best managed by participant hospitals. As we discussed earlier in this proposed rule, one justification for proposing that acute care hospitals be the provider type financially responsible under the CCJR model is the position of the hospital with respect to other providers and suppliers, in terms of coordinating care for CCJR beneficiaries. Given that position, we propose that where participant hospitals enter into Participation Agreements that contain CCJR Sharing Arrangements with CCJR collaborators, the participant hospital must also be responsible for ensuring that those providers and suppliers comply with the terms and requirements of this proposed rule. We seek comments on this proposal; specifically, whether CCJR collaborators should be termed participants in this model and subject to the applicable requirements, or whether the responsibility for compliance with the model’s requirements is better managed by participant hospitals. We are particularly interested in comments that address the advantages and disadvantages of making CCJR collaborators participants in the model, and whether there are certain provider or supplier types that CMS should consider including as ‘‘participants’’ in the model. The following discussion outlines our proposed requirements and responsibilities of participant hospitals that engage in such CCJR Sharing Arrangements. We believe these proposed requirements and responsibilities are essential to ensuring that all CCJR Sharing Arrangements are for the sole purpose of aligning the financial incentives of collaborating providers and suppliers with those of the participant hospital toward the CCJR model goals of improved LEJR episode care quality and efficiency. We believe that the rationale for and details of these arrangements must be documented and auditable by HHS, with a direct tie between the arrangements and the E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules participant hospital’s episode performance. Finally, we believe that the proposed limitations to the arrangements, as described later in this section, are necessary to ensure the integrity of the CCJR model by minimizing incentives for problematic behaviors, such as patient steering. We seek comments on all proposed requirements regarding CCJR Sharing Arrangements. With respect to whether certain entities or individuals should be prevented from participating in the CCJR model, either as participant hospitals or CCJR collaborators, we considered whether CMS should conduct screening for program integrity purposes. Many CMS models conduct screening during the application process and periodically thereafter. These screenings examine provider and supplier program integrity history, including any history of Medicare program exclusions or other sanctions and affiliations with individuals or entities that have a history of program integrity issues. Where a screening reveals that a provider or supplier has a history of program integrity issues or affiliations with individuals or entities that have a history of program integrity issues, we may remove that provider or supplier from the model. We utilize these screening processes for many CMS models, including the BPCI initiative. For several reasons, we believe that this type of screening for participant hospitals is inapplicable to the CCJR model. Most importantly, this model seeks to evaluate the performance in the model of hospitals located in a particular MSA. We believe it is important that all hospitals that meet the criteria for participation in the model be included, even if those hospitals have a history of program integrity issues. Further, we propose that CMS would evaluate the quality of care and institute beneficiary protections in ways that would go beyond some of the efforts of previous or existing CMS models. We solicit comments on this proposal, including whether screening of participant hospitals or CCJR collaborators might be appropriate or useful in aiding HHS’ program integrity efforts and identifying untrustworthy parties or parties with program integrity history problems. (a) CCJR Sharing Arrangement Requirements We propose that each CCJR Sharing Arrangement must include and set forth in writing at a minimum— • A specific methodology and accounting formula for calculating and verifying internal cost savings, if the VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 participant hospital elects to share internal cost savings through Gainsharing Payments with CCJR collaborators. We propose to define internal cost savings as the measurable, actual, and verifiable cost savings realized by the participant hospital resulting from care redesign undertaken by the participant hospital in connection with providing items and services to beneficiaries within specific CCJR episodes of care. Internal cost savings would not include savings realized by any individual or entity that is not the participant hospital. Each CCJR Sharing Arrangement must include specific methodologies for accruing and calculating internal cost savings of the participant hospital, where the hospital intends to share internal cost savings through a CCJR Sharing Arrangement with a CCJR collaborator. The specific methodologies for accruing and calculating internal cost savings must be transparent, measurable, and verifiable in accordance with Generally Accepted Accounting Principles (GAAP) and Government Auditing Standards (The Yellow Book). The methodology must set out the specific care redesign elements to be undertaken by the participant hospital or the CCJR collaborator or both; • A description of the methodology and accounting formula for calculating the percentage or dollar amount of a reconciliation payment received from CMS that will be paid as a Gainsharing Payment from the participant hospital to the CCJR collaborator; • A description of the methodology, frequency or dates of distribution, and accounting formula for distributing and verifying any and all Gainsharing Payments; • A description of the arrangement between the participant hospital and the CCJR collaborator regarding Alignment Payments, where the hospital and CCJR collaborator agree through a CCJR Sharing Arrangement to share risk for repayment amounts due to CMS, as reflected on a CCJR reconciliation report. The description of this arrangement must include safeguards to ensure that such Alignment Payments are made solely for purposes related to sharing responsibility for funds needed to repay Medicare in the CCJR model. This description should also include a methodology, frequency of payment, and accounting formula for payment and receipt of any and all Alignment Payments; • A provision requiring the participant hospital to recoup Gainsharing Payments paid to CCJR collaborators if Gainsharing Payments PO 00000 Frm 00067 Fmt 4701 Sfmt 4702 41263 were based on the submission of false or fraudulent data; • Plans regarding care redesign, changes in care coordination or delivery that are applied to the participant hospital or CCJR collaborators or both, and any description of how success will be measured; • Management and staffing information, including type of personnel or contactors that will be primarily responsible for carrying out changes to care under the model; • The participant hospital must maintain records identifying all CCJR collaborators, and the participant hospital’s process for determining and verifying the eligibility of CCJR collaborators to participate in Medicare; and • All CCJR Sharing Arrangements must require compliance, from both the participant hospital and the CCJR collaborator, with the proposed polices regarding beneficiary notification set forth in section III.F of this proposed rule. With respect to these requirements for Participation Agreements and CCJR Sharing Arrangements, we considered whether we should require participant hospitals and CCJR collaborators to periodically report this information to CMS for purposes of enforcement of these proposed regulations. However, we are mindful of the administrative burden in reporting this information as well as the challenges associated with creating a universal collection tool that would account for all the various iterations of financial arrangements into which participant hospitals and CCJR collaborators may enter. Therefore, we are proposing to require participant hospitals to retain this documentation as previously described, as well as in section III.C.10(d) of this proposed rule. We seek comment on this proposal as well as whether CMS should require participant hospitals and CCJR collaborators to periodically report data such as: Gainsharing Payments and/or Alignment Payments distributed and received; name and identifier (NPI, CCN, TIN) of all CCJR collaborators; and any other relevant information related to Participation Agreements and CCJR Sharing Arrangements that would assist HHS with enforcement of these regulations. We solicit comments about all of the requirements set out in the preceding discussion, including whether additional or different safeguards would be needed to ensure program integrity, protect against abuse, and ensure that the goals of the model are met. E:\FR\FM\14JYP3.SGM 14JYP3 41264 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (b) Participation Agreement Requirements We propose that the Participation Agreement must obligate the parties to comply, and must obligate the CCJR collaborator to require any of its employees, contractors or designees to comply, without limitation, to with the following requirements: • Each individual’s or entity’s participation in the CCJR Sharing Arrangement is voluntary and without penalty for nonparticipation. • Any Gainsharing Payments made pursuant to a CCJR Sharing Arrangement must be made only from the participant hospital to the CCJR collaborator with whom the participant hospital has signed a Participation Agreement containing a CCJR Sharing Arrangement. Additionally, we propose to require the following for all CCJR Sharing Arrangements between a participant hospital and a CCJR collaborator that is a physician group practice: ++ Where a Gainsharing Payment is made to a CCJR collaborator that is a physician group practice, all monies contained in such a Gainsharing Payment must be shared only with physician or nonphysician practitioners that furnished a service to a CCJR beneficiary during an episode of care in the calendar year from which the Net Payment Reconciliation Amount (NPRA), as that term is defined in section III.C.6. of this proposed rule, or internal cost savings was generated, either or both of which are the only permitted sources of funds for a Gainsharing Payment. We further propose that each CCJR Sharing Arrangement between a participant hospital and a CCJR collaborator that is physician group practice must stipulate that the physician group practice may not retain any portion of a Gainsharing Payment or distribute, by any method, any portion of a Gainsharing Payment to physician or nonphysician practitioners who did not furnish a service to a CCJR beneficiary during an episode of care in the calendar year from which the NPRA or internal cost savings was generated. • Any Alignment Payments made pursuant to a CCJR Sharing Arrangement may be made only to the participant hospital from the entity or individual with whom the participant hospital has signed a Participation Agreement containing a CCJR Sharing Arrangement. • Each CCJR Sharing Arrangement must require that the CCJR collaborator be in compliance with all Medicare provider enrollment requirements at VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 § 424.500 et seq., including having a valid and active TIN or NPI. • Any internal cost savings or reconciliation payments that the participant hospital seeks to share through CCJR Sharing Arrangements must meet the requirements set forth in the final CCJR rule (as finalized) and be administered by the participant hospital in accordance with GAAP. In no event may the participant hospital distribute any amounts pursuant to a CCJR Sharing Arrangement that are not comprised of either internal cost savings or a reconciliation payment, as those terms are defined in this proposed rule. All amounts determined to be internal cost savings by the participant hospital must reflect actual, internal cost savings achieved by the participant hospital through implementation of care redesign elements identified and documented by the participant hospital. In no case may internal cost savings reflect ‘‘paper’’ savings from accounting conventions or past investment in fixed costs. • Any Alignment Payments that the participant hospital receives through a CCJR Sharing Arrangement must meet the requirements set forth in the final CCJR rule (as finalized) and be administered by the participant hospital in accordance with GAAP. • CCJR Sharing Arrangements must not include any amounts that are not Alignment Payments or Gainsharing Payments. • Further, we propose that each Participation Agreement— ++ Between the participant hospital and a CCJR collaborator must obligate the CCJR collaborator to provide the participant hospital and HHS access to the CCJR collaborator’s records, information, and data for purposes of monitoring and reporting and any other lawful purpose. Records, information, and data regarding the CCJR Sharing Arrangement must have sufficient detail to verify compliance with all material terms of the CCJR Sharing Arrangement and the terms of the CCJR model; ++ Must require the participant hospital and the CCJR collaborator to include in their compliance programs specific oversight of their CCJR participation agreements and compliance with the requirements of the CCJR mode; ++ Must require compliance, from both the participant hospital and the CCJR collaborator, with the proposed polices regarding beneficiary notification set forth in section III.F; and ++ Must require the board or other governing body of the participant hospital to have responsibility for overseeing the participant hospital’s PO 00000 Frm 00068 Fmt 4701 Sfmt 4702 participation in the model, its arrangements with CCJR collaborators, its payment of Gainsharing Payments and receipt of Alignment Payments, and its use of beneficiary incentives in the CCJR model. • Participation Agreements must require all CCJR collaborators to comply with any evaluation, monitoring, compliance, and enforcement activities performed by HHS or its designees for the purposes of operating the CCJR model. • Each Participation Agreement must require the CCJR collaborator to permit site visits from CMS, or one of its designees, for purposes of evaluating the model. We solicit comments about all of the requirements set out in the preceding discussion, including whether additional or different safeguards would be needed to ensure program integrity, protect against abuse, and ensure that the goals of the model are met. (c) Gainsharing Payment and Alignment Payment Conditions and Restrictions We propose the following conditions and restrictions concerning Gainsharing Payments and Alignment Payments made pursuant to a CCJR Sharing Arrangement: • No entity or individual, whether or not a party to a Participation Agreement, may condition the opportunity to receive Gainsharing Payments in CCJR on the volume or value of past or anticipated referrals or other business generated to, from, or among a participant hospital, any CCJR collaborators, and any individual or entity affiliated with a participant hospital or CCJR collaborator. • Participant hospitals would not be required to share reconciliation payments, internal cost savings, or responsibility for repayment to CMS with other providers and suppliers. However, where a participant hospital elects to engage in those activities, we propose that such activities be limited to the provisions prescribed in this proposed rule. • We propose that Gainsharing Payments must be distributed on an annual basis, and are required to meet the following criteria: ++ Must be clearly identified and comply with all provisions in this proposed rule, as well as all applicable laws, statutes, and rules; ++ Must not be a loan, advance payments, or payments for referrals or other business; and ++ Must be made by electronic funds transfer (EFT). • We propose that Alignment Payments from a CCJR collaborator to a E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules participant hospital may be made at any interval, and are required to meet the following criteria: ++ Must be clearly identified and comply with all provisions in this proposed rule, as well as all applicable laws, statutes, and rules; ++ Must not be issued, distributed, or paid prior to the calculation by CMS of a reconciliation report reflecting a negative Net Payment Reconciliation Amount (NPRA); ++ Must not be a loan, advance payments, or payments for referrals or other business; and ++ Must be made by electronic funds transfer (EFT). • We propose that each CCJR Sharing Arrangement stipulate that any CCJR collaborator that is subject to any action involving noncompliance with the provisions of this propose rule, engaged in fraud or abuse, providing substandard care, or have other integrity problems not be eligible to receive any Gainsharing Payments related to NPRA generated during the time that coincides with the action involving any of the issues previously listed until the action has been resolved. • No entity or individual, as whether or not a party to a Participation Agreement, may condition the opportunity to make or receive Alignment Payments in CCJR on the volume or value of past or anticipated referrals or other business generated to, from, or among a participant hospital, any CCJR collaborators, and any individual or entity affiliated with a participant hospital or CCJR collaborator. • In a calendar year, the aggregate amount of the total Gainsharing Payments distributed by the participant hospital that are derived from a CCJR reconciliation payment may not exceed the amount of the reconciliation payment that the participant hospital received from CMS. • In a calendar year, the aggregate amount of the total Alignment Payments received by the participant hospital may not exceed 50 percent of the participant hospital’s repayment amount due to CMS. If no repayment amount is due, then no Alignment Payments may be received by the participant hospital. • We propose that the participant hospital must retain at least 50 percent of its responsibility for repayment to CMS, pursuant to the repayment amount reflected in each annual reconciliation report, under the CCJR model. Given that the participant hospital will be responsible for developing and coordinating care redesign strategies in response to its participation in the CCJR model, we VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 believe it is important that the participant hospital retain a significant portion of its responsibility for repayment to CMS. For example, upon receipt of a reconciliation report indicating that the participant hospital owes $100 to CMS, the participant hospital would be permitted to receive no greater than $50 in Alignment Payments, in the aggregate, from its CCJR collaborators. • Further, we propose that a CCJR Sharing Arrangement must limit the amount a single CCJR collaborator may make in Alignment Payments to a single participant hospital. We propose that a single CCJR collaborator not make an Alignment Payment to a participant hospital that represents an amount greater than 25 percent of the repayment amount reflected on the participant hospital’s annual reconciliation report. For example, upon receipt of a reconciliation report indicating that the participant hospital owes $100 to CMS, the participant hospital would be permitted to receive no more than $25 in an Alignment Payment from a single entity or individual who is a CCJR collaborator of the participant hospital. • Gainsharing Payments and Alignment Payments must not induce the participant hospital, CCJR collaborators, or the employees, contractors, or designees of the participant hospital or CCJR collaborators to reduce or limit medically necessary services to any Medicare beneficiary. • Individual physician and nonphysician practitioners, whether or not a party to a CCJR Sharing Arrangement, must retain their ability to make decisions in the best interests of the patient, including the selection of devices, supplies, and treatments. • Entities furnishing services to beneficiaries during a CCJR episode, whether or not a party to a CCJR Sharing Arrangement, must retain their ability to make decisions in the best interests of the patient, including the selection of devices, supplies, and treatments. • Gainsharing methodologies for calculating Gainsharing Payments and Alignment Payments must not directly account for volume or value of referrals, or business otherwise generated, between or among a participant hospital, any CCJR collaborators, and any individual or entity affiliated with a participant hospital or CCJR collaborator. • Gainsharing Payments must be derived solely from reconciliation payments or internal cost savings or both. • The total amount of Gainsharing Payments for a calendar year paid to an PO 00000 Frm 00069 Fmt 4701 Sfmt 4702 41265 individual physician or nonphysician practitioner who is a CCJR collaborator must not exceed a cap. The cap is 50 percent of the total Medicare approved amounts under the Physician Fee Schedule (PFS) for services furnished to the participant hospital’s CCJR beneficiaries during a CCJR episode by that physician or nonphysician practitioner. This cap of 50 percent on Gainsharing Payments to individual physician or nonphysician practitioner is consistent with the same policy for the BPCI initiative. The purpose of this cap is to limit the amount of Gainsharing Payments an individual practitioner may receive due to his/her provision of services included in the CCJR model. • The total amount of Gainsharing Payments for a calendar year paid to an physician group practice that is a CCJR collaborator must not exceed a cap. The cap is 50 percent of the sum of the total Medicare approved amounts under the Physician Fee Schedule (PFS) for services furnished by physician or nonphysician practitioner members of the physician group practice to the participant hospital’s CCJR beneficiaries during a CCJR episode by those physicians or nonphysician practitioners. We solicit comments about all of the requirements set out in the preceding discussion, including whether additional or different safeguards would be needed to ensure program integrity, protect against abuse, and ensure that the goals of the model are met. (d) Documentation and Maintenance of Records We propose to require participant hospitals and CCJR collaborators to comply with audit and document retention requirements similar to those required by the Medicare Shared Savings Program, BPCI Model 2, and other Innovation Center models. Specifically, with respect to all Participation Agreements and CCJR Sharing Arrangements, the participant hospital and CCJR collaborator must: • Comply with the retention requirements regarding Participation Agreements and CCJR Sharing Arrangements set forth in subsection III.C.10(a)–(d). • Maintain and give CMS, the Office of Inspector General of the Department of Health and Human Services (OIG), and the Comptroller General or their designee(s) access to all books, contracts, records, documents, and other evidence (including data related to utilization and payments, quality performance measures, billings, and CCJR Sharing Arrangements related to E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41266 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules CCJR) sufficient to enable the audit, evaluation, inspection, or investigation of the participant hospital’s compliance, as well as the compliance of any CCJR collaborator that has a CCJR Sharing Arrangement with the participant hospital, with CCJR requirements, the Participation Agreement, the quality of services furnished, the obligation to repay any reconciliation payments owed to CMS, the calculation, distribution, receipt, or recoupment of Gainsharing Payments or Alignment Payments. • Maintain such books, contracts, records, documents, and other evidence for a period of 10 years from the last day of the participant hospital’s participation in the CCJR model or from the date of completion of any audit, evaluation, inspection, or investigation, whichever is later, unless— ++ CMS determines there is a special need to retain a particular record or group of records for a longer period and notifies the participant hospital or CCJR collaborator at least 30 calendar days before the normal disposition date; or ++ There has been a dispute or allegation of fraud or similar fault against the participant hospital or any CCJR collaborator in which case the records must be maintained for an additional 6 years from the date of any resulting final resolution of the dispute or allegation of fraud or similar fault. • Notwithstanding any CCJR Sharing Arrangements between the participant hospital and CCJR collaborators, the participant hospital must have ultimate responsibility for adhering to and otherwise fully complying with all provisions of the CCJR model. • OIG Authority is not limited or restricted by the provisions of the CCJR model, including the authority to audit, evaluate, investigate, or inspect the participant hospital, CCJR collaborators, or any other person or entity or their records, data, or information, without limitation. • None of the provisions of the CCJR model limits or restricts any other government authority permitted by law to audit, evaluate, investigate, or inspect the participant hospital, CCJR collaborators, or any other person or entity or their records, data, or information, without limitation. We solicit comments about all of the requirements set out in the preceding discussion, including whether additional or different safeguards would be needed to ensure program integrity, protect against abuse, and ensure that the goals of the model are met. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 (2) Beneficiary Incentives Under the CCJR Model We believe that the CCJR model will incent participant hospitals to furnish directly and otherwise coordinate services throughout the episode that lead to higher quality care for the beneficiary and lower episode spending. We believe that one mechanism that may be useful to the participant hospital in achieving these goals is the provision of certain items and services to the beneficiary during the episode of care. We also considered whether this policy on beneficiary incentives should extend to providers and suppliers, other than the participant hospital, that furnish services during the CCJR episode of care. However, as discussed in section III.A, given our belief that the participant hospital is best positioned to coordinate the care of beneficiaries, we believe they are also better suited than other providers and suppliers to provide beneficiary incentives. Thus, we propose to include in the CCJR model certain in-kind patient engagement incentives to the beneficiary, subject to the following conditions: • The incentive must be provided by the participant hospital to the beneficiary during CCJR episode of care. • There must be a reasonable connection between the item or service and the beneficiary’s medical care. • The item or service must be a preventive care item or service or an item or service that advances a clinical goal for a CCJR beneficiary, including the following: Increasing the beneficiary’s engagement in the management of his or her own health care; adherence to a treatment or drug regimen; adherence to a follow-up care plan; reduction of readmissions and complications resulting from LEJR procedures; and management of chronic diseases and conditions that may be affected by the LEJR procedure. • Items of technology comply with certain safeguards regarding value, as discussed later in this section. • The participant hospital must maintain contemporaneous documentation of the incentives provided to beneficiaries for a period of 10 years. • The cost of the incentives is not shifted to another federal health care program. For example, under this proposal, participant hospitals could provide incentives such as post-surgical monitoring equipment to track patient weight and vital signs for post-surgical patients discharged directly to home, but they could not provide theater tickets, which would bear no reasonable PO 00000 Frm 00070 Fmt 4701 Sfmt 4702 connection to the patient’s medical care. Similarly, we are proposing that participant hospitals might provide post-surgical monitoring equipment, but not broadly used technology that is more valuable to the beneficiary than equipment that is reasonably necessary for the patient’s post-surgical care. In such circumstances, a reasonable inference arises that the technology would not be reasonably connected to the medical care of the patient. Among other things, this safeguard precludes incentives that might serve to induce beneficiaries inappropriately to receive other medical care that is not included in the episode. We propose that participant hospitals would be required to maintain contemporaneous documentation of such items and services furnished that exceed $10, including the date and identity of the beneficiary to whom the item or service was provided. We further propose that the required documentation be maintained for a period of 10 years. We propose that items and services involving technology provided to beneficiaries may not exceed $1,000 in retail value at the time of donation for any one beneficiary in any one CCJR episode. Items of technology exceeding $50 in retail value at the time of donation must remain the property of the participant hospital and must be retrieved from the beneficiary at the end of the episode, with the documentation of the date of retrieval. In addition, the amount and nature of the technology must be the minimum necessary to achieve the goals previously noted earlier in this section. Finally, we propose that beneficiary incentives may not be tied to the receipt of services outside the episode of care and that the cost of the incentives cannot be shifted to a federal health care program. The aforementioned proposals regarding beneficiary incentives are consistent with the policies on beneficiary incentives in other CMS models, such as the BPCI initiative. We seek comment on our proposal for beneficiary incentives under CCJR. In addition to general comments on the proposal, we are interested in comments on whether the $1,000 limit on technology items and services is necessary, reasonable, and appropriate. We also solicit comment on whether retrieving technology valued at more than $50 is too burdensome and whether elimination of that requirement will prevent abuse. We also solicit comment on the documentation requirement for items and services furnished that exceed $10, or whether a different amount would be more E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules appropriate and less burdensome. We welcome comments on additional program integrity safeguards for these arrangements. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (3) Compliance With Fraud and Abuse Laws Certain arrangements between and among participant hospitals and third parties or beneficiaries may implicate the civil monetary penalty (CMP) law (sections 1128A(a)(5), (b)(1) and (b)(2) of the Act), the Federal Anti-kickback statute (section 1128B(b)(1) and (2) of the Act), or the physician self-referral prohibition (section 1877 of the Act). In many cases, arrangements that implicate these laws can be structured to comply with them by using existing safe harbors and exceptions. Section 1115A(d)(1) of the Act authorizes the Secretary to waive certain specified fraud and abuse laws as may be necessary solely for purposes of testing of payment models under section 1115A(b) of the Act. A waiver is not needed for an arrangement that does not implicate the fraud and abuse laws or that implicates the fraud and abuse laws but either fits within an existing exception or safe harbor, as applicable, or does not otherwise violate the law. Accordingly, pursuant to section 1115A(d)(1) of the Act, the Secretary will consider whether waivers of certain fraud and abuse laws are necessary to test the CCJR model as the model develops. The vehicle for promulgating waivers, if any, is under consideration. Such waivers, if any, would be promulgated separately from this proposed regulation by OIG (as to sections 1128A and 1128B of the Act) and CMS (as to section 1877 of the Act), to which the respective authorities have been delegated. The requirements of the CCJR final rule will bear on the need for and scope of any fraud and abuse waivers that might be granted for the CCJR model. Because of the close nexus between the final regulations governing the structure and operations of the CCJR model and the development of any fraud and abuse waivers necessary to carry out the provisions of the model, CMS and OIG may, when considering the need for or scope of any waivers, consider comments submitted in response to this proposed rule and the provisions of the CCJR final rule. 11. Proposed Waivers of Medicare Program Rules a. Overview We believe it may be necessary and appropriate to provide additional flexibilities to hospitals participating in CCJR, as well as other providers that VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 furnish services to beneficiaries in CCJR episodes. The purpose of such flexibilities would be to increase LEJR episode quality and decrease episode spending or internal costs or both of providers and suppliers that results in better, more coordinated care for beneficiaries and improved financial efficiencies for Medicare, providers, and beneficiaries. These possible additional flexibilities could include use of our waiver authority under section 1115A of the Act, which provides authority for the Secretary to waive such requirements of title XVIII of the Act as may be necessary solely for purposes of carrying out section 1115A of the Act with respect to testing models described in section 1115A(b) of the Act. This provision affords broad authority for the Secretary to waive statutory Medicare program requirements as necessary to carry out the provisions of section 1115A of the Act. As we have stated elsewhere in sections I.B and III.A of this proposed rule, our previous and current efforts in testing episode payment models have led us to believe that models where entities bear financial responsibility for total Medicare spending for episodes of care hold the potential to incentivize the most substantial improvements in episode quality and efficiency. As discussed in section III.C of this proposed rule, we are proposing that hospitals participating in this model be eligible for reconciliation payments based on improved performance starting in performance year 1, and we would phase-in repayment responsibility for excess episode spending starting in performance year 2. We believe that where participant hospitals bear repayment responsibility for excess episode spending beyond the target price while high quality care is valued, they will have an increased incentive to coordinate care furnished by the hospital and other providers and suppliers throughout the episode to improve the quality and efficiency of care. With these incentives present, there may be a reduced likelihood of over-utilization of services that could otherwise result from waivers of Medicare program rules. Given these circumstances, waivers of certain program rules for providers and suppliers furnishing services to CCJR beneficiaries may be appropriate to offer more flexibility than under existing Medicare rules for such providers and suppliers, so that they may provide appropriate, efficient care for beneficiaries. An example of such a program rule that could be waived to potentially allow more efficient LEJR PO 00000 Frm 00071 Fmt 4701 Sfmt 4702 41267 episode care would be the 3-day inpatient hospital stay requirement prior to a covered SNF stay for beneficiaries who could appropriately be discharged to a SNF after less than a 3-day inpatient hospital stay. In addition, we believe that waivers of certain Medicare program rules are necessary to make reconciliation payments to or recoup payments from participant hospitals as a result of the Net Payment Reconciliation Amount (NPRA) for each performance year as discussed in section III.C.6.a. of this proposed rule, as well as to exclude beneficiary cost-sharing from these reconciliation payments or recoupments. We welcome comments on possible waivers under section 1115A of the Act of certain Medicare program rules beyond those specifically discussed in this proposed rule that might be necessary to test this model. We will consider the comments that are received during the public comment period and our early model implementation experience and may make future proposals regarding program rule waivers during the course of the model test. We are especially interested in comments explaining how such waivers could provide providers and suppliers with additional ways that are not permitted under existing Medicare rules to increase quality of care and reduce unnecessary episode spending, but that could be appropriately used in the context of CCJR where participant hospitals bear full responsibility for total episode spending by performance year 3. We are also interested in receiving comments regarding the timing and manner in which such waivers, were they to be offered, would be implemented. For example, would it be necessary and appropriate to offer program waivers early in the model test to allow providers and suppliers adequate time to adjust their care coordination strategies to implement changes permitted by the waivers, despite there being no full repayment responsibility for excess episode spending until performance year 3? What program integrity and beneficiary protection risks could be introduced by waivers of the program rules described later in this section of this proposed rule and how could we mitigate those risks? What other issues should be considered when making use of waiver authority with respect to program rules? What operational issues do CMS and providers and suppliers furnishing services to beneficiaries in the model need to consider and what processes would need to be in place to implement these alternative program policies? E:\FR\FM\14JYP3.SGM 14JYP3 41268 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS What implications would there be for provider and supplier infrastructure, including IT and other systems and processes? What provider education would be needed? We note that any waivers included in a final rule would be offered to participant hospitals, but depending on the specifics of each waiver, might be applied to services furnished by providers and suppliers other than the hospital. Where that is the case, we seek input on how we may best educate and disseminate information using methods effective in reaching providers and suppliers. Additionally, we seek comment on how we would appropriately and accurately track the use of waivers by providers and suppliers other than participant hospitals. Specific program rules for which we propose waivers under the CCJR model to support provider and supplier efforts to increase quality and decrease episode spending and for which we invite comments are included in the sections that follow. We propose that these waivers of program rules would apply to the care of beneficiaries who are in CCJR episodes at the time when the waiver is used to bill for a service that is furnished to the beneficiary, even if the episode is later cancelled as described in section III.B.3.b of this proposed rule. If a service is found to have been billed and paid by Medicare under circumstances only allowed by a program rule waiver for a beneficiary not in the CCJR model at the time the service was furnished, CMS would recoup payment for that service from the provider or supplier who was paid, and require that provider and supplier to repay the beneficiary for any coinsurance previously collected. We also generally seek comment on any additional Medicare program rules that it may be necessary to waive using our authority under section 1115A of the Act in order to effectively test the CCJR model that we could consider in the context of our early model implementation experience to inform any future proposals we may make. b. Post-Discharge Home Visits We expect that the broadly defined LEJR episodes with a duration of 90 days following hospital discharge as we propose in section III.B. of this proposed rule will result in participant hospitals redesigning care by increasing care coordination and management of beneficiaries following surgery. This will require participant hospitals to pay close attention to any underlying medical conditions that could be affected by the anchor hospitalization and improving coordination of care VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 across care settings and providers. Beneficiaries may have substantial mobility limitations during LEJR episodes following discharge to their home or place of residence that may interfere with their ability to travel easily to physicians’ offices or other health care settings. Adopting new strategies to increase beneficiary adherence to and engagement with recommended treatment and follow-up care following discharge from the hospital or PAC setting will also be important to high quality episode care. Scientific evidence exists 42 to support the use of home nursing visits among Medicare beneficiaries in improving care coordination following hospital discharge. In addition, we believe the financial incentives in this episode payment model will encourage hospitals to closely examine the most appropriate PAC settings for beneficiaries so that the clinically appropriate setting of the lowest acuity is recommended following discharge from the anchor hospitalization. We expect that all these considerations will lead to greater interest on the part of hospitals and other providers and suppliers caring for CCJR beneficiaries in furnishing services to beneficiaries in their home or place of residence. Such services could include visits by licensed clinicians other than physicians and nonphysician practitioners In order for Medicare to pay for home health services, a beneficiary must be determined to be ’’home-bound’’. Specifically, sections 1835(a) and 1814(a) of the Act require that a physician certify (and recertify) that in the case of home health services under the Medicare home health benefit, such services are or were required because the individual is or was ’’confined to the home’’ and needs or needed skilled nursing care on an intermittent basis, or physical or speech therapy or has or had a continuing need for occupational therapy. A beneficiary is considered to be confined to the home if the beneficiary has a condition, due to an illness or injury, that restricts his or her ability to leave home except with the assistance of another individual or the aid of a supportive device (that is, crutches, a cane, a wheelchair or a walker) or if the beneficiary has a condition such that leaving his or her home is medically contraindicated. While a beneficiary does not have to be bedridden to be considered confined to the home, the condition of the beneficiary must be such that there 42 Naylor MD, Brooten D, Campbell R, Jacobsen BS, Mezey MD, Pauly MV, Schwartz JS. JAMA. 1999:281(7):613–620. doi:10/1001/jama.281.7.613 PO 00000 Frm 00072 Fmt 4701 Sfmt 4702 exists a normal inability to leave home and leaving home requires a considerable and taxing effort by the beneficiary. Absent this condition, it would be expected that the beneficiary could typically get the same services in an outpatient or other setting. Thus, the homebound requirement provides a way to help differentiate between patients that require medical care at home versus patients who could more appropriately receive care in a less costly outpatient setting. Additional information regarding the homebound requirement is available in the Medicare Benefit Manual (Pub 100–02); Chapter 7, ‘‘Home Health Services,’’ Section 30.1.1, ‘‘Patient Confined to the Home.’’ We considered whether a waiver of the homebound requirement would be appropriate under the CCJR model, particularly beginning in performance year 2, where hospitals begin to bear repayment responsibility for excess episode spending. Waiving the homebound requirement would allow additional beneficiaries to receive home health care services in their home or place of residence. As previously discussed, physician certification that a beneficiary meets the homebound requirement is a prerequisite for Medicare coverage of home health services, and waiving the homebound requirement could result in lower episode spending in some instances. For example, if a beneficiary is allowed to have home health care visits, even if the beneficiary is not considered homebound, the beneficiary may avoid a hospital readmission. All other requirements for the Medicare home health benefit would remain unchanged. Thus, under such a waiver, only beneficiaries who otherwise meet all program requirements to receive home health services would be eligible for coverage of home health services without being homebound. However, we are not proposing to waive the homebound requirement under CCJR for several reasons. Based on the typical clinical course of beneficiaries after LEJR procedures, we believe that many beneficiaries would meet the homebound requirement for home health services immediately following discharge from the anchor hospitalization or following discharge to their home or place of residence from a SNF that furnished PAC services immediately following the hospital discharge, so they could receive medically necessary home health services under existing program rules. Home health episodes are 60 days in duration, and payment adjustments are made for beneficiaries who require only a few visits during the episode or who E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules are discharged during the episode. For those CCJR beneficiaries who could benefit from home visits by a licensed clinician for purposes of assessment and monitoring of their clinical condition, care coordination, and improving adherence with treatment but who are not homebound, we do not believe that paying for these visits as home health services under Medicare is necessary or appropriate, especially given that Medicare payments for home health services are set based on the clinical care furnished to beneficiaries who are truly homebound. Finally, in other CMS episode payment models, such as BPCI, we have not waived the homebound requirement for home health services. In BPCI, we have provided a waiver of the ‘‘incident to’’ rule to allow a physician or nonphysician practitioner participating in care redesign under a participating BPCI provider to bill for services furnished to a beneficiary who does not qualify for Medicare coverage of home health services as set forth under § 409.42 where the services are furnished in the beneficiary’s home during the episode after the beneficiary’s discharge from an acute care hospital. The ‘‘incident to’’ rules are set forth in § 410.26(b)(5), which requires services and supplies furnished incident to the service of a physician or other practitioner must be provided under the direct supervision (as defined at § 410.32(b)(3)(ii)) of a physician or other practitioner. In BPCI, the waiver is available only for services that are furnished by licensed clinical staff under the general supervision (as defined at § 410.32(b)(3)(i)) of a physician (or other practitioner), regardless of whether the individual is an employee, leased employee, or independent contractor of the physician (or other practitioner), or of the same entity that employs or contracts with the physician (or other practitioner), and while the services may be furnished by licensed clinical staff they must be billed by the physician (or other practitioner) in accordance with CMS instructions using a Healthcare Common Procedures Coding System (HCPCS) G-code created by CMS specifically for the BPCI initiative. As discussed in section III.B of this proposed rule, participants in the BPCI initiative are permitted to select the duration of an episode as either 30 days, 60 days or 90 days. In the case of the incident to waiver under BPCI, the waiver allows physician and nonphysician practitioners to furnish the services not more than once in a 30day episode, not more than twice in a 60-day episode, and not more than three times in a 90-day episode. All other VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 Medicare coverage and payment criteria must be met. For the CCJR model, we propose to waive the ‘‘incident to’’ rule set forth in § 410.26(b)(5), to allow a CCJR beneficiary who does not qualify for home health services to receive postdischarge visits in his or her home or place of residence any time during the episode. The waiver would not apply for beneficiaries who would qualify for home health services under the Medicare program, as set forth under § 409.42. Therefore these visits could not be billed for such beneficiaries. We propose to allow licensed clinicians, such as nurses, either employed by a hospital or not, to furnish the service under the general supervision of a physician, who may be either an employee or a contractor of the hospital. We propose to allow services furnished under such a waiver to be billed under the PFS by the physician or nonphysician practitioner or by the hospital to which the supervising physician has reassigned his or her benefits. In the latter scenario, we note that the post-discharge home visit services would not be ‘‘hospital services,’’ even when furnished by clinical staff of the hospital. We propose that up to 9 postdischarge home visits could be billed and paid during each 90-day postanchor hospitalization CCJR episode. Given the average PAC length of stay of approximately 45 days for these episodes and the incentives under CCJR to improve efficiency, which may shorten PAC stays, 9 visits would represent a home visit on average of once per week for two-thirds of the 90day episode duration, the period of time when the typical beneficiary may have concluded PAC in an efficient episode. We believe that a home visit of once a week to a non-homebound beneficiary who has concluded PAC and who could also receive services in the physician’s office or hospital outpatient department as needed, along with telehealth visits in the home from a physician or NPP as proposed in the next section, should be sufficient to allow comprehensive assessment and management of the beneficiary throughout the LEJR episode. We propose that the service be billed with HCPCS code GXXXX (Coordinated quality care—joint replacement model home visit for patient assessment performed by a qualified health care professional for an individual not considered homebound, including, but not necessarily limited to patient assessment of clinical status, safety/fall prevention, functional status/ambulation, medication reconciliation/management, compliance PO 00000 Frm 00073 Fmt 4701 Sfmt 4702 41269 with orders/plan of care, performance of activities of daily living, and making beneficiary connections to community and other services; (for use only in the Medicare-approved coordinated quality care—joint replacement model); may not be billed for a 30-day period covered by a transitional care management code) and paid at approximately $50 under the PFS. The standard PFS ratesetting methodologies establish relative value units (RVUs) based on the resources required to furnish the typical service. Final RVUs under the CY 2016 PFS for the proposed new HCPCS code for CCJR home visits will be included in the CCJR final rule. In addition, we propose to update the values each year to correspond to final values established under the PFS. The waiver would not apply with respect to a CCJR beneficiary who has qualified, or would qualify, for home health services when the visit was furnished. We expect that the visits by licensed clinicians could include patient assessment, monitoring, assessment of functional status and fall risk, review of medications, assessment of adherence with treatment recommendations, patient education, communication and coordination with other treating clinicians, care management to improve beneficiary connections to community and other services, etc. These post-discharge home visits would remove barriers to followup care outside of the home with providers and suppliers and allow the beneficiary to be treated in his or her home environment or place of residence, where potential safety concerns, such as tripping hazards, could quickly be identified and remediated. Given these occasions for further patient assessment and intervention, we believe that where such post-discharge home visits are furnished, there are opportunities to increase patient-centered care coordination and decrease episode spending, potentially resulting in higher quality care for beneficiaries and increased episode efficiency which may benefit the beneficiaries, the Medicare Trust Fund, and participant hospitals. We also propose to waive current Medicare billing rules in order to allow the separate reporting of these postdischarge home visits during surgical global periods. The PFS payment for the surgical procedure includes 90 days of post-operative care furnished by the surgeon. Post-operative follow-up care is not separately billable by the surgeon or, unless there is a transfer of care, by another practitioner. The current construction of the global packages included in PFS payments reflects a E:\FR\FM\14JYP3.SGM 14JYP3 41270 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS narrow view of surgical follow-up care that does not encompass broader, more comprehensive models of post-operative care, such as an episode model like CCJR. As we have noted in the past, it is also difficult to determine the appropriate valuation of the various components of the current global packages (2015 Physician Fee Schedule 79 FR 67584). We do not believe that the CCJR post-discharge home visits, which can include nursing assessments for chronic conditions for which care may be affected by the surgery, would replace or substantially duplicate the kind of post-operative visits involved in furnishing post-operative follow-up care for the global surgery procedure under the PFS. Instead, we anticipate that the work of these post-discharge visits will be similar to the work furnished by the physician coordinating the patient’s overall episode care. Therefore, we propose to waive the global surgery billing rules to allow the surgeon or other practitioners to furnish and bill for the post-discharge home visits during surgical global periods. We plan to monitor utilization patterns of post-discharge home visits under CCJR to monitor for overutilization and significant reductions in medical home health services. We seek comments on the proposed waiver of the ‘‘incident to’’ rule to pay for a maximum number of post-discharge home visits to beneficiaries who do not qualify for home health services by licensed clinicians under the general supervision of a physician. c. Billing and Payment for Telehealth Services As discussed in the previous section, we expect that the CCJR model design features will lead to greater interest on the part of hospitals and other providers and suppliers caring for CCJR beneficiaries in furnishing services to beneficiaries in their home or place of residence, including physicians’ professional services. While physicians may furnish and be paid by Medicare for home visits under the PFS, few visits are actually furnished to Medicare beneficiaries because of the significant physician resources required for such visits and the general structure of most physician office-based practices. For example, in 2014 only 2.6 million physician or nonphysician practitioner home visits were furnished to Medicare beneficiaries in contrast to almost 250 million office or other outpatient evaluation and management visits furnished by physicians or nonphysician practitioners. CCJR would create new incentives for VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 comprehensive episode care management for beneficiaries, including early identification and intervention regarding changes in health status following discharge from the anchor hospitalization. We understand that participant hospitals may want to engage physicians in furnishing timely visits to homebound or non-homebound CCJR beneficiaries in their homes or places of residence to address concerning symptoms or observations raised by beneficiaries themselves, clinicians furnishing home health services, or licensed clinicians furnishing post-discharge home visits, while physicians committed to LEJR care redesign may not be able to revise their practice patterns to meet this home visit need for CCJR beneficiaries. Under section 1834(m) of the Act, Medicare pays for telehealth services furnished by a physician or practitioner under certain conditions even though the physician or practitioner is not in the same location as the beneficiary. The telehealth services must be furnished to a beneficiary located in one of the eight types of originating sites specified in section 1834(m)(4)(C)(ii) of the Act and the site must satisfy at least one of the requirements of section 1834(m)(4)(C)(i)(I) through (III) of the Act. Generally, for Medicare payment to be made for telehealth services under the Physician Fee Schedule several conditions must be met, as set forth under § 410.78(b). Specifically, the service must be on the Medicare list of telehealth services and meet all of the following other requirements for payment: • The service must be furnished via an interactive telecommunications system. • The service must be furnished to an eligible telehealth individual. • The individual receiving the services must be in an eligible originating site. When all of these conditions are met, Medicare pays a facility fee to the originating site and provides separate payment to the distant site practitioner for the service. Section 1834(m)(4)(F)(i) of the Act defines Medicare telehealth services to include professional consultations, office visits, office psychiatry services, and any additional service specified by the Secretary, when furnished via a telecommunications system. For the list of approved Medicare telehealth services, see the CMS Web site at www.cms.gov/ Medicare/Medicare-Generalinformation/telehealth/. Under section 1834(m)(4)(F)(ii) of the Act, CMS has an annual process to consider additions to and deletions from the list of telehealth PO 00000 Frm 00074 Fmt 4701 Sfmt 4702 services. We do not include any services as telehealth services when Medicare does not otherwise make a separate payment for them. Some literature suggests that technologies that enable health care providers to deliver care to patients in locations remote from providers are being increasingly used to complement face-to-face patient-provider encounters in both urban and rural areas.43 In these cases, the use of remote access technologies may improve the accessibility and timeliness of needed care, increase communication between providers and patients, enhance care coordination, and improve the efficiency of care. We note that certain professional services that are commonly furnished remotely using telecommunications technology are paid under the same conditions as in-person physicians’ services, and thus do not require a waiver to be considered as telehealth services. Such services that do not require the patient to be present in person with the practitioner when they are furnished are covered and paid in the same way as services delivered without the use of telecommunications technology when the practitioner is in person at the medical facility furnishing care to the patient. In other CMS episode payment models, such as BPCI Models 2 and 3, we determined it was necessary to waive the geographic site requirements of section 1834(m)(4)(C)(i)(I) through (III) of the Act. This waiver allows telehealth services to be furnished to eligible telehealth individuals when they are located at one of the eight originating sites at the time the service is furnished via a telecommunications system but without regard to the site meeting one of the geographic site requirements. For CCJR, we propose a waiver of this same provision as well as waiver of the requirement that the eligible telehealth individual be in an originating site when the otherwise eligible individual is receiving telehealth services in his or her home or place of residence. This waiver would allow providers and suppliers furnishing services to CCJR beneficiaries to utilize telemedicine for beneficiaries that are not classified as rural and to allow the greatest degree of efficiency and communication between providers and suppliers and beneficiaries by allowing beneficiaries to receive telehealth services at their home or place of residence. We believe that these waivers are essential to maximize the opportunity to improve the quality of care and efficiency for LEJR episodes under CCJR. E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules Specifically, like the telehealth waiver for BPCI, we propose to waive the geographic site requirements of section 1834(m)(4)(C)(i)(I) through (III) of the Act that limit telehealth payment to services furnished within specific types of geographic areas or in an entity participating in a federal telemedicine demonstration project approved as of December 31, 2000. Waiver of this requirement would allow beneficiaries located in any region to receive services related to the episode to be furnished via telehealth, as long as all other Medicare requirements for telehealth services are met. Any service on the list of Medicare approved telehealth services and reported on a claim with an ICD–9 principal diagnosis code that is not excluded from the proposed CCJR episode definition (see section III.B.2 of this proposed rule) could be furnished to a CCJR beneficiary, regardless of the beneficiary’s geographic location. Under CCJR, this waiver would support care coordination and increasing timely access to high quality care for all CCJR beneficiaries, regardless of geography. Additionally, we propose, only for the purpose of testing the CCJR model, waiving the originating site requirements of section 1834(m)(4)(C)(ii)(I)–(VIII) of the Act that specify the particular sites at which the eligible telehealth individual must be located at the time the service is furnished via a telecommunications system. Specifically, we propose to waive the requirement only when telehealth services are being furnished in the CCJR’ beneficiary’s home or place of residence during the episode. Any service on the list of Medicare approved telehealth services and reported on a claim with an ICD–9 principal diagnosis code that is not excluded from the proposed CCJR episode definition (see section III.B.2 of this proposed rule) could be furnished to a CCJR beneficiary in his or her home or place of residence, unless the service’s HCPCS code descriptor precludes delivering the service in the home or place of residence. For example, subsequent hospital care services could not be furnished to beneficiaries in their home since those beneficiaries would not be inpatients of the hospital. The existing set of codes used to report evaluation and management (E/M) visits are extensively categorized and defined by the setting of the service, and the codes describe the services furnished when both the patient and the practitioner are located in that setting. Section 1834(m) of the Act provides for particular conditions under which Medicare can make payment for office VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 visits when a patient is located in a health care setting (the originating sites authorized by statute) and the eligible practitioner is located elsewhere. However we do not believe that the kinds of E/M services furnished to patients outside of health care settings via real-time, interactive communication technology are accurately described by any existing E/M codes. This would include circumstances when the patient is located in his or her home and the location of the practitioner is unspecified. Therefore, in order to create a mechanism to report E/M services accurately under the CCJR model, we propose to create a specific set of HCPCS G-codes to describe the E/M services furnished to CCJR beneficiaries in their homes via telehealth. Among the existing E/M visit services, we envision these services would be most similar to those described by the office and other outpatient E/M codes. Therefore, we propose to structure the new codes similarly to the office/ outpatient E/M codes but adjusted to reflect the location as the beneficiary’s residence and the virtual presence of the practitioner. Specifically, we propose to create a parallel structure and set of descriptors currently used to report office or other outpatient E/M services, (CPT codes 99201 through 99205 for new patient visits and CPT codes 99212 through 99215 for established patient visits.) For example, the proposed Gcode for a level 3 E/M visit for an established patient would be a telehealth visit for the evaluation and management of an established patient in the patient’s home, which requires at least 2 of the following 3 key components: • An expanded problem focused history; • An expanded problem focused examination; • Medical decision making of low complexity. Counseling and coordination of care with other physicians, other qualified health care professionals or agencies are provided consistent with the nature of the problem(s) and the patient’s or family’s needs or both. Usually, the presenting problem(s) are of low to moderate severity. Typically, 15 minutes are spent with the patient or family or both via real-time, audio and video intercommunications technology. We note that we are not proposing a G-code to parallel the level 1 office/ outpatient visit for an established patient, since that service does not require the presence of the physician or other qualified health professional. We PO 00000 Frm 00075 Fmt 4701 Sfmt 4702 41271 also believe this would duplicate the home visits for non-homebound beneficiaries previously proposed in this section. We propose to develop payment rates for these new telehealth G-codes for E/M services in the patient’s home that are similar to the payment rates for the office/outpatient E/M services, since the codes will describe the work involved in furnishing similar services. Therefore, we propose to include the resource costs typically incurred when services are furnished via telehealth. In terms of the relative resource costs involved in furnishing these services, we believe that the efficiencies of virtual presentation generally limit resource costs other than those related to the professional time, intensity, and malpractice risk to marginal levels. Therefore, we propose to adopt work and malpractice (MP) RVUs associated with the corresponding level of office/ outpatient codes as the typical service because the practitioner’s time and intensity and malpractice liabilities when conducting a visit via telehealth are comparable to the office visit. Final RVUs under the CY 2016 PFS will be included in the CCJR final rule. Additionally, we propose to update these values each year to correspond to final values established under the PFS. We considered whether each level of visit typically would warrant support by auxiliary licensed clinical staff within the context of the CCJR model. The cost of such staff and any associated supplies, for example, would be incorporated in the practice expense (PE) RVUs under the PFS. For the lower level visits, levels 1 through 3 for new and 2 and 3 for established visits, we did not believe that the visit would necessarily require auxiliary medical staff to be available in the patient’s home. We anticipate these lower level visits would be the most commonly furnished and would serve as a mechanism for the patient to consult quickly with a practitioner for concerns that can be easily described and explained by the patient. We do not propose to include PE RVUs for these services, since we do not believe that virtual visits envisioned for this model typically incur the kinds of costs included in the PE RVUs under the PFS. For higher level visits, we typically would anticipate some amount of support from auxiliary clinical staff. For example, wound examination and minor wound debridement would be considered included in an E/M visit and would require licensed clinical staff to be present in the beneficiary’s home during the telehealth visit in order for E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41272 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules the complete service to be furnished. We believe it would be rare for a practitioner to conduct as complex and detailed a service as a level 4 or 5 E/M home visit via telehealth for CCJR beneficiaries in LEJR episodes without licensed clinical staff support in the home. However, we also note that this proposed model already includes several avenues for licensed clinical staff to be in the patient’s home, either through a separately paid home visit as proposed for the model or through home health services as discussed earlier in this section of this proposed rule. Therefore, although we consider support by auxiliary clinical staff to be typical for level 4 or 5 E/M visits furnished to CCJR beneficiaries in the home via telehealth, we do not propose to incorporate these costs through PE RVUs. Given the anticipated complexity of these visits, we would expect to observe level 4 and 5 E/M visits to be reported on the same claim with the same date of service as a home visit or during a period of authorized home health care. If neither of these occurs, we propose to require the physician to document in the medical record that auxiliary licensed clinical staff were available on site in the patient’s home during the visit and if they were not, to document the reason that such a highlevel visit would not require such personnel. We note that because the services described by the proposed G-codes, by definition, are furnished remotely using telecommunications technology, they therefore are paid under the same conditions as in-person physicians’ services and they do not require a waiver to the requirements of section 1834(m) of the Act. We also note that because these home telehealth services are E/M services, all other coverage and payment rules regarding E/M services would continue to apply. Under CCJR, this proposal to waive the originating site requirements and create new home visit telehealth HCPCS codes would support the greatest efficiency and timely communication between providers and beneficiaries by allowing beneficiaries to receive telehealth services at their places of residence. With respect to home health services paid under the home health prospective payment system (HH PPS), we emphasize that telehealth visits under this model cannot substitute for inperson home health visits per section 1895(e)(1)(A) of the Act. Furthermore, telehealth services by social workers cannot be furnished for CCJR beneficiaries who are in a home health VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 episode of care because medical social services are included as home health services per section 1861(m) of the Act and paid for under the Medicare HH PPS. However, telehealth services permitted under section 1834 of the Act and furnished by physicians or other practitioners, specifically physician assistants, nurse practitioners, clinical nurse specialists, certified nurse midwives, nurse anesthetists, psychologists, and dieticians, can be furnished for CCJR beneficiaries who are in a home health episode of care. Finally, sections 1835(a) and 1814(a) of the Act require that the patient has a face-to-face encounter with the certifying physician or an allowed nonphysician practitioner (NPP) working in collaboration with or under the supervision of the certifying physician before the certifying physician certifies that the patient is eligible for home health services. Under § 424.22(a)(1)(v), the face-to-face encounter can be performed up to 90 days prior to the start of home health care or within 30 days after the start of home health care. Section 424.22(a)(1)(v)(A) also allows a physician, with privileges, who cared for the patient in an acute or PAC setting (from which the patient was directly admitted to home health) or an allowed NPP working in collaboration with or under the supervision of the acute or PAC physician to conduct the face-to-face encounter. Although sections 1835(a) and 1814(a) of the Act allow the face-to-face encounter to be performed via telehealth, we are not proposing that the waiver of the telehealth geographic site requirement for telehealth services and the the originating site requirement for telehealth services furnished in the CCJR beneficiary’s home or place of residence would apply to the face-toface encounter required as part of the home health certification when that encounter is furnished via telehealth. In other words, when a face-to-face encounter furnished via telehealth is used to meet the requirement for home health certification, the usual Medicare telehealth rules apply with respect to geography and eligibility of the originating site. We expect that this policy will not limit CCJR beneficiaries’ access to medically necessary home health services because beneficiaries receiving home health services during a CCJR episode will have had a face-toface encounter with either the physician or an allowed NPP during their anchor hospitalization or a physician or allowed NPP during a post-acute facility PO 00000 Frm 00076 Fmt 4701 Sfmt 4702 stay prior to discharge directly to home health services. Under the proposed waiver of the geographic site requirement and originating site requirement, all telehealth services would be required to be furnished in accordance with all Medicare coverage and payment criteria, and no additional payment would be made to cover set-up costs, technology purchases, training and education, or other related costs. The facility fee paid by Medicare to an originating site for a telehealth service would be waived if there is no facility as an originating site (that is, the service was originated in the beneficiary’s home). Finally, providers and suppliers furnishing a telehealth service to a CCJR beneficiary in his or her home or place of residence during the episode would not be permitted to bill for telehealth services that were not fully furnished when an inability to provide the intended telehealth service is due to technical issues with telecommunications equipment required for that service. Beneficiaries would be able to receive services furnished pursuant to the telehealth waivers only during the CCJR LEJR episode. We plan to monitor patterns of utilization of telehealth services under CCJR to monitor for overutilization or reductions in medically necessary care, and significant reductions in face-toface visits with physicians and NPPs. We plan to specifically monitor the distribution of new telehealth home visits that we are proposing, as we anticipate greater use of lower level visits. Given our concern that auxiliary licensed clinical staff be present for level 4 and 5 visits, we will monitor our proposed requirement that these visits be billed on the same claim with the same date of service as a home nursing visit, during a period authorized home health care, or that the physician document the presence of auxiliary licensed clinical staff in the home or an explanation as to the specific circumstances precluding the need for auxiliary staff for the specific visit. We seek comments on the proposed waivers with respect to telehealth services, and the proposed creation of the home visit telehealth codes. d. SNF 3-Day Rule We expect that the CCJR model will encourage participant hospitals and their provider and supplier partners to redesign care for LEJR episodes across the continuum of care extending to 90 days post-discharge from the anchor hospital stay. We believe that hospitals will seek to develop and refine the most efficient care pathways so beneficiaries E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules receive the lowest intensity, clinically appropriate care at each point in time throughout the episode. We understand that in some cases, particularly younger beneficiaries undergoing total knee replacement, certain beneficiaries receiving LEJR procedures may be appropriately discharged from the acute care hospital to a SNF in less than the 3 days required under the Medicare program for coverage of the SNF stay. While total knee arthroplasty (TKA) remains payable by Medicare to the hospital only when furnished to hospital inpatients, we have heard from some stakeholders that these procedures may be safely furnished to hospital outpatients with a hospital outpatient department stay of only 24 hours. Finally, we note that the current geometric mean hospital length of stay for LEJR procedures for beneficiaries without major complications or comorbidities (MS–DRG 470) is only 3 days and that for MS–DRG 469 for beneficiaries with such complications or comorbidities is 6 days. Thus, we believe it is possible that hospitals working to increase episode efficiency may identify some CCJR beneficiaries who could be appropriately discharged from the hospital to a SNF in less than 3 days, but that early discharge would eliminate Medicare coverage for the SNF stay unless a waiver of Medicare requirements were provided under CCJR. The Medicare SNF benefit is for beneficiaries who require a short-term intensive stay in a SNF, requiring skilled nursing or skilled rehabilitation care or both. Pursuant to section 1861(i) of the Act, beneficiaries must have a prior inpatient hospital stay of no fewer than 3-consecutive days in order to be eligible for Medicare coverage of inpatient SNF care. We refer to this as the SNF 3-day rule. We note that the SNF 3-day rule has been waived or is not a requirement for Medicare SNF coverage under other CMS models or programs, including BPCI Model 2. BPCI Model 2 awardees that request and are approved for the waiver can discharge Model 2 beneficiaries in less than 3 days from an anchor hospital stay to a SNF, where services are covered under Medicare Part A as long as all other coverage requirements for such services are satisfied. Currently, FFS Medicare beneficiary discharge patterns to a SNF immediately following hospitalization for an LEJR procedure vary regionally across the country, from a low of approximately 10 percent of Medicare beneficiaries to a VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 high of approximately 85 percent.44 Additionally, a study of Medicare beneficiaries has shown that over the period of time between 1991 and 2008, as the inpatient hospital length-of-stay for total hip arthroplasty (THA) decreased from an average of 9.1 days to an average of 3.7 days, the average percentage of primary THA patients discharged directly to home declined from 68 percent to 48 percent while the proportion discharged directly to skilled care (primarily SNFs) increased from 17.8 percent to 34.3 percent.45 During this same period of time, 30-day allcause readmission increased from 5.8 percent to 8.5 percent. Similar to the CCJR payment policies we propose in section III.C of this proposed rule, which would require participating CCJR hospitals to repay Medicare for excess episode spending beginning in performance year 2, participants in BPCI Model 2 assume financial responsibility for episode spending for beneficiaries included in a Model 2 episode. Episode payment models like BPCI and CCJR have the potential to mitigate the existing incentives under the Medicare program to overuse SNF benefits for beneficiaries, as well as to furnish many fragmented services that do not reflect significant coordinated attention to and management of complications following hospital discharge. The removal of these incentives in an episode payment model lays the groundwork for offering participant hospitals greater flexibility around the parameters that determine SNF stay coverage. BPCI participants considering the early discharge of a beneficiary pursuant to the waiver during a Model 2 episode must evaluate whether early discharge to a SNF is clinically appropriate and SNF services are medically necessary. Next, they must balance that determination and the potential benefits to the hospital in the form of internal cost savings due to greater financial efficiency with the understanding that a subsequent hospital readmission, attributable to premature discharge or low quality SNF care, could substantially increase episode spending while also resulting in poorer quality of care for the beneficiary. Furthermore, early hospital discharge for a beneficiary who would otherwise not require a SNF stay (that is, the beneficiary has no identified skilled nursing or rehabilitation need 44 ‘‘Analysis of Medicare claims with admission dates from July 1, 2013 through June 30, 2014 accessed through the Chronic Conditions Warehouse.’’ 45 Cram P, Lu X, Kaboli PJ, et al. Clinical Characteristics and Outcomes of Medicare Patients Undergoing Total Hip Arthroplasty, 1991–2008. JAMA. 2011;305(15):1560–1567. PO 00000 Frm 00077 Fmt 4701 Sfmt 4702 41273 that cannot be provided on an outpatient basis) following a hospital stay of typical length does not improve episode efficiency under an episode payment model such as BPCI or CCJR. Because of the potential benefits we see for participating CCJR hospitals, their provider partners, and beneficiaries, we propose to waive in certain instances the SNF 3-day rule for coverage of a SNF stay following the anchor hospitalization under CCJR beginning in performance year 2 of the model when repayment responsibility for actual episode spending that exceeds the target price begins. We propose to use our authority under section 1115A of the Act with respect to certain SNFs that furnish Medicare Part A posthospital extended care services to beneficiaries included in an episode in the CCJR model. We believe this waiver is necessary to the model test so that participant hospitals can redesign care throughout the episode continuum of care extending to 90 days post-discharge from the anchor hospital stay in order to maximize quality and hospital financial efficiency, as well as reduce episode spending under Medicare. However, we are not proposing to waive this requirement in performance year 1, when participating hospitals are not responsible for excess actual episode spending. We believe that there is some potential for early hospital discharge followed by a SNF stay to increase actual episode spending over historical patterns unless participant hospitals are particularly mindful of this potential unintended consequence. Without participant hospital repayment responsibility in performance year 1, we are concerned that Medicare would be at full risk under the model for increased episode spending because, without a financial incentive to closely manage care, hospitals might be more likely to discharge beneficiaries to SNFs early leading to increased episode spending for which the hospital would bear no responsibility. Beginning in performance year 2 and continuing through performance year 5, we propose to waive the SNF 3-day rule because participant hospitals will bear partial or full responsibility (capped at the proposed stop-loss limit described in section III.C. of this proposed rule) for excess episode actual spending, thereby providing a strong incentive in those years for participant hospitals to redesign care with both quality and efficiency outcomes as priorities. All other Medicare rules for coverage and payment of Part A-covered SNF services would continue to apply to CCJR E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41274 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules beneficiaries in all performance years of the model. In addition, because the average length of stay for Medicare beneficiaries hospitalized for LEJR procedures without major complications or comorbidities is already relatively short at 3 days and in view of our concerns over protecting immediate CCJR beneficiary safety and optimizing health outcomes, we propose to require that participant hospitals may only discharge a CCJR beneficiary under this proposed waiver of the SNF 3-day rule to a SNF rated an overall of three stars or better by CMS based on information publicly available at the time of hospital discharge. Problem areas due to early hospital discharge may not be discovered through model monitoring and evaluation activities until well after the episode has concluded, and the potential for later negative findings alone may not afford sufficient beneficiary protections. CMS created a Five-Star Quality Rating System for SNFs to allow SNFs to be compared more easily and to help identify areas of concerning SNF performance. The Nursing Home Compare Web site (www.medicare.gov/ NursingHomeCompare/) gives each SNF an overall rating of between 1 and 5 stars. Skilled nursing facilities with 5 stars are considered to have much above average quality, and SNFs with one star are considered to have quality much below average. Published SNF ratings include distinct ratings of health inspection, staffing, and quality measures, with ratings for each of the three sources combined to calculate an overall rating. These areas of assessment are all relevant to the quality of SNF care following discharge from the anchor hospitalization initiating a CCJR episode, especially if that discharge occurs after less than three days in the hospital. A study of the clinical factors that kept patients in a Danish hospital unit dedicated to discharge in three days or fewer following total hip and knee arthroscopy procedures found that that pain, dizziness, and general weakness were the main clinical reasons for longer hospitalization, as well as problems with personal care and walking 70 meters with crutches.46 Medicare beneficiaries discharged from the hospital to a SNF in less than three days may be at higher risk of these uncomfortable symptoms and disabling functional problems not being fully resolved at hospital discharge, although 46 Husted H, Lunn TH, Troelsen A, Gaarm-Larsen L, Kristensen BB, Kehlet H. Why still in hospital after fast-track hip and knee arthroplasty? Acta Orthopaedica. 2011; 82(6)679–684. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 we expect that under the CCJR episode payment model participant hospitals will have a strong interest in ensuring appropriate discharge timing so that hospital readmissions and complications are minimized. Nevertheless, because of the potential greater risks following early inpatient hospital discharge, we believe it is appropriate that all CCJR beneficiaries discharged from the participant hospital to a SNF in less than 3 days be admitted to a SNF that has demonstrated that it is capable of providing quality care to patients with significant unresolved post-surgical symptoms and problems. We believe such a SNF would need to provide care of at least average overall quality, which would be represented by an overall SNF 3-star or better rating. We propose that the waiver be available for the CCJR beneficiary’s care. The SNF would insert a Treatment Authorization Code on the claim for a beneficiary in the model where the SNF seeks to the use the waiver. This process would promote coordination between the SNF and the participant hospital, as the SNF would need to be in close communication with the participant hospital to ensure that the beneficiary is in the model at the time the waiver is used. We propose that where the beneficiary would be eligible for inclusion in a CCJR episode of care at the time of hospital discharge, use of the waiver would be permitted where it is medically necessary and appropriate to discharge the beneficiary to a SNF prior to a 3-day inpatient stay. Beneficiaries would be eligible to receive services furnished under the 3Day Rule waiver only during the CCJR episode. We plan to monitor patterns of SNF utilization under CCJR, particularly with respect to hospital discharge in less than 3 days to a SNF, to ensure that beneficiaries are not being discharged prematurely to SNFs and that they are able to exercise their freedom of choice without patient steering. We seek comment on our proposal to waive the SNF 3-day stay rule for stays in SNFs rated overall as three stars or better following discharge from the anchor hospitalization in CCJR episodes. e. Waivers of Medicare Program Rules To Allow Reconciliation Payment or Repayment Actions Resulting From the Net Payment Reconciliation Amount In order to make reconciliation payment to or carry out recoupment from a participant hospital that results from the NPRA calculation for each performance year as discussed in section III.C.6.a. of this proposed rule, we believe we would need to waive certain Medicare program rules. PO 00000 Frm 00078 Fmt 4701 Sfmt 4702 Therefore, in accordance with the authority granted to the Secretary in section 1115A(d)(1) of the Act, we would waive requirements of the Act for all Medicare Part A and Part B payment systems only to the extent necessary to make reconciliation payments or receive repayments based on the NPRA that reflect the episode payment methodology under this proposed payment model for CCJR participant hospitals selected in accordance with CMS’s proposed selection methodology. In addition, we do not propose that reconciliation payments or repayments change beneficiary cost-sharing from the regular Medicare program cost-sharing for the related Part A and Part B services that were paid for CCJR beneficiaries and aggregated to determine actual episode spending in the calculation of the NPRA. We therefore would waive the requirements of sections 1813 and 1833(a) of the Act to the extent that they would otherwise apply to reconciliation payments or repayments from a participant hospital under the CCJR model. We seek comment on our proposed waivers related to repayment and recoupment actions as a result of the NRPA calculated. 12. Proposed Enforcement Mechanisms CMS must have certain mechanisms to enforce compliance with the requirements of the model, either by the participant hospital, or by an entity or individual participating in the CCJR model by furnishing a service to a beneficiary during a CCJR episode. The following discussion details the enforcement mechanisms we propose to make available to CMS for the CCJR model. We propose an enforcement structure that would be consistent with other CMMI models. We believe that Model 2 of the BPCI initiative is an appropriate model for comparison, given that Model 2 and CCJR share many of the same policy characteristics, particularly with respect to episode definition. For example, the participation agreement between CMS and a participant (called an Awardee) in BPCI Model 2 provides that CMS may immediately or with advance notice terminate the awardee’s participation in the model or require the Awardee to terminate its agreement (‘‘participant agreement’’) with a participating provider or supplier that is not in compliance with BPCI requirements. In such circumstances, CMS may direct the Awardee to terminate its participant agreement with a participating provider or supplier because the Awardee has a participation agreement with CMS, whereas the participating provider or supplier does E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules not. CMS may require termination of the Awardee or a participating provider or supplier if— • CMS determines that it no longer has the funds to support the BPCI model; • CMS terminates the model pursuant to section 1115A(b)(3)(B) of the Act; or • The BPCI awardee or an individual or entity participating in BPCI under the awardee does any of the following: ++ Takes any action that threatens the health or safety of patients; avoids atrisk Medicare beneficiaries, as this term is defined in § 425.20; or avoids patients on the basis of payer status. ++ Is subject to sanctions or final actions of an accrediting organization or federal, state or local government agency that could lead to the inability to comply with the requirements and provisions of the BPCI agreement. ++ Takes or fails to take any action that CMS determines for program integrity reasons is not in the best interests of the BPCI initiative. ++ Is subject to action by HHS (including OIG and CMS) or the Department of Justice to redress an allegation of fraud or significant misconduct, including intervening in a False Claims Act qui tam matter, issuing a pre-demand or demand letter under a civil sanction authority, or similar actions. Under the terms of the BPCI agreement, upon CMS’s termination of the agreement for any of the reasons previously listed in this section, CMS may immediately cease the distribution of positive reconciliation payments to the awardee and the awardee must immediately cease the distribution of any gainsharing payments. Many CMMI models also allow for CMS to impose remedial actions to address noncompliance by either a participant that has a direct relationship (participation agreement) with CMS, or by any individual or entity participating in the CMMI model pursuant to an agreement with the participant hospital. For example, with respect to the BPCI Model 2, where CMS determines that there may be noncompliance, CMS may take any or all of the following actions: • Notify the BPCI awardee of the specific performance problem. • Require the awardee to provide additional data to CMS or its designees. • Require the awardee to stop distributing funds to a particular individual or entity. • Require the awardee to forego the receipt of any positive reconciliation payments from CMS. • Request a corrective action plan from the awardee. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 ++ If CMS requests a corrective action plan, then the following requirements apply to awardees in the BPCI initiative: — The awardee must submit a corrective action plan for CMS approval by the deadline established by CMS. — The corrective action plan must address what actions the awardee will take within a specified time period to ensure that all deficiencies are corrected and that it remains in compliance with the BPCI agreement. Under the CCJR model, we propose that CMS would have the enforcement mechanisms detailed in this section available for use against participant hospitals and any entity or individual furnishing a service to a beneficiary during a CCJR episode, where the participant hospital or such entity or individual: (1) Does not comply with the CCJR model requirements; or (2) are identified as noncompliant via CMS’ monitoring of the model or engage in behavior related to any of the reasons previously described that apply to the BPCI initiative. These mechanisms will support the goals of CCJR to maintain or improve quality of care. Given that participant hospitals may receive reconciliation payments, and choose to distribute or share those payments with other providers or suppliers (‘‘CCJR collaborators’’) we believe that enhanced scrutiny and monitoring of participant hospitals and CCJR collaborators under the model is necessary and appropriate. Participant hospitals and CCJR collaborators will also be subject to all existing requirements and conditions for Medicare participation not otherwise waived under section 1115A(d)(1) of the Act. We propose that CMS would have the option to use any one or more of the following enforcement mechanisms for participant hospitals in CCJR. We further propose that these enforcement mechanisms could be instituted and applied in any order, as is consistent with other CMMI models: • Warning letter—We propose to give CMS the authority to issue a warning letter to participant hospitals to put them on notice of behavior that may warrant additional action by CMS. This letter would inform participant hospitals of the issue or issues identified by CMS leading to the issuance of the warning letter. • Corrective Action Plan—We propose to give CMS the authority to request a corrective action plan from participant hospitals. We propose the following requirements for corrective action plans: PO 00000 Frm 00079 Fmt 4701 Sfmt 4702 41275 ++ The participant hospital would be required to submit a corrective action plan for CMS approval by the deadline established by CMS. ++ The corrective action plan would be required to address what actions the participant hospital will take within a specified time period to correct the issues identified by CMS. ++ The corrective action plan could include provisions requiring that the participant hospital terminate Participation Agreements with CCJR collaborators that are determined by HHS to be engaging in activities involving noncompliance with the provisions of this proposed rule, engaged in fraud or abuse, providing substandard care, or experiencing other integrity problems. ++ The participant hospital’s failure to comply with the corrective action plan within the specified time period could result in additional enforcement action, including: (1) Termination; (2) automatic forfeiture of all or a portion of any reconciliation payments as that term is defined in section III.C. of this proposed rule; (3) CMS’s discretionary reduction or elimination of all or a portion of the hospital’s reconciliation payment; or (4) a combination of such actions. • Reduction or elimination of reconciliation amount—We propose to give CMS the authority to reduce or eliminate a participant hospital’s reconciliation amount based on noncompliance with the model’s requirements, negative results found through CMS’ monitoring activities, or the participant hospital’s noncompliance associated with a corrective action plan (as noted previously). For example, where CMS requires a participant hospital to submit a corrective action plan, the result of the participant hospital’s failure to timely comply with that requirement could be a 50 percent reduction in the reconciliation amount due to the participant hospital at the end a performance year, where the participant hospital’s reconciliation report reflects a positive reconciliation amount. We solicit comments on whether negative monitoring results and noncompliance with program requirements or corrective action plans should result in automatic forfeiture of all or a portion of positive NPRA, the amount that could be forfeited or reduced, the number of performance periods over which NPRA may be forfeited or reduced per instance or episode of noncompliance, whether the amount should be a fixed percentage of NPRA or a variable amount depending on the nature and severity of the noncompliance, and the criteria E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41276 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules CMS should use in deciding the severity of noncompliance. Where the participant hospital’s reconciliation report reflects a repayment amount, forfeiture of a reconciliation amount would not be an option for that performance year. In such a case, we considered whether CMS would require the participant hospital to forfeit a certain percentage of a reconciliation amount in the reconciliation report for a future performance year. However, in the case of a failure to comply with the model’s requirements, presence of negative results found through CMS’s monitoring activities, or noncompliance associated with a corrective action plan, we believe a policy that would increase the amount of repayment amount on the reconciliation report for the performance year in which the noncompliance occurred by the participant hospital is more likely to result in compliance from the hospital. Therefore, we propose to add 25 percent to a repayment amount on a reconciliation report, where the participant hospital fails to timely comply with a corrective action plan or is noncompliant with the model’s requirements, We seek comments on this forfeiture policy, including the percentage to be added to a repayment amount on a reconciliation report; the number of performance periods over which a reconciliation amount may be forfeited or reduced per instance or episode of noncompliance; whether the amount should be a fixed percentage of a reconciliation amount or repayment amount, as applicable, or a variable amount depending on the nature and severity of the noncompliance; and the criteria CMS should use in deciding the severity of noncompliance. • Termination from the model— Given the provisions we have proposed outlining the participation of hospitals in the model, we believe that, in contrast to other CMS models, termination from the CCJR model would contradict the model’s design. As a result, in some circumstances termination from the model may be unlikely to be a sufficient mechanism to deter noncompliance by participant hospitals. While we believe termination is a remedy unlikely to be frequently used by CMS in this model, we nonetheless leave open the possibility that in extremely serious circumstances termination might be appropriate, and for that reason, we propose to include it as an available enforcement option. Where a participant hospital is terminated from the CCJR model, we propose that the hospital would remain liable for all negative NPRA generated VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 from episodes of care that occurred prior to termination. We propose that CMS may terminate the participation in CCJR of a participant hospital when the participant hospital, or a CCJR collaborator that has a Participation Agreement with a participant hospital and performs functions or services related to CCJR activities, fails to comply with any of the requirements of the CCJR model. We further propose that CMS could terminate the participant hospital’s participation in the model, or require a participant hospital to terminate a Participation Agreement with a CCJR collaborator for reasons including, but not limited to the following: • CMS determines that it no longer has the funds to support the CCJR model. • CMS terminates the model pursuant to section 1115A(b)(3)(B) of the Act. • The CCJR participant hospital, or an individual or entity participating in CCJR under the participant hospital does any of the following: ++ Takes any action that threatens the health or safety of patients; avoids atrisk Medicare beneficiaries, as this term is defined in § 425.20; or avoids patients on the basis of payor status. ++ Is subject to sanctions or final actions of an accrediting organization or federal, state or local government agency that could lead to the inability to comply with the requirements and provisions of this proposed rule. ++ Takes or fails to take any action that CMS determines for program integrity reasons is not in the best interests of the CCJR model. ++ Is subject to action by HHS (including OIG and CMS) or the Department of Justice to redress an allegation of fraud or significant misconduct, including intervening in a False Claims Act qui tam matter, issuing a pre-demand or demand letter under a civil sanction authority, or similar actions. ++ Is subject to action involving violations of the physician self-referral prohibition, civil monetary penalties law, federal anti-kickback statute, antitrust laws, or any other applicable Medicare laws, rules, or regulations that are relevant to the CCJR model • Other Enforcement Mechanisms— We seek to incorporate policies regarding enforcement mechanisms that are necessary and appropriate to test the CCJR model. Thus, we seek public comment on additional enforcement mechanisms that would contribute to the following goals: ++ Allow CMS to better operate or monitor the model. PO 00000 Frm 00080 Fmt 4701 Sfmt 4702 ++ Appropriately engage and encourage all entities and individuals furnishing a service to a beneficiary during a CCJR episode to comply with the requirements and provisions of the CCJR model. ++ Preserve the rights of Medicare beneficiaries to receive medically necessary care, to not be endangered by providers and suppliers engaging in noncompliant activities, and to be able to choose from whom they want to receive care. We seek public comment on these proposals and invite commenters to propose additional safeguards we should consider in this proposed rule. D. Quality Measures and Display of Quality Metrics Used in the CCJR Model 1. Background a. Purpose of Quality Measures in the CCJR Model The priorities of the National Quality Strategy 47 include making care safer and more affordable, promoting effective communication and coordination as well as engaging patients and families in their care. We believe quality measures that encourage providers to focus on the National Quality Strategy priorities will ultimately improve quality of care and cost efficiencies. As described earlier in section III.C.5 of this proposed rule, we are proposing that in order for a hospital in the CCJR model to receive a reconciliation payment for the applicable performance year, the participant hospital’s measure results must meet or exceed certain thresholds compared to the national hospital measure results calculated for all HIQRparticipant hospitals for all three measures for each performance period. More specifically, for performance years 1 through 3, a participant hospital’s measure results must be at or above the 30th percentile of the national hospital measure results calculated for all hospitals under the HIQR Program for each of the three measures for each performance period (for a detailed discussion see section III.C.5.b of this proposed rule. For performance years 4 and 5, a participant hospital’s measure results must be at or above the 40th percentile of the national hospital measure results (for a detailed discussion see section III.C.5.b. of this proposed rule). In this section, we fully describe the proposed quality measures that will be used for public reporting and to determine whether a participant 47 National Quality Strategy. Working for Quality: About the National Quality Strategy. Available at: https://www.ahrq.gov/workingforquality/ about.htm#develnqs. Accessed on April 15, 2015. E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules hospital is eligible for the reconciliation payment under the CCJR model. We are proposing a complication measure, readmission measure, and a patient experience survey measure for the CCJR model. We note that these measures will assess the priorities of safer care, transitions of care and effective communication, and engagement of patients in their care, respectively. Specifically, we are proposing the following three CMS outcome measures: • The Hospital-level riskstandardized complication rate (RSCR) following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1550) (as referred to as THA/TKA Complications measure (NQF #1550)). • The Hospital-level 30-day, all-cause risk-standardized readmission rate (RSRR) following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1551) (as referred to as THA/TKA Readmissions measure (NQF #1551)). • HCAHPS Survey (NQF #0166). For the inpatient hospital settings, these fully developed measures are endorsed by the National Quality Forum (NQF), and recommended by the NQF Measure Application Partnership (MAP) with subsequent implementation in the HIQR Program, HVBP Program, and the HRRP (see FY 2015 IPPS/LTCH final rule 79 FR 50031, 50062, 50208 and 50209, and 50259). These measures are also publicly reported on Hospital Compare. An important purpose of the proposed quality measures for the CCJR model is to provide transparent information on hospital performance for the care of patients undergoing eligible elective joint replacement surgery and to ensure that care quality is either maintained or improved. The proposed measures assess the following key outcomes for patients undergoing elective joint replacement surgery: • Serious medical and surgical complications. • Unplanned readmissions. • Patient experience. We note that complications and unplanned readmissions result in excess inpatient and post-acute spending, and reductions in these undesirable events will improve patient outcomes while simultaneously lowering healthcare spending. The THA/TKA Complications measure (NQF #550) will inform quality improvement efforts targeted towards minimizing medical and surgical complications during surgery and the postoperative period. The THA/TKA Readmission measure (NQF #1551) captures the additional priorities of care VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 provided in the transition to outpatient settings and communication with patients and providers during and immediately following inpatient admission. Improved quality of care, specifically achieved through coordination and communication among providers and with their patients and their caregivers, can favorably influence performance on these measures. We believe improvement in measure performance will also mean improved quality of care and reduced cost. Additionally, we continue to focus on patient experience during hospitalizations, and believe that the HCAHPS Survey measure provides not only the opportunity for patients to share their lower extremity joint replacement hospital experience, but also for hospitals to improve quality of care based on patient experience. For example, the HCAHPS Survey ‘‘categories of patient experience’’ specifically provides areas (for example, communication with doctors and nurses, responsiveness of hospital staff, pain management) in which a hospital could improve transition of care and increase patient safety (for detailed description of patient experience areas covered by HCAHPS surveys see section III.D.2.c. of this proposed). Additionally, the survey includes measures related to nurse and physician communication, pain management, timeliness of assistance, explanation of medications, discharge planning and cleanliness of the hospitals to provide specific areas for hospitals to improve on.48 Specific questions on provider communication include the following: • How often the patient believed providers listened carefully to his or her questions? • Whether the purpose of medications and associated adverse events were explained? • Whether discussions on postdischarge instructions and plans occurred so that the patient had a clear understanding of how to take medications and an understanding of his or her responsibilities in managing his or her health post-discharge? All of these areas of patient experience would be invaluable to improving hospital quality of care. We note that Manary, et al.2 suggest that by focusing on patient outcomes we can improve patient experience and that timeliness of measuring patient experience is important due to the 48 Manary MP, Boulding W, Staelin R, Glickman SW. The Patient Experience and Health Outcomes. New England Journal of Medicine. Jan 2013; 368(3):201–203. PO 00000 Frm 00081 Fmt 4701 Sfmt 4702 41277 potential for recall inaccuracies; survey administration for HCAHPS surveys must begin between 2 and 42 days after discharge from a hospital. We are aware that there is concern whether there is a relationship between patient satisfaction and quality of surgical care. To address this question Tsai et al.49 recently assessed patient satisfaction using the HCAHPS Survey results and correlated quality performance using nationally implemented structural, process and outcome surgical measures (that is, structural, process and outcome surgical measures in the Hospital Value Based Purchasing, and the Hospital Readmission Reduction Programs). The study found a positive relationship between patient experience of care and surgical quality of care, among the 2,953 hospitals that perform six high cost and high frequency surgical procedures that are also associated with morbidity and mortality in Medicare beneficiaries. The study included hip replacement procedures, and specifically noted that those hospitals with high patient satisfaction also had high performance on nationally implemented surgical quality measures (such as the Surgical Care Improvement Project measures and 30-day risk-adjusted readmission and peri-operative mortality outcome measures). Finally, we note that although the HCAHPS Survey measure is not specific to joint replacements, the survey provides all patients the opportunity to comment on their hospital experience, including patients who have received lower extremity joint replacements, which helps to inform hospitals on areas for improvement. While HCAHPS scores are aggregated at the hospital level, the surgical service line is one of three service lines encompassed by the survey.50 We strive to align as many measures and programs as is feasibly possible. We believe proposing fully developed measures that are used in other CMS hospital quality programs will minimize the burden on participant hospitals for having to become familiar with new measures and will allow us to appropriately capture quality data for the CCJR model. 49 Tsai TC, Orav EJ, Jha AK. Patient Satisfaction and quality of surgical care in US hospitals. Annals of Surgery. 2015; 261:2–8. 50 Giordano LA, Elliott MN, Goldstein E, Lehrman WG, Spencer PA. Development, Implementation, and Public Reporting of the HCAHPS Survey. Medical Care Research and Review. 2010;67(1):27– 37. E:\FR\FM\14JYP3.SGM 14JYP3 41278 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules b. Public Display of Quality Measures in the CCJR Model We believe that the display of measure results is an important way to educate the public on hospital performance and increase the transparency of the model. As discussed later in this section of this proposed rule, for the CCJR model, we are proposing to display quality measure results on the Hospital Compare Web site (https:// www.hospitalcompare.hhs.gov/). We believe that the public and hospitals are familiar with this Web site and how the information is displayed. The proposed measures have been displayed on Hospital Compare over the past few years. Finally, while also aligning the display of data for the CCJR model with other CMS hospital quality programs, we believe that the public and ’hospitals’ familiarity with the Hospital Compare Web site will make it simpler to access data. 2. Proposed Quality Measures for Performance Year 1 (CY 2016) and Subsequent years a. Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550) (1) Background asabaliauskas on DSK5VPTVN1PROD with PROPOSALS THA and TKA are commonly performed procedures for the Medicare population that improve quality of life. Between 2009 and 2012, there were 337,419 total hip arthroplasty (THA) procedures and 750,569 total knee arthroplasty (TKA) procedures for Medicare FFS patients 65 years and older.51 The post-operation complications of these procedures are high considering these are elective procedures, and usually, the complications are devastating to patients. For example, rates for periprosthetic joint infection, a rare but devastating complication, have been reported at 2.3 percent for THA/TKA patients with rheumatoid arthritis after 1 year of follow-up 52 and 1.6 percent in Medicare patients undergoing TKA after 51 Suter L, Grady JL, Lin Z et al.: 2013 Measure Updates and Specifications: Elective Primary Total Hip Arthroplasty (THA) And/Or Total Knee Arthroplasty (TKA) All-Cause Unplanned 30-Day Risk-Standardized Readmission Measure (Version 2.0). 2013. https://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/ HospitalQualityInits/Measure-Methodology.html. 52 Bongartz, T, Halligan CS, Osmon D, et al. Incidence and risk factors of prosthetic joint infection after total hip or knee replacement in patients with rheumatoid arthritis. Arthritis Rheum. 2008; 59(12): 1713–1720. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 2 years of follow up.53 Two studies reported 90-day death rates following THA at 0.7 percent 54 and 2.7 percent, respectively.55 Reported rates for pulmonary embolism following TKA range from 0.5 percent to 0.9 percent.56 57 58 Reported rates for septicemia range from 0.1 percent, during the index admission59 to 0.3 percent, 90 days following discharge for primary TKA.60 Rates for bleeding and hematoma following TKA have been reported at 0.94 percent 61 to 1.7 percent.62 Combined, THA and TKA procedures account for the largest payments for procedures under Medicare.63 Both hip and knee arthroplasty procedures improve the function and quality of life of patients with disabling arthritis, and the volume and cost associated with these procedures are very high. We believe it is important to assess the quality of care 53 Kurtz S, Ong K, Lau E, Bozic K, Berry D, Parvizi J. Prosthetic joint infection risk after TKA in the Medicare population. Clin Orthop Relat Res. 2010;468:5. 54 Cram P, Vaughan-Sarrazin MS, Wolf B, Katz JN, Rosenthal GE. A comparison of total hip and knee replacement in specialty and general hospitals. J Bone Joint Surg Am. Aug 2007;89(8):1675–1684. Soohoo NF, Farng E, Lieberman JR, Chambers L, Zingmond, DS. Factors That Predict Short-term Complication Rates After Total Hip Arthroplasty. Clin Orthop Relat Res. Sep 2010;468(9):2363–2371. 55 Soohoo NF, Farng E, Lieberman JR, Chambers L, Zingmond, DS. Factors That Predict Short-term Complication Rates After Total Hip Arthroplasty. Clin Orthop Relat Res. Sep 2010;468(9):2363–2371. Cram P, Vaughan-Sarrazin MS, Wolf B, Katz JN, Rosenthal GE. A comparison of total hip and knee replacement in specialty and general hospitals. J Bone Joint Surg Am. Aug 2007;89(8):1675–1684. 56 Mahomed NN, Barrett JA, Katz JN, et al. Rates and outcomes of primary and revision total hip replacement in the United States medicare population. J Bone Joint Surg Am. Jan 2003;85– A(1):27–32. 57 Khatod M, Inacio M, Paxton EW, et al. Knee replacement: epidemiology, outcomes, and trends in Southern California: 17,080 replacements from 1995 through 2004. Acta Orthop. Dec 2008;79(6):812–819. 58 Solomon DH, Chibnik LB, Losina E, et al. Development of a preliminary index that predicts adverse events after total knee replacement. Arthritis & Rheumatism. 2006;54(5):1536–1542. 59 Browne, JA, Cook C, Hofmann A, Bolognesi MP. Postoperative morbidity and mortality following total knee arthroplasty with computer navigation. Knee. 2010;17(2): 152–156. 60 Cram P, Vaughan-Sarrazin MS, Wolf B, Katz JN, Rosenthal GE. A comparison of total hip and knee replacement in specialty and general hospitals. J Bone Joint Surg Am. Aug 2007;89(8):1675–1684. 61 Browne, JA, Cook C, Hofmann A, Bolognesi MP. Postoperative morbidity and mortality following total knee arthroplasty with computer navigation. Knee. 2010;17(2): 152–156. 62 Huddleston JI, Maloney WJ, Wang Y, Verzier N, Hunt DR, Herndon JH. Adverse Events After Total Knee Arthroplasty: A National Medicare Study. The Journal of Arthroplasty. 2009;24(6, Supplement 1): 95–100. 63 Bozic KJ, Rubash HE, Sculco TP, Berry DJ., An analysis of Medicare payment policy for total joint arthroplasty. J Arthroplasty. Sep 2008; 23(6 Suppl 1):133–138. PO 00000 Frm 00082 Fmt 4701 Sfmt 4702 provided to Medicare beneficiaries who undergo one or both of these procedures. The proposed measure developed by CMS, and currently implemented in the Hospital IQR and Hospital Value-Based Purchasing Program, assesses a hospital’s risk standardized complication rate, which is the rate of complications occurring after elective primary THA and TKA surgery. The measure outcome is the rate of complications occurring after THA and TKA during a 90-day period that begins with the date of the index admission for a specific hospital; an index admission is the hospitalization to which the complications outcome is attributed. The following outcomes (either one or more) are considered complications in this measure: Acute myocardial infarction, pneumonia, or sepsis/ septicemia within 7 days of admission; surgical site bleeding, pulmonary embolism or death within 30 days of admission; or mechanical complications, periprosthetic joint infection or wound infection within 90 days of admission. The data indicated that the median hospital-level riskstandardized complication rate for 2008 was 4.2 percent, with a range from 2.2 percent to 8.9 percent in hospitals. The variation in complication rates suggests that there are important differences in the quality of care delivered across hospitals, and that there is room for quality improvement. In 2010, we developed the proposed measure of hospital-level risk-standardized complication rate (RSCR) following elective primary THA and TKA surgery, which was later endorsed by the NQF (NQF #1550). In its Pre-Rulemaking Report for 2012,64 the Measure Application Partnership (MAP) also recommended the inclusion of this measure in the HIQR Program; we have not submitted this measure for use in the post-acute care settings as the measure was developed for the acute care hospital setting. This measure has been publicly reported on Hospital Compare since FY 2014 and in the HIQR Program since FY 2015 (FY 2015 IPPS/ LTCH final rule 79 FR 50062). Finally, we note a comparison of the median hospital-level risk-standardized complication rates for hospitals between April 1, 2011 and March 31, 2014 illustrates a performance gap (median RSCR of 3.1 percent with a range from 1.4 percent to 6.9 percent) indicating 64 National Quality Forum. MAP Final Reports. Available at: https://www.qualityforum.org/ Publications/2012/02/MAP_Pre-Rulemaking_ Report__Input_on_Measures_Under_Consideration_ by_HHS_for_2012_Rulemaking.aspx. Accessed on April 1 6, 2015, page 78. E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules there is still room for quality improvement.65 (2) Data Sources We propose to use Medicare Part A and Part B FFS claims submitted by the participant hospital as the data source to calculate the measure. Index admission diagnoses and in-hospital comorbidities are assessed using Medicare Part A claims. Additional comorbidities prior to the index admission are assessed using Part A inpatient, outpatient, and Part B office visit Medicare claims in the 1 to 2 months prior to the index (initial) admission. Enrollment and postdischarge mortality status are obtained from Medicare’s enrollment database which contains beneficiary demographic, benefits/coverage, and vital status information. (3) Cohort The THA/TKA Complication measure (NQF #1550) includes Medicare FFS beneficiaries, aged 65 years or older, admitted to non-federal acute care hospitals for elective primary THA or TKA. THA and TKA procedures eligible for inclusion are defined using ICD–9– CM codes 81.51 and 81.54, respectively. We propose that the cohort will include all hospitals included in the CCJR model, but the CCJR model cohort may differ slightly from the hospital cohort that is currently captured in the measures through the HIQR program. That is, the CCJR model cohort is a randomly selected group of acute care hospitals and therefore may not include all of the HIQR program acute care hospitals (for a detailed discussion on selection of hospitals for the model see section III.A.4. of this proposed rule). asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (4) Inclusion and Exclusion Criteria An index admission is the hospitalization to which the complication outcome is attributed. The measure includes the following index admissions for patients: • Enrolled in Medicare FFS. • Aged 65 or over. • Enrolled in Part A and Part B Medicare for the 12 months prior to the date of index admission and during the index admission. • Having a qualifying elective primary THA/TKA procedure; elective primary THA/TKA procedures are defined as those procedures without any of the following: 65 Suter L, Zang W, Parzynski C, et al. 2015 Procedure-Specific Complication Measures Update and Specifications: Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) Risk-Standardized Complication Measure (Version 4.0). 2015. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 ++ Femur, hip, or pelvic fractures coded in principal or secondary discharge diagnosis fields of the index admission. ++ Partial hip arthroplasty (PHA) procedures with a concurrent THA/ TKA. ++ Revision procedures with a concurrent THA/TKA. ++ Resurfacing procedures with a concurrent THA/TKA. ++ Mechanical complication coded in the principal discharge diagnosis field. ++ Malignant neoplasm of the pelvis, sacrum, coccyx, lower limbs, or bone/ bone marrow or a disseminated malignant neoplasm coded in the principal discharge diagnosis field. ++ Removal of implanted devices/ prostheses. ++ Transfer from another acute care facility for the THA/TKA. The following admissions would be excluded from the measure: • Admissions for patients discharged against medical advice (AMA). • Admissions for patients with more than two THA/TKA procedure codes during the index hospitalization. • Consistent with the FY 2016 IPPS/ LTCH proposed rule, admissions for patients without at least 90 days postdischarge enrollment in FFS Medicare; this exclusion is an update to the measure signaled in the HIQR program section of the FY2016 IPPS/LTCH proposed rule (80 FR 24572 through 24574) to ensure that disproportionate Medicare FFS disenrollment does not bias the measure results. After applying these exclusion criteria, we randomly select one index admission for patients with multiple index admissions in a calendar year. Therefore, we exclude the other eligible index admissions in that year. Identification and use of a single index admission in a calendar year is done because this measure includes mortality as an outcome and the probability of death increases with each subsequent admission, preventing each episode of care from being mutually independent. Therefore only one index admission is selected to maintain measure integrity. We note that THA/TKA Complication measure (NQF #1550) does not capture patients undergoing partial hip arthroplasty procedures. We excluded partial hip arthroplasty procedures primarily because partial hip arthroplasty procedures are done for hip fractures. Therefore, they are not elective procedures. Also, partial hip arthroplasty procedures are typically performed on patients who are older, frailer, and have more comorbid conditions. Although this exclusion is not fully harmonized with MS–DRG 469 PO 00000 Frm 00083 Fmt 4701 Sfmt 4702 41279 and 470, which includes partial hip arthroplasty procedures, this measure will still provide strong incentive for improving and maintaining care quality across joint replacement patients as hospitals typically develop protocols for lower extremity joint arthroplasty that will address peri-operative and postoperative care for both total and partial hip arthroplasty procedures. As previously cited in the Episode Definition of the CCJR model (section III.B. of this proposed rule) the frequency of administrative claims data using ICD–9 codes for 2014 indicated that partial hip arthroplasty (ICD–9 code: 81.52) accounted for 12 percent of the administrative claims, while Total Hip replacement (ICD–9 code: 81.51) and Total Knee replacement (ICD–9 code: 81.54) accounted for 87 percent of the administrative claims for 2014. We also note that the same surgeons and care teams frequently perform both procedures. Therefore, quality improvement efforts initiated in response to the THA/TKA Complication measure (NQF #1550) are likely to benefit patients undergoing similar elective procedures, such as partial hip arthroplasty and revision THA/TKA procedures, and possibly even nonelective THA/TKA procedures, such as fracture-related THA. (5) Risk-Adjustment We note that CCJR-we chose to align this measure with the risk-adjustment methodologies adopted for the HIQR program and the HRRP in accordance with section 1886(b)(3)(B)(viii)(VIII) of the Act (FY 2013 IPPS/LTCH final rule 77 FR 53516 through 53518 and FY 2015 IPPS/LTCH final rule; 79 FR 50024, 50031, and 50202). We note that the risk-adjustment takes into account the patient case-mix to assess hospital performance. The patient risk factors are defined using the Hierarchical Condition Categories (CC), which are clinically relevant diagnostic groups of ICD–9–CM codes.66 The CCs used in the risk adjustment model for this measure, are provided on the CMS QualityNet Web site (https://www.qualitynet.org/ dcs/ContentServer?c= Page&pagename=Qnet Public%2FPage%2FQnetTier4& cid=1228772783162). We note that the measure uses all Part A and B administrative claims ICD–9 codes for the year prior to and including the index admission. The Part A and B administrative claims ICD–9 codes are 66 Pope G, Ellis R, Ash A, et al., Principal Inpatient Diagnostic Cost Group Models for Medicare Risk Adjustment. Health Care Financing Review. 2000;21(3):26. E:\FR\FM\14JYP3.SGM 14JYP3 41280 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS used to inform the risk prediction for each patient; diagnostic codes from post-acute care settings are included in the measure, but this information is only used to identify a hospital’s patient case mix in order to adequately adjust for differences in case mix across hospitals. Use of the Part A and B data does not mean the measures are applicable to post-acute care settings, only that they use comprehensive data to predict the risk of the outcome and adjust for hospital patient case mix. The measure would meet the requirement if it applied since risk-adjustment adjusts for hospital patient mix, including age and comorbidities, to ensure that hospitals that care for a less healthy patient population are not penalized unfairly. The measure methodology defines ’’complications’’ as acute myocardial infarction (AMI); pneumonia; sepsis/septicemia; pulmonary embolism; surgical site bleeding; death; wound infection; periprosthetic joint infection; and mechanical complication within 0 to 90 days post the index date of admission, depending on the complication. The decision on the appropriate follow-up period of 0 to 90 days was based on our analysis of 90-day trends in complication rates using the 2008 Medicare FFS Part A Inpatient Data. We found that rates for mechanical complications are elevated until 90 days post the date of index admission. We found that the rates for four other complications—death, surgical site bleeding, wound infection, and pulmonary embolism—are elevated for 30 days, and that rates for AMI, pneumonia, and sepsis/septicemia level off 7 days after the date of index admission. (6) Calculating the Risk-Standardized Complication Rate and Performance Period Analogous to how we calculate hospital risk-standardized readmission rates with all readmission measures and risk-standardized mortality rates with the mortality measures used in CMS hospital quality programs, we calculate the hospital risk-standardized complication rate by producing a ratio of the number of ‘‘predicted’’ complications (that is, the adjusted number of complications at a specific hospital based on its patient population) to the number of ‘‘expected’’ complications (that is, the number of complications if an average quality hospital treated the same patients) for each hospital and then multiplying the ratio by the national raw complication rate. The 3-year rolling performance period would be consistent with that VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 used for HIQR (FY 2015 IPPS/LTCH final rule 79 FR 50208 and 50209). For performance year-one of the CCJR model, we propose that the performance period for the THA/TKA Complication measure (NQF #1550) we propose to be April 2013 through March 2016. As noted in this proposed rule, the THA/ TKA Readmissions measure (NQF #1551) uses a 30-day window of followup, which is different from the 90-day window of follow-up used in the THA/ TKA Complications measure (NQF #1550). Section III.D.4. of this proposed rule, Form and Manner, summarizes performance periods for years 1 through 5 of the CCJR JR model. We seek public comment on this proposal to assess quality performance through implementation of the Hospitallevel risk-standardized complication rate (RSCR) following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1550) measure. b. Hospital-Level 30-Day, All-Cause Risk-Standardized Readmission Rate (RSRR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1551) (1) Background The objective of CMS’s Hospital-level 30-day, all-cause risk-standardized readmission rate (RSRR) following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1551) (as referred to as THA/TKA Readmission measure (NQF #1551)) measure is to assess readmission from any cause within 30 days of discharge from the hospital following elective primary THA and TKA. As previously stated, outcome measures such as complications and readmissions are the priority areas for the HIQR Program. Elective primary THA and TKA are commonly performed procedures that improve quality of life. THA and TKA readmissions are disruptive to patients’ quality of life, costly to the Medicare program, and data support that readmission rates can be improved through better care coordination and other provider actions.67 Furthermore, we believe that there is an opportunity for hospitals to improve quality of life for the patient. From July 1, 2011 to June 30, 2014, Medicare FFS claims data indicate that 30-day hospital-level risk-standardized readmission rates ranged from 2.6 67 Mistiaen P, Francke AL, Poot E. Interventions aimed at reducing problems in adult patients discharged from hospital to home: a systematic meta-review. BMC Health Services Research. 2007;7:47. PO 00000 Frm 00084 Fmt 4701 Sfmt 4702 percent to 8.5 percent among hospitals with a median rate of 4.8 percent. The mean risk-standardized readmission rate was 4.9 percent.68 This variation suggests there are important differences in the quality of care received across hospitals, and that there is room for improvement. A measure that addresses readmission rates following THA and TKA provides an opportunity to provide targets for efforts to improve the quality of care and reduce costs for patients undergoing these elective procedures. The measure also increases transparency for consumers and provides patients with information that could guide their choices. We believe that a risk-adjusted readmission outcome measure can provide a critical perspective on the provision of care, and support improvements in care for the Medicare patient population following THA/TKA hospitalization. We note that the THA/TKA Readmission measure (NQF #1551) has wide stakeholder support, with NQF endorsement in January 2012, and support by the MAP for the HIQR Program (2012 Pre-Rulemaking report 19), and for HRRP (2013 PreRulemaking report 69). Finally, THA/ TKA Readmission Measure (NQF #1551) has been publicly reported since FY 2014 (79 FR 50062), and was implemented in both the HIQR program (77 FR 53519 through 53521) and HRRP (78 FR 50663 and 50664). (2) Data Sources We propose to use Medicare Part A and Part B FFS claims submitted by the participant hospital as the data source for calculation of the THA/TKA Readmission measure (NQF #1551). Index admission diagnoses and inhospital comorbidity data are assessed using Medicare Part A claims. Additional comorbidities prior to the index admission are assessed using Part A inpatient, outpatient, and Part B office visit Medicare claims in the 12 months prior to index (initial) admission. Enrollment status is obtained from Medicare’s enrollment database which contains beneficiary demographic, 68 Suter L, Desai N, Zang W, et al. 2015 2015 Procedure-Specific Readmission Measures Updates and Specifications Report: Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) Risk-Standardized Readmission Measure (Version 4.0), Isolated Coronary Artery Bypass Graft (CABG) Surgery—Version 2.0. 2015; https://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/ HospitalQualityInits/Measure-Methodology.html. 69 National Quality Forum. MAP Final Reports. Available at: https://www.qualityforum.org/ Publications/2013/02/MAP_Pre-Rulemaking_ Report_-_February_2013.aspx. Accessed on April 16, 2015, page 143. E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules benefit/coverage, and vital status information. (3) Cohort The THA/TKA Readmission measure (NQF #1551) includes Medicare FFS beneficiaries, aged 65 years or older, admitted to non-federal acute care hospitals for elective primary THA or TKA. THA and TKA procedures eligible for inclusion are defined using ICD–9– CM codes 81.51 and 81.54, respectively. We propose that the cohort will include all hospitals included in the CCJR model, but the CCJR model cohort may differ slightly from the hospital cohort that is currently captured in the measures through the HIQR program. That is, the CCJR model cohort is a randomly selected group of acute care hospitals and therefore may not include all of the HIQR program acute care hospitals (for a detailed discussion on selection of hospitals for the model see section III.A. of this proposed rule.) asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (4) Inclusion and Exclusion Criteria We propose that an index admission is the anchor hospitalization to which the readmission outcome is attributed. The measure includes index admissions for patients: • Enrolled in Medicare FFS. • Aged 65 or over. • Discharged from non-federal acute care hospitals alive. • Enrolled in Medicare Part A and Part B for the 12 months prior to the date of index admission and during the index admission. • Having a qualifying elective primary THA/TKA procedure; elective primary THA/TKA procedures are defined as those procedures without any of the following: ++ Femur, hip, or pelvic fractures coded in principal or secondary discharge diagnosis fields of the index admission. ++ Partial hip arthroplasty (PHA) procedures with a concurrent THA/ TKA. ++ Revision procedures with a concurrent THA/TKA. ++ Resurfacing procedures with a concurrent THA/TKA. ++ Mechanical complication coded in the principal discharge diagnosis field. ++ Malignant neoplasm of the pelvis, sacrum, coccyx, lower limbs, or bone/ bone marrow or a disseminated malignant neoplasm coded in the principal discharge diagnosis field. ++ Removal of implanted devices/ prostheses. ++ Transfer from another acute care facility for the THA/TKA. • This measure excludes index admissions for patients: VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 ++ Without at least 30 days postdischarge enrollment in FFS Medicare. ++ Discharged against medical advice (AMA). ++ Admitted for the index procedure and subsequently transferred to another acute care facility. ++ With more than two THA/TKA procedure codes during the index hospitalization. Finally, for the purpose of this measure, admissions within 30 days of discharge from an index admission are not eligible to also be index admissions. Thus, no hospitalization will be counted as both a readmission and an index admission in this measure. This measure does not capture patients undergoing partial hip arthroplasty procedures, as partial hip arthroplasties are primarily done for hip fractures and are typically performed on patients who are older, frailer, and have more comorbid conditions. Although this exclusion is not fully harmonized with MS–DRG 469 and 470, which includes partial hip arthroplasty procedures, this measure would still provide strong incentive for improving and maintaining care quality across joint replacement patients. We believe the THA/TKA Readmission measure (NQF #1551) provides strong incentive for quality improvement because hospitals typically develop protocols for lower extremity joint arthroplasty that will address peri-operative and postoperative care for both total and partial hip arthroplasties, and the same surgeons and care teams frequently perform both procedures. Therefore, quality improvement efforts initiated in response to the THA/TKA Readmission measure (NQF #1551) are likely to benefit patients undergoing similar elective procedures, such as partial hip arthroplasty and revision THA/TKA procedures, and possibly even nonelective THA/TKA procedures, such as fracture-related THA. (5) Risk-Adjustment We note that CCJR-we chose to align this measure with the risk-adjustment methodologies adopted for Readmission measure (NQF #1551) under the HIQR Program in accordance with section 1886(b)(3)(B)(viii)(VIII) of the Act, as finalized in FY 2013 IPPS/LTCH PPS final rule (77 FR 53519 through 53521). We also note that the measure riskadjustment takes into account patient age and comorbidities to allow a fair assessment of hospital performance. The measure defines the patient risk factors for readmission using diagnosis codes collected from all patient claims 1 year prior to patient index hospitalization for THA and TKA. As previously noted in PO 00000 Frm 00085 Fmt 4701 Sfmt 4702 41281 the THA/TKA Complication measure (NQF #1550), Part A and B administrative claims ICD–9 codes are used to inform the risk prediction for each patient; diagnostic codes from post-acute care settings are included in the measure, but this information is only used to identify a hospital’s patient case mix in order to adequately adjust for differences in case mix across hospitals. Use of the Part A and B data does not mean the measures are applicable to post-acute care settings, only that they use comprehensive data to predict the risk of the outcome and adjust for hospital patient case mix. We note that the patient diagnosis codes are grouped using Hierarchical Condition Categories (CCs), which are clinically relevant diagnostic groups of ICD–9–CM codes.70 The CCs used in the risk adjustment model for this measure, are provided on the CMS QualityNet Web site (https://www.qualitynet.org/dcs/ ContentServer?c=Page&pagename= QnetPublic%2FPage%2F QnetTier4&cid=1219069856694). In summary, age and comorbidities present at the time of admission are adjusted for differences in hospital case mix (patient risk factors). The measure uses the hierarchical logistic regression model (HLM) statistical methodology for risk adjustment. (6) Calculating the Risk-Standardized Readmission Rate and Performance period We propose to calculate hospital riskstandardized readmission rates consistent with the methodology used to risk standardize all readmission measures and mortality measures used in CMS hospital quality programs. Using HLM, we calculate the hospitallevel elective primary THA/TKA riskstandardized readmission rate by producing a ratio of the number of ’’predicted’’ readmissions (that is, the adjusted number of readmissions at a specific hospital) to the number of ’’expected’’ readmissions (that is, the number of readmissions if an average quality hospital treated the same patients) for each hospital and then multiplying the ratio by the national raw readmission rate. The 3-year rolling performance period would be consistent with that used for the HIQR program (FY 2015 IPPS/LTCH final rule 79 FR 50208 and 50209). For performance year-one of the CCJR model, we propose that the performance period for the THA/TKA Readmission measure (NQF 70 Pope G, Ellis R, Ash A, et al., Principal Inpatient Diagnostic Cost Group Models for Medicare Risk Adjustment. Health Care Financing Review. 2000;21(3):26. E:\FR\FM\14JYP3.SGM 14JYP3 41282 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules #1551) would be July 2013 through June 2016. As noted in this proposed rule for the section on the THA/TKA Complications measure (NQF #1550), there is a 90-day window of follow-up which is different from the THA/TKA Readmissions measure (NQF #1551). Section III.D.4.Form and Manner, of this proposed rule summarizes performance periods for years 1 through 5 of the CCJR model years. We invite public comments on this proposal to include Hospital-level 30day, all-cause risk-standardized readmission rate (RSRR) following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1551) or both in the CCJR model to assess quality performance. We also invite public comment on inclusion of other potential quality measures in the model. c. Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (1) Background The HCAHPS Survey (NQF #0166) is a CMS survey and a national, standardized, publicly reported survey of patients’ experience of hospital care. The HCAHPS Survey is endorsed by the NQF (#0166); CMS is the measure steward. The HCAHPS survey, also known as CAHPS® Hospital Survey, is a survey instrument and data collection methodology for measuring patients’ perceptions of their hospital experience. The HCAHPS Survey asks recently discharged patients 32 questions about aspects of their hospital experience that they are uniquely suited to address. The core of the survey contains 21 items that ask ‘‘how often’’ or whether patients experienced a critical aspect of hospital care. The survey also includes four items to direct patients to relevant questions, five items to adjust for the mix of patients across hospitals, and two items that support Congressionallymandated reports (see 77 FR 53513 through 53515). Eleven HCAHPS measures (seven composite measures, two individual items and two global items) are currently publicly reported on the Hospital Compare Web site for each hospital participating in the HIQR Program (see 79 FR 50259.) Each of the seven currently reported composite measures is constructed from two or three survey questions. The seven composites summarize the following: • How well doctors communicate with patients. • How well nurses communicate with patients. • How responsive hospital staff are to patients’ needs. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 • How well hospital staff helps patients manage pain. • How well the staff communicates with patients about medicines. • Whether key information is provided at discharge. • How well the patient was prepared for the transition to post-hospital care. Lastly, the two individual items address the cleanliness and quietness of patients’ rooms, while the two global items report patients’ overall rating of the hospital, and whether they would recommend the hospital to family and friends. We propose to adopt a measure in the CCJR model that uses HCAHPS survey data to assess quality performance and capture patient experience of care. languages, and all official translations of the HCAHPS Survey instrument are available in the current HCAHPS Quality Assurance Guidelines at https:// www.hcahpsonline.org/ qaguidelines.aspx.) (2) Data Sources The HCAHPS Survey is administered to a random sample of adult inpatients between 48 hours and 6 weeks after discharge. As previously discussed in section III.D.5. of this proposed rule, the HCAHPS survey data is collected on inpatient experience, is not limited to Medicare beneficiaries, and does not distinguish between types of Medicare beneficiaries. Patients admitted in the medical, surgical and maternity care service lines are eligible for the survey; the survey is not restricted to Medicare beneficiaries. Hospitals may use an approved survey vendor, or collect their own HCAHPS data (if approved by CMS to do so) (for a detailed discussion see 79 FR 50259). To accommodate hospitals, the HCAHPS Survey can be implemented using one of the following four different survey modes: • Mail. • Telephone. • Mail with telephone follow-up. • Active Interactive Voice Recognition (IVR). Regardless of the mode used, hospitals are required to make multiple attempts to contact patients. Hospitals may use the HCAHPS Survey alone, or include additional questions after the 21 core items discussed previously. Hospitals must survey patients throughout each month of the year, and hospitals participating in the HIQR Program must target at least 300 completed surveys over 4 calendar quarters in order to attain the reliability criterion CMS has set for publicly reported HCAHPS scores (see 79 FR 50259). The survey itself and the protocols for sampling, data collection, coding, and file submission can be found in the current HCAHPS Quality Assurance Guidelines manual, available on the HCAHPS Web site located at: https://www.hcahpsonline.org. (The HCAHPS Survey is available in several (4) Inclusion and Exclusion Criteria PO 00000 Frm 00086 Fmt 4701 Sfmt 4702 (3) Cohort Hospitals, or their survey vendors, submit HCAHPS data in calendar quarters (3 months). Consistent with other quality reporting programs, we propose that HCAHPS scores would be publicly reported on Hospital Compare based on 4 consecutive quarters of data. For each public reporting, the oldest quarter of data is rolled off, and the newest quarter is rolled on (see 79 FR 50259). The HCAHPS Survey is broadly intended for patients of all payer types who meet the following criteria: • Eighteen years or older at the time of admission. • Admission includes at least one overnight stay in the hospital. • Non-psychiatric MS–DRG/principal diagnosis at discharge. • Alive at the time of discharge. There are a few categories of otherwise eligible patients who are excluded from the sample frame as follows: • ‘‘No-Publicity’’ patients—Patients who request that they not be contacted. • Court/Law enforcement patients (that is, prisoners); patients residing in halfway houses are included. • Patients with a foreign home address (U.S. territories—Virgin Islands, Puerto Rico, Guam, American Samoa, and Northern Mariana Islands are not considered foreign addresses and are not excluded). • Patients discharged to hospice care (Hospice-home or Hospice-medical facility). • Patients who are excluded because of state regulations. • Patients discharged to nursing homes and skilled nursing facilities. The HCAHPS Survey is intended for short-term, acute care hospitals. Both IPPS and Critical Access Hospitals participate in the survey; specialty hospitals, psychiatric hospitals and children’s hospitals do not. (5) Case-Mix-Adjustment To ensure that HCAHPS scores allow fair and accurate comparisons among hospitals, CMS adjusts for factors that are not directly related to hospital performance but which affect how patients answer survey items. This includes the mode of survey administration and characteristics of E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS patients that are out of a hospital’s control. Patient-mix adjustments (also known as case-mix adjustment) control for patient characteristics that affect ratings and that are differentially distributed across hospitals. Most of the patient-mix items are included in the ‘‘About You’’ section of the survey, while others are taken from hospital administrative records. Based on the HCAHPS mode experiment,71 and consistent with previous studies of patient-mix adjustment in HCAHPS and in previous hospital patient surveys, we employ the following variables in the patient-mix adjustment model: • Self-reported general health status (specified as a linear variable). • Education (specified as a linear variable). • Type of service (medical, surgical, or maternity care). • Age (specified as a categorical variable). • Admission through emergency room (discontinued in 2010). • Lag time between discharge and survey. • Age by service line interaction. • Language other than English spoken at home. Once the data are adjusted for patientmix, there is a fixed adjustment for the mode of survey administration (mail, telephone, mail with telephone followup, and active Interactive Voice Response). Information on patient-mix adjustment (risk adjustment) and survey mode adjustment of HCAHPS scores can be found at https:// www.hcahpsonline.org/ modeadjustment.aspx. (6) HCAHPS Scoring Regarding the HCAHPS survey measure, we identified the methodology used to assess hospitals in the HIQR program as reasonable for use in the CCJR model since this is a survey that many hospitals and patients are familiar with. In determining HCAHPS performance, we propose to utilize the HCAHPS Linear Mean Roll-up (HLMR) score. The HLMR summarizes performance across the 11 publicly reported HCAHPS measures for IPPS hospitals with 100 or more completed HCAHPS surveys in a 4-quarter period. The HLMR is calculated by taking the average of the linear mean scores (LMS) for each of the 11 publicly reported HCAHPS measures. The LMS, which 71 The Effects of Survey Mode, Patient Mix, and Nonresponse on CAHPS Hospital Survey Scores.’’ M.N. Elliott, A.M. Zaslavsky, E. Goldstein, W. Lehrman, K. Hambarsoomian, M.K. Beckett and L. Giordano. Health Services Research, 44 (2): 501– 518. 2009. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 was created for the calculation of HCAHPS Star Ratings, summarizes all survey responses for each HCAHPS measure; a detailed description of LMS can be found in HCAHPS Star Rating Technical Notes, at https:// www.hcahpsonline.org/ StarRatings.aspx. We propose that hospitals participating in the CCJR model also have at least 100 completed HCAHPS surveys over a given 4-quarter period to be evaluated on HCAHPS for the CCJR model. The responses to the survey items used in each of the 11 HCAHPS measures described previously are combined and converted to a 0 to 100 linear-scaled score (LMS) as follows: • ‘‘Never’’ = 0; ‘‘Sometimes’’ = 331⁄3; ‘‘Usually’’ = 662⁄3; and ‘‘Always’’ = 100 (For HCAHPS Survey items 1–9, 11, 13– 14, and 16–17). • ‘‘No’’ = 0; and ‘‘Yes’’ = 100 (For items 19 and 20). • Overall Rating ‘‘0’’ = 0; Overall Rating ‘‘1’’ = 10; Overall Rating ‘‘2’’ = 20; . . .; Overall Rating ‘‘10’’ = 100 (For item 21). • ‘‘Definitely No’’ = 0; ‘‘Probably No’’ = 331⁄3; ‘‘Probably Yes’’ = 662⁄3; and ‘‘Definitely Yes’’ = 100 (For item 22). • ‘‘Strongly Disagree’’ = 0; ‘‘Disagree’’ = 331⁄3; ‘‘Agree’’ = 662⁄3; and ‘‘Strongly Agree’’ = 100 (For items 23, 24, and 25). The 0 to 100 linear-scaled HCAHPS scores are then adjusted for patient mix, survey mode, and quarterly weighting, see https://www.hcahpsonline.org/files/ HCAHPS_Stars_Tech_Notes_ Apr2015.pdf. The HLMR summarizes performance across the 11 HCAHPS measures by taking an average of each of the LMS of the 11 HCAHPS measures, using a weight of 1.0 for each of the 7 HCAHPS composite measures, and a weight of 0.5 for each of the single item measures (Cleanliness, Quietness, Overall Hospital Rating and Recommend the Hospital). The HLMR is calculated to the second decimal place. Once the HLMR score is determined for a participant hospital, the hospital’s percentile of performance can be determined based on the national distribution of hospital performance on the score. (7) Performance Period We propose to be consistent with the HIQR program, which uses four quarters of data (79 FR 50259). For the CCJR model, we propose to use the most recently available HCAHPS 4-quarter roll-up to calculate the HLMR score for the initial year of the CCJR model. The performance period would assess data on patients discharged from July 1, 2015 PO 00000 Frm 00087 Fmt 4701 Sfmt 4702 41283 through June 30, 2016. Section III.D.4 of this proposed rule, Form and Manner, summarizes performance periods for years 1 through 5 of the CCJR model years. We invite public comments on this proposal to include HCAHPS Survey in the CCJR model to assess quality performance and capture patient experience of care. d. Applicable Time Period In order to align as much as is reasonably possible with other CMS hospital quality and public reporting programs in which these three measures are implemented, we propose for the THA/TKA Complication measure (NQF #1550) and the THA/TKA Readmission measure (NQF #1551) performance time periods to be consistent with the HIQR, HVBP and HRRP programs. These programs use a 3-year rolling performance (see section III.D.2.b.(6). of this proposed rule) or applicable period for the Hospital-level 30-day, all-cause risk-standardized readmission rate (RSRR) following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1551) and the Hospital-level risk-standardized complication rate (RSCR) following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1550) measures. We similarly propose a 3-year rolling performance period for the THA/TKA Complication measure (NQF #1550) and the THA/TKA Readmission measure (NQF #1551) because a 3-year performance period yields the most consistently reliable and valid measure results. We also propose the 3-year rolling performance periods for the THA/TKA Complication measure (NQF #1550) and the THA/TKA Readmission measure (NQF #1551) because hospitals are intimately familiar with these measures. We note that reconciliation payments to hospitals as part of the CCJR are dependent upon both cost and quality outcome measures, and that making reconciliation payments solely based on cost has the potential to lead to reduced access and stinting of care. In order to address these possibilities the inclusion of performance on outcome measures is critical to ensure access and high quality care for patients undergoing these procedures. The only way to include reliable quality measures in the model upon which to base reconciliation payments for 2016 is to use measures that have a performance period that precedes the effective date of the model. Furthermore, from a measure reliability and validity perspective, it is imperative to have at least 4 quarters of data for HCAHPS survey measures and E:\FR\FM\14JYP3.SGM 14JYP3 41284 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules 3 years of data for the THA/TKA readmission and complications measures. We intentionally chose outcome and patient experience measures for which hospitals that are already financially accountable in other IPPS programs. Consequently, the performance periods are the same periods for the THA/TKA readmission and complications measures between the CCJR model, HIQR, HVBP and HRRP programs. For the HCAHPS survey measures, there is overlap with the performance periods for the CCJR model and HIQR. Given that there is no downward payment adjustment associated with the CCJR model, that hospitals are already familiar with these measures as part of the Hospital IQR program, Hospital VBP program, and the Hospital readmission reduction program, and that hospitals are already held financially accountable for these measures, we believe it is appropriate and necessary to use performance periods that precede the effective date of the CCJR model. For the HCAHPS Survey measure, we would continue to use a 4 quarter performance period as in the HIQR program, but would not align with the Hospital IQR program performance period. We initially considered using the same Hospital IQR program performance period for the HCAHPS survey measures but realized that should we use the same Hospital IQR program performance periods for the CCJR model, other CCJR model timeframes and policy goals would not be met. Such policy goals like calculating reconciliation payment adjustments in a timely fashion during the 2nd quarter of each year. We note that HCAPHS survey results are not available until the 3rd quarter of each year. For this reason, we are not proposing that the HCAHPS survey performance period follow the HIQR program performance periods. We also propose that HCAHPS survey scores be calculated from 4 consecutive quarters of survey data; publicly reported HCAHPS results are also based on 4 quarters of data (79 FR 50259). asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 3. Possible New Outcomes for Future Measures a. Hospital-Level Performance Measure(s) of Patient-Reported Outcomes Following Elective Primary Total Hip and/or Total Knee Arthroplasty (1) Background As part of our goal to move towards outcome measures that assess patient reported outcomes, we have begun development on a measure to assess improvement in patient-reported VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 outcomes following THA/TKA procedures. The Hospital-Level Performance Measure(s) of PatientReported Outcomes Following Elective Primary Total Hip and/or Total Knee Arthroplasty (hereinafter referred to as ’’THA THA/TKA patient-reported outcome-based measure’’) is currently under development. We specifically chose to focus on THA/TKA procedures since THA/TKAs are important, effective procedures performed on a broad population, and the patient outcomes for these procedures (for example, pain, mobility, and quality of life) can be measured in a scientifically sound way and are also influenced by a range of improvements in care.72 73 74 We also note that THA/TKA procedures are specifically intended to improve function and reduce pain, making patient-reported outcomes the most meaningful outcome metric to assess for these common, costly procedures. Patient-reported outcomes will be assessed separately for THA and TKA procedures, though these results may be combined into a single composite measure for reporting. Therefore, we will refer to a single measure, but acknowledge the possibility of two measures, one for THA patients and one for TKA patients. During measure development, we discovered that in order to complete measure development, we would need access to a nationally representative sample of THA and TKA inpatient surgical procedure patient-reported outcome data set that is also consistently collected at the hospitallevel and contains risk variables identified by orthopedists. The rationale for requesting access to a national THA and TKA inpatient surgical procedures patient-reported data source are twofold: (1) A national data source would provide us with hospital-level data representative of the total number of THA and TKA procedures performed in hospitals, as well as representative data on hospital-level case-mix; and (2) 72 Monticone M, Ferrante S, Rocca B, et al. Homebased functional exercises aimed at managing kinesiophobia contribute to improving disability and quality of life of patients undergoing total knee arthroplasty: a randomized controlled trial. Archives of physical medicine and rehabilitation. Feb 2013;94(2):231–239. 73 Galea MP, Levinger P, Lythgo N, et al. A targeted home- and center-based exercise program for people after total hip replacement: a randomized clinical trial. Archives of physical medicine and rehabilitation. Aug 2008;89(8):1442–1447. 74 Moffet H, Collet JP, Shapiro SH, Paradis G, Marquis F, Roy L. Effectiveness of intensive rehabilitation on functional ability and quality of life after first total knee arthroplasty: A single blind randomized controlled trial. Archives of physical medicine and rehabilitation. Apr 2004;85(4):546–556. PO 00000 Frm 00088 Fmt 4701 Sfmt 4702 access to a national THA and TKA inpatient surgical procedures patientreported data source would allow us to assess and identify a set of parsimonious data elements that will minimize the data collection burden by patients, physicians and hospitals. We believe access to such data would allow for completion and testing of the current measure under development that can be appropriately used for nationwide hospital performance evaluation. We also believe the CCJR model provides a unique opportunity to resolve these measure development issues through the collection of THA and TKA patient—reported outcome data. Access to this data through the CCJR Model would address the following: • Current data sources are not consistently collected nor collected in a uniform process and in a standardized format (that is, data elements are not consistently defined across different data sources). We note that currently available data sources tend to be limited to single hospitals or regional registries which are associated with complex data access sharing requirements. • Current lack of uniform hospitallevel data that can be used in measure development. • Lack of incentive for physicians and hospitals to collect patient-reported outcome data such as that through the model’s financial incentives associated with voluntary data submission. • Current lack of a technically simple and feasible mechanism for hospitals to submit patient-reported data to CMS. This model would help create and optimize such a mechanism, potentially enabling future measure implementation. In summary, the voluntary data collection initiative in the CCJR model would provide data from the patient’s perspective that is necessary to finalize and test the measure specifications, including the risk model. Access to this national representative voluntarily submitted data would enable us to do the following: • Determine a parsimonious set of risk factors that are statistically adequate for risk adjustment for patientreported outcome. • Examine the differences in hospital performance related to different components in the patient-reported outcome (such as functional status, pain, etc.) to finalize the statistical modeling methodology for risk adjustment. • Evaluate the reliability of the patient-reported outcome measure. • Examine validity of the patientreported outcome measure upon finalization of the risk adjustment E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules model via potential testing methods such as face validity testing with national experts, comparing the measure results to similar results based on other data sources if feasible, etc. In order to encourage participation with voluntary data submission of patient-reported outcome data, we are proposing to seek and reward voluntary participation in submission of THA/ TKA patient-reported outcome-based measure data as outlined in section III.D.5.b. of this proposed rule. We note that we would not publicly report the THA/TKA voluntary data. Finally, we intend to use a fully tested and completed THA/TKA patientreported outcome-based measure in CMS models or programs when appropriate. If there is a decision to implement the fully developed THA/ TKA patient-reported outcome-based measure, such as in the CCJR model, we would propose to adopt the measure through notice and comment rulemaking. We refer reviewers to draft measure specifications in the downloads section of the Measure Methodology Web page at https:// www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/ Measure-Methodology.html. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (2) Data Sources As previously discussed, this measure is under development, and we are proposing to reward participant hospitals that volunteer to submit provider- and patient- level data elements. We note that there is currently little uniformity across hospitals regarding collection of specific provider- and patient-level data elements that are used to assess patient outcomes after THA and TKA inpatient procedures. In the voluntary data submission for the THA/TKA patientreported outcome-based measure, we are trying to identify a uniform set of provider- and patient-level data elements that are accurate, valid, and reliable pieces of information that can be used in the determination of improvement in various patient characteristics like those previously listed (that is, pain, mobility, and quality of life). Furthermore, in order to minimize provider and hospital burden associated with data collection and submission of provider- and hospitallevel data elements, we propose using a variety of data sources for measure development. We anticipate using the following data sources are: • Patient-reported data; • Administrative claims-based data; and VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 • One or both physician-reported and electronic health record data. Through this voluntary data submission proposal, we hope to identify a uniform set of provider- and patient-level data elements while also identifying data sources that are the least burdensome for the patients, providers, and hospitals. We propose to request that participant hospitals provide administrative claims-based data whenever possible, in order to minimize burden on patients, providers, and hospitals. Additionally, we propose to request that participant hospitals submit either hospital documentation, chart abstraction, or abstraction from the electronic health records. We propose to request submission of the following data elements: • Pre-operative Assessments (to be collected between 90 and 0 days prior to THA/TKA procedure): ++ Age. ++ Date of Birth. ++ Gender. ++ Ethnicity. ++ THA or TKA procedure. ++ Date of admission to anchor hospitalization. ++ Date of discharge from anchor hospitalization. ++ Date of eligible THA/TKA procedure. ++ Medicare Health Insurance Claim Number. —PROMIS Global (all items). ++ VR–12 (all items.) ++ For TKA patients Knee injury and Osteoarthritis Outcome Score (KOOS 75) (all items). ++ For THA patients Hip disability and Osteoarthritis Outcome Score (HOOS 76) (all items). ++ Body Mass Index. ++ Presence of live-in home support, including spouse. ++ Use of chronic (≥ 90 day) narcotics. —American Society of Anesthesiologists (ASA) physical status classification. ++ Charnley Classification. ++ Presence of retained hardware. —Total painful joint count. —Quantified spinal pain. ++ Joint range of motion in degrees (specify hip or knee). ++ Use of gait aides. ++ For THA patients abductor muscles strength. ++ For THA patients presence of Trendelenberg gait. 75 What is the KOOS? Available at: https:// www.koos.nu/koospresentation.html. Accessed on April 15, 2015. 76 What is the HOOS? Available at: https:// www.koos.nu/hoospres.html. Accessed on April 15, 2015. PO 00000 Frm 00089 Fmt 4701 Sfmt 4702 41285 ++ For THA patients history of congenital hip dysplasia or other congenital hip disease. ++ For THA patients presence of angular, translational, or rotational deformities of the proximal femur (in degrees). ++ For TKA patients anatomic angle (femoro-tibial angle) in degrees with varus/valgus. ++ For TKA patients knee extensor strength. ++ Single Item Health Literacy Screening (SILS2) questionnaire.77 • Post-operative Assessments (To be collected between 270 and 365 days following THA/TKA procedure): ++ Age. ++ Date of Birth. ++ Gender. ++ Date of admission to anchor hospitalization. ++ Date of discharge from anchor hospitalization. ++ Date of eligible THA/TKA procedure ++ Medicare Health Insurance Claim Number —PROMIS Global (all items). ++ VR–12 (all items). —For TKA patients, Knee injury and Osteoarthritis Outcome Score (KOOS 78) (all items). —For THA patients, Hip disability and Osteoarthritis Outcome Score (HOOS 79) (all items). Finally, we note that as the measure continues to undergo development that the list of data elements may be simplified. As stated earlier in this section entitled Data Sources, we intend identify a uniform set of provider- and patient-level data elements that are accurate, valid and reliable pieces of information that can be used in the determination of improvement in various patient-reported outcomes like those previously listed (that is, pain, mobility, and quality of life). We anticipate, via public comment and experience with the voluntary data submission, that the set of data elements listed previously will be simplified. In accordance with, and to the extent permitted by, the HIPAA Privacy Rule and other applicable law, we propose to request that participant hospitals submit 77 Wallace LS, Rogers ES, Roskos SE., Holiday DB, Weiss BD. Screening items to identify patients with limited health literacy skills. J Gen Intern Med. 2006;21:874–7. 78 Roos EM, Roos HP, Lohmander LS, Ekdahl C, Beynnon BD. Knee Injury and Osteoarthritis Outcome Score (KOOS)—development of a selfadministered outcome measure. J Orthop Sports Phis There. 1998 Aug;28(2):88–96. 79 What is the HOOS? Available at: https:// www.koos.nu/hoospres.html. Accessed on April 15, 2015. E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41286 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules the data specified in the request, which we would limit to the minimum data necessary for us to conduct quality assessment and improvement activities. Regarding the process for data collection, we propose the THA/TKA voluntary data will be submitted to and collected by a CMS contractor in a manner and format similar to existing CMS data submission processes. For example, CMS would supply applicable hospitals with a file template and instructions for populating the file template with data and submitting the data; the hospitals will populate the template, log in to a secure portal, and transmit the file to the appropriate CMS contractor; the CMS contractor would also match the submitted data to Medicare administrative claims-based data and calculate completeness for determination of the reconciliation payment as noted in section III.C.5 of this proposed rule (or validated subscales or abbreviated versions of these instruments). We believe that participation in the submission of THA/ TKA—voluntary data will provide the minimum information we would need that would inform us on how to continuously improve the currently specified measure in development. We note that some of these data elements are closely aligned with data elements in e-clinical measures submitted by eligible professionals for the Medicare EHR Incentives Program for Eligible Professionals. Specifically these EHR Incentives Program measures for eligible professionals are: (1) Functional Status Assessment for Knee replacement (CMS 66); and (2) Functional Status Assessment for Hip replacement (CMS 56). We refer reviewers to CMS.gov EHR Incentives Program 2014 Eligible Professional June 2015 zip file update at https://cms.gov/ Regulations-and-Guidance/Legislation/ EHRIncentivePrograms/Downloads/ eCQM_2014_EP_June2015.zip for full measure specifications. We believe it is possible that many health IT vendors are already certified to capture, calculate and report these provider-level measures of functional status on total knee and total hip arthroplasty, and therefore we anticipate that the provider-level data elements that are identical to the THA/TKA patientreported outcome voluntary data elements previously listed may not be as burdensome for the CCJR model participant hospitals to voluntarily submit. (3) Cohort The measure cohort(s) includes Medicare FFS beneficiaries, aged 65 years or older, admitted to non-federal VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 acute care hospitals for elective primary THA or TKA. We would exclude from the cohort patients with fractures and mechanical complications or those undergoing revision procedures. THA and TKA patient-reported outcomes will be assessed separately but may be combined into a single composite measure for reporting. (4) Inclusion and Exclusion Criteria The measure cohort inclusion criteria are all patients undergoing elective primary THA/TKA procedures. Exclusion criteria will consist of patients undergoing non-elective procedures (that is, patients with fractures resulting in THA/TKA), as it is unfeasible to routinely capture preoperative patient-reported assessments in these patients; patients with mechanical complications of prior hip and knee joint procedures and those undergoing revision THA/TKA will also be excluded, as their patient-reported outcomes may be influenced by prior care experiences and therefore may not adequately represent care quality of the hospital performing the revision procedure. (5) Outcome The measure will assess change between pre- and post-operative patientreported outcomes for THA and TKA separately or as a composite measure for both procedures. The measure will use one or more of the following patientreported outcome instruments (or validated subscales or abbreviated versions of these instruments) to calculate the measure score: the Patient Reported Outcomes Measurement Information Systems (PROMIS)-Global or the Veterans Rand 12 Item Health Survey (VR–12), and the Hip dysfunction and Osteoarthritis Outcome Score/Knee injury and Osteoarthritis Outcome Score (HOOS/KOOS) instruments to measure pre- and postoperative improvement or both. These candidate instruments were selected by a Technical Expert Panel based upon their meaningfulness to patients and clinicians, performance characteristics such as reliability, responsiveness and validity, and their perceived burden to both patients and providers. The pre-operative data collection timeframe will be 90 to 0 days before surgery, and the postoperative data collection timeframe will be 270 to 365 days following surgery. The approach to calculating the improvement or worsening of patient outcomes represented by the pre- and postoperative patient-reported survey results has not yet been determined, but will use one or more surveys to define PO 00000 Frm 00090 Fmt 4701 Sfmt 4702 the improvement or worsening of patient-reported outcomes to reliably identify differences between hospitals of varying performance. (6) Risk-Adjustment (If Applicable) We note that the measure’s risk model has yet to be developed. In order to develop the risk model, final risk variable selection for the risk model will involve empirical testing of candidate risk variables as well as consideration of the feasibility and reliability of each variable. The risk model will account for the hospital level response rate as well as measureable patient-level factors relevant to patient-reported outcomes following elective THA/TKA procedures. To the extent feasible, the risk model methodology will adhere to established statistical recommendations.80 (7) Calculating the Risk-Standardized Rate We note that the approach to reporting this measure(s) has yet to be developed. The measure will assess change in patient-reported outcomes between the pre-operative (90 to 0 days prior to the elective primary THA/TKA procedure) and post-operative (270–365 days following the elective primary THA/TKA procedure) periods. We invite public comments on this proposal to seek voluntary participation in submitting data for a Hospital-Level Performance Measure of PatientReported Outcomes Following Elective Primary Total Hip and/or Total Knee Arthroplasty. We also welcome comments on the appropriateness of this voluntary data collection for this model and the specific data collection requirements (see section III.D.3.a.(9) of this proposed rule) and data elements proposed. (8) Performance Period We propose defining performance periods for each year of the model as outlined in Table 16. A performance period for the voluntary THA/TKA data submission, are those timeframes in which an anchor hospital admission occurs for eligible THA/TKA voluntary data submission procedure. For the first year of the CCJR model, hospitals voluntarily submitting data will only be 80 Ash AS, Fiengerg SE., Louis TA, Normand ST, Stukel TA, Utts J. STATISTICAL ISSUES IN ASSESSING HOSPITAL PERFORMANCE, Commissioned by the Committee of Presidents of Statistical Societies. Original report submitted to CMS on November 28, 2011, Revised on January 27, 2012. Available at: https://www.cms.gov/Medicare/ Quality-Initiatives-Patient-Assessment-Instruments/ HospitalQualityInits/Downloads/Statistical-Issuesin-Assessing-Hospital-Performance.pdf. Accessed on April 15, 2015. E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asked to submit data for a 3-month period. The 3-month period for THA/TKA voluntary data reporting was identified due to data processing and coordination of other proposed timelines in this model. Data submitted for the first year would be for cases that fulfill the measure specifications described in section III.D.3.a. of this proposed rule, and would be restricted to the pre-operative data elements on cases performed between April 1, 2016 and June 30, 2016. The proposed timing allows matching of the patient-reported data with relevant administrative claims-based data in order to accurately calculate the percent of eligible elective primary THA/TKA patients for which THA/TKA voluntary data was successfully submitted. The April 1st date acknowledges the measure requirement of the 90-day window prior to surgery during which hospitals can collect pre-operative data. The June 30th end date was selected because it correlates with the THA/TKA readmission measure performance period end date currently implemented 41287 for the HIQR program and the HRRP. Both of these dates provide the greatest feasibility for data collection. For year 2, THA/TKA voluntary data reporting would be 3 months of postoperative data for cases performed between April 1, 2016 and June 30, 2016, and 12 months of pre-operative data for cases performed between July 1, 2016 and June 30, 2017. For year 3 and subsequent years of the model, the performance periods for submission of voluntary data will consist of 12-month time periods. TABLE 16—EXAMPLE OF POTENTIAL PERFORMANCE PERIODS FOR PRE- AND POST-OPERATIVE THA/TKA VOLUNTARY DATA SUBMISSION CCJR model year Performance period Patient population eligible for THA/TKA voluntary data submission Requirements for successful THA/TKA voluntary data submission * Submit PRE-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between April 1, 2016 and June 30, 2016. Submit POST-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between April 1, 2016 and June 30, 2016. Submit PRE-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2016 and June 30, 2017. Submit POST-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2016 and June 30, 2017. Submit PRE-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2017 and June 30, 2018. Submit POST-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2017 and June 30, 2018. Submit PRE-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2018 and June 30, 2019. Submit POST-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2018 and June 30, 2019. Submit PRE-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2019 and June 30, 2020. Submit PRE-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between April 1, 2016 and June 30, 2016. 1. Submit POST-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between April 1, 2016 and June 30, 2016. 2. Submit PRE-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2016 and June 30, 2017. 1. Submit POST-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2016 and June 30, 2017. April 1, 2016 through June 30, 2016. All patients undergoing elective primary THA/TKA procedures performed between April 1, 2016 and June 30, 2016. 2017 ........... April 1, 2016 through June 30, 2016. All patients undergoing elective primary THA/TKA procedures performed between April 1, 2016 and June 30, 2016. 2017 ........... July 1, 2016 through June 30, 2017. All patients undergoing elective primary THA/TKA procedures performed between July 1, 2016 and June 30, 2017. 2018 ........... July 1, 2016 through June 30, 2017. All patients undergoing elective primary THA/TKA procedures performed between July 1, 2016 and June 30, 2017. 2018 ........... July 1, 2017 through June 30, 2018. All patients undergoing elective primary THA/TKA procedures performed between July 1, 2017 and June 30, 2018. 2019 ........... July 1, 2017 through June 30, 2018. All patients undergoing elective primary THA/TKA procedures performed between July 1, 2017 and June 30, 2018. 2019 ........... July 1, 2018 through June 30, 2019. All patients undergoing elective primary THA/TKA procedures performed between July 1, 2018 and June 30, 2019. 2020 ........... July 1, 2018 through June 30, 2019. All patients undergoing elective primary THA/TKA procedures performed between July 1, 2018 and June 30, 2019. 2020 ........... July 1, 2019 through June 30, 2020. All patients undergoing elective primary THA/TKA procedures performed between July 1, 2019 and June 30, 2020. 2016 ........... 3 months ........................ All patients undergoing elective primary THA/TKA procedures performed between April 1, 2016 and June 30, 2016. 2017 ........... asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 2016 ........... 15 months ...................... All patients undergoing elective primary THA/TKA procedures performed between April 1, 2016 and June 30, 2017. 2018 ........... 24 months ...................... All patients undergoing elective primary THA/TKA procedures performed between July 1, 2016 and June 30, 2018. 21:01 Jul 13, 2015 PO 00000 VerDate Sep<11>2014 Jkt 235001 Frm 00091 Fmt 4701 Sfmt 4702 E:\FR\FM\14JYP3.SGM 14JYP3 41288 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules TABLE 16—EXAMPLE OF POTENTIAL PERFORMANCE PERIODS FOR PRE- AND POST-OPERATIVE THA/TKA VOLUNTARY DATA SUBMISSION—Continued CCJR model year Performance period Patient population eligible for THA/TKA voluntary data submission 2019 ........... 24 months ...................... All patients undergoing elective primary THA/TKA procedures performed between July 1, 2017 and June 30, 2019. 2020 ........... 24 months ...................... All patients undergoing elective primary THA/TKA procedures performed between July 1, 2018 and June 30, 2020. Requirements for successful THA/TKA voluntary data submission * 2. Submit PRE-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2017 and June 30, 2018. 1. Submit POST-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2017 and June 30, 2018. 2. Submit PRE-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2018 and June 30, 2019. 1. Submit POST-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2018 and June 30, 2019. 2. Submit PRE-operative data on primary elective THA/TKA procedures for ≥80% of procedures performed between July 1, 2019 and June 30, 2020. * Requirements for determining successful submission of THA/TKA voluntary data are located in section III.D.3.a.(9) of this proposed rule. The proposed performance period enables hospitals to receive incentives for data collection starting in performance year-one, even though complete pre-operative and postoperative data collection requires a minimum 9 through 12 month time period. This 9 through 12 month time period, between the procedure and postoperative data collection, was defined through clinician and stakeholder input and provides for both sufficient elapsed time for maximum clinical benefit of THA/TKA procedures on patientreported outcomes and accommodates common clinical care patterns in which THA/TKA patients return to their surgeon one year after surgery. We invite public comments on our proposal of defining performance year-one episodes for a participating hospital as an anchor hospital admission for an eligible THA/TKA procedure between April 1, 2016 and June 30, 2016, with subsequent year performance time periods each being 12-month periods and starting every July 1st. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (9) Requirements for ‘‘Successful’’ Submission of THA/TKA Voluntary Data In order for CMS to assess if participant hospitals are eligible for reconciliation payment after receiving the THA/TKA voluntary data, requirements to determine if the submitted data will inform measure development have been identified. We believe that the following criteria should be used to determine if a participant hospital has successfully VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 submitted THA/TKA voluntary data. We note that successful THA/TKA voluntary data submission, as stated briefly in section III.C.5. of this proposed rule, requires completion of all of the following: • Submission of the data elements listed in section III.D.3.a.(2).of this proposed rule. • Data elements listed in section III.D.3.a.(2) of this proposed rule must be submitted on at least 80 percent of their eligible elective primary THA/TKA patients (as described in section III.D.3.a.(3) of this proposed rule). • THA/TKA voluntary data submission must occur within 60 days of the end of the most recent data collection period. To fulfill THA/TKA voluntary data collection criteria for performance yearone, only pre-operative data collection and submission on at least 80 percent of eligible elective primary THA/TKA patients is required. To successfully submit THA/TKA voluntary data for performance years 2 through 5, hospitals must submit both preoperative and post-operative patient reported outcome data on at least 80 percent of eligible elective primary THA/TKA patients. A potential example of the performance periods for which we would like to have THA/TKA voluntary data is summarized in section III.D.3.a.of this proposed rule. Table 16 also summarizes the performance periods for pre-operative and post-operative THA/TKA voluntary data. Finally, hospitals volunteering to submit THA/TKA data will be required to submit pre-operative data on all PO 00000 Frm 00092 Fmt 4701 Sfmt 4702 eligible patients and post-operative data elements only on those patients at least 366 days out from surgery. Therefore, hospitals are not expected to collect and submit post-operative THA/TKA voluntary data on patients who are fewer than 366 days from the date of surgery. We previously described a THA/TKA eligible patient in section III.D.3.a.(2) of this proposed rule. This description is important as these patients are those in which we seek submission of voluntary data. We also selected the requirement of submitting 80 percent of eligible elective primary THA/TKA patients’ data because this volume of cases will result in a high probability that we will have a have a national sample of THA/TKA patient data representative of each hospital’s patient case mix. Having 80 percent of the eligible elective primary THA/TKA patients will enable an accurate and reliable assessment of patient-reported outcomes for use in measure development. We note that data used for outcome measure development must adequately represent the population that is anticipated to be measured and in this case that population would be those experiencing elective primary THA/TKA inpatient surgical procedures. Data that more accurately reflects the patient outcomes and case mix of the population to be measured will allow, during measure development, a more scientifically accurate and reliable measure. Having 80 percent of eligible elective primary THA/TKA recipient data will result in a more reliable measure that is better E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS able to assess hospital performance than a measure created from a less representative patient sample. Furthermore, we considered setting the requirement at 100 percent of the eligible elective primary THA/TKA patients, but concluded that a requirement of 100 percent data collection may not be feasible for all hospitals or may be excessively burdensome to achieve. Therefore we set the requirement at 80 percent of the eligible elective primary THA/TKA patients. We believe acquisition of 80 percent of the eligible elective primary THA/TKA patients will provide representative data for measure development while decreasing patient, provider and hospital burden. We seek public comment of these requirements to determine successful voluntary submission of THA/TKA data. We also seek public comment specifically on the requirement for data on 80 percent of the eligible elective primary THA/TKA patients. b. Measure That Captures Shared Decision-Making Related to Elective Primary Total Hip and/or Total Knee Arthroplasty In addition to the patient-reported functional status outcomes, we note that shared-decision making is an important aspect of care around elective procedures such as primary total hip and total knee arthroplasty. We also note that lower episode expenditures achieved through improved efficiency may yield the unintended consequence of a compensatory increase in the number of episodes initiated. Use of shared decision-making prior to episode initiation can serve as an important tool to ensure appropriate care. Though there are no developed measures, we seek feedback on the opportunity to capture quality data related to shared decision-making between patients and providers. Examples of such a measure could include concepts such as a trial of conservative medical therapy prior to elective procedures or broader shared decision-making measures. We invite public comment on whether such a measure concept would be appropriate for the CCJR model. If we develop a measure that captures shared decisionmaking related to elective primary total hip and total knee arthroplasty or both, we would propose through rulemaking or other means to add that measure to the CCJR model. c. Future Measures Around Care Planning The person-centered shared care plan is an important tool that can help providers across settings collaborate VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 around a customized plan that reflects a patient’s goals and offers providers critical information about all of the treatment a beneficiary has received. Health IT solutions are increasingly supporting the exchange of care plan information across settings so that providers and individuals have access to necessary information whenever and wherever it is needed. In the 2015 Edition of certification criteria for health information technology (80 FR 16842) the Office of the National Coordinator for Health Information Technology (ONC) has proposed the adoption of a new criterion to ensure health IT can capture, display, and exchange a robust care plan document in accordance with new standards released in the Consolidated Clinical Document Architecture Release 2. While further measure development is needed, we are seeking comment on the appropriateness of a future quality measure which would assess the use of shared care plans in the care of beneficiaries participating in the CCJR model. d. Future Measures for Use of Health IT and Health Information Exchange We believe the use of health IT tools is a critical component of effective coordination across settings of care. Under bundled payment models, in which providers across the continuum of care share accountability for the clinical management and total cost of an episode of care, the capacity to share information electronically across disparate provider systems is essential for delivering efficient, safe, high quality care. As discussed in the August 2013 Statement ‘‘Principles and Strategies for Accelerating Health Information Exchange’’ (available at https://www.healthit.gov/sites/default/ files/acceleratinghieprinciples_ strategy.pdf), we believe that all individuals, their families, their healthcare and social service providers, and payers should have consistent and timely access to health information in a standardized format that can be securely exchanged between the patient, providers, and others involved in the individual’s care. ONC has released a draft document entitled ‘‘Connecting Health and Care for the Nation: A Shared Nationwide Interoperability Roadmap’’ (available at https:// www.healthit.gov/sites/default/files/ nationwide-interoperability-roadmapdraft-version-1.0.pdf), which describes barriers to interoperability across the current health IT landscape, the desired future state that will be necessary according to the industry to enable a learning health system, and a suggested PO 00000 Frm 00093 Fmt 4701 Sfmt 4702 41289 path for moving forward. ONC will focus on actions that will enable a majority of individuals and providers across the care continuum to send, receive, find and use a common set of electronic clinical information at the nationwide level by the end of 2017. Under section 1833(z)(3)(D)(i)(I) of the Act, as amended by section 101(e) of the Medicare Access and CHIP Reauthorization Act, providers participating in qualifying alternative payment models under Medicare will be required to use certified EHR technology beginning in 2019. As this date approaches, we believe it will be important for providers working in these models to demonstrate adoption of health information technology. We believe that use of certified health IT tools and the interoperable exchange of health information is a critical capability for CCJR model participants to be able to deliver the high-quality care and effective coordination across settings that will be required to demonstrate success under the model. Moreover, we believe that it will be important to incentivize adoption and use of these enabling technologies among model participants including post-acute care providers, by linking these activities to participant eligibility to receive reconciliation payments. While we are not proposing to add a measure for certified health IT use for the program’s initial performance year, we are seeking comment on how we might incorporate such a measure beginning in the 2017 performance year. We invite stakeholder comment on the following questions: • Is successful attestation as part of the EHR Incentive Program for Medicare hospitals tin he applicable reporting year the most appropriate quality measure for assessing hospital performance on the use of health IT and interoperable health information in the CCJR model? • Should the model include a performance measure that would be specific to the ability of hospitals to conduct electronic care coordination using certified health IT, for instance, the measure of transitions of care which hospitals currently report on as part of the EHR Incentives Program for Medicare Hospitals? • What other measures could be used to assess hospital performance on the use of health IT and interoperable health information while minimizing program and provider collection and reporting burden? We seek public comments on how we might incorporate an electronic measure beginning in the 2017 performance year, E:\FR\FM\14JYP3.SGM 14JYP3 41290 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules and public comments on the questions posed previously in this rule. We also seek public comment on the appropriateness of quality measures for post-acute care patients, physicians and facilities that care for THA/TKA surgical procedure patients. 4. Form, Manner and Timing of Quality Measure Data Submission We believe it is important to be transparent and to outline the form, manner and timing of quality measure data submission so that accurate measure results are provided to hospitals, and that timely and accurate calculation of measure results are consistently produced to determine annual reconciliation payment. We propose that data submission for Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550) and Hospital-Level Risk-Standardized Readmission Rate (RSRR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1551) (or both) be accomplished through the existing HIQR program processes. Since these measures are administrative claims based measures, hospitals will not need to submit data. We propose that the same mechanisms used in the HIQR program to collect HCAHPS survey measure data also be used in the CCJR model (79 FR 50259). For the hospitals that voluntarily submit data for the THA/TKA patient-reported outcome-based performance measure we anticipate, if it is technically feasible, for data submission processes to be broadly similar to those summarized for the HIQR program for chart abstracted and administrative claims based measures. We would create a template for hospitals to complete with the THA/ TKA voluntary data, provide a secure portal for data submission, and provide education and outreach on how to use these mechanisms for data collection and where to submit the THA/TKA voluntary data. We describe potential processes for voluntary data collection in section III.D.3.a.(2) of this proposed rule, Data Sources. These processes are broadly similar to those used by the HIQR program. We invite public comment on the proposal to collect quality measure data through mechanisms similar to those used in the Hospital IQR program. 5. Proposed Display of Quality Measures and Availability of Information for the Public From the CCJR Model We believe display of quality data is an important way to educate the public on hospital performance. We have used several methods to report quality data to the public, including posting data on the Hospital Compare Web site and data.medicare.gov. Data has been available for viewing on these Web sites and in downloadable databases since 2005, and are well-known mechanisms for providing information to the public. We are proposing to post data for measures included in the CCJR model for each participant hospital on the Hospital Compare Web site in an easily understood format. The applicable time periods for the measures during the CCJR model initiative are summarized in Table 17. TABLE 17—SUMMARY OF QUALITY MEASURE PERFORMANCE PERIODS BY YEAR OF THE CCJR MODEL CCJR model year Measure title 1st THA/TKA Complication * ................................ THA/TKA ** Readmission ............................... HCAHPS *** .................................................... 2nd 3rd 4th 5th April 1, 2013–March 31, 2016. July 1, 2013–June 30, 2016. July 1, 2015–June 30, 2016. April 1, 2014–March 31, 2017. July 1, 2014–June 30, 2017. July 1, 2016–June 30, 2017. April 1, 2015–March 31, 2018. July 1, 2015–June 30, 2018. July 1, 2017–June 30, 2018. April 1, 2016–March 31, 2019. July 1, 2016–June 30, 2020. July 1, 2018–June 30, 2019. April 1, 2017–March 31, 2020. July 1, 2017–June 30, 2016. July 1, 2019–June 30, 2020. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS * Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550). ** Hospital-Level Risk-Standardized Readmission Rate (RSRR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1551). *** HCAHPS (NQF #0166) Survey. The proposed time periods for the THA/TKA Complications measure (NQF #1550), and the THA/TKA Readmission measure (NQF #1551) are consistent with HIQR program performance periods for July 2017 public reporting. The HCAHPS quality information will be the measure results. We believe the public is familiar with the proposed measures, which have been publicly reported in past releases of Hospital Compare as part of the Hospital IQR Program. In order to minimize confusion and facilitate access to the data on the measures included in the CCJR model, we propose to post the data on each participant hospital’s performance on each of the 3 proposed quality measures in a downloadable format in a section of the Web site specific to the CCJR model, similar to what is done for HRRP and the HospitalAcquired Conditions Reduction VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 Program. We also propose to post data on whether or not each participant hospital met the proposed threshold (section III.C.5.b. of this proposed rule) for receiving a reconciliation payment in the same downloadable database. In addition, we believe information about functional status both pre- and post-operatively is important for hip and knee replacements. We are developing a functional status measure that we believe will provide this needed information. The measure, HospitalLevel Performance Measure(s) of Patient-Reported Outcomes Following Elective Primary Total Hip and/or Total Knee Arthroplasty (see section III.D.3 of this proposed rule for a detailed description), requires comprehensive testing before it can be used in a CMS program. As part of the effort to collect data on functional status voluntarily from hospitals, we are proposing that PO 00000 Frm 00094 Fmt 4701 Sfmt 4702 hospitals that voluntarily submit data for this measure be acknowledged through the use of a symbol on Hospital Compare. The data submitted voluntarily for the functional status measure would not be publicly reported along with the other measures in the program. We invite public comments on these proposals to post data for mandatorily required measures on the Hospital Compare Web site and to acknowledge hospitals that voluntarily submit data for the functional status measure with an icon on the Hospital Compare Web site. Finally, in accordance with section 1115A of the Act, we are proposing section III.D. in the new proposed part 510 of the Code of Federal Regulations. E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS E. Data Sharing 1. Overview In this section, we propose to provide data to the hospital participants of the CCJR model. CMS has experience with a range of efforts designed to improve care coordination for Medicare beneficiaries, including the Medicare Shared Savings Program (MSSP), Pioneer Accountable Care Organization (ACO) Model, and BPCI, all of which make certain data available to participants. The CCJR model proposes in section III.C.2. of this proposed rule to financially incentivize hospitals, through retrospective bundled payments, to engage in care redesign efforts to improve quality of care and reduce spending for the aggregate Part A and B FFS (FFS) spending for beneficiaries included in the model during the inpatient hospitalization and 90 days post-discharge. Given this, we believe it is necessary to provide historical and ongoing claims data representing care furnished during episodes of care for LEJRs to hospitals so that they can, among other things, adequately structure their care pathways, coordinate care for beneficiaries, and estimate acute inpatient and post-acute spending within LEJR episodes. As noted previously, this would not be the first instance in which we have provided claims data to entities participating in a CMS model or program. For example, participants in MSSP initially receive historical aggregate information on their financial performance as well as updated financial data throughout their tenure in the program. In addition, MSSP participants receive certain beneficiaryidentifiable claims information in accordance with our regulations (see Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 FR 67844 through 67849, November 2, 2011). The MSSP regulation noted that while an ACO may have complete information for the services it provides or coordinates on behalf of its FFS beneficiary population, it may not have complete information on a FFS beneficiary who chose to receive services, medications or supplies from non-ACO providers and suppliers. Thus, we decided to provide ACOs participating in the MSSP with an opportunity to request CMS claims data on the premise that more complete beneficiary-identifiable information would enable practitioners in an ACO to better coordinate and target care strategies. Recently, we noted that the ACOs participating in the MSSP have reported how important access to real VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 time data is for providers to improve care coordination across all sites of care, including outpatient, acute, and postacute sites of care. Furthermore, we noted our view that providers across the continuum of care are essential partners to physicians in the management of care. (See Medicare Program: Medicare Shared Savings Program: Accountable Care Organizations: Proposed Rule, 79 FR 72779). Similarly, participants in the Pioneer ACO model can request historical claims data of beneficiaries aligned with the particular Pioneer ACO entity, and the entities continue to receive certain ongoing data regarding the services furnished to those beneficiaries. (See https://innovation.cms.gov/Files/factsheet/Pioneer-ACO-Model-BeneficiariesRights-Fact-Sheet.pdf). In addition, we provide BPCI participants with the opportunity to request beneficiary-level claims data regarding their own patients, both for the historical period of 2009–2012 that was used to set baseline prices for entities participating in BPCI, as well as ongoing monthly claims feeds containing Medicare FFS claims for beneficiaries that could have initiated an episode of care for that particular BPCI participant. These monthly claims feeds provide BPCI participants with data for both acute and post-acute care spending for beneficiaries that could have initiated an episode of care at that BPCI participant. Based on our experience with these efforts, we believe that providing a similar opportunity for hospitals participating in the CCJR model to request data is necessary for participant hospitals to have the relevant information to allow for practice changes supported by CCJR and to identify services furnished to beneficiaries receiving LEJRs under the model. Specifically, providing participant hospitals with certain claims and summary information on beneficiaries in accordance with established privacy and security protections would improve their understanding of the totality of care provided during an episode of care. With this greater understanding, we anticipate that hospitals would be better equipped to evaluate their practice patterns and actively manage care delivery so that care for beneficiaries is better coordinated, quality and efficiency are improved, and payments aligned more appropriately to the medically necessary services beneficiaries have a right to receive. We also expect that providing this data to CCJR participants will benefit beneficiaries by allowing providers to use the data to improve care PO 00000 Frm 00095 Fmt 4701 Sfmt 4702 41291 coordination activities in areas that may be currently lacking. However, we also expect that CCJR hospitals are able to, or will work toward, independently identifying and producing their own data, through electronic health records, health information exchanges, or other means that they believe are necessary to best evaluate the health needs of their patients, improve health outcomes, and produce efficiencies in the provision and use of services. Accordingly, we believe that making certain data available to CCJR hospitals, as we do with ACOs participating in the MSSP and Pioneer model, would help them to monitor trends and make needed adjustments in their practice patterns. In order for CCJR participants to understand and track their care patterns, we propose to provide the participants with beneficiary-level claims data for the historical period used to calculate a CCJR hospital’s target price as well as ongoing quarterly beneficiary-identifiable claims data in response to their request for such data in accordance with our regulations. Given that the CCJR model also proposes to incorporate regional pricing in the calculation of target prices, we also propose to provide participants with aggregate regional data. 2. Beneficiary Claims Data Based on our experience with BPCI participants, we recognize that hospitals vary with respect to the kinds of beneficiary claims information that would be most helpful. While many hospitals located in MSAs that are selected for participation in CCJR model may have the ability to analyze raw claims data, other hospitals may find it more useful to have a summary of these data. Given this, we are proposing to make beneficiary claims information available through two formats. First, for participant hospitals that lack the capacity to analyze raw claims data, we propose to provide summary beneficiary claims data reports on beneficiaries’ use of health care services during the baseline and performance periods. These reports would allow participant hospitals to assess summary data on their relevant beneficiary population without requiring sophisticated analysis of raw claims data. Such summary reports will provide tools to monitor, understand, and manage utilization and expenditure patterns as well as to develop, target, and implement quality improvement programs and initiatives. For example, if the data provided by CMS to a particular hospital participant reflects that a certain post-acute care (PAC) provider admits beneficiaries who then E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41292 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules have significantly higher rates of inpatient readmissions than the rates experienced by other beneficiaries with similar care needs at similarly situated PAC providers, that may be evidence that the hospital could consider, among other things, the appropriateness of discharges to that provider, whether other alternatives might be more appropriate, and whether there exist certain care interventions that could be incorporated post-discharge to lower readmission rates. Therefore, for both the baseline period and on a quarterly basis during a participant hospital’s performance period, we are proposing to provide participant hospitals with an opportunity to request summary claims data that would encompass the total expenditures and claims for an LEJR episode, including the procedure, inpatient stay, and all related care covered under Medicare Parts A and B within the 90 days after discharge, including hospital care, post-acute care, and physician services for the hospital’s beneficiaries whose anchor diagnosis at discharge was either MS DRG 469 or 470. We propose that these summary claims aggregate data reports would also contain payment information, utilizing the categories listed for each episode triggered by a beneficiary as follows: • Inpatient Hospital. • Outpatient Hospital. • Physician. • Long-Term Care Hospitals (LTCH). • Inpatient Rehabilitation Facilities (IRF). • Skilled Nursing Facilities (SNF). • Home Health Agencies (HHA). • Hospice. • Ambulatory Surgical Center. • Part-B Drugs. • Durable Medical Equipment (DME). • Clinical Laboratories. • Ambulance. These reports would likely include the following: • Information such as admission and discharge date from the anchor hospitalization. • The physician for the primary procedure, Medicare payments during the anchor hospitalization. • Medicare payments during the postacute care phase. • Medicare payments for physician services would likely be included in these reports. These summary claims data would reflect all Medicare Part A and Part B expenditures during the 90-day episodes, except for those claim types noted later in this section, as well as excluding expenditures related to those MS–DRGs that we are proposing to be VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 specifically excluded from the episode of care, as set forth in section III.B.2. of this proposed rule. Alternatively, for hospitals with a capacity to analyze raw claims data, we would make- more detailed beneficiarylevel information available in accordance with established privacy and security protections. These data would enable hospitals to better coordinate and target care strategies for beneficiaries included in CCJR episodes. For example, in the BPCI initiative, we provide participants with beneficiarylevel claims data for all Part A and Part B services furnished to a beneficiary treated by that BPCI participant for all MS–DRGs included in an episode that the participant has selected for participation (See ‘‘Bundled Payments for Care Improvement Initiative (BPCI): Background on Model 2 for Prospective Participants, page 3 at https:// innovation.cms.gov/Files/x/BPCI_ Model2Background.pdf.) These data include services furnished by the participant, as well as services furnished by other entities during the 30, 60, or 90-day episode. For example, where the entity participating in BPCI is an acute care hospital, we provide beneficiary-level claims data for all Medicare Part A and B services and supplies furnished by the hospital during the inpatient admission, as well as all post-acute services furnished to the beneficiary by the hospital or any other providers or suppliers. The response from entities participating in BPCI has indicated that the availability of these data is necessary to monitor trends and pinpoint areas where care practice changes are appropriate, as well as assess the cost drivers during the acute and post-acute periods of the episode. Thus, for the baseline period and on a quarterly basis during a hospital’s performance period, we propose to provide participant hospitals with an opportunity to request line-level claims data for each episode that is included in the relevant performance year, as described in section III.C. of this proposed rule. For both the proposed summary claims data and the more detailed claims data formats, we propose that the sets of these files would be packaged and sent to a portal in a ‘‘flat’’ or binary format for the individual participant hospitals to retrieve. Furthermore, the files would contain information on all claims triggered by a beneficiary in a participating CCJR hospital. Finally, we note that beneficiary information that is subject to the regulations governing the confidentiality of alcohol and drug abuse patient records (42 CFR part 2) PO 00000 Frm 00096 Fmt 4701 Sfmt 4702 would not be included in any beneficiary identifiable claims data shared with a hospital under our proposal. We request comments on these proposals as well as the kinds of data and frequency of reports that would be most helpful to the hospitals’ efforts in coordinating care, improving health, and producing efficiencies. 3. Aggregate Regional Data Additionally, because we are proposing to incorporate regional pricing data in the creation of prices for CCJR, as set forth in section III.C.4 of this proposed rule, we believe it will also be necessary to provide comparable aggregate expenditure data available for all claims associated with MS–DRGs 469 and 470 for the census region in which the participant hospital is located. As noted in section III.C, we are proposing that a hospital’s target price will be determined based on a blend of its own historical expenditures as well regional pricing data of all other hospitals in its region. Thus, we are also proposing to provide CCJR hospitals with aggregate data on the total expenditures during an acute inpatient stay and 90-day post-discharge period for all Medicare FFS beneficiaries whose anchor diagnosis at discharge was either MS–DRG 469 or 470 (and would have initiated a CCJR episode if discharged from a CCJR hospital) in their census region. These data would not include beneficiary-identifiable claims data, but would provide highlevel information on the average episode spending for MS–DRGs 469 and 470 in the region in which the participant hospital is located. We request comments on these proposals as well as the kinds of aggregate data and frequency of data reports that would be most helpful to the hospitals’ efforts in coordinating care, improving health, and producing efficiencies. 4. Timing and Period of Baseline Data We considered various options for the timing of providing baseline data, as described previously, to CCJR participant hospitals. We considered provision of data prior to the effective date of the model, January 1, 2016, as well as providing data to participants at the point of the first payment reconciliation (described in section III.C.6. of this proposed rule). We propose to make baseline data available to hospitals participating in CCJR no sooner than 60 days after January 1, 2016, the effective date of the model. We recognize that these data are important to the abilities of CCJR participant hospitals to estimate costs, E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules coordinate care, and identify areas for practice transformation, and that early release of this data can facilitate their efforts to do so. We also anticipate that hospitals will view the CCJR effort as one involving continuous improvement. As a result, changes initially contemplated by a hospital could be subsequently revised based on updated information and experiences. While we would like to be able to make data available as soon as possible once the program begins, we do not believe that these baseline data must be immediately available upon its effective date as hospitals can begin considering improvements that would enhance their ability to better coordinate care and increase efficiencies in the absence of these data. Therefore, we propose to begin making baseline data available to CCJR hospitals within 60 days of CMS’ receipt of the request by the participant hospital for such data, in a form, time, and manner of such requests to be determined by CMS and announced at a later date. Requests would not be accepted until the model has begun. We seek comments on this proposal. We have also considered which period of baseline data should be shared with hospitals, for example, whether the data should represent a single year, or some longer period such as a 3-year period or more. To be most useful, we believe the baseline information should be recent enough to reflect current practices yet of a sufficient duration to reflect trends in those recent practices. For example, 1 year of data would likely reflect a hospital’s most current practices, but would not be helpful for purposes of identifying trends. In contrast, 3 years of data could both reflect a hospital’s most recent performance and recent performance trends. Moreover, making data available for a 3-year period aligns with our proposal to set a target price based on a 3-year period of baseline data, which is a factor in assessing CCJR hospitals’ performance (see section III.C). If a hospital has access to baseline data for the 3-year period used to set its target price, then it would be able to assess its practice patterns, identify cost drivers, and ultimately redesign its care practices to improve efficiency and quality. We alternatively considered making data available for an even longer historical period—for example, 4 or 5 years. However, we question the usefulness of information that is older than 3 years for purposes of changes contemplated for current operations. Accordingly, we are proposing to make available baseline data for up to a 3-year period. We will limit the content of this VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 data set to the minimum data necessary for the participant hospital to conduct quality assessment and improvement activities and effectively coordinate care of its patient population. This period would encompass up to the 3 most recent years for which claims data are available for the hospital and would align with the baseline period we propose to utilize to establish target prices, as noted previously. We seek comments on our proposal and invite comments on alternative time periods that could better help hospitals evaluate their practice patterns and actively manage care delivery so that care is better coordinated, quality and efficiency are improved, and costs are better controlled. 5. Frequency and Period of Claims Data Updates for Sharing BeneficiaryIdentifiable Claims Data During the Performance Period The availability of periodically updated beneficiary-identifiable claims data would assist hospitals participating in CCJR to identify areas where they might wish to change their care practice patterns, as well as monitor the effects of any such changes. With respect to these purposes, we have considered what would be the most appropriate period for making updated claims information available to hospitals, while complying with the HIPAA Privacy Rule’s ‘‘minimum necessary’’ provisions standard. We believe that quarterly claims data updates align with a 90-day episode window. Moreover, as a larger episode window would be included, the claims data would be more representative of total costs and hence more useful to hospitals as they consider long-term practice changes. Accordingly, we are proposing to make updated claims data available to hospitals upon receipt of a request for such information that meets CMS’s requirements to ensure the applicable HIPAA conditions for disclosure have been met, as frequently as on a quarterly basis. We seek comments on this proposal. Related to this is the period of claims that would be represented in each update. For example, we considered limiting this period to 3 months of data, which aligns with the frequency with which we would make updated claims data available. However, other than this alignment, we do not see additional reasons for artificially limiting the period to this extent. Alternatively, we considered providing an updated dataset as frequently as each quarter that would include data from up to the previous 6 quarters. We believe that this level of cumulative data would offer PO 00000 Frm 00097 Fmt 4701 Sfmt 4702 41293 more complete information and allow better trend comparisons. Accordingly, we propose to make beneficiary-identifiable and aggregate claims data available that would represent up to 6 quarters of information upon receipt of a request for such information that meets the requirements of the HIPAA Privacy Rule. We would note that we intend for the data for this model to be consistent with the performance year (January 1 through December 31). To accomplish this for the first year of CCJR (2016), we would provide, upon request and in accordance with the HIPAA Privacy Rule, claims data from January 1, 2016 to June 30, 2017 on as frequently as a running quarterly basis, as claims are available. For each quarter and extending through June 30, 2017, participants would receive data for up to the current quarter and all of the previous quarters going back to January 1, 2016. These datasets would contain all claims for all potential episodes that were initiated in 2016 and capture a sufficient amount of time for relevant claims to have been processed. We will limit the content of this data set to the minimum data necessary for the participating hospital to conduct quality assessment and improvement activities and effectively coordinate care of its patient population. We seek comment on our proposal. 6. Legal Permission To Share Beneficiary-Identifiable Data We recognize that there are a number of issues and sensitivities surrounding the disclosure of beneficiary-identifiable health information, and note that a number of laws place constraints on sharing individually identifiable health information. For example, section 1106 of the Act bars the disclosure of information collected under the Act without consent unless a law (statute or regulation) permits for the disclosure. In this instance, the HIPAA Privacy Rule permits this proposed disclosure of individually identifiable health information by us. In this proposed rule, we are proposing to make participant hospitals financially responsible for services that may have occurred outside of the hospital during the 90-day postdischarge period. Although we expect hospitals to be actively engaged in postdischarge planning and other care during the 90-day post-discharge period for beneficiaries receiving LEJRs, as discussed in section III.A. of this proposed rule, we believe it is necessary for the purposes of the CCJR—JR model to provide participant hospitals with beneficiary-level claims data, either in E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41294 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules summary or line-level claim formats for a 3-year historical period as well as on a quarterly basis during the performance period. We believe that these data constitute the minimum information necessary to enable the participant hospital to understand spending patterns during the episode, appropriately coordinate care, and target care strategies toward individual beneficiaries furnished care by the participant hospital and other providers and suppliers. Under the HIPAA Privacy Rule, covered entities (defined as health care plans, providers that conduct covered transactions, including hospitals, and health care clearinghouses) are barred from using or disclosing individually identifiable health information (called ‘‘protected health information’’ or PHI) in a manner that is not explicitly permitted or required under the HIPAA Privacy Rule. The Medicare FFS program, a ‘‘health plan’’ function of the Department, is subject to the HIPAA Privacy Rule limitations on the disclosure of PHI. The hospitals and other Medicare providers and suppliers are also covered entities, provided they are health care providers as defined by 45 CFR 160.103 and they conduct (or someone on their behalf conducts) one or more HIPAA standard transactions electronically, such as for claims transactions. In light of these relationships, we believe that the proposed disclosure of the beneficiary claims data for an acute inpatient stay plus 90-day post-discharge episode where the anchor diagnosis at discharge was MS–DRG 469 or 470 would be permitted by the HIPAA Privacy Rule under the provisions that permit disclosures of PHI for ‘‘health care operations’’ purposes. Under those provisions, a covered entity is permitted to disclose PHI to another covered entity for the recipient’s health care operations purposes if both covered entities have or had a relationship with the subject of the PHI to be disclosed, the PHI pertains to that relationship, and the recipient will use the PHI for a ‘‘health care operations’’ function that falls within the first two paragraphs of the definition of ‘‘health care operations’’ in the HIPAA Privacy Rule (45 CFR 164.506(c)(4)). The first paragraph of the definition of health care operations includes ‘‘conducting quality assessment and improvement activities, including outcomes evaluation and development of clinical guidelines,’’ and ‘‘population-based activities relating to improving health or reducing health costs, protocol development, case management and care coordination’’ VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 (45 CFR 164.501). Under our proposal, hospitals would be using the data on their patients to evaluate the performance of the hospital and other providers and suppliers that furnished services to the patient, conduct quality assessment and improvement activities, and conduct population-based activities relating to improved health for their patients. When done by or on behalf of a covered entity, these are covered functions and activities that would qualify as ‘‘health care operations’’ under the first and second paragraphs of the definition of health care operations at 45 CFR 164.501. Hence, as previously discussed, we believe that this provision is extensive enough to cover the uses we would expect a participant hospital to make of the beneficiary-identifiable data and would be permissible under the HIPAA Privacy Rule. Moreover, our proposed disclosures would be made only to HIPAA covered entities that have (or had) a relationship with the subject of the information, the information we would disclose would pertain to such relationship, and those disclosures would be for purposes listed in the first two paragraphs of the definition of ‘‘health care operations.’’ When using or disclosing PHI, or when requesting this information from another covered entity, covered entities must make ‘‘reasonable efforts to limit’’ the information that is used, disclosed or requested the ‘‘minimum necessary’’ to accomplish the intended purpose of the use, disclosure or request (45 CFR 164.502(b)). We believe that the provision of the proposed data elements listed previously would constitute the minimum data necessary to accomplish the CCJR model goals of the participant hospital. The Privacy Act of 1974 also places limits on agency data disclosures. The Privacy Act applies when the federal government maintains a system of records by which information about individuals is retrieved by use of the individual’s personal identifiers (names, Social Security numbers, or any other codes or identifiers that are assigned to the individual). The Privacy Act prohibits disclosure of information from a system of records to any third party without the prior written consent of the individual to whom the records apply (5 U.S.C. 552a(b)). ‘‘Routine uses’’ are an exception to this general principle. A routine use is a disclosure outside of the agency that is compatible with the purpose for which the data was collected. Routine uses are established by means of a publication in the Federal Register about the applicable system of records describing to whom the disclosure will PO 00000 Frm 00098 Fmt 4701 Sfmt 4702 be made and the purpose for the disclosure. We believe that the proposed data disclosures are consistent with the purpose for which the data discussed in this proposed rule was collected and may be disclosed in accordance with the routine uses applicable to those records. Notwithstanding these exceptions, we believe it would be appropriate to provide some form of notice to Medicare beneficiaries about sharing these data. Based on our experiences with data sharing in other CMS programs and models, we propose a strategy for notifying beneficiaries of claims data sharing in this proposed rule, and in order to provide meaningful beneficiary choice over claims data sharing with the participant hospitals in CCJR. We considered both ‘‘opt-in’’ and ‘‘opt-out’’ options for beneficiaries with respect to data sharing in CCJR. An opt-in method has some advantages, particularly with regard to the fact that consumers have consistently expressed a desire that their consent should be sought before their health information may be shared (Schneider, S. et al. ‘‘Consumer Engagement in Developing Electronic Health Information System.’’ Prepared for: Agency for Healthcare Research and Quality, July 2009, at 16. Available at: https://healthit.ahrq.gov/ahrq-fundedprojects/consumer-engagementdeveloping-electronic-healthinformation-systems). An opt-out method is used successfully in most systems of electronic exchange of information because it is significantly less burdensome on patients and providers while still providing an opportunity for patients to exercise control over their data. Thus, we propose to use an ‘‘optout’’ approach to provide beneficiaries with the opportunity to decline claims data sharing directly through 1–800– Medicare, rather than through the participant hospital. We also propose to provide advance notification to all Medicare beneficiaries about the opportunity to decline claims data sharing with entities participating in CMS programs and models through CMS materials such as the Medicare & You Handbook. The Handbook would include information about the purpose of the model, describe the opportunity for participants to request beneficiary identifiable claims data for health care operations purposes, and provide instructions on how beneficiaries may decline claims data sharing by contacting CMS directly through 1–800– Medicare. The Handbook would also contain instructions on how a beneficiary may reverse his or her preference to decline claims data sharing by contacting 1–800–Medicare. E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules There are several advantages to these strategies. First, we note that 1–800– Medicare is a communication method to which beneficiaries have familiarity and broad exposure. It also has the capability for beneficiaries to use accessible alternative or appropriate assistive technology, if needed. While many procedures in MS–DRGs 469 and 470 are planned in advance, some are emergent or unplanned procedures. Thus, asking the participant hospital to provide advance notification to the beneficiary, prior to the provision of services, may be inappropriate or impossible in certain circumstances. We would continue to maintain a list of beneficiaries who have declined data sharing and ensure that their claims information is not included in the claims files shared with participants. Hospitals with patient portals or Blue Button® may have capability to garner patient input prior to discharge through a hospital intervention specific to patient and care-giver education, while also aiding the hospital to meet reporting requirements for other CMS programs, such as Meaningful Use under the EHR Incentive Program for Medicare Hospitals. Finally, participant hospitals in CCJR will only be allowed to request beneficiary-identifiable claims data for beneficiaries who: (1) Have been furnished a billable service by the participant hospital corresponding to the episode definitions for CCJR; and (2) have not chosen to opt-out of claims data sharing. A beneficiary that chooses to opt-out of claims data sharing is only opting out of the data sharing portion of the model. The decision to opt-out does not otherwise limit CMS’ use of the beneficiaries’ data, whether the beneficiary can initiate an episode, inclusion in quality measures, or inclusion in reconciliation calculations. Where a beneficiary chooses to opt-out of claims data sharing, our data contractor would maintain a list of all HICNs that choose to opt-out of data sharing. We would monitor whether participant hospitals continue to request data on beneficiaries who have opted out of having their data shared and do not intend to make such data available in response to a CCJR such hospitals’ requests. We request comments on our proposals related to the provision of both aggregate and beneficiaryidentifiable data to participant hospitals in CCJR. We are particularly interested in comments on the kinds and frequency of data that would be useful to hospitals, potential privacy and security issues, the implications for sharing protected health information VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 with hospitals, and the use of a beneficiary opt-out, as opposed to an opt-in, to obtain beneficiary consent to the sharing of their information. We also request comment on whether it would be helpful to provide any such system of notices, since Medicare claims information and other electronic information is already routinely shared for many other purposes among health care providers and insurers, and generally is subject to HIPAA protections. We also propose where available, the exchange of CMS beneficiary data with the local electronic health information exchange, a system that allows doctors, nurses, pharmacists, other health care providers and patients to appropriately access and securely share a patient’s vital medical information electronically in order to facilitate the hospitals ability to share timely patient data supporting improved patient referral, access, and care coordination across varied service settings. F. Monitoring and Beneficiary Protection 1. Introduction and Summary We are proposing the CCJR model as we believe it is an opportunity to improve the quality of care and that the policies of the model support making care more easily accessible to consumers when and where they need it, increasing consumer engagement and thereby informing consumer choices. For example, under this model we are proposing certain waivers which would offer participant hospitals additional flexibilities with respect to furnishing telehealth services, post-discharge home visits, and care in skilled nursing facilities, as discussed in section III.C.11 of this proposed rule. We believe that this model will improve beneficiary access and outcomes. Conversely, we do note that these same opportunities could be used to try to steer beneficiaries into lower cost services without an appropriate emphasis on maintaining or increasing quality. We direct readers to sections III.C.5 and III.D. of this proposed rule for discussion of the methodology for incorporating quality into the payment structure and the measures utilized for this model. We believe that existing Medicare provisions can be effective in protecting beneficiary freedom of choice and access to appropriate care under the CCJR model. However, because the CCJR model is designed to promote efficiencies in the delivery of all care associated with lower extremity joint replacement procedures, providers may PO 00000 Frm 00099 Fmt 4701 Sfmt 4702 41295 seek greater control over the continuum of care and, in some cases, could attempt to direct beneficiaries into care pathways that save money at the expense of beneficiary choice or even beneficiary outcomes. As such, we acknowledge that some additional safeguards may be necessary under the CCJR model as providers are simultaneously seeking opportunities to decrease costs and utilization. We believe that it is important to consider any possibility of adverse consequences to patients and to ensure that sufficient controls are in place to protect Medicare beneficiaries receiving lower extremity joint replacement related services under the CCJR model. 2. Beneficiary Choice and Beneficiary Notification Because we have proposed that hospitals in selected geographic areas will be required to participate in the model, individual beneficiaries will not be able to opt out of the CCJR model when they receive care from a participant hospital in the model. We do not believe that it is appropriate or consistent with other Medicare programs to allow patients to opt out of a payment system that is unique to a particular geographic area. For example, the state of Maryland has a unique payment system under Medicare, but that payment system does not create an alternative care delivery system, nor does it in any way impact beneficiary decisions. Moreover, we do not believe that an ability to opt out of a payment system is a factor in upholding beneficiary choice or is otherwise advantageous to beneficiaries or even germane to beneficiary decisions given that this model does not increase beneficiary cost-sharing. We also believe that full notification and disclosure of the payment model and its possible implications is critical for beneficiary understanding and protection. However, it is important to create safeguards for beneficiaries to ensure that care recommendations are based on clinical needs and not inappropriate cost savings. It is also important for beneficiaries to know that they can raise any concerns with their physicians, with 1–800–Medicare, or with their local Quality Improvement Organizations. This proposed payment model does not limit the ability to choose among Medicare providers or the range of services available to the beneficiary. Beneficiaries may continue to choose any Medicare participating provider, or any provider who has opted out of Medicare, with the same costs, copayments and responsibilities as they E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41296 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules have with other Medicare services. Although the proposed model would allow participant hospitals to enter into CCJR Sharing Arrangements with certain providers and these preferred providers may be recommended to beneficiaries as long as those recommendations are made within the constraints of current law, hospitals may not restrict beneficiaries to any list of preferred or recommended providers that surpass any restrictions that already exist under current statutes and regulations. Moreover, hospitals may not charge any CCJR collaborator a fee to be included on any list of preferred providers or suppliers, nor may the hospital accept such payments, which would be considered to be outside the realm of risk-sharing agreements. Thus, this proposed payment model does not create any restriction of beneficiary freedom to choose providers, including surgeons, hospitals, post-acute care or any other providers or suppliers. Moreover, as participant hospitals redesign care pathways, it may be difficult for providers to sort individuals based on health care insurance and to treat them differently. We anticipate that care pathway redesign occurring in response to the model will increase coordination of care, improve the quality of care, and decrease cost for all patients, not just for Medicare beneficiaries. This anticipated change in the delivery of care to all patients may further promote consistent treatment of all beneficiaries. We believe that beneficiary notification and engagement is essential because there will be a change in the way participating hospitals are paid. We believe that appropriate beneficiary notification should explain the model, advise patients of both their clinical needs and their care delivery choices, and should clearly specify that any nonhospital provider holding a risk-sharing agreement with the hospital should be identified to the beneficiary as a ‘‘financial partner of the hospital for the purposes of LEJR services.’’ These policies seek to enhance beneficiaries’ understanding of their care, improve their ability to share in the decisionmaking, and ensure that they have the opportunity to consider competing benefits even as they are presented with cost-saving recommendations. We believe that appropriate beneficiary notification should do all of the following: • Explain the model and how it will or will not impact their care. • Inform patients that they retain freedom of choice to choose providers and services. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 • Explain how patients can access care records and claims data through an available patient portal and through sharing access to care-givers to their Blue Button® electronic health information. • Advise patients that all standard Medicare beneficiary protections remain in place. These include the ability to report concerns of substandard care to Quality Improvement Organizations (QIO) and 1–800–MEDICARE. After carefully considering the appropriate timing and circumstances for the necessary beneficiary notification, we are proposing that participating hospitals must require all providers and suppliers who execute a CCJR Sharing Arrangement with a participant hospital to share certain notification materials, to be developed or approved by CMS, that detail this proposed payment model before they order an admission for joint replacement for a Medicare FFS patient who would be included under the model. Participant hospitals must require this notification as a condition of any CCJR Sharing Arrangement. Where a participant hospital does not have CCJR Sharing Arrangements with providers or suppliers that furnish services to beneficiaries during a CCJR episode of care, or where the admission for joint replacement for a Medicare FFS patient who would be included under the model was ordered by a physician who does not have a CCJR Sharing Arrangement, the beneficiary notification materials must be provided to the beneficiary by the participant hospital. The purpose of this proposed policy is to ensure that all beneficiaries that initiate a CCJR episode receive the beneficiary notification materials, and that they receive such materials as early as possible. We believe that this proposal targets beneficiaries for whom information is relevant, and increases the likelihood that patients will become engaged and seek to understand the model and its potential impact on their care. We note that beneficiaries are accustomed to receiving similar notices of rights and obligations from healthcare providers prior to the start of inpatient care. However, we also considered that this information might be best provided by hospitals at the point of admission for all beneficiaries, as hospitals provide other information concerning patient rights and responsibilities at that time. We invite comment on ways in which the timing and source of beneficiary notification could best serve the needs of beneficiaries without creating PO 00000 Frm 00100 Fmt 4701 Sfmt 4702 unnecessary administrative work for providers. We believe that this notification is an important safeguard to help ensure that beneficiaries in the model receive all medically necessary services, but it is also an important clinical opportunity to better engage beneficiaries in defining their goals and preferences as they share in the planning of their care. 3. Monitoring for Access to Care Given that participant hospitals would receive a reconciliation payment when they are able to reduce average costs per case and meet quality thresholds, they could have an incentive to avoid complex, high cost cases by referring them to nearby facilities or specialty referral centers. We intend to monitor the claims data from participant hospitals—for example, to compare a hospital’s case mix relative to a premodel historical baseline to determine whether complex patients are being systematically excluded. We will publish these data as part of the model evaluation to promote transparency and an understanding of the model’s effects. We also propose to continue to review and audit hospitals if we have reason to believe that they are compromising beneficiary access to care. For example, where claims analysis indicates an unusual pattern of referral to regional hospitals located outside of the model catchment area or a clinically unexplained increase or decrease in joint replacement surgery rates. 4. Monitoring for Quality of Care As we noted previously, in any payment system that promotes efficiencies of care delivery, there may be opportunities to direct patients away from more expensive services at the expense of outcomes and quality. We believe that professionalism, the quality measures in the model, and clinical standards can be effective in preventing beneficiaries from being denied medically necessary care in the inpatient setting and in post-acute care settings during the 90 days postdischarge. Accordingly, the potential for the denial of medically necessary care within the CCJR model will not be greater than that which currently exists under IPPS. However, we also believe that we have the authority and responsibility to audit the medical records and claims of participating hospitals and their CCJR collaborators in order to ensure that beneficiaries receive medically necessary services. We may also monitor arrangements between participant hospitals and their CCJR collaborators to ensure that such arrangements do not result in the denial E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules of medically necessary care or other program or patient abuse. We invite public comment on whether there are elements of the CCJR model that would require additional beneficiary protection for the appropriate delivery of inpatient care, and if so, what types of monitoring or safeguards would be most appropriate. With respect to post-acute care, we believe that requiring participating hospitals to engage patients in shared decision making is the most important safeguard to prevent inappropriate recommendations of lower cost care, and that such a requirement can be best effected by requiring hospitals to make this a condition of any CCJR Sharing Arrangements with practitioners who perform these procedures. Additional deterrents are created by the financial accountability of the 90-day bundle, which is sufficiently long that it encourages the provision of high-quality care to avoid the risk of complications and readmissions, which would typically occur within that time period. Physician patterns of practice are also constrained by clinical standards of care, and we believe that the risk associated with deviations from those standards provides further deterrence to compromising care. We believe that these safeguards are all enhanced by beneficiary knowledge and engagement. Therefore, we are proposing to require that participant hospitals must, as part of discharge planning, account for potential financial bias by providing patients with a complete list of all available post-acute care options in the service area consistent with medical need, including beneficiary cost-sharing and quality information (where available and when applicable). We expect that the treating surgeons or other treating practitioners, such as physiatrists, will continue to identify and discuss all medically appropriate options with the beneficiary, and that hospitals will discuss the various facilities and providers who are available to meet the clinically identified needs. These proposed requirements for CCJR participant hospitals would supplement the existing discharge planning requirements under the hospital Conditions of Participation. We also specifically note that neither the Conditions of Participation nor this proposed transparency requirement preclude hospitals from recommending preferred providers within the constraints created by current law, as coordination of care and optimization of care are important factors for successful participation in this model. We invite comment on this proposal, including VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 additional opportunities to ensure high quality care. 5. Monitoring for Delayed Care This model is based in part on an incentive for hospitals to create efficiencies in the delivery of care within a 90-day episode following the joint replacement surgery. Theoretically this basis could create incentives for hospitals and other CCJR collaborators involved in any CCJR Sharing Arrangements to delay services until after that window has closed. We believe that existing Medicare safeguards are sufficient to protect beneficiaries. First, our experience with other bundled payments such as the BPCI initiative has shown that providers focus on appropriate care first and efficiencies only when those efficiencies can be obtained in the setting of appropriate care. We believe that a 90day post-discharge episode will sufficiently minimize the risk that services furnished in relation to the beneficiary’s lower extremity joint replacement procedure will be necessary beyond the end of the episode duration. To ensure that the length of the episode duration sufficiently minimizes the risk that any lower extremity joint replacement related care will not exceed the time established for the episode, we proposed to establish a 90-day post-discharge duration. We believe that participant hospitals would be unlikely to postpone services beyond a 90-day period because the consequences of delaying care beyond this long episode duration would be contrary to usual standards of care. However, we also note that additional monitoring would occur as a function of the payment model. We have proposed as part of the payment definition (see section III.C of this proposed rule) that certain post-episode payments occurring in the 30-day window subsequent to the end of the 90-day episode would be counted as an adjustment against savings. We believe that the inclusion of this payment adjustment would create an additional deterrent to delaying care beyond the episode duration. In addition, the data collection and calculations used to determine this adjustment provide a mechanism to check if providers are inappropriately delaying care. Finally, we note that the proposed quality measures create additional safeguards as they are used to monitor and influence hospital clinical care at the institutional level. In accordance with section 1115A of the Act, we are proposing to codify these proposals in regulation in the new proposed Part 510. We invite public comment on our proposed requirements PO 00000 Frm 00101 Fmt 4701 Sfmt 4702 41297 for notification of beneficiaries and our proposed methods for monitoring participants’ actions and ensuring compliance as well as on other methods to ensure that beneficiaries receive high quality, clinically appropriate care. G. Coordination With Other Agencies Impacts created by payment changes under this model are entirely internal to HHS operations; coordination with other agencies is not required outside of the usual coordination involved in the publication of all HHS regulatory changes. IV. Evaluation Approach A. Background The proposed CCJR model is intended to enable CMS to better understand the effects of bundled payments models on a broader range of Medicare providers than what is currently being tested under BPCI. Obtaining information that is representative of a wide and diverse group of hospitals will best inform us on how such a payment model might function were it to be more fully integrated within the Medicare program. All CMS models, which would include the proposed CCJR model, are rigorously evaluated on their ability to improve quality and reduce costs. In addition, we routinely monitor CMS models for potential unintended consequences of the model that run counter to the stated objective of lowering costs without adversely affecting quality of care. Outlined in this proposed rule are the proposed design and evaluation methods, the data collection methods, key evaluation research questions, and the evaluation period and anticipated reports for the proposed CCJR model. B. Design and Evaluation Methods Our evaluation approach for the CCJR model will have elements in common with the standard Innovation Center evaluation approaches we have taken in other projects such as the BPCI initiative, Acute Care Episode (ACE) Demonstration, Pioneer ACO model, and other Innovation Center models. Specifically, the evaluation design and methodology for the proposed CCJR model would be designed to allow for a comparison of historic patterns of care among the CCJR providers to any changes made in these patterns in response to the CCJR model. Our evaluation methodology for this model builds upon the fact that MSAs will be selected for participation in the model by stratified random assignment. Due to the random assignment, we can evaluate the effects of the model on outcomes of interest by directly E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41298 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules comparing MSAs that are randomly selected to participate in the model to a comparison group of MSAs that were not randomly selected for the model (but could have been). Randomized evaluation designs of this kind are widely considered the ‘‘gold standard’’ for social science and medical research because they ensure that the systematic differences are reduced between units that do and do not experience an intervention, which ensures that (on average) differences in outcomes between participating and nonparticipating units reflect the effect of the intervention. In constructing the comparison group, we are considering whether to use a simple comparison group that consists of all non-selected MSAs or to instead select a comparison group from among the non-selected providers based on how well they match the providers along a variety of measurable dimensions, such as hospital size, LEJR expenditures, provider characteristics and market characteristics. The latter approach is sometimes referred to as ‘‘poststratification’’ in the literature on the analysis of randomized experiments. We plan to use a range of analytic methods, including regression and other multivariate methods appropriate to the analysis of stratified randomized experiments to examine each of our measures of interest. Measures of interest could include, for example, quality of and access to care, utilization patterns, expenditures, and beneficiary experience. The evaluation would also include rigorous qualitative analyses in order to capture the evolving nature of the care model interventions. In our design, we plan to take into account the impact of the CCJR model at the geographic unit level, the hospital level, and at the patient level. We are also considering various statistical methods to address factors that could confound or bias our results. For example, we would use statistical techniques to account for clustering of patients within hospitals and markets. Clustering allows our evaluation to compensate for commonalities in beneficiary outcomes by hospitals and by markets. Thus, in our analysis, if a large hospital consistently has poor performance, clustering would allow us to still be able to detect improved performance in the other, smaller hospitals in a market rather than place too much weight on the results of one hospital and potentially lead to biased estimates and mistaken inferences. Finally, we plan to use various statistical techniques to examine the effects of the CCJR model while also taking into account the effects of other VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 ongoing interventions such as BPCI, Pioneer ACOs, and Medicare Shared Savings Program. For example, we are considering additional regression techniques to help identify and evaluate the incremental effects of adding the CCJR model in areas where patients and market areas are already subject to these other interventions as well as potential interactions among these efforts. C. Data Collection Methods We are considering multiple sources of data to evaluate the effects of the CCJR model. We expect to base much of our analysis on secondary data sources such as Medicare FFS claims and required patient assessment instruments such as the Minimum Data Set (MDS) collected for skilled nursing facility stays, the Patient Assessment Instrument for Inpatient Rehabilitation Facility (IRF–PAI) collected for IRF stays and the Outcome and Assessment Information Set (OASIS) collected for home health episodes of care. The beneficiary claims data would provide information such as expenditures in total and by type of provider and service as well as whether or not there was an inpatient hospital readmission. The assessment tools would provide information on a beneficiary’s functioning (for example, physical, psychological and psychosocial functioning). In conjunction with the previously stated secondary data sources, we are considering a CMS-administered survey of beneficiaries who received an LEJR during the performance period. This survey would be administered to beneficiaries who either had received an LEJR under the CCJR model or were selected as part of a control group. The primary focus of this survey would be to obtain information on the beneficiary’s perception of their functional status before and after the LEJR as well as information on their pain and LE joint symptoms, and perceptions on access to care. The administration of this beneficiary survey would be coordinated with administration of the HCAHPS survey so as to not conflict with or compromise the HCAHPS efforts. Likewise, we are considering a survey administered by CMS and guided interviews conducted by CMS with providers including, but not limited to, the orthopedic surgeons, initiating hospitals, and PAC providers participating furnishing services to beneficiaries included in the CCJR model. These surveys would provide insight on beneficiaries’ experience under the model and additional information on the care redesign PO 00000 Frm 00102 Fmt 4701 Sfmt 4702 strategies undertaken by health care providers. In addition, we are considering CMS evaluation contractor administered site visits with selected hospitals and PAC providers as well as focus groups with a range of populations such as PAC providers and orthopedic surgeons. We believe that these qualitative methods would provide contextual information that would help us better understand the dynamics and interactions occurring among CCJR providers furnishing services included within a CCJR episode. For example, these data could help us better understand hospitals’ intervention plans as well as how they were implemented and what they achieved. Moreover, in contrast to relying on quantitative methods alone, qualitative approaches would enable us to view program nuances as well as identify factors that are associated with successful interventions and distinguish the effects of multiple interventions that may be occurring within participating providers, such as simultaneous ACO and bundled payment participation. D. Key Evaluation Research Questions Our evaluation would assess the impact of the CCJR model on the aims of improved care quality and efficiency as well as reduced health care costs. This would include assessments of patient experience of care, utilization, outcomes, Medicare expenditures, provider costs, quality, and access. Our key evaluation questions would include, but are not limited to, the following: • PAYMENT. Is there a reduction in total Medicare expenditures in absolute terms or for subcategories of providers (for example, acute vs post-acute providers, providers in certain geographic areas, providers within concentrated vs non-concentrated market areas or in urban vs rural areas)? Do the participants reduce or eliminate variations in utilization and expenditures or both that are not attributable to differences in health status? If so, how have they accomplished these changes? • UTILIZATION. Are there changes in Medicare utilization patterns overall or for specific types of providers or services? How do these patterns compare to historic patterns, regional variations, and national patterns of care? How are these patterns of changing utilization associated with Medicare payments, patient outcomes and general clinical judgment of appropriate care? • OUTCOMES/QUALITY. Is there either a negative or positive impact on quality of care and patient experiences of care or both? Did the incidence of complications remain constant or E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules decrease? Was there a change in beneficiaries’ level of pain reduction, functional outcomes or return to independence under the model than relative to appropriate comparison groups? If so, how and for which beneficiaries? • REFERRAL PATTERNS AND MARKET IMPACT. How, if at all, has the behavior in the selected geographic areas changed under the model? How have the referral patterns changed and for which type(s) of providers? Similarly, does the model have an impact on the number of patients with LEJR procedures and what types of patients are undergoing the procedure? To what extent, if any, is this related to gainsharing activities? • UNINTENDED CONSEQUENCES. Did the CCJR model result in any unintended consequences, including adverse selection of patients, access problems, cost shifting beyond the agreed upon episode, evidence of stinting on appropriate care, anticompetitive effects on local health care markets, evidence of inappropriate referrals practices? Is so, how, to what extent, and for which beneficiaries or providers? • POTENTIAL FOR EXTRAPOLATION OF RESULTS. What was the typical patient case mix in the participating practices and how did this compare to regional and national patient populations? What were the characteristics of participating practices and to what extent were they representative of practices treating Medicare FFS beneficiaries? Was the model more successful in certain types of markets? To what extent would the results be able to be extrapolated to similar markets and nationally or both? • EXPLANATIONS FOR VARIATIONS IN IMPACT. What factors are associated with the patterns of results? Specifically, are the results related to the following? ++ Characteristics of the models including variations by year and factors such as presence of downside risk? ++ The participating hospital’s specific features and ability to carry out their proposed intervention? ++ Characteristics and nature of interaction with partner providers including orthopedic surgeons and PAC provider community? ++ Characteristics of the geographic area, such as market concentration or size of city and availability of PAC providers? ++ Characteristics associated with the patient populations served? VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 E. Evaluation Period and Anticipated Reports As discussed in section III.A. of this proposed rule, each of the selected participants in the CCJR model would have a 5-year performance period. The evaluation period would encompass this entire 5-year period and up to two years after. We plan to evaluate the CCJR model on an annual basis. We recognize, however, that interim results are subject to issues such as sample size and random fluctuations in practice patterns. Hence, while CMS intends to have internal periodic summaries to offer useful insight during the course of the effort, a final analysis after the end of the 5-year performance period will be important for ultimately synthesizing and validating results. We seek comments on our design, evaluation, data collection methods, and research questions. V. Collection of Information Requirements As stated in section1115A(d)(3) of the Act, Chapter 35 of title 44, United States Code, shall not apply to the the testing and evaluation of models under section 1115A. As a result, the information collection requirements contained in this proposed rule need not be reviewed by the Office of Management and Budget. VI. Response to Comments Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this proposed rule, and, when we proceed with a subsequent document(s), we will respond to those comments in the preamble to that document. VII. Regulatory Impact Analysis We have examined the impact of this rule as required by Executive Order 12866 and other laws and Executive Orders requiring economic analysis of the effects of proposed rules. A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). We estimate that this rulemaking is ‘‘economically significant’’ as measured by the $100 million threshold, and hence also a major rule under the Congressional Review Act. Accordingly, we have prepared a RIA that, to the best of our ability, presents the costs and benefits of the rulemaking. PO 00000 Frm 00103 Fmt 4701 Sfmt 4702 41299 A. Statement of Need This proposed rule is necessary in order to create and test a new payment model under the authority of section 1115A of the Act that allows the Innovation Center to test innovative payment and service delivery models in order to ‘‘reduce program expenditures while preserving or enhancing the quality of care furnished to individuals.’’ The underlying issue addressed by the proposed model is that under FFS, Medicare makes separate payments to providers and suppliers for items and services furnished to a beneficiary over the course of a treatment (an episode of care). Because the amount of payment is dependent on the volume of services delivered, this creates incentives for care that are fragmented, unnecessary or duplicative, while impeding the investment in quality improvement or care coordination that would maximize patient benefit. We anticipate the proposed model may reduce costs while maintaining or improving quality where the provision of ‘‘bundled services’’ in which all the services needed for a given episode of care are included in a single payment arrangement that provides incentives to promote high quality and efficient care. This proposed rule would create and test the first bundled care model under the Innovation Center authority in which providers would be required to participate, building on the experience of the current voluntary BPCI and ACE efforts. Testing the model in this manner would also allow us to learn more about patterns of inefficient utilization of health care services and how to incentivize the improvement quality for common LEJR procedure episodes. This learning could inform future Medicare payment policy. Under the proposed CCJR model, acute care hospitals in certain selected counties will receive retrospective bundled payments for episodes of care for lower extremity joint replacement or reattachment of a lower extremity. This proposed rule was developed based on the experiences we gained from the implementation of the Bundled Payments and Care Improvement Initiative and the Medicare Acute Care Episode (ACE) Demonstration to test bundled payments. We believe the model may benefit Medicare beneficiaries through improving the coordination and transition of care, improving the coordination of items and services paid for through Medicare FFS payments, encouraging provider investment in infrastructure and redesigned care processes for high E:\FR\FM\14JYP3.SGM 14JYP3 41300 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS quality and efficient service delivery, and incentivizing higher value care across the inpatient and post-acute care spectrum spanning the episode of care. It will also provide an opportunity to evaluate the nature and extent of reductions in the cost of treatment by providing financial incentives for providers to coordinate their efforts to provide services to meet patient needs and prevent future costs. As detailed in Table 18, we estimate a total aggregate impact of $153 million in net Medicare savings over the proposed duration of the model, CYs 2016 through 2020, from the proposed implementation of the CCJR model. These estimated impacts represent the net effect of federal transfers that reward or penalize hospitals for improving care while making it more efficient. Furthermore, the proposed CCJR model may benefit beneficiaries since the model requires participant hospitals to be accountable for 90-day episodes of care for Medicare beneficiaries with a lower extremity joint replacement, improve the coordination of FFS items and services, and encourage investment in infrastructure and redesigned care processes for high quality and efficient service delivery that demonstrate a dedication and focus toward patientcentered care. Our analysis of the model’s effects shows that this proposed rule would trigger the threshold of ‘‘an annual effect on the economy of $100 million or more’’ or any of the other criteria for significant economic effects under E.O. 12866. Accordingly it would also be a major rule under the Congressional Review Act, and we are required to prepare an analysis that presents the costs and benefits of this proposed rule. We have prepared an analysis that address benefits and costs that applies to ‘‘economically significant’’ or ‘‘major’’ rules. We solicit comment on the assumptions and analysis presented throughout this regulatory impact section. Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a ‘‘significant regulatory action’’ as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as ‘‘economically significant’’); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the Executive Order. As previously stated, this proposed rule triggers these criteria. Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on state and local governments, pre-empts state law, or otherwise has federalism implications. We do not believe that there is anything in this proposed rule that either explicitly or implicitly pre-empts any state law, and furthermore we do not believe that this proposed rule will have a substantial direct effect on state or local governments, preempt states law, or otherwise have a federalism implication. B. Overall Impact We have examined the impacts of this proposed rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96–354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104–4), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)). C. Anticipated Effects VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 1. Overall Magnitude of the Model and Its Effects on the Market According to Medicare FFS claims data in FY 2014 (October 1, 2013 through September 30, 2014), there were approximately 21,000 discharges for MS–DRG 469 and 406,000 discharges for MS–DRG 470 (these DRG’s cover knee and hip replacements, respectively with and without complications) nationally. Based on the same data, we estimate that the participant hospitals cover approximately 111,000 LEJR episodes in this model or about 25 percent of LEJR discharges nationally. PO 00000 Frm 00104 Fmt 4701 Sfmt 4702 The number of such procedures has grown in recent years, due both to the aging of the American population and to advances in medical technology and care that have made these operations less physically burdensome on patients and led to faster recovery times. More uncertain are the total costs of these procedures. The mean estimated 90-day episode payment for lower extremity joint replacement procedures (defined as discharges for MS–DRG 469 and MS–DRG 470) is about $26,000 based on Medicare claims data for FY 2014 where approximately 55 percent of the spending is attributed to hospital inpatient services, 25 percent of spending is attributed to post-acute services such as physical therapy (either ambulatory and in a facility) and 20 percent to physician, outpatient hospital and other spending. We have proposed to apply the model in 75 MSAs out of 196 MSAs eligible for selection, as described previously in this proposed rule. Based on this proposed selection methodology, we estimate that the model will cover about 25 percent of all lower extremity joint replacement procedures nationally. We estimate the model will cover about $2.261 billion in episode spending in 2016 and $2.713 billion in episode spending in 2020 as displayed in Table 18 later in this section. As discussed subsequently in this analysis, this is likely to generate approximately a net amount of $153 million in savings to Medicare over the entire duration of the model. Annual reconciliation payments for each performance year may be greater than or less than the net change as detailed in Table 18 later in this section. In years 2019 and 2020 of the proposed model, we estimate a net change that is less than $100 million, but with repayments that may be greater than $100 million, which exceed the $100 million dollar threshold for economic significance. There may also be spillover effects in the non-Medicare market, or even in the Medicare market in other areas as a result of this model. We believe these are likely to be small, but cannot be certain. These issues are discussed later in the analysis. We welcome comments on our assumptions and calculations. 2. Effects on the Medicare Program The proposed CCJR model is a model involving an innovative mix of financial incentives for quality of care and efficiency gains within FFS Medicare for lower extremity joint replacement episodes. This model represents a new approach for the Medicare FFS program because it applies bundled payments to hospitals that might not otherwise E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules participate in Innovation Center models or Medicare demonstrations and tests bundled payment models for episodes of care for LEJR procedures in multiple geographic areas. As such, we are interested in testing and evaluating the impact of a bundled payment approach for LEJR procedures in a variety of circumstances, especially among those providers that may not have decided to engage in programs or models in which Medicare makes payments differently than Medicare FFS. As described earlier in this proposed rule, episodes would begin with admission to an acute care hospital for an LEJR procedure that is paid under the IPPS through MS–DRG 469 or 470 and extend 90 days following discharge from the acute care hospital. The episode would include the LEJR procedure, inpatient stay, and all related care covered under Medicare Parts A and B within the 90 days after discharge, including hospital care, postacute care, and physician services. Furthermore, we have proposed to designate participant hospitals as the episode initiators and to be financially responsible for episode cost under the proposed CCJR model. We propose to require all hospitals paid under the IPPS and physically located in selected geographic areas to participate in the CCJR model, with limited exceptions. Eligible beneficiaries who receive care at these hospitals will automatically be included in the model. Geographic areas, based on MSAs, are proposed to be selected through a stratified random sampling methodology based on the following criteria: Historical episode wage-adjusted payment quartiles and population size halves. We anticipate the proposed model may have financial and quality of care effects on nonhospital providers that are involved in the care of Medicare beneficiaries with an LEJR episode, improving the coordination of items and services paid for through Medicare FFS, encouraging more provider investment in infrastructure and redesigned care processes for higher quality and more efficient service delivery, and incentivizing higher value care across the inpatient and post-acute care spectrum spanning the episode of care. However, the proposed model attributes episode spending and makes the retrospective reconciliation payment to or repayment from the participant hospital. Accordingly, our analysis examines the proposed effects on participant hospitals, as they are the providers accountable for the episode payment under this model. Additionally, we have proposed to test VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 CCJR for a 5-year period, beginning January 1, 2016, and ending December 31, 2020 and our estimates cover the 5 years of the model. As described earlier in this proposed rule, we propose to continue paying hospitals and other providers according to the usual Medicare FFS payment systems during all performance years. After the completion of a performance year, the Medicare claims payments for services furnished to the beneficiary during the episode, based on claims data, would be combined to calculate an actual episode payment. The actual episode payment is the sum of Medicare claims payments furnished to a beneficiary during a CCJR episode. The actual episode payment would then be reconciled against an established CCJR target price, with consideration of additional payment adjustments based on quality performance and post episode spending. The amount of this calculation, if positive, would be paid to the participant hospital if the hospital has met the quality thresholds proposed in this rule. This payment is the reconciliation payment. If negative, the participant hospital would be required to make repayment to Medicare. We also proposed to phase in the requirement that hospitals whose actual episode payments exceed their CCJR target price to pay the difference back to Medicare beginning in performance year 2. Under this proposal, Medicare will not require repayment from hospitals for CCJR episode cost performance above their target price in performance year 1. Lastly, we propose to limit how much a hospital can gain or lose based on its reconciliation calculation with additional policies to further limit the risk of high payment cases for all participant hospitals and for special categories of hospitals. Based on the mix of financial and quality incentives, the proposed CCJR model could result in a range of possible outcomes for participant hospitals. The effects on hospitals of potential savings and liabilities will have varying degrees. Table 18 summarizes the estimated impact for the CCJR model. Our model estimates that the Medicare program will save $153 million dollars over the 5 performance years (2016 through 2020). Savings to the Medicare program may be greater if providers are able to improve the coordination of care, invest in infrastructure, and redesign care processes to promote high quality and efficient service delivery. Costs to the Medicare program may increase if providers are able to use waivers provided under the model to increase episode volume among beneficiaries that are expected to be less costly than PO 00000 Frm 00105 Fmt 4701 Sfmt 4702 41301 the hospitals target price without the need for improving the coordination of care. Our analysis to the best of our ability presents the cost and transfer payment effects of this proposed rule. We solicit comment on the assumptions and analysis presented. a. Assumptions and Uncertainties We used final action Medicare claims data from January 1, 2012 through December 31, 2014 to simulate the impact that this model would have on Medicare spending for joint replacement episodes. This time period is consistent with the historical period that are proposing to use to calculate target prices for performance years 1 and 2 of the model as described in section III.C of this proposed rule (we note that for performance year 3 through 5, target prices would be calculated based on episodes that start between in the proposed period of January 1, 2014 to December 31, 2016). Specifically we applied the methodology provided in this proposed rule for calculating target prices for all hospitals that would be required to participate in the model, as discussed in section III.A. of this proposed rule, based on their performance from calendar years 2012 through 2014. Specifically, all IPPS hospitals in the selected MSAs not currently participating in Model 1 or Phase II of BPCI Models 2 or 4 for the LEJR clinical episode were included in this analysis. We identified the anchor hospitalizations based on claims with MS–DRG 469 and MS–DRG 470 and included the related spending that occurred 90 days after discharge. We removed payments excluded from the episode as not being associated with joint replacement care, as well as removing the IPPS add-on payments including disproportionate share hospital and indirect medical educational payments, and new technology payments associated with the anchor hospitalization. We note that we have proposed other payment exclusions in the calculation of the episode target price, in comparing actual episode payments with target prices, and in determining whether a reconciliation payment should be made to the hospital or repayment from the hospital should be made as described in section III.C of this proposed rule. For the purpose of this impact analysis, we have only limited our calculations to remove the IPPS add-on payments for disproportionate share hospital and indirect medical educational payments, and new technology payments in calculating estimated target prices and in comparing the target price to actual episode payments. We then excluded E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41302 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules episodes where the anchor hospitalization occurred in hospitals that are not paid under the IPPS. With the remaining episodes, we standardized episode payments to remove the variation in spending due to differences in the hospital’s wage index. We trended utilization and prices in 2012 and 2013 to match 2014 national performance, and we incorporated the proposed outlier policy to cap spending for high cost outlier episodes such that payments are capped at the MS–DRG anchor value that is two standard deviations above the mean as described in section III.C of this proposed rule. After we pooled episodes for MS–DRGs 469 and 470, we calculated average episode prices for each hospital and census region, as well as a hospitalspecific weight representing a case mix value for each hospital that is dependent only on episode volume for MS–DRGs 469 and 470, and the national anchor factor. We then calculated blended prices for each hospital, with prices set at two-thirds of the hospital’s experience and one-third of the region’s average experience for performance years 1 and 2 of the model, as one-third of the hospital’s experience and twothirds of the region’s experience as used for performance year 3 of the model, and as the region’s average experience for performance years 4 and 5 of the model. We made an exception for hospitals with low historical CCJR episode volume defined in this proposed rule as those with fewer than 20 CCJR episodes in total across the 3 historical years, by setting their target price as the region’s experience. These average prices were then disaggregated based on the national anchor factor of average episode spending for MS–DRG 470 relative to MS–DRG 469, the computed hospital-specific weight, the hospital’s wage index was then applied back to the price, and a 2 percent discount was applied. After calculating target prices for MS– DRG 469 and 470 for each hospital appropriate for each performance year, we compared these target prices against actual performance in the 2014 calendar year. We capped actual spending for individual episodes based on the methodology in this proposed rule for high cost outlier spending episodes. After incorporating the proposed outlier policy, total Medicare FFS spending in the 2014 calendar year for each hospital was reconciled against the target price and total number of episodes for the hospital. The aggregate impacts were then determined by multiplying by the total episodes for each MS–DRG. We have proposed that the difference between each CCJR episode’s actual VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 payment and the relevant target price (calculated as target price subtracted by CCJR episode actual episode payment) would be aggregated for all episodes for a participant hospital within the performance year, creating the NPRA. Any positive NPRA amount greater than the proposed stop-gain limit would be capped at the stop-gain limit of 20 percent for each performance year of the model, and any negative NPRA amount exceeding the proposed stop-loss limit would be capped at the stop-loss limit as described in section III.C.8.b of this proposed rule. To limit a hospital’s overall repayment responsibility under this model, we have proposed a 10 percent repayment limit in performance year 2 and a 20 percent repayment limit in performance year 3 and subsequent years. For rural hospitals, MDHS, SCHs and RRCs, we have proposed a 3 percent repayment limit in performance year 2 and a 5 percent repayment limit in performance year 3 and subsequent years. Furthermore, as described earlier in this proposed rule, in order for a participant hospital to qualify for a reconciliation payment, a hospital must meet or exceed the 30th percentile benchmark for each of the three proposed quality measures in performance years 1 through 3: • Hospital-level risk-standardized complication rate following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1550) • Hospital-level 30-day, all-cause risk-standardized readmission rate following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1551) • HCAHPS Survey (NQF #0166). In performance years 4 through 5, a hospital must meet or exceed the 40th percentile benchmark for those proposed quality measures. To simulate the impact for performance year 1 or 2016, we calculated the NPRA assuming no downside risk to hospitals as proposed, and using the target price calculated for performance year 1, that is two-thirds hospital experience and one-third region experience. If the estimated NPRA is negative (that is, in the aggregate, the actual episode payments for all episodes is greater than the target price multiplied by the number of episodes) for performance year 1, Medicare would not require repayment of the NRPA from the hospital because we have proposed no hospital responsibility for repayment for the first performance year. Additionally, as part of this estimate, we accounted for whether a hospital met the quality benchmarks to be eligible for a PO 00000 Frm 00106 Fmt 4701 Sfmt 4702 reconciliation payment. Lastly, we have applied the proposed 20 percent stopgain limit on the estimated reconciliation payments made to participant hospitals total reconciliation payments reflect what we would expect Medicare to pay hospitals due to normal claims variation, and due to a blended target price which rewards hospitals that already perform better than their regional average. To simulate the impact in performance year 2, we calculated the NPRA assuming full risk as proposed for this model, rewarding hospitals that perform better than their 2 percent discount that met the 30th percentile threshold for the complications, readmissions and HCAHPs quality metrics, but only requiring repayments from hospitals for total spending that is above a 1 percent discount. For the simulation in performance year 2, we used the target price calculated for performance year 2 that is two-thirds hospital experience and one-third regional experience. A 10 percent stoploss limit was applied to repayments, and 3 percent stop-loss limit was applied for rural hospitals, sole community hospitals, Medicare dependent hospitals, and rural referral centers, as proposed, and a 20 percent stop-gain limit was applied. To simulate the impact in performance year 3, we calculated the NPRA assuming full risk as proposed in the model and rewarding hospitals that perform better than their 2 percent discount and met the 30th percentile thresholds for all three of the quality metrics, and requiring repayments from hospitals for total spending that is above the 2 percent discount. For the simulation in year 3, we used the target price calculated as one-third of the hospital’s experience and two-thirds of the regional experience. We included a 20 percent stop-gain limit for all hospitals, a 20 percent stop-loss limit on repayments from acute care hospitals included in this analysis, but used a 5 percent stop-loss limit on reconciliation repayments from rural hospitals, sole community hospitals, Medicare dependent hospitals, and rural referral centers, as proposed. For performance years 4 and 5, the impact estimates were calculated in the same way except that the episode target prices are based on 100 percent of the regional experience, as proposed. Additionally, the impact estimates accounted for the proposal that a hospital must meet or exceed the 40th percentile benchmark for those proposed quality measures in order to be eligible for a reconciliation payment. E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules In this proposed model, we are selecting a total of 75 MSAs from 8 MSA groupings. IPPS hospitals located within the selected MSAs will be required to participate in this model unless they participate in BPCI as discussed earlier in this proposed rule in section III.A. Additionally, as described earlier in this proposed rule in section III.C.5, hospitals can qualify for a lower discount applied to their target episode price if they voluntarily submit patientreported outcome measures data. More specifically, for hospitals that successfully submit patient-reported outcome measures data for episodes beginning in performance year 2, the discount percentage is reduced from 2 percent to 1.7 percent for purposes of determining the hospital’s opportunity to receive reconciliation payment for actual episode spending below the target price, and reduce the discount percentage from 1 percent to 0.7 percent for purposes of determining the amount Medicare would require the hospital to repay. We modeled the effects of this proposal by re-running the simulation using a 1.7 percent discount for all hospitals in performance years 2 through 5, and in performance year 2 41303 only requiring repayments that are beyond a 0.7 percent discount. We combined the simulations with a 2 percent discount and 1.7 percent discount by assuming that 33 percent of hospitals would submit the patientreported outcome measures data. Additionally, we note for these estimates, we did not make assumptions for changes in efficiency or utilization over the course of the model. Over the 5 years of the model, we estimate $153 million dollars in savings to the Medicare program, out of $12.321 billion in total episode spending. TABLE 18: PROPOSED ESTIMATES OF RECONCILIATION PAYMENTS * Year of proposed model 2016 Total episode spending ............................ Net reconciliation payments** .................. Reconciliation amounts ............................ Repayment amounts ................................ Net reconciliation as a percentage of total episode spend .............................. 2017 2018 2019 2020 Across all 5 years of the proposed model $2,261 23 23 0 $2,332 (29) 24 (53) $2,447 (43) 47 (90) $2,568 (50) 63 (113) $2,713 (53) 66 (120) $12,321 (153) 223 (376) 1.0% (1.3%) (1.7%) (2.0%) (2.0%) (1.2%) asabaliauskas on DSK5VPTVN1PROD with PROPOSALS * Impact for 75 selected MSAs. All numbers rounded to closest million. ** Sum of reconciliation amount and repayment amount may not add to net reconciliation payment due to rounding. These estimates contain a significant amount of uncertainty. As a result, this proposed model could produce more significant Medicare savings or could result in additional costs to the Medicare program. The primary source of uncertainty stems from the normal variation in claim cost trends each year coupled with the proposed cap on the repayment made at reconciliation. In addition, this analysis assumes no change in utilization both for the use of services within the bundled episode, as well as no change in total episodes among hospitals. The prospective prices for the proposed CCJR model incorporate price updates from the FFS payment systems, but assume no change in utilization for the performance years. If there is a national increase in utilization within each bundle that is independent of this model, then savings to the Medicare program may increase due to greater repayments paid back to Medicare. If there is a national decrease in utilization within each bundle that is independent of this model then costs to the Medicare program may increase due to greater reconciliation payments paid by Medicare to hospitals. The results will also depend on the cumulative effects over time and across providers on whether and how to change either actual medical procedures or the allocations of payments among service providers. We would expect significant VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 variation among hospitals and among metropolitan areas, but are unable to predict these. Additionally, although we project savings to Medicare under this proposed model, as stated earlier, we note that under section 1115A(b)(3)(B) of the Act, the Secretary is required to terminate or modify a model unless certain findings can be made with respect to savings and quality after the model has begun. If during the course of testing the model it is determined that termination or modification is necessary, such actions would be undertaken through rulemaking. b. Analyses The first performance year of the model is expected to cost the Medicare program $23 million in reconciliation payments made by CMS to hospitals. We have proposed that no repayments from hospitals will be assessed because hospitals are not subject to downside risk in performance year 1. Hospitals that would receive reconciliation payments are the hospitals that provide lower cost care relative to their regional average. In the second performance year of the model, participant hospitals on net are expected to pay $29 million to CMS. We have proposed a 10 percent stop-loss limit for acute care hospitals, with exception for rural hospitals, sole PO 00000 Frm 00107 Fmt 4701 Sfmt 4702 community hospitals, Medicare dependent hospitals, and rural referral center hospitals which would be subject to a 3 percent stop-loss limit. These limits would cap the total amount of repayments paid by hospitals to CMS. In the third performance year of the model, net reconciliation payments are expected to be $43 million in savings to the Medicare program. The additional savings in performance year 3 compared to performance year 2 can be attributed to receiving repayments from hospitals for total spending that is above a 1 percent discount in performance year 2, while in performance year 3, we would require repayments from hospitals for total spending that is above a 2 percent discount. For performance years 4 and 5 of the model, the proposed episode target price will be based on full regional pricing. This creates great variation between the target price and hospital’s own experience. Therefore, the stopgain and stop-loss limits on reconciliation payments are estimated to have a larger impact. As a result, net payments are expected to be $50 million dollars from hospitals to the Medicare program in the fourth year and $53 million in the fifth year. Savings to the Medicare program increases as a higher proportion of hospitals that provide care more efficiently than their regional average will forego reconciliation E:\FR\FM\14JYP3.SGM 14JYP3 41304 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS payments due to failure to meet the proposed thresholds on all three of the quality of care measures. These estimated savings in years 4 and 5 represent 2.0 percent of total episode spending in those years. The proposed total savings to the Medicare program after 5 years of the model are expected to be $153 million dollars out of $12.321 billion dollars or 1.2 percent in total episode spending. Due to the uncertainty of estimating this model, actual results could be significantly higher or lower than this estimate. c. Further Consideration We can use our experience in previous implementation of bundled payment models to help inform our impact analyses. We have previously used our statutory authority to create payment models such as the BPCI initiative and the ACE Demonstration to test bundled payments. Under the authority of section 1866C of the Act, CMS funded a 3-year demonstration, the ACE Demonstration. The demonstration used a prospective global payment for a single episode of care as an alternative approach to payment for service delivery under traditional Medicare FFS. The episode of care was defined as a combination of Parts A and B services furnished to Medicare FFS beneficiaries during an inpatient hospital stay for any one of a specified set of cardiac and orthopedic MS DRGs. The MS DRGs tested included 469 and 470, those proposed for inclusion in the CCJR model. The discounted bundled payments generated an average gross savings to Medicare of $585 per episode for a total of $7.3 million across all episodes (12,501 episodes) or 3.1 percent of the total expected costs for these episodes. After netting out the savings produced by the Medicare Parts A and B discounted payments and some increased post-acute care costs that were observed at two sites, Medicare saved approximately $4 million, or 1.72 percent of the total expected Medicare spending. Additionally, we are currently testing the BPCI initiative. Under the initiative, entities enter into payment arrangements with CMS that include financial and performance accountability for episodes of care. Episodes of care under the BPCI initiative begin with either an—(1) inpatient hospital stay; or (2) post-acute care services following a qualifying inpatient hospital stay and include tests of LEJR episodes. The BPCI initiative is evaluating the effects of episode based payment approaches on patient experience of care, outcomes, and cost of care for Medicare FFS beneficiaries. Although there is limited evidence from VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 BPCI and ACE suggesting that providers may improve their performance, both of these demonstrations were voluntary, and the participants that volunteered for these demonstrations may be in a better position to reduce episode spending relative to the average provider. We believe that our experiences with BPCI support the proposed design of the CCJR Model. 3. Effects on Beneficiaries In 2014, approximately 430,000 Medicare beneficiaries had discharges for lower extremity joint replacements (MS–DRG 469 and MS–DRG 470) nationally. We anticipate that the CCJR model may benefit beneficiaries receiving lower extremity joint replacements because the intent of the model is to test whether providers under this bundled payment system are able to improve the coordination and transition of care, invest in infrastructure and redesigned care processes for high quality and efficient service delivery, and incentivize higher value care across the inpatient and postacute care spectrum spanning the episode of care. We believe the model has a patient-centered focus such that healthcare delivery and communication on the patient and those who are close to the patient and bases the care and communication delivered around the needs of the beneficiary, thus benefitting the beneficiary community. We have proposed several quality of care and patient experience measures to evaluate participant hospitals in the CCJR model with the intent that it will encourage the provider community to focus on and deliver improved quality care for the Medicare beneficiary. We are proposing to adopt and publicly report three hospital level quality of care measures for the CCJR model. Those measures include a complication measure, readmission measure, and a patient experience survey measure. In addition, we are proposing to voluntarily collect data to develop a hospital-level measure of patient reported outcomes following an elective primary total hip or total knee arthroplasty. We propose to use these measures to test the success of the model and to monitor for beneficiary safety. Additionally, participant hospitals must meet the proposed quality performance standards in order to qualify to receive a reconciliation payment. The accountability of participant hospitals for both quality and cost of care provided for Medicare beneficiaries with an LEJR episode provides the hospitals with new incentives to improve the health and PO 00000 Frm 00108 Fmt 4701 Sfmt 4702 well-being of the Medicare beneficiaries they treat. Additionally, the model does not affect the beneficiary’s freedom of choice to obtain health services from any individual or organization qualified to participate in the Medicare program guaranteed under section 1802 of the Act. Under the CCJR model, eligible beneficiaries who choose to receive services from a participant hospital would not have the option to opt out of inclusion in the model. Although the proposed model allows hospitals to enter into risk-sharing arrangements with certain other providers and these hospitals may recommended those providers to the beneficiary, hospitals may not prevent or restrict beneficiaries to any list of preferred or recommended providers. Many controls exist under Medicare to ensure beneficiary access and quality and we have proposed to use our existing authority, if necessary, to audit participant hospitals if claims analysis indicates an inappropriate change in delivered services. As described earlier in this proposed rule, given that participant hospitals would receive a reconciliation payment when they are able to reduce average costs per case and meet quality thresholds, they could have an incentive to avoid complex, high cost cases by referring them to nearby facilities or specialty referral centers. We intend to monitor the claims data from participant hospitals— for example, to compare a hospital’s case mix relative to a pre-model historical baseline to determine whether complex patients are being systematically excluded. Furthermore, we also proposed to require providers to supply beneficiaries with written information regarding the design and implications of this model as well as their rights under Medicare, including their right to use their provider of choice. We have proposed to implement several safeguards to ensure that Medicare beneficiaries do not experience a delay in services. We believe that the longer the episode duration, the lower the risk of delaying care beyond the episode duration, and we believe that a 90 day episode is sufficiently long to minimize the risk that any lower extremity joint replacement related care will be delayed beyond the end of the episode. Moreover, we have proposed as part of the payment definition (see section III.C of this proposed rule) that certain outlier costs post-episode payments occurring in the 30 day window subsequent to the end of the 90-day episode will be counted as an E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules asabaliauskas on DSK5VPTVN1PROD with PROPOSALS adjustment against savings. Importantly, approaches to saving costs will include taking steps that facilitate patient recovery, that shorten recovery duration, and that minimize postoperative problems that might lead to readmissions. Thus, the model itself rewards better patient care. Lastly, we note that Medicare payments for services will continue to be made for each Medicare FFS payment system under this model, and will include normal beneficiary copayments, deductibles, and coinsurance. We expect and assume that beneficiary payments will not be affected, as only the hospital will be subject to the reconciliation process. Beneficiaries may benefit if providers are able to systematically improve the quality of care while reducing costs. We welcome public comments on our estimates of the impact of our proposals on Medicare beneficiaries. 4. Effects on Small Entities The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. We estimate that most hospitals and most other providers and suppliers are small entities, either by virtue of their nonprofit status or by qualifying as small businesses under the Small Business Administration’s size standards (revenues of less than $7.5 to $38.5 million in any 1 year; NAIC Sector–62 series). States and individuals are not included in the definition of a small entity. For details, see the Small Business Administration’s Web site at https://www.sba.gov/content/smallbusiness-size-standards. For purposes of the RFA, we generally consider all hospitals and other providers and suppliers to be small entities. We believe that the provisions of this proposed rule relating to acute care hospitals would have some effects on a substantial number of other providers involved in these episodes of care including surgeons and other physicians, skilled nursing facilities, physical therapists, and other providers. Although we acknowledge that many of the affected entities are small entities, and the analysis discussed throughout this proposed rule discusses aspects of the model that may or will affect them, we have no reason to assume that these effects will reach the threshold level of 5 percent of revenues used by HHS to identify what are likely to be ‘‘significant’’ impacts. Although lower VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 extremity joint replacement procedures (MS–DRGs 469 and 470) are among the most common surgical procedures undergone by Medicare beneficiaries, they are only about 5 percent of all acute hospital discharges.81 We assume that all or almost all of these entities will continue to serve these patients, and to receive payments commensurate with their cost of care. Such changes occur frequently already (for example, as both hospital affiliations and preferred provider networks change), and we have no reason to assume that this will change significantly under the model. Accordingly, we have determined that this proposed rule will not have a significant impact on a substantial number of small entities. We solicit public comments on our estimates and analysis of the impact of our proposals on those small entities. 5. Effects on Small Rural Hospitals Section 1102(b) of the Social Security Act requires us to prepare a regulatory impact analysis if a proposed rule or final rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, a small rural hospital is defined as a hospital that is located outside of an MSA and has fewer than 100 beds. We note that, according to this definition, the CCJR model would not include any rural hospitals given that the CCJR model would only include hospitals located in MSAs, as proposed in section III.A. However, we also note that as discussed in section III.C.8., for purposes of our proposal to include a more protective stop-loss policy for certain hospitals, we are proposing to define a rural hospital as an IPPS hospital that is either located in a rural area in accordance with § 412.64(b) or in a rural census tract within an MSA defined at § 412.103(a)(1) or has reclassified to rural in accordance with § 412.103. Thus, the proposed model will affect some rural hospitals, as discussed previously in section III.C.8 of this proposed rule. Because of our concerns that rural hospitals may have lower risk tolerance and less infrastructure and support to achieve efficiencies for high payment episodes, we have proposed additional financial protections for certain categories of hospitals, including rural hospitals. In performance year 2, a hospital could owe Medicare no more 81 Medicare Inpatient Claims data from January– December 2014, Chronic Conditions Warehouse. PO 00000 Frm 00109 Fmt 4701 Sfmt 4702 41305 than 10 percent of the target price multiplied by the number of the hospital’s LEJR episodes in CCJR as we phase in repayment responsibility under the model. In performance year 3 and beyond when full repayment responsibility is in place, no more than 20 percent of the target price multiplied by the number of the hospital’s LEJR episodes in CCJR could be owed by a hospital to Medicare. However, for rural hospitals, Medicare Dependent Hospitals, Rural Referral Centers and Sole Community, we proposed a stop loss limit policy of 3 percent of episode payments for these categories of hospitals. More specifically, in performance year 2, a hospital could owe Medicare no more than 3 percent of the target price multiplied by the number of the hospital’s episodes in CCJR. In performance years 3 through 5, a hospital could owe Medicare no more than 5 percent of the target price multiplied by the number of the hospital’s episodes. Although we propose these additional protections, we believe that few rural hospitals will be included in the model, and therefore that few will need those protections. Because lower extremity joint replacement procedures (MS–DRGs 469 and 470) account for only about 5 percent of all discharges, because relatively few of these procedures are performed at small rural hospitals, and because our model is designed to minimize adverse effects on rural hospitals, we do not believe that rural hospitals will experience significant adverse economic impacts. Accordingly, we conclude that this proposed rule would not have a significant impact on the operations of a substantial number of small rural hospitals. We are soliciting public comments on our estimates and analysis of the impact of our proposals on those small rural hospitals. 6. Unfunded Mandates Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2015, that is approximately $144 million. This proposed rule does not include any mandate that would result in spending by state, local or tribal governments, in the aggregate, or by the private sector in the amount of $144 million in any 1 year. E:\FR\FM\14JYP3.SGM 14JYP3 41306 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules D. Alternatives Throughout this proposed rule, we have identified our proposed policies and alternatives that we have considered, and provided information as to the effects of these alternatives and the rationale for each of the proposed policies. We solicit and welcome comments on our proposals, on the alternatives we have identified, and on other alternatives that we should consider, as well as on the costs, benefits, or other effects of these. We note that our estimates are limited to the IPPS hospitals that would be selected to participate in this proposed model. This proposed rule will not impinge directly on hospitals that are not participating in the model. However, it may encourage innovations in health care delivery in other areas or in care reimbursed through other payers. For example, a hospital and affiliated providers may choose to extend their arrangements to all joint replacement procedures they provide, not just those reimbursed by Medicare. Alternatively, a hospital and affiliated providers in one city may decide to hold themselves forth as ‘‘centers of excellence’’ for patients from other cities, both those included and not included in the model. We welcome comments that address these or other possibilities. E. Accounting Statement As required by OMB Circular A–4 under Executive Order 12866 (available at https://www.whitehouse.gov/omb/ circulars_a004_a-4) in Table 19, we have prepared an accounting statement showing the classification of transfers, benefits, and costs associated with the provisions in this proposed rule. The accounting statement is based on estimates provided in this regulatory impact analysis. Because of the uncertainties identified in establishing the economic impact estimates, we intend to update the estimates in the final rule. As described in Table 18, we estimate this proposed model will result in savings to the federal government of $153 million over the 5years of the model from 2016 to 2020. The following Table 19 shows the annualized change in (A) net federal monetary transfers, and (B) potential reconciliation payments to participating hospitals net of repayments from participant hospitals that is associated with the provisions of this proposed rule as compared to baseline. In Table 19, the annualized change in payments based on a 7 percent and 3 percent discount rate, results in net federal monetary transfer from the participant IPPS hospitals to the federal government of $28 million and $30 million respectively. TABLE 19—ACCOUNTING STATEMENT ESTIMATED IMPACTS Category Primary estimate Source citation (RIA, preamble, etc.) BENEFITS: Annualized monetized transfers: Discount rate: 7% ........... $28 million ............................... Change from baseline to proposed changes (Table 18). Annualized monetized transfers: Discount rate: 3% ........... $30 million. From whom to whom? ......................................................... From Participant IPPS Hospitals to Federal Government. F. Conclusion asabaliauskas on DSK5VPTVN1PROD with PROPOSALS The preceding analysis, together with the remainder of this preamble, provides the Regulatory Impact Analysis of a rule with a significant economic effect. As a result of this proposed rule, we estimate of the financial impact of the CCJR model for CYs 2016 through 2020 would be net federal savings of $153 million over a 5 year period. The annualized change in payments based on a 7 percent and 3 percent discount rate, results in net federal monetary transfer from the participant IPPS hospitals to the federal government of $28 million and $30 million respectively. In accordance with the provisions of Executive Order 12866, this rule was reviewed by the Office of Management and Budget. List of Subjects for 42 CFR Part 510 Administrative practice and procedure, Health facilities, Medicare, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, under the authority at section 1115A of the Social Security Act, the Centers for Medicare & Medicaid VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 Services proposes to amend 42 CFR Chapter IV as follows: 1. Revise the heading of Subchapter H to read as follows: ■ SUBCHAPTER H—HEALTH CARE INFRASTRUCTURE AND MODEL PROGRAMS 2. Part 510 is added to Subchapter H to read as follows: ■ PART 510—COMPREHENSIVE CARE FOR JOINT REPLACEMENT MODEL 510.305 Determination of the NPRA and reconciliation process. 510.310 Appeals process. 510.315 Quality thresholds for reconciliation payment eligibility. 510.320 Treatment of incentive programs or add-on payments under existing Medicare payment systems. 510.325 Allocation of payments for services that straddle the episode. Subpart E—Quality Measures, Beneficiary Protections, and Compliance Enforcement Subpart A—General Provisions 510.400 Quality measures and reporting. 510.405 Beneficiary choice and beneficiary notification. 510.410 Compliance enforcement. 510.1 510.2 Subpart F—Financial Arrangements and Beneficiary Incentives Secs. Basis and scope. Definitions. Subpart B—Comprehensive Care for Joint Replacement Model Participants 510.100 510.105 Episodes being tested. Geographic areas. 510.500 Financial arrangements under the CCJR model. 510.505 Beneficiary incentives under the CCJR model. Subpart C—Scope of Episodes Subpart G—Waivers 510.200 Time periods, included services, and attribution. 510.205 Beneficiary inclusion criteria. 510.210 Determination of the episode. 510.600 Waiver of direct supervision requirement for certain post-discharge home visits. 510.605 Waiver of certain telehealth requirements. 510.610 Waiver of SNF 3-day rule. 510.615 Waiver of certain post-operative billing restrictions. Subpart D—Pricing and Payment 510.300 Determination of episode target prices. PO 00000 Frm 00110 Fmt 4701 Sfmt 4702 E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules Authority: Secs. 1102, 1115A, and 1871 of the Social Security Act (42 U.S.C. 1302, 1315(a), and 1395hh). Subpart A—General Provisions § 510.1 Basis and scope. (a) Basis. This part implements the test of the Comprehensive Care for Joint Replacement model under section 1115A of the Act. Except as specifically noted in this part, the regulations under this part must not be construed to affect the payment, coverage, program integrity, and other requirements (such as those in parts 412 and 482 of this chapter) that apply to providers and suppliers under this chapter. (b) Scope. This part sets forth the following: (1) The participants in the Comprehensive Care for Joint Replacement model. (2) The episodes being tested in the model. (3) The methodology for pricing and payment under the model. (4) Quality performance standards and quality reporting requirements. (5) Safeguards to ensure preservation of beneficiary choice and beneficiary notification. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS § 510.2 Definitions. For the purposes of this part, the following definitions are applicable: ACO stands for Accountable Care Organization. Actual episode payment means the sum of Medicare claims payments for items and services that are included in the episode in accordance with § 510.200(b), excluding the items and services described in § 510.200(d) and the incentive programs and add-on payments specified in § 510.320, and subject to the cap described in § 510.300(b)(4). Alignment payment means a payment from a Comprehensive Care for Joint Replacement collaborator to a participant hospital under a Comprehensive Care for Joint Replacement sharing arrangement. Anchor hospitalization means the initial hospital stay upon admission for a lower extremity joint replacement. BPCI stands for the Bundled Payments for Care Improvement initiative. CCJR stands for Comprehensive Care for Joint Replacement. CCJR collaborator means one of the following persons or entities that enter into a CCJR sharing arrangement: (1) Skilled nursing facility. (2) Home health agency. (3) Long-term care hospital. (4) Inpatient rehabilitation facility. (5) Physician. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 (6) Nonphysician practitioner. (7) Outpatient therapy provider. (8) Physician group practice. CCJR-eligible hospital means a hospital that is paid under IPPS and not a participant in BPCI Model 1 or in the risk-bearing period of Models 2 or 4 for LEJR episodes, regardless of whether or not the metropolitan statistical area in which the hospital is located is selected for inclusion in the CCJR model. CCJR reconciliation report means the report prepared after each reconciliation that CMS provides to each participant hospital notifying the participant hospital of the outcome of the reconciliation. CCJR sharing arrangement means a financial arrangement between a participant hospital and a CCJR collaborator for the sole purpose of sharing the following: (1) CCJR reconciliation payments. (2) The participant hospital’s internal cost savings. (3) The participant hospital’s responsibility for repayment to Medicare. Core-based statistical area (CBSA) means a statistical geographic entity consisting of the county or counties associated with at least one core (urbanized area or urban cluster) of at least 10,000 population, plus adjacent counties having a high degree of social and economic integration with the core as measured through commuting ties with the counties containing the core. Critical access hospital (CAH) means a hospital designated under subpart F of part 485 of this chapter. Episode of care (Episode) means all Medicare Part A and B items and services described in § 510.200(b) (and excluding the items and services described in § 510.200(d)) that are furnished to a beneficiary described in § 510.205 during the time period that begins with such beneficiary’s admission to an anchor hospitalization and ends 90 days after discharge from the anchor hospitalization. Episode target price means the amount determined in accordance with § 510.300 and applied to an episode in determining a net payment reconciliation amount. Gainsharing payment means a payment from a participant hospital to a CCJR collaborator, under a CCJR sharing arrangement, composed of only reconciliation payments or internal cost savings or both. Historical episode payment means the most recent 3 years of expenditures for an episode in a given participant hospital. PO 00000 Frm 00111 Fmt 4701 Sfmt 4702 41307 Hospital means a hospital subject to the prospective payment system specified in § 412.1(a)(1) of this chapter. ICD–CM stands for International Classification of Diseases, Clinical Modification. Inpatient prospective payment systems (IPPS) means the payment systems for subsection (d) hospitals as defined in section 1886(d)(1)(B) of the Act. Internal cost savings means the measurable, actual, and verifiable cost savings realized by the participant hospital resulting from care redesign undertaken by the participant hospital in connection with providing items and services to beneficiaries within specific CCJR episodes of care. Internal cost savings does not include savings realized by any individual or entity that is not the participant hospital. Lower-extremity joint replacement (LEJR) means any procedure that is within MS–DRG 469 or 470, including lower-extremity joint replacement procedures or reattachment of a lower extremity. Medicare severity diagnosis-related group (MS–DRG) means a patient classification system for inpatient discharges and adjusting payments under the IPPS. Medicare-dependent, small rural hospital (MDH) means a specific type of hospital that meets the classification criteria specified under § 412.108 of this chapter. Metropolitan Statistical Area (MSA) means a core-based statistical area associated with at least one urbanized area that has a population of at least 50,000. Net payment reconciliation amount (NPRA) means the amount determined in accordance with § 510.305(e). NPI stands for National Provider Identifier. OIG stands for the Department of Health and Human Services’, Office of the Inspector General. Participant hospital means an IPPS hospital (other than those hospitals specifically excepted under § 510.100(b)) that is physically located in one of the geographic areas selected for participation in the CCJR model in accordance with § 510.105, as of the date of selection or any time thereafter during any performance period. Participation agreement means a written, signed agreement between a CCJR collaborator and a participant hospital that meets the requirements of § 510.500(c). PBPM stands for per-beneficiary-permonth. E:\FR\FM\14JYP3.SGM 14JYP3 41308 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules Performance year means one of the calendar years in which the CCJR model will be tested. Post-episode spending amount means the sum of Medicare Parts A and B payments for items and services that are furnished within 30 days after the end of the episode. Reconciliation payment means a payment of the NPRA made to a CCJR participant hospital. Region means one of the nine U.S. census divisions, as defined by the U.S. Census Bureau. Rural hospital means a hospital that meets one of the following definitions: (1) Is located in a rural area as defined under § 412.64 of this chapter. (2) Is located in a rural census tract defined under § 412.103(1) of this chapter. (3) Has reclassified as a rural hospital under § 412.103 of this chapter. Rural referral center (RRC) has the same meaning given this term under § 412.96 of this chapter. Sole community hospital (SCH) means a certain type of hospital that meets the classification criteria specified in § 412.92 of this chapter. TIN stands for Taxpayer Identification Number. Total episode payments means the total Medicare FFS Parts A and B claims for an episode. States. All counties within each of the selected MSAs are selected for inclusion in the CCJR model. (b) Stratification criteria. Geographic areas in the United States are stratified according to the characteristics that CMS determines are necessary to ensure that the model is tested on a broad range of different types of hospitals that may face different obstacles and incentives for improving quality and controlling costs. (c) Exclusions. CMS excludes from the selection of geographic areas MSAs that met the following criteria between July 1, 2013 and June 30, 2014: (1) Had fewer than 400 episodes; (2) Had fewer than 400 non-BPCI episodes; (3) Had at least 400 non-BPCI episodes, but— (i) Had more than 50 percent of otherwise qualifying (BPCI or non BPCI) episodes in Phase 2 of BPCI Model 2 or 4 with hospital episode initiators; or (ii) Had more than 50 percent of otherwise qualifying (BPCI or non-BPCI) episodes treated in a SNF or HHA that were treated in a BPCI Model 3 initiating provider; (4) Had more than 50 percent of episodes that were paid under the Maryland State Waiver System, if any part of the MSA was located in Maryland. Subpart B—Comprehensive Care for Joint Replacement Program Participants Subpart C—Scope of Episodes asabaliauskas on DSK5VPTVN1PROD with PROPOSALS § 510.100 Episodes being tested. (a) Initiation of an episode. An episode is initiated when a participant hospital admits a Medicare beneficiary described in § 510.205 for an anchor hospitalization. (b) Exclusions. A hospital is excluded from being a participant hospital if any of the following conditions apply on or after July 1, 2015: (1) The hospital is an episode initiator for an LEJR episode in the risk-bearing period of Models 2 or 4 of the BPCI. This exclusion ceases to apply to the hospital upon any termination of its participation as an episode initiator for a lower-extremity joint replacement episode. (2) The hospital is participating in Model 1 of the BPCI. This exclusion ceases to apply to the hospital upon any termination of its participation in BPCI in Model 1. § 510.105 Geographic areas. (a) General. The geographic areas for inclusion in the CCJR model are obtained using a stratified random sampling of certain MSAs in the United VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 § 510.200 Time periods, included services, and attribution. (a) Time periods. All episodes being tested in the CCJR model begin on or after January 1, 2016 and end on or before December 31, 2020. (b) Included services. All Medicare Parts A and B items and services are included in the episode, except as specified in paragraph (d) of this section. These services include, but are not limited to, the following: (1) Physicians’ services. (2) Inpatient hospital services (including hospital readmissions). (3) Inpatient hospital readmission services. (4) Inpatient psychiatric facility (IPF) services. (5) Long-term hospital care (LTCH) services. (6) Inpatient rehabilitation facility (IRF) services. (7) Skilled nursing facility (SNF) services. (8) Home health agency (HHA) services. (9) Hospital outpatient services. (10) Independent outpatient therapy services. (11) Clinical laboratory services. PO 00000 Frm 00112 Fmt 4701 Sfmt 4702 (12) Durable medical equipment (DME). (13) Part B drugs and biologicals. (14) Hospice services. (15) PBPM payments under models tested under section 1115A of the Act. (c) Episode attribution. All items and services included in the episode (as described in paragraph (b) of this section) are attributed to the participant hospital at which the anchor hospitalization occurs. (d) Excluded services. The following items, services, and payments are excluded from the episode: (1) Hemophilia clotting factors provided in accordance with § 412.115 of this chapter. (2) New technology add-on payments, as defined in part 412, subpart F of this chapter. (3) Items and services unrelated to the anchor hospitalization, as determined by CMS. Such excluded services include, but are not limited to, the following: (i) Inpatient hospital admissions for MS–DRGs that group to the following categories of diagnoses: (A) Oncology. (B) Trauma medical. (C) Chronic disease surgical, such as prostatectomy. (D) Acute disease surgical, such as appendectomy. (ii) Medicare Part B services as identified by the principal ICD–CM diagnosis code, based on the ICD–CM version in use during the performance year, on the claim that group to the following categories of diagnoses: (A) Acute disease diagnoses, such as severe head injury. (B) Certain chronic disease diagnoses, as specified by CMS on a diagnosis-bydiagnosis—basis depending on whether the condition was likely to have been affected by the lower-extremity joint replacement procedure and recovery period or whether substantial services were likely to be provided for the chronic condition during the episode. Such chronic disease diagnoses are posted on the CMS Web site and may be revised in accordance with paragraph (e) of this section. (C) Certain PBPM payments under models tested under section 1115A of the Act. PBPM model payments are excluded if they are determined to be primarily used for care coordination or care management services for clinical conditions in excluded categories of diagnoses, as described in this paragraph. The list of excluded PBPM payments is posted on the CMS Web site and is updated consistent with the following. Notwithstanding the foregoing, all PBPM model payments E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules funded from CMMI’s appropriation are excluded from the episode. (1) The list of excluded PBPM payments will be posted on the CMS Web site. (2) On an annual basis, or more frequently as needed, CMS updates the list of excluded PBPM payments. (3) Criteria for exclusion of PBPM payments under certain models tested under section 1115A of the Act. Model PBPM payments are excluded from episode target price and actual episode payments if determined to be primarily used for care coordination or care management services for clinical conditions in excluded categories of diagnoses, as described in paragraph (d) of this section. (4) Updating the list of excluded PBPM payments to account for new models. CMS posts potential new exclusions of PBPM payments to the CMS Web site to allow for public comment and finalize and post to the CMS Web site the updated exclusions list after consideration of public input. (D) Previous years’ reconciliation or repayment amounts are not included in the episode for purposes of calculating episode target prices (§ 510.300) or total episode payments during a performance period. (e) Updating the lists of excluded services. (1) The list of excluded MS– DRGs and ICD–CM diagnosis codes are posted on the CMS Web site. (2) On an annual basis, or more frequently as needed, CMS updates the list of excluded services to reflect annual coding changes or other issues brought to CMS’s attention. (3) CMS applies the following standards when revising the list of excluded services for reasons other than to reflect annual coding changes: (i) Items or services that are directly related to the LEJR procedure or the quality or safety of LEJR care would be included in the episode. (ii) Items or services for chronic conditions that may be affected by the LEJR procedure or post-surgical care would be related and included in the episode. (iii) Items and services for chronic conditions that are generally not affected by the LEJR procedure or postsurgical care would be excluded from the episode. (iv) Items and services for acute clinical conditions not arising from existing, episode-related chronic clinical conditions or complications of LEJR surgery would be excluded from the episode. (4) CMS posts the following to the CMS Web site: VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 (i) Potential revisions to the exclusion to allow for public comment; and (ii) An updated exclusions list after consideration of public comment. § 510.205 Beneficiary inclusion criteria. (a) Episodes tested in the CCJR model include only those in which care is furnished to beneficiaries who meet all of the following criteria upon admission to the anchor hospitalization: (1) The beneficiary is enrolled in Medicare Parts A and Part B. (2) The beneficiary’s eligibility for Medicare is not on the basis of end stage renal disease, as described in § 406.13 of this chapter. (3) The beneficiary is not enrolled in any managed care plan (for example, Medicare Advantage, health care prepayment plans, or cost-based health maintenance organizations). (4) The beneficiary is not covered under a United Mine Workers of America health care plan. (5) Medicare is the primary payer. (b) If at any time during the episode the beneficiary no longer meets all of the criteria in this section, the episode is canceled in accordance with § 510.210(b). § 510.210 Determination of the episode. (a) General. The episode begins with the admission of a Medicare beneficiary described in § 510.205 to a participant hospital for an anchor hospitalization and ends 90 calendar days after discharge from the anchor hospitalization. (b) Cancellation of an episode. The episode is cancelled and is not included in the determination of NPRA as specified in § 510.305 if the beneficiary does any of the following: (1) Ceases to meet any criterion listed in § 510.205 at any time during the episode. (2) Is readmitted to any participant hospital during the episode for another anchor hospitalization; (3) Initiates an LEJR episode under BPCI (4) Dies during the anchor hospitalization. Subpart D—Pricing and Payment § 510.300 prices. Determination of episode target (a) General. CMS establishes episode target prices for participant hospitals for each performance year the model as specified in this section. Episode target prices are established according to the following: (1) MS–DRG assigned at discharge for anchor hospitalization— (i) MS–DRG 469; or (ii) MS–DRG 470. PO 00000 Frm 00113 Fmt 4701 Sfmt 4702 41309 (2) Applicable time period for performance period episode target prices. Episode target prices are be updated to account for midyear payment updates no less than twice per year, for updated episode target prices effective October 1 and January 1, and at other intervals if necessary. (3) Episodes that straddle performance years or midyear payment updates. Episode target prices apply for the time period in which the date of the anchor hospitalization admission occurs. (4) Adjustments for quality reporting, as discussed in § 510.305(g). (b) Episode target price. (1) CMS calculates episode target prices based on a blend of each participant hospital’s most recent 3 years of expenditures for an episode and the most recent 3 years of expenditures for an episode in the region in which the participant hospital is physically located. Specifically, the blend consists of the following: (i) Two-thirds of the participant hospital’s own historical episode payments and one-third of the regional historical episode payments for performance years 1 and 2. (ii) One-third of the hospital’s own historical episode payments and twothirds of the regional historical episode payments for performance year 3. (iii) Regional historical episode payments for performance years 4 and 5. (2) Exception for low-volume hospitals. Episode target prices for participant hospitals with fewer than 20 CCJR episodes in total across the 3 historical years of data used to calculate the episode target price are based on 100 percent regional historical episode payments. (3) Exception for recently merged or split or altogether new hospitals. (i) Hospital-specific historical payments for recently merged or split hospitals would incorporate the historical episodes attributed to their previous entities. (ii) New hospitals (with new CMS provider agreements) would receive target prices using the same blended approach and low-volume policy for existing hospitals as described in in this section. (4) Exception for high episode spending in baseline period. Historical episode payments are capped at 2 standard deviations above the mean episode payment for purposes of calculating the episode target prices. (5) Exclusion of incentive programs and add-on payments under existing Medicare payment systems. Certain incentive programs and add-on payments are excluded, as applicable, from target price and total episode payment calculations by using the CMS E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41310 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules Price Standardization methodology used for the Medicare spending per beneficiary measure in the Hospital Value-Based Purchasing Program. (6) Communication of episode target prices. CMS communicates episode target prices to participant hospitals before the performance period in which they apply for performance years 2 through 5, and before or shortly after the start of performance year 1. (c) Discount factor. A participant hospital’s episode target prices incorporate applicable discount factors to reflect Medicare’s portion of reduced expenditures from the CCJR model as described in this section. (1) Except as provided in paragraph (c)(2) of this section, the applicable discount factor is for a participant hospital that— (i) Does not successfully submit voluntary patient-reported outcome data for that performance year as provided in § 510.400(b) is 2.0 percent. (ii) Successfully submits voluntary patient-reported outcome data for that performance year as provided in § 510.400(b) is 1.7 percent. (2) For performance year 2 only, if the participant hospital’s NPRA (defined in section § 510.305(e)) would be negative using the applicable discount factor under paragraph (c)(1) of this section, then for purposes of determining the participant hospital’s NPRA, the discount factor is applied in lieu of the applicable discount factor under paragraph (c)(1) of this section for a participant hospital that— (i) Successfully submits the voluntary patient-reported outcomes data for performance year 2 as provided in § 510.400(b) is 0.7 percent. (ii) Does not successfully submit the voluntary patient-reported outcomes data for performance year 2 as provided in § 510.400(b), is 1 percent. (d) Data sharing. (1) CMS makes available to participant hospitals, through the most appropriate means, data that CMS determines may be useful to participant hospitals to do the following: (i) Determine appropriate ways to increase the coordination of care. (ii) Improve quality. (iii) Enhance efficiencies in the delivery of care. (iv) Otherwise achieve the goals of the CCJR model described in this section. (2) Beneficiary-identifiable data. (i) CMS makes beneficiary-identifiable data available to a participant hospital in accordance with applicable privacy laws and only in response to the hospital’s request for such data for a beneficiary who has been furnished a billable service by the participant VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 hospital corresponding to the episode definitions for CCJR and has not chosen to opt out of claims data sharing. (ii) The minimum data necessary to achieve the goals of the CCJR model, as determined by CMS, may be provided under this section for a participant hospital’s baseline period and as frequently as on a quarterly basis throughout the hospital’s participation in the CCJR model. § 510.305 Determination of the NPRA and reconciliation process. (a) General. Providers and suppliers furnishing items and services included in the episode bill for such items and services in accordance with existing rules and as if this part were not in effect. (b) Reconciliation. Medicare uses a series of reconciliation processes, which CMS performs as described in paragraphs (d) and (f) of this section after the end of each performance year, to establish final payment amounts to participant hospitals for CCJR episodes for a given performance year. Following the end of each performance year, CMS determines actual episode payments for each episode for the performance year (other than episodes that have been canceled in accordance with § 510.210(b)) and determines the amount of a reconciliation or repayment amount. (c) Data used. CMS uses the most recent claims data available to perform each reconciliation calculation. (d) Annual reconciliation. (1) Two months after the end of each performance year, CMS performs a reconciliation calculation to establish an NPRA for each participant hospital. (2) CMS— (i) Calculates the NPRA for each participant hospital in accordance with § 510.305(e) including the adjustments provided for in § 510.305(e)(5); and (ii) Assesses whether hospitals meet specified quality requirements under § 510.315. (e) Calculation of the NPRA. By comparing the episode target prices described in § 510.300 and the participant hospital’s actual episode spending for the performance year and applying the adjustments in paragraph (e)(1)(v) of this section, CMS establishes an NPRA for each participant hospital for each performance year. (1) Initial calculation. In calculating the NPRA for each participant hospital for each performance year, CMS does the following: (i) Determines actual episode payments for each episode included in the performance year (other than episodes that have been cancelled in PO 00000 Frm 00114 Fmt 4701 Sfmt 4702 accordance with § 510.210(b)) using claims data that is available 2 months after the end of the performance year, in accordance with the adjustments in § 510.300(b)(5). (ii) Multiplies the participant hospital’s applicable episode target price, including necessary adjustments for voluntary reporting of outcome data (§ 510.400(b)) for each type of episode being tested and time period (as determined in accordance with § 510.300) by the number of episodes being tested in the performance year to which that episode target price applies. (iii) Aggregates the amounts computed in paragraph (e)(1) of this section across all episodes being tested for that participant hospital in that performance year. (iv) Subtracts the aggregate actual episode payments for all of the participant hospital’s episodes being tested in that performance year from the calculated amount from paragraph (e)(2) of this section. (v) Makes the following adjustments: (A) Increases in post-episode spending. If the average post-episode spending for a participant hospital in any given performance year is greater than 3 standard deviations above the regional average post-episode spending for the same performance year, then this amount would be applied to the NPRA. (B) Limit on financial responsibility for high episode payment cases. Actual episode payments for an episode are capped at 2 standard deviations above the mean episode payment for purposes of calculating the episode target prices (§ 510.300) and for purposes of comparing the actual episode payments with the applicable episode target price to calculate the NPRA. (C) Limitation on loss. The total amount any participant hospital is responsible for repaying to Medicare for a performance year cannot exceed the following: (1) For performance year 2 only, 10 percent of the amount calculated in paragraph (e)(1)(ii) of this section for the performance year. (2) For performance years 3, 4, and 5, 20 percent of the amount calculated in paragraph (e)(1)(ii) of this section for the performance year. (D) Limitation on gain. The total amount of any reconciliation payment Medicare would make to a participant hospital for a performance year cannot exceed 20 percent of the amount calculated in paragraph (e)(1)(ii) of this section for the performance year. (E) Financial loss limits for SCHs, MDHs, and RRCs. If a participant hospital is an SCH, an MDH or RRC, then for— E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules (1) Performance year 2, the total repayment amount for which the participant hospital is responsible cannot exceed 3 percent of amount calculated in paragraph (e)(1)(ii) of this section; and (2) Performance years 3 through 5, the total repayment amount cannot exceed 5 percent of the amount calculated in paragraph (e)(1)(ii) of this section. (f) Determination of reconciliation or repayment amount—(1) Determination of the reconciliation or repayment amount. (i) For performance year 1, the reconciliation or repayment amount is equal to the NPRA. (ii) For performance years 2 through 5, results from the subsequent reconciliation calculation for a prior year’s reconciliation, as described in paragraph (i)(3) of this section, are applied to the current year’s NPRA in order to determine the reconciliation or repayment amount. (2) Reconciliation payment. If the amount from paragraph (f)(1) of this section is positive and the participant hospital meets or exceeds all of the quality thresholds described in § 510.400, Medicare pays the participant hospital a reconciliation payment an amount equal to the calculation described in paragraph (f)(1) of this section. (3) Repayment amount. If the amount from paragraph (f)(1) of this section is negative, the participant hospital pays to Medicare an amount equal to the calculation described in paragraph (f)(1) of this section. CMS waives this requirement for performance year 1. (g) Determination of eligibility for reconciliation based on quality. (1) CMS assesses each participant hospital’s performance on quality metrics, as described in § 510.400, to determine whether the participant hospital is eligible to receive a reconciliation payment for a performance year. (2) If the hospital meets the quality thresholds as specified in § 510.400, and is determined to have positive NPRA under paragraph (e) of this section, the hospital is eligible for a reconciliation payment. (3) If the hospital does not meet the thresholds as specified in § 510.400 for a performance year, the hospital is not eligible for a reconciliation payment. (h) Reconciliation report. CMS issues each participant hospital a CCJR reconciliation report for the performance year. Each CCJR reconciliation report contains the following: (1) Information on whether the participant hospital met or exceeded the quality thresholds specified in § 510.400. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 (2) The total actual episode payments for the participant hospital. (3) The NPRA. (4) Whether the participant hospital is eligible for a reconciliation payment or must make a repayment to Medicare. (5) The NPRA and subsequent reconciliation calculation amount for the previous performance year, as applicable. (6) The reconciliation payment or repayment amount. (i) Subsequent reconciliation calculation. (1) Fourteen months after the end of each performance year, CMS performs an additional calculation, using claims data available at that time, to account for final claims run-out and any additional overlap between the CCJR model and other CMS models and programs as described in paragraph (i)(2) of this section. (2) The subsequent reconciliation calculation accounts for CCJR episodes that overlap with the following shared savings programs and models in cases where the participant hospital is a participant in the ACO and the beneficiary in the episode is assigned to the ACO: (i) The Pioneer ACO model. (ii) The Medicare Shared Savings Program. (iii) The Next Generation ACO model. (iv) The Comprehensive ESRD Care Initiative (CEC). (3) The additional calculation occurs concurrently with the reconciliation process for the most recent performance year. If the result of the subsequent calculation is different than zero, CMS applies the stop-loss and stop-gain limits in paragraph (e) of this section to the calculations in aggregate for that performance year (the initial reconciliation and the subsequent calculation) to ensure the amount does not exceed the stop-loss or stop-gain limits. CMS then applies this amount to the NPRA for the most recent performance year in order to determine the reconciliation amount or repayment amount for the most recent performance year. For the performance year 2 reconciliation report only, the subsequent calculation amount (for performance year 1) is applied to the performance year 1 NPRA to ensure that the combined amount is not less than 0. If the combined amount is less than zero, the subsequent calculation amount would be capped at the amount that would result in a net amount of zero for the combination of the performance year 1 NPRA and subsequent calculation amount. PO 00000 Frm 00115 Fmt 4701 Sfmt 4702 § 510.310 41311 Appeals process. (a) General. If a participant hospital believes that there is an error in a calculation that involves a matter in any way related to payment, reconciliation amounts, repayment amounts, or determinations associated with quality measures impacting payment, the hospital is required to provide written notice of the error, in a form and manner specified by CMS. (1) Unless the participant hospital provides such notice, the CCJR reconciliation report is deemed final 30 calendar days after it is issued. (2) If CMS receives a timely notice of a calculation error as provided in paragraph (d) of this section, CMS responds in writing within 30 calendar days to either confirm or refute the calculation error, although CMS reserves the right to an extension upon written notice to the participant hospital. (3) If a participant hospital does not submit timely notice of a calculation error in accordance with the timelines and processes specified by CMS, then CMS deems final the CCJR reconciliation report and proceeds with the payment or repayment processes, as applicable, as determined by the NPRA reflected in the CCJR reconciliation report. (b) Participant hospitals may appeal the NPRA or any calculations impacting NPRA, reconciliation amounts or repayment amounts on the grounds that CMS or its representative made an error in calculating such amounts using the dispute resolution process defined in paragraph (e) of this section. (c) Only participant hospitals may utilize the dispute resolution process. (d) To begin the dispute resolution process, a participant hospital must submit a notice of calculation error in a timely manner, as specified by CMS. (e) Dispute resolution process. (1) If the participant hospital is dissatisfied with CMS’s response to the notice of a calculation error, the participant hospital may request a reconsideration review in a form and manner as specified by CMS. (i) The reconsideration review request must provide a detailed explanation of the basis for the dispute and include supporting documentation for the participant hospital’s assertion that CMS or its representatives did not accurately calculate the NPRA in accordance with § 510.305. (ii) If CMS does not receive a request for reconsideration from the participant hospital within 10 calendar days of the issue date of CMS’s response to the participant hospital’s notice of calculation error, then CMS’s response E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41312 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules to the calculation error is deemed final and CMS proceeds with reconciliation payment or repayment processes, as applicable, as described in § 510.305. (iii) Where the participant hospital contests a matter that does not involve an issue contained in, or a calculation which contributes to, a CCJR reconciliation report, a calculation error form is not required. An example of such a matter is termination of the participant hospital from the model. In those instances, if CMS does not receive a request for reconsideration from the participant hospital within 10 calendar days of the notice of the initial determination, the initial determination is deemed final and CMS proceeds with action indicated in the initial determination. (2)(i) A CMS reconsideration official notifies the participant hospital in writing within 15 calendar days of receiving the participant hospital’s review request of the following: (A) The date, time, and location of the review. (B) The issues in dispute. (C) The review procedures. (D) The procedures (including format and deadlines) for submission of evidence. (ii) The CMS reconsideration official takes all reasonable efforts to schedule the review to occur no later than 30 days after the date of receipt of the notification. (iii) The provisions at § 425.804(b), (c), and (e) of this chapter are applicable to reviews conducted in accordance with the reconsideration review process for CCJR. (iv) The CMS reconsideration official issues a written determination within 30 days of the review. The determination is final and binding. (3) Limitations on review. In accordance with section 1115A(d)(2) of the Act, there is no administrative or judicial review under sections 1869 or 1878 of the Act or otherwise for the following: (i) The selection of models for testing or expansion under section 1115A of the Act. (ii) The selection of organizations, sites, or participants to test those models selected. (iii) The elements, parameters, scope, and duration of such models for testing or dissemination. (iv) Determinations regarding budget neutrality under section 1115A(b)(3) of Act. (v) The termination or modification of the design and implementation of a model under section 1115A(b)(3)(B) of Act. (vi) Decisions about expansion of the duration and scope of a model under VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 section 1115A(c) of the Act, including the determination that a model is not expected to meet criteria described in paragraph (e)(1) or (2) of this section. § 510.315 Quality thresholds for reconciliation payment eligibility. (a) General. Participant hospitals are eligible for a reconciliation payment for a performance year only if they meet or exceed the minimum quality thresholds specified in paragraph (b) of this section for the performance year. (b) Quality measure thresholds. A participant hospital’s measure result must be at or above the thresholds in paragraphs (b)(1) and (2) of this section for all three quality measures for each performance year of this model to be eligible for additional payments under the CCJR model. (1) The 30th percentile of the national hospital measure results calculated for all HIQR-participant hospitals for performance years 1, 2, and 3. (2) The 40th percentile for performance years 4 and 5. (c) Low-volume hospital exception. A participant hospital with an insufficient volume of episodes on which to determine performance on an individual measure, as determined by CMS, is considered to have met the performance threshold for that quality measure. § 510.320 Treatment of incentive programs or add-on payments under existing Medicare payment systems. The CCJR model does not replace any existing Medicare incentive programs or add-on payments. The target price and NPRA for a participant hospital is independent of, and does not affect, any incentive programs or add-on payments under existing Medicare payment systems (as described in § 510.300(b)(5)). § 510.325 Allocation of payments for services that straddle the episode. (a) General. Services included in the episode as provided in § 510.200(b) that straddle the episode are prorated so that only the portion attributable to care furnished during the episode are attributed to the calculation of actual episode payments. (b) Proration of services. Payments for services that straddle the episode are prorated using the following methodology: (1) Non-IPPS inpatient services and other inpatient services. Non-IPPS inpatient services, and services furnished by other inpatient providers that extend beyond the end of the episode are prorated according to the percentage of the actual length of stay (in days) that falls within the episode window. PO 00000 Frm 00116 Fmt 4701 Sfmt 4702 (2) Home health agency services. Home health services paid under the prospective payment system in part 484, subpart E of this chapter are prorated according to the percentage of days, starting with the first billable service date (‘‘start of care date’’) and through and including the last billable service date, that occur during the fixed duration of the episode. This methodology is applied in the same way if the home health services begin (the start of care date) prior to the start of the episode. (3) IPPS services. IPPS claim amounts that extend beyond the end of the episode are prorated according to the geometric mean length of stay, using the following methodology: (i) The first day of the IPPS stay is counted as 2 days. (ii) If the actual length of stay that occurred during the episode is equal to or greater than the MS–DRG geometric mean, the normal MS–DRG payment would be fully allocated to the episode. (iii) If the actual length of stay that occurred during the episode is less than the geometric mean, the normal MS– DRG payment amount would be allocated to the episode based on the number of inpatient days that fall within the episode. (iv) If the full amount is not allocated to the episode, any remainder amount is allocated to the post-episode spending calculation (defined in § 510.2). Subpart E—Quality Measures, Beneficiary Protections, and Compliance Enforcement § 510.400 Quality measures and reporting. (a) Reporting of quality measures. The following quality measures are used for public reporting and for determining whether a participant hospital is eligible for additional payments under the CCJR model, as described in § 510.305: (1) Hospital-level risk-standardized complication rate following elective primary total hip arthroplasty and/or total knee arthroplasty. (2) Hospital-level 30-day, all-cause risk-standardized readmission rate following elective primary total hip arthroplasty and/or total knee arthroplasty. (3) Hospital Consumer Assessment of Healthcare Providers and Systems Survey. (b) Requirements for successful data submission of patient reported outcomes. To be eligible for the discount factors that apply to participant hospitals that successfully submit the voluntary patient reported outcomes data described in § 510.300(c), participant hospitals must submit data E:\FR\FM\14JYP3.SGM 14JYP3 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules on the hospital-level performance measure(s) of patient-reported outcomes following elective primary total hip and/or total knee arthroplasty, including but not limited to the pre-operative and post-operative data elements, for at least 80 percent of the eligible elective primary total hip and/or total knee arthroplasty beneficiaries within 60 days of the end of the most recent performance period. (c) Public reporting. CMS— (1) Makes the quality measurement results calculated for the readmission, complication, and patient survey quality measures for each participant hospital in each performance year publicly available on the CMS Web site in a form and manner as determined by CMS. (2) Shares each participant hospital’s quality metrics with the hospital prior to display on the Web site. (3) Does not publicly report the voluntary patient reported outcome data during this 5 year model. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS § 510.405 Beneficiary choice and beneficiary notification. (a) Beneficiary choice. The CCJR model does not restrict Medicare beneficiaries’ ability to choose any Medicare participating provider or supplier, or any provider or supplier who has opted out of Medicare. (b) Required beneficiary notification. (1) Each participant hospital must provide written notice to any Medicare beneficiary that meets the criteria in § 510.205 of his or her inclusion in the CCJR model. The beneficiary notification must contain all of the following: (i) A detailed explanation of the model and how it might be expected to affect the beneficiary’s care. (ii) Notification that the beneficiary retains freedom of choice to choose providers and services. (iii) Explanation of how patients can access care records and claims data through an available patient portal, and how they can share access to their Blue Button® electronic health information with caregivers. (iv) A statement that all existing Medicare beneficiary protections continue to be available to the beneficiary. These include the ability to report concerns of substandard care to Quality Improvement Organizations (QIO) and 1–800–MEDICARE. (2) A participant hospital must require any physician with whom it has a CCJR sharing arrangement to provide written notice of the existence of such an arrangement to any Medicare beneficiary that meets the criteria for inclusion in the model specified in § 510.205. VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 (c) Timing of the required beneficiary notification. The participant hospital provides the written notice described in paragraph (b) of this section upon the beneficiary’s admission for an anchor hospitalization. § 510.410 Compliance enforcement. (a) General. Participant hospitals must comply with all of the requirements outlined in this part. (b) Failure to comply. CMS may do one or more of the following if a participant hospital fails to comply with any of the requirements outlined in this part: (1) Issue a warning letter to the participant hospital. (2) Require the participant hospital to develop a corrective action plan. (3) Reduce or eliminate a participant hospital’s positive NPRA. (4) Terminate the participant hospital’s participation in the CCJR model, if the participant hospital, or an individual or entity with which the participant hospital has a participation agreement, does any of the following: (i) Takes any action that threatens the health or safety of patients. (ii) Avoids at-risk Medicare beneficiaries, as this term is defined in § 425.20 of this chapter. (iii) Avoids patients on the basis of payer status. (iv) Is subject to sanctions or final actions of an accrediting organization or federal, state, or local government agency that could lead to the inability to comply with the requirements and provisions of this part. (v) Takes or fails to take any action that CMS determines for program integrity reasons is not in the best interests of the CCJR model. (vi) Is subject to action by the Secretary to redress an allegation of fraud or significant misconduct, including intervening in a False Claims Act qui tam matter, issuing a predemand or demand letter under a civil sanction authority or similar actions. Subpart F—Financial Arrangements and Beneficiary Incentives § 510.500 Financial arrangements under the CCJR model. (a) General. To assist participant hospitals in aligning the financial incentives of other providers and suppliers caring for beneficiaries in CCJR episodes with the quality and efficiency goals of the CCJR model, participant hospitals may, consistent with applicable law, elect to enter into financial arrangements that contain CCJR sharing arrangements with CCJR collaborators, as defined in this section. PO 00000 Frm 00117 Fmt 4701 Sfmt 4702 41313 (1) All such financial arrangements must comply with all relevant laws and regulations, including the fraud and abuse laws and all applicable payment and coverage requirements. (2) CMS reserves the right to review any CCJR sharing arrangement to ensure that it does not pose a risk to beneficiary access, beneficiary freedom of choice, or quality of care. (b) Required records. When a participant hospital enters into a CCJR sharing arrangement with a CCJR collaborator, the participant hospital, and all of its CCJR collaborators must maintain copies of the following records: (1) All original copies of CCJR sharing arrangements that the participant hospital signs with a CCJR collaborator in connection with the hospital’s participation in CCJR. Each CCJR sharing arrangement must include, but is not limited to the following: (i) A specific methodology and accounting formula for calculating and verifying the internal cost savings generated by the participant hospital entering into a CCJR sharing arrangement with a CCJR collaborator based on the care redesign elements specifically associated with the particular CCJR collaborator. (ii) Specific methodologies for accruing and calculating internal cost savings from the participant hospital, where the hospital intends to share internal cost savings through a CCJR sharing arrangement with a CCJR collaborator. The specific methodologies for accruing and calculating internal cost savings must be transparent, measurable, and verifiable in accordance with generally accepted accounting principles and Government Auditing Standards (The Yellow Book). The methodology must set out the specific care redesign elements to be undertaken by the participant hospital or the CCJR collaborator or both. (iii) A description of the methodology and accounting formula for calculating the percentage or dollar amount of a reconciliation payment that will be paid from the participant hospital to the CCJR collaborator. (iv) A description of the methodology, frequency of distribution, and accounting formula for distributing and verifying any and all gainsharing payments. (v) A description of the arrangement between the participant hospital and the CCJR collaborator regarding gainsharing payments and alignment payments, including safeguards to ensure that such alignment payments are made solely for purposes related to sharing responsibility for funds need to repay E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS 41314 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules Medicare in the CCJR model. This description must include the following: (A) A methodology. (B) Frequency of payment. (C) Accounting formula for payment. (D) Receipt of any and all alignment payments. (E) Plans regarding care redesign. (F) Changes in care coordination or delivery that is applied to the participant hospital or CCJR collaborators or both. (G) Any description of how success will be measured. (vi) Management and staffing information, including type of personnel or contractors that will be primarily responsible for carrying out changes to care under the model. (2) The participant hospital must keep records of the following: (i) All CCJR collaborators. (ii) Its process for determining and verifying the eligibility of CCJR collaborators to participate in Medicare. (iii) Information confirming the organizational readiness of the participant hospital to measure and track internal cost savings. (iv) Plan to track internal cost savings. (v) Information on the accounting systems used to track internal cost savings. (vi) A description of current health information technology, including systems to track reconciliation payments and internal cost savings. (c) Participant agreement. The participant agreement must obligate the parties to comply, and must obligate the CCJR collaborator to require any of its employees, contractors or designees to comply, without limitation, to the following: (1) An individual or entity’s participation in the CCJR sharing arrangement is voluntary, and there is no penalty for nonparticipation. (2) Any gainsharing payments made under the CCJR sharing arrangement may be made only from the participant hospital to the entity or individual with whom the participant hospital has a signed CCJR sharing arrangement. (3) Any alignment payments made in accordance with a CCJR sharing arrangement may be made only to the participant hospital from the entity or individual with whom the participant hospital has signed a participation agreement containing a CCJR sharing arrangement. A CCJR collaborator entering into a CCJR sharing arrangement must be in compliance with all Medicare provider enrollment requirements at § 424.500 of this chapter, including having a valid and active TIN or NPI. (4) Any internal cost savings or reconciliation payments that the VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 participant hospital seeks to share through CCJR sharing arrangements must meet the requirements set forth in this part and must be administered by the participant hospital in accordance with generally accepted accounting principles. (i) The participant hospital may not distribute any amounts that are not comprised of dollars that are either internal cost savings or a reconciliation payment, as those terms are defined in this part. (ii) All amounts deemed internal cost savings by the participant hospital must reflect actual, internal cost savings achieved by the participant hospital through implementation of care redesign elements identified and documented by the participant hospital in the manner described in this section. (iii) Internal cost savings may not reflect ‘‘paper’’ savings from accounting conventions or past investment in fixed costs. (5) Any alignment payments that the participant hospital receives through a CCJR sharing arrangement must meet the requirements set forth in this section and be administered by the participant hospital in accordance with generally accepted accounting principles. In no event may the participant hospital receive any amounts from a CCJR collaborator under a CCJR sharing arrangement that are not alignment payments. (6) Provisions that require CCJR collaborators to share all records related to a CCJR Sharing Arrangement, including at a minimum the following: (i) Each participation agreement between the participant hospital and a CCJR collaborator must obligate the CCJR collaborator to provide the participant hospital and CMS with access to the CCJR collaborator’s records, information, and data for purposes of monitoring and reporting and any other lawful purpose. (ii) Records, information, and data demonstrating compliance with the gainsharing payment must— (A) Have sufficient detail to verify compliance with all material terms of the CCJR sharing arrangement; and (B) Be fully substantiated and documented, as to both statements and numbers. (7) Participation agreements must require all CCJR collaborators to comply with any evaluation, monitoring, compliance, and enforcement activities performed by CMS or its designees for the purposes of operating the CCJR model. (d) Gainsharing payment and alignment payment conditions and restrictions. Participant hospitals must PO 00000 Frm 00118 Fmt 4701 Sfmt 4702 adhere to the following conditions and restrictions concerning gainsharing payments and alignment payments made under a CCJR sharing arrangement: (1) No entity or individual, as a party to a participation agreement or not, may condition the opportunity to receive gainsharing payments in CCJR on the volume or value of past or anticipated referrals or other business generated to, from, or among the participant hospital and any CCJR collaborators. (2) Participant hospitals are not required to share reconciliation payments, internal cost savings, or responsibility for repayment to CMS with other providers and suppliers. (i) If a participant hospital elects to engage in those activities, such activities are limited to the terms of this section. (ii) Gainsharing payments, if distributed, must be distributed on an annual basis. (iii) Alignment payments from a CCJR collaborator to a participant hospital may be made at any interval that is agreed upon by both parties, and must— (A) Be clearly identified; (B) Comply with all provisions in this section; (C) Comply with all applicable laws, statutes, and rules. (3) No entity or individual, as a party to a participation agreement or not, may condition the opportunity to send or receive alignment payments in CCJR on the volume or value of past or anticipated referrals or other business generated to, from, or among the participant hospital and any CCJR collaborators. (4) In a calendar year, the aggregate amount of the total gainsharing payments distributed by a participant hospital that are derived from a CCJR reconciliation payment may not exceed the amount of the reconciliation payment the participant hospital receives from CMS. (5) In a calendar year, the aggregate amount of the total alignment payments received by the participant hospital may not exceed 50 percent of the participant hospital’s repayment amount due to CMS. If no repayment amount is due, then no alignment payments may be received by the participant hospital. (6) The participant hospital must retain at least 50 percent of its responsibility for repayment, pursuant to the repayment amount reflected in a reconciliation report, under the CCJR model to CMS. (7) A single CCJR collaborator may not make an alignment payment to a participant hospital that represents an amount greater than 25 percent of the E:\FR\FM\14JYP3.SGM 14JYP3 asabaliauskas on DSK5VPTVN1PROD with PROPOSALS Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules repayment amount reflected on a reconciliation report. (8) Gainsharing payments and alignment payments must not induce any of the following parties to reduce or limit medically necessary services to any Medicare beneficiary: (i) The participant hospital. (ii) CCJR collaborators. (iii) Employees, contractors, or designees of the participant hospital or CCJR collaborators. (9) Individual physician and nonphysician practitioners must retain their ability to make decisions in the best interests of the patient, including the selection of devices, supplies, and treatments. (10) Methodologies for calculating gainsharing payments and alignment payments must not directly account for volume or value of referrals, or business otherwise generated, between or among the participant hospital and CCJR collaborators. (11) Gainsharing payments must be derived solely from reconciliation payments or internal cost savings or both. (12) The total amount of gainsharing payments for a calendar year paid to an individual physician or nonphysician practitioner who is a CCJR collaborator must not exceed 50 percent of the total Medicare approved amounts under the Physician Fee Schedule (PFS) for services furnished to the participant hospital’s CCJR beneficiaries during a CCJR episode by that physician or nonphysician practitioner. (e) Documentation and maintenance of records. All participant hospitals and CCJR collaborators who enter into CCJR sharing arrangements must: (1) Provide to CMS, the OIG, and the Comptroller General or their designee(s) scheduled and unscheduled access to all books, contracts, records, documents, and other evidence (including data related to utilization and payments, quality performance measures, billings, and CCJR sharing arrangements related to CCJR) sufficient to enable the audit, evaluation, inspection, or investigation of the participant hospital’s compliance, as well as the compliance of any CCJR collaborator that has a CCJR sharing arrangement with the participant hospital, with CCJR requirements, the participation agreement, the quality of services furnished, the obligation to repay any reconciliation payments owed to CMS, or the calculation or both, distribution, receipt, or recoupment of gainsharing payments or alignment payments. (2) Maintain all such books, contracts, records, documents, and other evidence for a period of 10 years from the last day VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 of the participant hospital’s participation in the CCJR model or from the date of completion of any audit, evaluation, inspection, or investigation, whichever is later, unless— (i) CMS determines that there is a special need to retain a particular record or group of records for a longer period and notifies the participant hospital at least 30 calendar days before the normal disposition date; or (ii) There has been a dispute or allegation of fraud or similar fault against the participant hospital or any CCJR collaborator, in which case the records must be maintained for an additional 6 years from the date of any resulting final resolution of the dispute or allegation of fraud or similar fault. (f) Compliance responsibility. Notwithstanding any CCJR sharing arrangements between the participant hospital and CCJR collaborators, the participant hospital must have ultimate responsibility for adhering to and otherwise fully complying with all provisions of the CCJR model. (g) OIG authority. OIG authority is not limited or restricted by the provisions of the CCJR model, including the authority to audit, evaluate, investigate, or inspect the participant hospital, CCJR collaborators, or any other person or entity or their records, data, or information, without limitation. (h) Other authorities. None of the provisions of the CCJR model limits or restricts any other government authority permitted by law to audit, evaluate, investigate, or inspect the participant hospital, CCJR collaborators, or any other person or entity or their records, data, or information, without limitation. § 510.505 Beneficiary incentives under the CCJR model. (a) General. Participant hospitals may choose to provide in-kind patient engagement incentives to beneficiaries in CCJR episodes for free or below fair market value, subject to the following conditions: (1) The incentive must be provided to the beneficiary during a CCJR episode of care. (2) The item or service provided must be reasonably connected to the beneficiary’s medical care, as well as be a preventive care item or service or an item or service that advances a clinical goal, as listed in paragraph (b) of this section, for a beneficiary in a CCJR episode by engaging the beneficiary in better managing his or her own health. (b) Goals of the CCJR model. The following are the particular clinical goals of the CCJR model, which may be advanced through beneficiary incentives: PO 00000 Frm 00119 Fmt 4701 Sfmt 4702 41315 (1) Beneficiary adherence to drug regimens. (2) Beneficiary adherence to follow up care plan or care. (3) Reduction of readmissions and complications resulting from lowerextremity joint replacement procedures. (4) Management of chronic diseases and conditions that may be affected by the lower-extremity joint replacement procedure. (c) Beneficiary incentives. Participant hospitals are required to maintain a list of items and services furnished as beneficiary incentives that exceed $10, including the following: (1) The date the incentive is provided. (2) The identity of the beneficiary to whom the item or service was provided. (d) Technology provided to a beneficiary. (1) Items or services involving technology provided to a beneficiary may not exceed $1,000 in value for any one beneficiary in any one CCJR episode. (2) Items of technology exceeding $50 must— (i) Remain the property of the participant hospital; and (ii) Be retrieved from the beneficiary at the end of the CCJR episode. The participant hospital must maintain documentation of the date of retrieval. Subpart G—Waivers § 510.600 Waiver of direct supervision requirement for certain post-discharge home visits. (a) General. CMS waives the requirement in § 410.26(b)(5) of this chapter that services and supplies furnished incident to a physician’s service must be furnished under the direct supervision of the physician (or other practitioner) to permit home visits as specified in this section. The services furnished under this waiver are not be considered to be ‘‘hospital services,’’ even when furnished by the clinical staff of the hospital. (b) General supervision of qualified personnel. The waiver of the direct supervision requirement in § 410.26(b)(5) of this chapter applies only in the following circumstances: (1) The home visit is furnished during the episode to a beneficiary who has been discharged from an anchor hospitalization. (2) The home visit is furnished at the beneficiary’s home or place or residence. (3) The beneficiary does not qualify for home health services under sections 1835(a) and 1814(a) of the Act at the time of any such home visit. (4) The visit is furnished by a licensed clinician, either employed by a hospital E:\FR\FM\14JYP3.SGM 14JYP3 41316 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Proposed Rules or not, under the general supervision of a physician employee or a contractor of the participant hospital. (5) No more than 9 visits are furnished to the beneficiary during the episode. (c) Payment. Up to 9 post-discharge home visits per CCJR episode may be billed under Part B by the physician or nonphysician practitioner or by the participant hospital to which the supervising physician has reassigned his or her billing rights. (d) Other requirements. All other Medicare rules for coverage and payment of services incident to a physician’s service continue to apply. § 510.605 Waiver of certain telehealth requirements. asabaliauskas on DSK5VPTVN1PROD with PROPOSALS (a) Waiver of the geographic site requirements. CMS waives the geographic site requirements of section 1834(m)(4)(C)(i)(I) through (III) of the Act for all episodes being tested in the CCJR model, but only for services that— (1) May be furnished via telehealth under existing requirements; and (2) Are included in the episode in accordance with § 510.200(b). (b) Waiver of the originating site requirements. CMS waives originating site requirements under section 1834(m)(4)(C)(ii)(I) through (VIII) of the Act for all episodes being tested in the CCJR model to permit a telehealth visit to originate in the beneficiary’s home or VerDate Sep<11>2014 21:01 Jul 13, 2015 Jkt 235001 place of residence, but only for services that— (1) May be furnished via telehealth under existing requirements; and (2) Are included in the CCJR episode in accordance with § 510.200(b). The facility fee normally paid by Medicare to an originating site for a telehealth service is not paid if the service is originated in the beneficiary’s home. (c) Other requirements. All other requirements for Medicare coverage and payment of telehealth services continue to apply, including the list of specific services approved to be furnished by telehealth. § 510.610 Waiver of SNF 3-day rule. (a) Waiver of the SNF 3-day rule. For all episodes being tested in the CCJR model in performance years 2 through 5, CMS waives the SNF 3-day rule for coverage of a SNF stay for a beneficiary following the anchor hospitalization, but only if the SNF is rated an overall of 3 stars or better in the Five-Star Quality Rating System for SNFs on the Nursing Home Compare Web site (www.medicare.gov/NursingHome Compare/). (b) Other requirements. All other Medicare rules for coverage and payment of Part A-covered SNF services continue to apply. § 510.615 Waiver of certain post-operative billing restrictions. (a) Waiver to permit certain services to be billed separately during the 90-day PO 00000 Frm 00120 Fmt 4701 Sfmt 9990 post-operative global surgical period. CMS waives the billing requirements for global surgeries to allow the separate billing of certain post-discharge home visits, including those related to recovery from the surgery, as described in paragraph (b) of this section, for all episodes being tested in the CCJR model. (b) Services to which the waiver applies. Up to 9 post-discharge home visits, including those related to recovery from the surgery, per CCJR episode may be billed separately under Part B by the physician or nonphysician practitioner, or by the participant hospital to which the physician or nonphysician practitioner has reassigned his or her billing rights. (c) Other requirements. All other Medicare rules for global surgery billing during the 90-day post-operative period continue to apply. Dated: July 1, 2015. Andrew M. Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services. Dated: July 6, 2015. Sylvia M. Burwell, Secretary, Department of Health and Human Services. [FR Doc. 2015–17190 Filed 7–9–15; 4:15 pm] BILLING CODE 4120–01–P E:\FR\FM\14JYP3.SGM 14JYP3

Agencies

[Federal Register Volume 80, Number 134 (Tuesday, July 14, 2015)]
[Proposed Rules]
[Pages 41197-41316]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17190]

[[Page 41197]]

Vol. 80

Tuesday,

No. 134

July 14, 2015

Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Part 510

Medicare Program; Comprehensive Care for Joint Replacement Payment
Model for Acute Care Hospitals Furnishing Lower Extremity Joint
Replacement Services; Proposed Rule

Federal Register / Vol. 80 , No. 134 / Tuesday, July 14, 2015 /
Proposed Rules

[[Page 41198]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 510

[CMS-5516-P]
RIN 0938-AS64

Medicare Program; Comprehensive Care for Joint Replacement
Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint
Replacement Services

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule proposes to implement a new Medicare Part A
and B payment model under section 1115A of the Social Security Act,
called the Comprehensive Care for Joint Replacement (CCJR) model, in
which acute care hospitals in certain selected geographic areas will
receive retrospective bundled payments for episodes of care for lower
extremity joint replacement or reattachment of a lower extremity. All
related care within 90 days of hospital discharge from the joint
replacement procedures will be included in the episode of care. We
believe this model will further our goals in improving the efficiency
and quality of care for Medicare beneficiaries for these common medical
procedures.

DATES: Comment period: To be assured consideration, comments on this
proposed rule must be received at one of the addresses provided in the
ADDRESSES section no later than 5 p.m. EDT on September 8, 2015.

ADDRESSES: In commenting, please refer to file code CMS-5516-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to https://www.regulations.gov.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-5516-P, P.O. Box 8013,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-5516-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--

Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue SW., Washington, DC 20201.

(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal Government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--

Centers for Medicare & Medicaid Services, Department of Health and
Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address,
please call the telephone number (410) 786-7195 in advance to schedule
your arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:
Claire Schreiber, Claire.Schreiber@cms.hhs.gov, 410-786-8939
Gabriel Scott, Gabriel.Scott@cms.hhs.gov, 410-786-3928

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection, generally beginning approximately 3 weeks after publication
of the rule, at the headquarters of the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard, Baltimore, MD 21244, on Monday
through Friday of each week from 8:30 a.m. to 4:00 p.m. EDT. To
schedule an appointment to view public comments, phone 1-800-743-3951.

Electronic Access

This Federal Register document is also available from the Federal
Register online database through Federal Digital System (FDsys), a
service of the U.S. Government Printing Office. This database can be
accessed via the internet at https://www.gpo.gov/fdsys/.

Alphabetical List of Acronyms

Because of the many terms to which we refer by acronym,
abbreviation, or short form in this proposed rule, we are listing the
acronyms, abbreviations and short forms used and their corresponding
terms in alphabetical order.

[micro]SA Micropolitan Statistical Area
ACO Accountable Care Organization
ASPE Assistant Secretary for Planning and Evaluation
BPCI Bundled Payments for Care Improvement
CBSA Core-Based Statistical Area
CMS Centers for Medicare & Medicaid Services
CPT Current Procedural Terminology
CCJR Comprehensive Care for Joint Replacement
CSA Combined Statistical Area
DME Durable Medical Equipment
FFS Fee-for-service
HCAHPS Hospital Consumer Assessment of Healthcare Providers and
Systems
HHA Home health agency
HOPD Hospital outpatient department
HHPPS Home Health Prospective Payment System
HIQR Hospital Inpatient Quality Reporting
HRRP Hospital Readmissions Reductions Program
HRR Hospital Referral Region
HVBP Hospital Value Based Purchasing Program
ICD-9-CM International Classification of Diseases, 9th Revision,
Clinical Modification
IPPS Inpatient Prospective Payment System
IPF Inpatient psychiatric facility
IRF Inpatient rehabilitation facility
LEJR Lower extremity joint replacement
LOS Length of stay
LTCH Long term care hospital
LUPA Low Utilization Payment Adjustment

[[Page 41199]]

MAC Medicare Administrative Contractor
MCC Major complications or comorbidities
MSA Metropolitan Statistical Area
MS-DRG Medical Severity Diagnosis-Related Group
MP Malpractice
NPP Nonphysician Practitioner
NPRA Net Payment Reconciliation Amount
OPPS Outpatient Prospective Payment System
PAC Post-acute care
SNF Skilled nursing facility
THA Total hip arthroplasty
TKA Total knee arthroplasty

Table of Contents

I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
1. Model Overview: LEJR Episodes of Care
2. Model Scope
3. Payment
4. Similar Previous and Concurrent Models
5. Overlap With Ongoing CMS Efforts
6. Quality Measures and Reporting Requirements
7. Data Sharing Process
8. Beneficiary Protections
C. Summary of Economic Effects
II. Background
III. Provisions of the Proposed Rule
A. Proposed Definition of the Episode Initiator and Selected
Geographic Areas
1. Background
2. Proposed Definition of Episode Initiator
3. Financial Responsibility for the Episode of Care
4. Proposed Geographic Unit of Selection and Exclusion of
Selected Hospitals
a. Overview and Options for Geographic Area Selection
b. MSA Selection Methodology
(1) Exclusion of Certain MSAs
(2) Proposed Selection Strata
(a) MSA Average Wage-adjusted Historic LEJR Episode Payments
(b) MSA Population Size
(c) Analysis of Strata
(3) Factors Considered but Not Used in Creating Proposed Strata
(4) Sample Size Calculations and the Number of Selected MSAs
(5) Method of Selecting MSAs
B. Episode Definition for the Comprehensive Care for Joint
Replacement (CCJR) Model
1. Background
2. Clinical Dimension of Episodes of Care
a. Definition of the Clinical Conditions Included in the Episode
b. Definition of Related Services Included in the Episode
3. Duration of Episodes of Care
a. Beginning the Episode and Beneficiary Care Inclusion Criteria
b. Middle of the Episode
c. End of the Episode
C. Proposed Methodology for Setting Episode Prices and Paying
Model Participants Under the CCJR Model
1. Background
2. Performance Years, Retrospective Episode Payment, and Two-
Sided Risk Model
a. Performance Period
b. Proposed Retrospective Payment Methodology
c. Proposed Two-Sided Risk Model
3. Adjustments to Payments Included in Episode
a. Proposed Treatment of Special Payment Provisions Under
Existing Medicare Payment Systems
b. Proposed Treatment of Payment for Services That Extend Beyond
the Episode
c. Proposed Pricing Adjustment for High Payment Episodes
4. Proposed Episode Price Setting Methodology
a. Overview
b. Proposed Pricing Features
(1) Different Target Prices for Episodes Anchored by MS-DRG 469
vs. MS-DRG 470
(2) Three Years of Historical Data
(3) Proposed Trending of Historical Data to the Most Recent Year
of the Three
(4) Update Historical Episode Payments for Ongoing Payment
System Updates
(a) Proposed Inpatient Acute Services Update Factor
(b) Proposed Physician Services Update Factor
(c) Proposed IRF Services Update Factor
(d) Proposed SNF Services Update Factor
(e) Proposed HHA Services Update Factor
(f) Proposed Other Services Update Factor
(5) Blend Hospital-Specific and Regional Historical Data
(6) Define Regions as U.S. Census Divisions
(7) Normalize for Provider-Specific Wage Adjustment Variations
(8) Proposed Combination of CCJR Episodes Anchored by MS-DRGs
469 and 470
(9) Discount Factor
c. Proposed Approach To Combine Pricing Features
5. Proposed Use of Quality Performance in the Payment
Methodology
a. Background
b. Proposed Implementation of Quality Measures for
Reconciliation Payment Eligibility
(1) General Selection of Proposed Quality Measures
(2) Proposal To Adjust the Payment Methodology for Voluntary
Submission of Data for Patient-Reported Outcome Measure
(3) Measure Risk-Adjustment and Calculations
(4) Applicable Time Period
(5) Criteria for Applicable Hospitals and Performance Scoring
(a) Identification of Applicable Hospitals for the CCJR Model
(b) Methodology to Determine Performance on the Quality Measures
(c) Proposed Methodology To Link Quality and Payment
(i) Background
(ii) Alternatives Considered To Link Quality and Payment
(iii) Proposal To Link Quality and Payment through Thresholds
for Reconciliation Payment Eligibility
6. Proposed Process for Reconciliation
a. Net Payment Reconciliation Amount
b. Payment Reconciliation
7. Proposed Adjustments for Overlaps With Other Innovation
Center Models and CMS Programs
a. Overview
b. CCJR Beneficiary Overlap With BPCI Episodes
c. Accounting for CCJR Reconciliation Payments and Recoupments
in Other Models and Programs
d. Accounting for Per Beneficiary Per Month (PBPM) Payments in
the Episode Definition
e. Accounting for Overlap With Shared Savings Programs and Total
Cost of Care Models
8. Proposals To Limit or Adjust Hospital Financial
Responsibility
a. Overview
b. Proposed Limit on Raw NPRA Contribution to Repayment Amounts
and Reconciliation Payments
(1) Proposed Limit on Raw NPRA Contribution to Repayment Amounts
(2) Proposed Limit on Raw NPRA Contribution to Reconciliation
Payments
c. Proposed Policies for Certain Hospitals to Further Limit
Repayment Responsibility
d. Proposed Hospital Responsibility for Increased Post-Episode
Payments
9. Proposed Appeal Procedures for Reconciliation
a. Payment Processes
b. Calculation Error
c. Dispute Resolution
(1) Limitations on Review
(2) Matters Subject to Dispute Resolution.
(3) Dispute Resolution Process.
10. Proposed Financial Arrangements, Beneficiary Incentives, and
Proposed Program Rule Waivers and Amendments
a. Financial Arrangements and Beneficiary Incentives
(1) Financial Arrangements Permitted Under the CCJR Model
(a) CCJR Sharing Arrangement Requirements.
(b) Participation Agreements Requirements.
(c) Gainsharing Payment and Alignment Payment Conditions and
Restrictions.
(d) Documentation and Maintenance of Records
(2) Beneficiary Incentives Permitted Under the CCJR Model
(3) Compliance with Fraud and Abuse Laws
11. Proposed Waivers of Medicare Program Rules
a. Overview
b. Post-Discharge Home Visits
c. Billing and Payment for Telehealth Services
d. SNF 3-Day Rule
e. Waivers of Medicare Program Rules To Allow Reconciliation
Payment or Recoupment Actions Resulting From the Net Payment
Reconciliation Amount12. Proposed Enforcement Mechanisms
D. Quality Measures and Display of Quality Metrics Used in the
CCJR Model
1. Background
a. Purpose of Quality Measures in the CCJR Model
b. Public Display of Quality Measures in the CCJR Model
2. Proposed Quality Measures for Performance Year 1 (CY 2016)
and Subsequent Years

[[Page 41200]]

a. Hospital-Level Risk-Standardized Complication Rate (RSCR)
Following Elective Primary Total Hip Arthroplasty (THA) and/or Total
Knee Arthroplasty (TKA) (NQF #1550)
(1) Background
(2) Data Sources
(3) Cohort
(4) Inclusion and Exclusion Criteria
(5) Risk-Adjustment
(6) Calculating the Risk-Standardized Complication Rate and
Performance Period
b. Hospital-Level 30-day, All-Cause Risk-Standardized
Readmission Rate (RSRR) Following Elective Primary Total Hip
Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1551)
(1) Background
(2) Data Sources
(3) Cohort
(4) Inclusion and Exclusion Criteria
(5) Risk-Adjustment
(6) Calculating the Risk-Standardized Readmission Rate and
Performance Period
c. Hospital Consumer Assessment of Healthcare Providers and
Systems (HCAHPS) Survey
(1) Background
(2) Data Sources
(3) Cohort
(4) Inclusion and Exclusion Criteria
(5) Case-Mix-Adjustment
(6) HCAHPS Scoring
(7) Performance period
d. Applicable Time Period
3. Possible New Outcomes for Future Measures
a. Hospital-Level Performance Measure(s) of Patient-Reported
Outcomes Following Elective Primary Total Hip and/or Total Knee
Arthroplasty
(1) Background
(2) Data Sources
(3) Cohort
(4) Inclusion and Exclusion Criteria
(5) Outcome
(6) Risk-Adjustment (if Applicable)
(7) Calculating the Risk-Standardized Rate
(8) Performance Period
(9) Requirements for Successful Submission of THA/TKA Voluntary
Data
b. Measure that Captures Shared Decision-Making Related to
Elective Primary Total Hip and/or Total Knee Arthroplasty
c. Future Measures Around Care Planning
d. Future Considerations for Use of Electronic Health Records
4. Form, Manner and Timing of Quality Measure Data Submission
5. Proposed Display of Quality Measures and Availability of
Information for the Public From the CCJR Model
E. Data Sharing
1. Overview
2. Beneficiary Claims Data
3. Aggregate Regional Data
4. Timing and Period of Baseline Data
5. Frequency and Period of Claims Data Updates for Sharing
Beneficiary-Identifiable Claims Data During the Performance Period
6. Legal Permission to Share Beneficiary-Identifiable Data
F. Monitoring and Beneficiary Protection
1. Introduction and Summary
2. Beneficiary Choice and Beneficiary Notification
3. Monitoring for Access to Care
4. Monitoring for Quality of Care
5. Monitoring for Delayed Care
G. Coordination With Other Agencies
IV. Evaluation Approach
A. Background
B. Design and Evaluation Methods
C. Data Collection Methods
D. Key Evaluation Research Questions
E. Evaluation Period and Anticipated Reports
V. Collection of Information Requirements
VI. Response to Comments
VII. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Anticipated Effects
1. Overall Magnitude of the Model and its Effects on the Market
2. Effects on the Medicare Program
a. Assumptions and Uncertainties
b. Analyses
c. Further Consideration
3. Effects on Beneficiaries
4. Effects on Small Entities
5. Effects on Small Rural Hospitals
6. Unfunded Mandates
D. Alternatives
E. Accounting Statement
F. Conclusion
Regulations Text

I. Executive Summary

A. Purpose

The purpose of this proposed rule is to propose the creation and
testing of a new payment model called the Comprehensive Care for Joint
Replacement (CCJR) Model under the authority of the Center for Medicare
and Medicaid Innovation (Innovation Center or CMMI). Section 1115A of
the Social Security Act (the Act) authorizes the Innovation Center to
test innovative payment and service delivery models to reduce program
expenditures while preserving or enhancing the quality of care
furnished to Medicare, Medicaid, and Children's Health Insurance
Program beneficiaries. The intent of the CCJR model is to promote
quality and financial accountability for episodes of care surrounding a
lower-extremity joint replacement (LEJR) or reattachment of a lower
extremity procedure.\1\ CCJR will test whether bundled payments to
acute care hospitals for LEJR episodes of care will reduce Medicare
expenditures while preserving or enhancing the quality of care for
Medicare beneficiaries. We anticipate the CCJR model being proposed
would benefit Medicare beneficiaries by improving the coordination and
transition of care, improving the coordination of items and services
paid for through Medicare Fee-For-Service (FFS), encouraging more
provider investment in infrastructure and redesigned care processes for
higher quality and more efficient service delivery, and incentivizing
higher value care across the inpatient and post-acute care spectrum
spanning the episode of care. We propose to test CCJR for a 5 year
performance period, beginning January 1, 2016, and ending December 31,
2020. Under FFS, Medicare makes separate payments to providers and
suppliers for the items and services furnished to a beneficiary over
the course of treatment (an episode of care). With the amount of
payments dependent on the volume of services delivered, providers may
not have incentives to invest in quality improvement and care
coordination activities. As a result, care may be fragmented,
unnecessary, or duplicative.
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\1\ In this proposed rule, we use the term LEJR to refer to all
procedures within the Medicare Severity-Diagnosis Related Groups
(MS-DRGs) we propose to select for the model, including reattachment
of a lower extremity, as described in section III.B. of this
proposed rule.
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We have previously used our statutory authority under section 1115A
of the Act to test bundled payment models such as the Bundled Payments
for Care Improvement (BPCI) initiative. Bundled payments for multiple
services in an episode of care hold participating organizations
financially accountable for an episode of care. They also allow
participants to receive payment in part based on the reduction in
expenditures for Medicare arising from their care redesign efforts.
We believe the CCJR model being proposed would further the mission
of the Innovation Center and the Secretary's goal of increasingly
paying for value and outcomes, rather than for volume,\2\ because it
would promote the alignment of financial and other incentives for all
health care providers caring for a beneficiary during an LEJR episode.
In the proposed CCJR model, the acute care hospital that is the site of
surgery would be held accountable for spending during the episode of
care. Participant hospitals would be afforded the opportunity to earn
performance-based payments by appropriately reducing expenditures and
meeting certain quality metrics. They would also gain access to data
and educational resources to better understand post-acute care and
associated spending. Payment approaches that reward providers that
assume financial and performance accountability for a particular
episode of care create

[[Page 41201]]

incentives for the implementation and coordination of care redesign
between hospitals and other providers.
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\2\ Sylvia Mathews Burwell, HHS Secretary, Progress Towards
Achieving Better Care, Smarter Spending, Healthier People, https://www.hhs.gov/blog/2015/01/26/progress-towards-better-care-smarter-spending-healthier-people.html (Jan 26, 2015).
---------------------------------------------------------------------------

The proposed model would require the participation of hospitals in
multiple geographic areas that might not otherwise participate in the
testing of bundled payments for episodes of care for LEJR procedures.
Other episode-based, bundled payment models being tested by Centers for
Medicare & Medicaid Services (CMS), such as the BPCI initiative, are
voluntary in nature. Interested participants must apply to such models
to participate. To date, we have not tested an episode payment model
with bundled payments in which providers are required to participate.
We recognize that realizing the full potential of new payment models
will require the engagement of an even broader set of providers than
have participated to date, providers who may only be reached when new
payment models are applied to an entire class of providers of a
service. As such, we are interested in testing and evaluating the
impact of a bundled payment approach for LEJR procedures in a variety
of circumstances, especially among those hospitals that may not
otherwise participate in such a test.
This proposed model would allow CMS to gain experience with making
bundled payments to hospitals who have a variety of historic
utilization patterns; different roles within their local markets;
various volumes of services; different levels of access to financial,
community, or other resources; and various levels of population and
health provider density including local variations in the availability
and use of different categories of post-acute care providers. We
believe that by requiring the participation of a large number of
hospitals with diverse characteristics, the proposed model would result
in a robust data set for evaluation of this bundled payment approach,
and would stimulate the rapid development of new evidence-based
knowledge. Testing the model in this manner would also allow us to
learn more about patterns of inefficient utilization of health care
services and how to incentivize the improvement of quality for common
LEJR procedure episodes. This learning potentially could inform future
Medicare payment policy.
Within this proposed rule we propose a model focused on episodes of
care for LEJR procedures. We chose LEJR episodes for the proposed model
because as discussed in depth in section III.C. of this proposed rule,
these are high-expenditure, high utilization procedures commonly
furnished to Medicare beneficiaries,\3\ where significant variation in
spending for procedures is currently observed. The high volume of
episodes and variation in spending for LEJR procedures create a
significant opportunity to test and evaluate the proposed model that
specifically focuses on a defined set of procedures. Moreover, there is
substantial regional variation in post-acute care referral patterns and
the intensity of post-acute care provided for LEJR patients, thus
resulting in significant variation in post-acute care expenditures
across LEJR episodes initiated at different hospitals. The proposed
model would enable hospitals to consider the most appropriate post-
acute care for their LEJR patients. The proposed model additionally
would offer hospitals the opportunity to better understand their own
processes with regard to LEJR, as well as the processes of post-acute
providers. Finally, while many LEJR procedures are planned, the
proposed model would provide a useful opportunity to identify
efficiencies both for when providers can plan for LEJR procedures and
for when the procedure must be performed urgently.
---------------------------------------------------------------------------

\3\ For example, Total Hip Arthroplasty and Total Knee
Arthroplasty procedures are very high volume LEJR procedures that
together represent the largest payments for procedures under
Medicare. Suter L, Grady JL, Lin Z et al.: 2013 Measure Updates and
Specifications: Elective Primary Total Hip Arthroplasty (THA) And/Or
Total Knee Arthroplasty (TKA) All-Cause Unplanned 30-Day Risk-
Standardized Readmission Measure (Version 2.0). 2013. https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html; Bozic KJ,
Rubash HE, Sculco TP, Berry DJ., An analysis of Medicare payment
policy for total joint arthroplasty. J Arthroplasty. Sep 2008; 23(6
Suppl 1):133-138.
---------------------------------------------------------------------------

We note that we seek public comment on the proposals contained in
this proposed rule, and also on any alternatives considered as well.

B. Summary of the Major Provisions

1. Model Overview: LEJR Episodes of Care
LEJR procedures are currently paid under the Inpatient Prospective
Payment System (IPPS) through one of two Medicare Severity-Diagnosis
Related Groups (MS-DRGs): MS-DRG 469 (Major joint replacement or
reattachment of lower extremity with Major Complications or
Comorbidities (MCC)) or MS-DRG 470 (Major joint replacement or
reattachment of lower extremity without MCC). Under the proposed model,
as described further in section III.B of this proposed rule, episodes
would begin with admission to an acute care hospital for an LEJR
procedure that is assigned to MS-DRG 469 or 470 upon beneficiary
discharge and paid under the IPPS and would end 90 days after the date
of discharge from the acute care hospital. This episode of care
definition offers operational simplicity for providers and CMS. The
episode would include the LEJR procedure, inpatient stay, and all
related care covered under Medicare Parts A and B within the 90 days
after discharge, including hospital care, post-acute care, and
physician services.
2. Model Scope
We propose that participant hospitals would be the episode
initiators and bear financial risk under the proposed CCJR model. In
comparison to other health care facilities, hospitals are more likely
to have resources that would allow them to appropriately coordinate and
manage care throughout the episode, and hospital staff members are
already involved in hospital discharge planning and post-acute care
recommendations for recovery, key dimensions of high quality and
efficient care for the episode. We propose to require all hospitals
paid under the IPPS and physically located in selected geographic areas
to participate in the CCJR model, with limited exceptions. Eligible
beneficiaries who receive care at these hospitals will automatically be
included in the model. We propose to select geographic areas through a
stratified random sampling methodology within strata based on the
following criteria: Historical wage adjusted episode payments and
population size. Our proposed geographic area selection process is
detailed further in section III.A of this proposed rule.
3. Payment
We propose to test the CCJR model for 5 performance years. During
these performance years we propose to continue paying hospitals and
other providers according to the usual Medicare FFS payment systems.
However, after the completion of a performance year, the Medicare
claims payments for services furnished to the beneficiary during the
episode, based on claims data, would be combined to calculate an actual
episode payment. The actual episode payment is defined as the sum of
related Medicare claims payments for items and services furnished to a
beneficiary during a CCJR episode. The actual episode payment would
then be reconciled against an established CCJR target price, with
consideration of additional payment adjustments based on quality
performance and post-episode spending. The amount of this calculation,
if

[[Page 41202]]

positive, would be paid to the participant hospital. This payment would
be called a reconciliation payment. If negative, we would require
repayment from the participant hospital. We propose Medicare would
require repayment of the difference between the actual episode payments
and the CCJR target price from a participant hospital if the CCJR
target price is exceeded.
We propose to make reconciliation payments to participant hospitals
that achieve quality outcomes and cost efficiencies relative to the
established CCJR target prices in all performance years of the model.
We also propose to phase in the requirement that participant hospitals
whose actual episode payments exceed the applicable CCJR target price
pay the difference back to Medicare beginning in performance year 2.
Under this proposal, Medicare would not require repayment from
hospitals for performance year 1 for actual episode payments that
exceed their target price in performance year 1.
We also propose to limit how much a hospital can gain or lose based
on its actual episode payments relative to target prices. We also
propose additional policies to further limit the risk of high payment
cases for all participant hospitals and for special categories of
participant hospitals as described in section III.C. of this proposed
rule.
4. Similar Previous and Concurrent Models
This proposed model is informed by other models and demonstrations
currently and previously conducted by CMS and would explore additional
ways to enhance coordination of care and improve the quality of
services through bundled payments.
We recently announced the Oncology Care Model (OCM), a new
voluntary payment model for physician practices administering
chemotherapy. Under OCM, practices will enter into payment arrangements
that include financial and performance accountability for episodes of
care surrounding chemotherapy administration to cancer patients. We
plan to coordinate with other payers to align with OCM in order to
facilitate enhanced services and care at participating practices. More
information on the OCM can be found on the Innovation Center's Web site
at: https://innovation.cms.gov/initiatives/Oncology-Care/.
Medicare tested innovative approaches to paying for orthopedic
services in the Medicare Acute Care Episode (ACE) demonstration, a
prior demonstration, and is currently testing additional approaches
under BPCI. Both of these models have also informed the design of the
CCJR model.
Under the authority of section 1866C of the Act, we conducted a 3-
year demonstration, the Medicare Acute Care Episode (ACE)
Demonstration. The demonstration used a prospective global payment for
a single episode of care as an alternative approach to payment for
service delivery under traditional Medicare FFS. The episode of care
was defined as a combination of Part A and Part B services furnished to
Medicare FFS beneficiaries during an inpatient hospital stay for any
one of a specified set of cardiac and orthopedic MS-DRGs. The MS-DRGs
tested included 469 and 470, those proposed for inclusion in the CCJR
model. The discounted bundled payments generated an average gross
savings to Medicare of $585 per episode for a total of $7.3 million
across all episodes (12,501 episodes) or 3.1 percent of the total
expected costs for these episodes. After accounting for increased post-
acute care costs that were observed at two sites, Medicare saved
approximately $4 million, or 1.72 percent of the total expected
Medicare spending. More information on the ACE Demonstration can be
found on the Innovation Center's Web site at: https://innovation.cms.gov/initiatives/ACE/.
We are currently testing the BPCI initiative. The BPCI initiative
is comprised of four related payment models, which link payments for
multiple services that Medicare beneficiaries receive during an episode
of care into a bundled payment. Under the initiative, entities enter
into payment arrangements with CMS that include financial and
performance accountability for episodes of care. Episodes of care under
the BPCI initiative begin with either--(1) an inpatient hospital stay
or (2) post-acute care services following a qualifying inpatient
hospital stay. The BPCI initiative is evaluating the effects of
episode-based payment approaches on patient experience of care,
outcomes, and cost of care for Medicare FFS beneficiaries. Each of the
four models tests LEJR episodes of care. While final evaluation results
for the models within the BPCI initiative are not yet available, we
believe that CMS' experiences with BPCI support the design of the CCJR
model. Under section 1115A(c) of the Act, the Secretary may, taking
into consideration an evaluation conducted under section 1115A(b)(4) of
the Act, ``through rulemaking, expand (including implementation on a
nationwide basis) the duration and the scope of a model that is being
tested under'' the Innovation Center's authority. CCJR is not an
expansion of BPCI, and BPCI may be expanded in the future. CMS
published a discussion item soliciting public comment on a potential
future expansion of one or more of the models within BPCI in the CY2016
IPPS rule, 80 FR 24414 through 24418. CCJR would not be not an
expansion or modification of BPCI; nor does it reflect comments
received in response to the NPRM for the 2016 IPPS Rule. CCJR is a
unique model that tests a broader, different group of hospitals than
BPCI. It is necessary to provide CMS with information about testing
bundled payments to hospitals that are required to participate in an
alternative payment model. For a discussion of why we are requiring
hospitals to participate in the CCJR model, see section III.A of this
proposed rule.
The CCJR model's design was informed to a large degree by our
experience with BPCI Model 2. BPCI's Model 2 is a voluntary episode
payment model in which a qualifying acute care hospitalization
initiates a 30, 60 or 90 day episode of care. The episode of care
includes the inpatient stay in an acute care hospital and all related
services covered under Medicare Parts A and B during the episode,
including post-acute care services. More information on BPCI Model 2
can be found on the Innovation Center's Web site at: https://innovation.cms.gov/initiatives/BPCI-Model-2/.
Further information of why elements of the OCM, the ACE
Demonstration, and BPCI Model 2 were incorporated into the design of
the CCJR model is discussed later in this proposed rule.
5. Overlap With Ongoing CMS Efforts
We propose to exclude from participation in CCJR certain hospitals
participating in the risk-bearing phase of BPCI Models 2 and 4 for LEJR
episodes, as well as acute care hospitals participating in BPCI Model
1. We propose not to exclude beneficiaries in CCJR model episodes from
being included in other Innovation Center models or CMS programs, such
as the Medicare Shared Savings Program, as detailed later in this
proposed rule. We propose to account for overlap, that is, where CCJR
beneficiaries are also included in other models and programs to ensure
the financial policies of CCJR are maintained and results and spending
reductions are attributed to the correct model or program.
6. Quality Measures and Reporting Requirements
We are proposing to adopt three hospital-level quality of care
measures for the CCJR model. Those measures

[[Page 41203]]

include a complication measure, readmission measure, and a patient
experience survey measure. We propose to use these measures to test the
success of the model in achieving its goals under section 1115A of the
Act and to monitor for beneficiary safety. We intend to publicly report
this information on the Hospital Compare Web site. Additionally, we are
proposing and requesting public feedback on possible voluntary
submission of data to support the development of a hospital-level
measure of patient-reported outcomes following an elective Primary
Total Hip (THA) or Total Knee Arthroplasty (TKA).
7. Data Sharing Process
We propose to share data with participant hospitals upon request
throughout the performance period of the CCJR model to the extent
permitted by the HIPAA Privacy Rule and other applicable law. We
propose to share upon request both raw claims-level data and claims
summary data by service line with participants. This approach would
allow participant hospitals without prior experience analyzing claims
to use summary data to receive useful information, while allowing those
participant hospitals who prefer raw claims-level data the opportunity
to analyze claims. We propose to provide hospitals with up to 3 years
of retrospective claims data upon request that will be used to develop
their target price, as described in section III.C of this proposed
rule. In accordance with the HIPAA Privacy Rule, we would limit the
content of this data set to the minimum data necessary for the
participant hospital to conduct quality assessment and improvement
activities and effectively coordinate care of its patient population.
8. Beneficiary Protections
Under the CCJR model, beneficiaries retain the right to obtain
health services from any individual or organization qualified to
participate in the Medicare program. Under the CCJR model, eligible
beneficiaries who receive services from a participant hospital would
not have the option to opt out of inclusion in the model. We propose to
require participant hospitals to supply beneficiaries with written
information regarding the design and implications of this model as well
as their rights under Medicare, including their right to use their
provider of choice. We will also make a robust effort to reach out to
beneficiaries and their advocates to help them understand the CCJR
model.
We also propose to use our existing authority, if necessary, to
audit participant hospitals if claims analysis indicates an
inappropriate change in delivered services. Beneficiary protections are
discussed in greater depth in section III.E. of this proposed rule.
9. Financial Arrangements and Program Policy Waivers
We propose to hold participant hospitals financially responsible
for CCJR LEJR episodes as participants in the model as discussed in
section III.C.10.a. of this proposed rule. Specifically, only these
hospital participants would be directly subject to the requirements of
this proposed rule for the CCJR model. Participant hospitals would be
responsible for ensuring that other providers and suppliers
collaborating with the hospital on LEJR episode care redesign are in
compliance with the terms and conditions of the model.
Several of the proposed Medicare program policy waivers outline the
conditions under which skilled nursing facilities (SNFs) and physicians
could furnish and bill for certain services furnished to CCJR
beneficiaries where current Medicare programs rules would not permit
such billing. We draw the attention of SNFs and physicians to these
proposals that are included in section III.C.10.b.(5). of this proposed
rule.

C. Summary of Economic Effects

As shown in our impact analysis, we expect the proposed model to
result in savings to Medicare of $153 million over the 5 years of the
model. More specifically, in performance year 1 of the model, we
estimate a Medicare cost of approximately $23 million, as we have
proposed that hospitals will not be subject to downside risk in the
first year of the model. As we introduce downside risk beginning in
performance year 2 of the model, we estimate Medicare savings of
approximately $29 million. In performance year 3 of the model, we
estimate Medicare savings of $43 million. In performance years 4 and 5
of the model, as we have proposed to move from target episode pricing
that is based on a hospital's experience to target pricing based on
regional experience, we estimate Medicare savings of $50 million and
$53 million, respectively.
Additionally, hospitals must meet or exceed specific thresholds on
performance on certain quality of care measures in order to be eligible
for a reconciliation payment and as the performance threshold increases
in performance years 4 through 5, we estimate additional savings. As a
result, we estimate the net savings to Medicare to be $153 million over
the 5 years of the model. We anticipate there would be a broader focus
on care coordination and quality improvement for LEJR episodes among
hospitals and other providers within the Medicare program that would
lead to both increased efficiency in the provision of care and improved
quality of the care provided to beneficiaries.
We note that under section 1115A(b)(3)(B) of the Act, the Secretary
is required to terminate or modify a model unless certain findings can
be made with respect to savings and quality after the model has begun.
If during the course of testing the model it is determined that
termination or modification is necessary, such actions would be
undertaken through rulemaking.

II. Background

This proposed rule proposes the implementation of a new innovative
health care payment model under the authority of section 1115A of the
Act. Under the model, called the CCJR model, acute care hospitals in
certain selected geographic areas will receive bundled payments for
episodes of care where the diagnosis at discharge includes a lower
extremity joint replacement or reattachment of a lower extremity that
was furnished by the hospital. We are proposing that the bundled
payment will be paid retrospectively through a reconciliation process;
hospitals and other providers and suppliers will continue to submit
claims and receive payment via the usual Medicare FFS payment systems.
All related care covered under Medicare Part A and Part B within 90
days after the date of hospital discharge from the joint replacement
procedure will be included in the episode of care. We believe this
model will further our goals of improving the efficiency and quality of
care for Medicare beneficiaries for these common medical procedures.

III. Provisions of the Proposed Rule

A. Proposed Definition of the Episode Initiator and Selected Geographic
Areas

1. Background
The CCJR model is different from BPCI because it would require
participation of all hospitals (with limited exceptions) throughout
selected geographic areas, which would result in a model that includes
varying hospital types. However, a discussion of BPCI is relevant
because its design informs and supports the proposed CCJR model. The
BPCI model is voluntary, and under that model we pay a bundled payment
for an episode of care only to entities that have

[[Page 41204]]

elected to participate in the model. We are interested in testing and
evaluating the impact of an episode payment approach for LEJRs in a
variety of other circumstances, including among those hospitals that
have not chosen to voluntarily participate because we have not tested
bundled payments for these hospitals previously. This would allow CMS
and participants to gain experience testing and evaluating episode-
based payment for LEJR procedures furnished by hospitals with a variety
of historic utilization patterns; roles within their local markets;
volume of services provided; access to financial, community, or other
resources; and population and health care provider density. Most
importantly, participation of hospitals in selected geographic areas
will allow CMS to test bundled payments without introducing selection
bias such as the selection bias inherent in the BPCI model due to self-
selected participation.
2. Proposed Definition of Episode Initiator
In BPCI Model 2, LEJR episode initiators are either acute care
hospitals where the LEJR procedure is performed or physician group
practices whose physician members are the admitting or operating
physician for the hospital stay. Thus, under BPCI, it is possible that
only some Medicare cases that could potentially be included in an LEJR
episode at a specific hospital are actually being tested in BPCI. For
example, if the hospital itself is not participating as an episode
initiator under BPCI, yet some physicians who admit patients to the
hospital are members of physician group practices participating in
BPCI, not all of the hospital's possible LEJR episodes are tested and
paid under BPCI.
Under the proposed CCJR model, as described further in section
III.B of this proposed rule, episodes would begin with admission to an
acute care hospital for an LEJR procedure that is paid under the IPPS
through Medical Severity Diagnosis-Related Group (MS-DRG) 469 (Major
joint replacement or reattachment of lower extremity with MCC) or 470
(Major joint replacement or reattachment of lower extremity without
MCC) and end 90 days after the date of discharge from the hospital. For
the CCJR model, we propose that hospitals would be the only episode
initiators. For purposes of CCJR, the term ``hospital'' means a
hospital as defined in section 1886(d)(1)(B) of the Act. This statutory
definition of hospital includes only acute care hospitals paid under
the IPPS. Under this proposal, all acute care hospitals in Maryland
would be excluded from CCJR. The state of Maryland entered into an
agreement with CMS, effective January 1, 2014, to participate in CMS'
new Maryland All-Payer Model. In order to implement the Maryland All-
Payer Model, CMS waived certain requirements of the Act, and the
corresponding implementing regulations, as set forth in the agreement
between CMS and Maryland. Specifically, under the Maryland All-Payer
Model, Maryland acute care hospitals are not paid under the IPPS or
OPPS but rather are paid under rates set by the state. Following the
model's performance period, Maryland will transition to a new model
that incorporates the full spectrum of care, not just hospital
services. As such, with respect to Maryland hospitals, CMS intends to
test and develop new payment and delivery approaches that can
incorporate non-hospital services in a manner that accounts for
Maryland's unique hospital rate setting system and permit Maryland to
develop its own strategy to incentivize higher quality and more
efficient care across clinical situations within and beyond hospitals,
including but not limited to LEJR episodes of care. We are proposing
that payments to Maryland hospitals would be excluded in the regional
pricing calculations as described in section III.C.4 of this proposed
rule. We seek comment on this proposal and whether there are potential
approaches for including Maryland acute care hospitals in CCJR. In
addition, we seek comment on whether Maryland hospitals should be
included in CCJR in the future upon any termination of the Maryland
All-Payer Model.
We propose to designate IPPS hospitals as the episode initiators to
ensure that all Medicare FFS LEJR services furnished by participant
hospitals in selected geographic areas to beneficiaries who do not meet
the exclusion criteria specified in section III.B.3 of this proposed
rule and are not BPCI episodes that we are proposing to exclude as
outlined in this section and also in section III.C.7 of this proposed
rule are included in the CCJR model. We are proposing certain
exceptions to the inclusion of hospitals in the CCJR Model, as
discussed in section III.C. of this proposed rule. Given that our
proposal to initiate the LEJR episode begins with an admission to a
hospital paid under the IPPS that results in a discharge assigned to
MS-DRG 469 or 470, we believe that utilizing the hospital as the
episode initiator is a straightforward approach for this model because
the hospital furnishes the LEJR procedure. In addition, we are
interested in testing a broad model in a number of hospitals under the
CCJR model in order to examine results from a more generalized payment
model. Thus, we believe it is important that, in a model where hospital
participation is not voluntary, all Medicare FFS LEJR episodes that
begin at the participant hospital in a selected geographic area are
included in the model for beneficiaries that do not meet the exclusion
criteria specified in section III.B.3 of this proposed rule and are not
BPCI episodes that we are proposing to exclude as outlined in this
section and also in section III.C.7 of this proposed rule. This is best
achieved if the hospital is the episode initiator. Finally, as
described in the following sections that present our proposed approach
to geographic area selection, this geographic area selection approach
relies upon our definition of hospitals as the entities that initiate
episodes. We seek comment on our proposal to define the episode
initiator as the hospital under CCJR.
3. Financial Responsibility for the Episode of Care
BPCI Model 2 participants that have entered into agreements with
CMS to bear financial responsibility for an episode of care include
acute care hospitals paid under the IPPS, health systems, physician-
hospital organizations, physician group practices, and non-provider
business entities that act as conveners by coordinating multiple health
care providers' participation in the model. Thus, our evaluation of
BPCI Model 2 will yield information about how results for LEJR episodes
may differ based on differences in which party bears financial
responsibility for the episode of care.
For the CCJR model, we propose to make hospitals financially
responsible for the episode of care for several reasons. We recognize
that ideally all of the providers involved in the continuum of care for
Medicare beneficiaries in a 90-day post-discharge LEJR episode would
work together to determine the best structure for managing the LEJR
episode, develop an efficient process that leads to high quality care,
track information across the episode about quality and Medicare
expenditures, and align financial incentives using a variety of
approaches, including gainsharing. However, because the proposed CCJR
model is testing a more generalizable model by including hospitals that
might not participate in a voluntary model and includes episodes
initiated at a wide variety of hospitals, we believe it is

[[Page 41205]]

most appropriate to identify a single type of provider to bear
financial responsibility for making repayment to CMS under the model.
Hospitals play a central role in coordinating episode-related care
and ensuring smooth transitions for beneficiaries undergoing LEJR
procedures. Moreover, the episode always begins with an acute care
hospital stay, IPPS payments for LEJRs comprise about 50 percent of
Medicare payments for a 90-day episode, and the beneficiary's recovery
from surgery begins during the hospital stay. Most hospitals already
have some infrastructure related to health information technology,
patient and family education, and care management and discharge
planning. This includes post-acute care (PAC) coordination
infrastructure and resources such as case managers, which hospitals can
build upon to achieve efficiencies under this episode payment model.
Many hospitals also have recently heightened their focus on aligning
their efforts with those of community providers to provide an improved
continuum of care due to the incentives under other CMS models and
programs, including Accountable Care Organization (ACO) initiatives
such as the Medicare Shared Savings Program (MSSP), and the Hospital
Readmissions Reduction Program (HRRP), establishing a base for
augmenting these efforts under the CCJR model.
In view of our proposal that hospitals be the episode initiators
under this model, we believe that hospitals are more likely than other
providers to have an adequate number of episode cases to justify an
investment in episode management for this model. We also believe that
hospitals are most likely to have access to resources that would allow
them to appropriately manage and coordinate care throughout the LEJR
episode. Finally, the hospital staff is already involved in discharge
planning and placement recommendations for Medicare beneficiaries, and
more efficient PAC service delivery provides substantial opportunities
for improving quality and reducing costs under CCJR.
We considered requiring treating physicians (orthopedic surgeons or
others) or their associated physician group practices, if applicable,
to be financially responsible for the episode of care under the CCJR
Model. We expect that every Medicare beneficiary discharged with a
diagnosis grouped under MS-DRG 469 or 470 would have an operating
physician and an admitting physician for the hospital stay. However,
the services of providers other than the hospital where the acute care
hospital stay for the LEJR procedure (hereinafter ``the anchor
hospitalization'') occurs would not necessarily be furnished in every
LEJR episode. For example, that physicians of different specialties
play varying roles in managing patients during an acute care
hospitalization for a surgical procedure and during the recovery
period, depending on the hospital and community practice patterns and
the clinical condition of the beneficiary and could not be assumed to
be included in every LEJR episode. This variability would make
requiring a particular physician or physician group practice to be
financially responsible for a given episode very challenging.
If we were to assign financial responsibility to the operating
physician, it is likely that there would be significant variation in
the number of relevant episodes that could be assigned to an individual
person. Where the physician was included in a physician group practice,
episodes could be aggregated to this group level but this would not be
possible for all cases and would likely still have low volume concerns.
We believe that the small sample sizes accruing to individual physician
and physician group practices would make systematic care redesign
inefficient and more burdensome, given that we are proposing to test
all episodes occurring at hospitals selected for participation for
beneficiaries that do not meet the exclusion criteria specified in
section III.B.3 of this proposed rule and are not BPCI episodes that we
are proposing to exclude as outlined in this section and also in
section III.C.7 of this proposed rule.
Finally, we note that although the BPCI initiative includes the
possibility of a physician group practice as a type of initiating
participant, the physician groups electing to participate in BPCI have
done so because their practice structure supports care redesign and
other infrastructure necessary to bear financial responsibility for
episodes and is not necessarily representative of the typical group
practice. In addition, most of the physician group practices in BPCI
are not bearing financial responsibility, but are participating in BPCI
as partners with convener organizations (discussed later in this
section), which enter into agreements with CMS, on behalf of health
care providers such as physician group practices, through which they
accept financial responsibility for the episode of care. The
infrastructure necessary to accept financial responsibility for
episodes is not present across all physician group practices, and thus
we do not believe it would be appropriate to designate physician group
practices to bear the financial responsibility for making repayments to
CMS under the proposed CCJR model. We seek comment on our proposal to
require the hospital to bear the financial responsibility for the
episodes of care under CCJR.
We are proposing that hospitals will bear the financial
responsibility for LEJR episodes of care under CCJR. However, because
there are LEJR episodes currently being tested in BPCI Model 1, 2, 3 or
4, we believe that participation in CCJR should not be required if it
would disrupt testing of LEJR episodes already underway in BPCI models.
Therefore, we are proposing that IPPS hospitals located in an area
selected for the model that are active Model 1 BPCI participant
hospitals as of July 1, 2015 or episode initiators for LEJR episodes in
the risk-bearing phase of Model 2 or 4 of BPCI as of July 1, 2015,
would be excluded from participating in CCJR during the time that their
qualifying episodes are included in one of the BPCI models. Likewise,
we are proposing that if the participant hospital is not an episode
initiator for LEJR episodes under BPCI Model 2, then LEJR episodes
initiated by other providers or suppliers under BPCI Model 2 or 3
(where the surgery takes place at the participant hospital) would be
excluded from CCJR. Otherwise qualifying LEJR episodes (that is, those
that are not part of a Model 3 BPCI LEJR episode or a Model 2 physician
group practice-initiated LEJR episode) at the participant hospital
would be included in CCJR.
While we propose that the participant hospital be financially
responsible for the episode of care under CCJR, we also believe that
effective care redesign for LEJR episodes requires meaningful
collaboration among acute care hospitals, PAC providers, physicians,
and other providers and suppliers within communities to achieve the
highest value care for Medicare beneficiaries. We believe it may be
essential for key providers to be aligned and engaged, financially and
otherwise, with the hospitals, with the potential to share financial
responsibility with those hospitals. We note that all relationships
between and among providers and suppliers must comply with all relevant
laws and regulations, including the fraud and abuse laws and all
Medicare payment and coverage requirements unless otherwise specified
further later in this section and in section III.C.10 of this proposed
rule. Depending on a hospital's current degree of clinical integration,
new and different contractual relationships among hospitals and other
health care

[[Page 41206]]

providers may be important, although not necessarily required, for CCJR
model success in a community. We acknowledge that financial incentives
for other providers may be important aspects of the model in order for
hospitals to partner with these providers and incentivize certain
strategies to improve episode efficiency.
In the BPCI initiative, participants have entered a variety of
relationships with entities above the hospital level. Some of these
relationships are ones where the financial risk is borne by the entity
other than the hospital, such as a parent organization (known as
awardee conveners) and others have managerial or other responsibility
relationships with other organizations (known as facilitator conveners)
but financial responsibility remains with the episode initiator . We
acknowledge the important role that conveners play in the BPCI
initiative with regard to providing infrastructure support to hospitals
and other entities initiating episodes in BPCI. The convener
relationship (where another entity assumes financial responsibility)
may take numerous forms, including contractual (such as a separate for-
profit company that agrees to take on a hospital's financial risk in
the hopes of achieving financial gain through better management of the
episodes) and through ownership (such as when risk is borne at a
corporate level within a hospital chain).
However, we are proposing that for the CCJR model, we would hold
only the participant hospitals financially responsible for the episode
of care. This is consistent with the goal of evaluating the impact of
bundled payment and care redesign across a broad spectrum of hospitals
with varying levels of infrastructure and experience in entering into
risk-based reimbursement arrangements. If conveners were included as
participants in CCJR, we may not gain the knowledge of how a variety of
hospitals can succeed in relationship with CMS in which they bear
financial risk for the episode of care. We acknowledge that CCJR
hospitals may wish to enter into relationships with other entities in
order to manage the episode of care or distribute risk. We do not
intend to restrict the ability of hospitals to enter into
administrative or risk sharing arrangements related to this model. We
refer readers to section III.C.10 of this proposed rule for further
discussion of model design elements that may outline financial
arrangements between participant hospitals and other providers and
suppliers.
4. Proposed Geographic Unit of Selection and Exclusion of Selected
Hospitals
In determining which hospitals to include in the CCJR model, we
considered whether the model should be limited to hospitals where a
high volume of LEJRs are performed, which would result in a more narrow
test on the effects of an episode-based payment, or whether to include
all hospitals in particular geographic areas, which would result in
testing the effects of an episode-based payment approach more broadly
across an accountable care community seeking to coordinate care
longitudinally across settings. Selecting certain hospitals where a
high volume of LEJRs are performed may allow for fewer hospitals to be
selected as model participants, but still result in a sufficient number
of CCJR episodes to evaluate the success of the model. However, there
would be more potential for behavioral changes that could include
patient shifting and steering between hospitals in a given geographic
area that could impact the test. Additionally, this approach would
provide less information on testing episode payments for LEJR
procedures across a wide variety of hospitals with different
characteristics. Selecting geographic areas and including all IPPS
hospitals in those areas not otherwise excluded due to BPCI overlap as
previously described and in section III.C.7 of this proposed rule as
model participants would help to minimize the risk of participant
hospitals shifting higher cost cases out of the CCJR model. Moreover,
in selecting geographic areas we could choose certain characteristics,
stratify geographic areas according to these characteristics, and
randomly select geographic areas from within each stratum. Such a
stratified random sampling method based on geographic area would allow
us to observe the experiences of hospitals with various
characteristics, such as variations in size, profit status, and episode
utilization patterns, and examine whether these characteristics impact
the effect of the model on patient outcomes and Medicare expenditures
within episodes of care. Stratification would also substantially reduce
the extent to which the selected hospitals will differ from non-
selected hospitals on the characteristics used for stratification,
which would improve the statistical power of the subsequent model
evaluation, improving our ability to reach conclusions about the
model's effects on episode costs and the quality of patient care.
Therefore, given the authority in section 1115A(a)(5) of the Act, which
allows the Secretary to elect to limit testing of a model to certain
geographic areas, we propose to use a stratified random sampling method
to select geographic areas and require all hospitals paid under the
IPPS in those areas to participate in the CCJR model and be financially
responsible for the cost of the episode, with certain exceptions as
previously discussed and in sections III.B.3 and III.C.7 of this
proposed rule.
a. Overview and Options for Geographic Area Selection
In determining the geographic unit for the geographic area
selection for this model, we considered using a stratified random
sampling methodology to select (1) certain counties based on their
Core-Based Statistical Area (CBSA) status, (2) certain zip codes based
on their Hospital Referral Regions (HRR) status or (3) certain states.
We address each geographic unit in turn.
We considered selecting certain counties based on their CBSA
status. The general concept of a CBSA is that of a core area containing
a substantial population nucleus, together with adjacent communities
having a high degree of economic and social integration within that
core. Counties are designated as part of a CBSA when the county or
counties or equivalent entities are associated with at least one core
(urbanized area or urban cluster) of at least 10,000 in population,
plus adjacent counties having a high degree of social and economic
integration with the core as measured through commuting ties with the
counties associated with the core. There are 929 CBSAs currently used
for geographic wage adjustment purposes across Medicare payment
systems.\4\ The 929 CBSAs include 388 Metropolitan Statistical Areas
(MSAs), which have an urban core population of at least 50,000, and the
541 Micropolitan Statistical Areas ([micro]SA), which have an urban
core population of at least 10,000 but less than 50,000. CBSAs may be
further combined into a Combined Statistical Area (CSA) which consists
of two or more adjacent CBSAs (MSAs or [micro]SAs or both) with
substantial employment interchange. Counties not classified as a CBSA
are typically categorized and examined at a state level.
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\4\ As stated in the FY 2014 IPPS/LTCH PPS proposed rule (78 FR
27552) and final rule (78 FR 50586), on February 28, 2013, OMB
issued OMB Bulletin No. 13-01, which established revised
delineations for MSAs, [micro]SAs, and CSAs, and provided guidance
on the use of the delineations of these statistical areas. A copy of
this bulletin may be obtained at https://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf.

---------------------------------------------------------------------------

[[Page 41207]]

The choice of a geographical unit based on CBSA status could mean
selection of a CBSA, an MSA, or a CSA. We propose basing the selection
on an MSA, which we will discuss later in this section.
In determining which geographic areas will be potentially subject
to selection, we focused on MSAs, which is a subcategory within CBSA
characterized by counties associated with an urban core population of
at least 50,000. It is our intention at this time that counties not in
an MSA would not be subject to the selection process. These counties
not subject to selection would include the [micro]SA counties and the
counties without a core urban area of at least 10,000. These areas are
largely rural areas and have a limited number of qualifying LEJR cases.
Relatively few of these areas would be able to qualify for inclusion
based on the minimum number of LEJR episodes in year requirement
discussed later in this section.
We considered, but ultimately decided against, using CSA
designation instead of MSAs as a potential unit of selection. Under
this scenario, we would look at how OMB classifies counties. We would
first assess whether a county has been identified as belonging to a
CSA, a unit which consists of adjacent MSAs or [micro]SAs or both. If
the county was not in a CSA, we would determine if it was in an MSA
that is not part of a larger CSA. Counties not associated with a CSA or
an MSA would be unclassified and excluded from selection. These
unclassified areas would include the counties in a state that were
either not a CBSA (no core area of at least 10,000) or associated with
a [micro]SA (core area of between 10,000 and 50,000) but unaffiliated
with a CSA.
Whether to select on the basis of CSA/MSAs or just on MSAs was
influenced by a number of factors including an assessment with respect
to the anticipated degree to which LEJR patients would be willing to
travel for their initial hospitalization, the extent to which surgeons
are expected to have admitting privileges in multiple hospitals located
in different MSAs and considerations related to the degree to which we
desire to include hospitals within [micro]SAs that are part of a larger
CSA. It was believed that the anticipated risk for patient shifting and
steering between MSAs within a CSA was not severe enough to warrant
selecting CSAs. However, for these same reasons, we believe that
selecting complete MSAs is preferable to selecting metropolitan
divisions of MSAs for inclusion in the CCJR model. We use the
metropolitan divisions to set wage indices for its prospective payment
systems. Of the 388 MSAs, there are 11 MSAs that contain multiple
metropolitan divisions. For example, the Boston-Cambridge-Newton, MA-NH
MSA is divided into the following metropolitan divisions:
Boston, MA.
Cambridge-Newton-Framingham, MA.
Rockingham County-Strafford County, NH.

The Seattle-Tacoma-Bellevue, WA MSA is divided into the following
metropolitan divisions:
Seattle-Bellevue-Everett, WA.
Tacoma-Lakewood, WA.

We propose selecting entire MSAs rather than sub-divisions within
an MSA.
We next considered selecting hospital referral regions (HRRs). HRRs
represent regional health care markets for tertiary medical care. There
are 306 HRRs with at least one city where both major cardiovascular
surgical procedures and neurosurgery are performed. HRRs are defined by
determining where the majority of patients were referred for major
cardiovascular surgical procedures and for neurosurgery.\5\ Compared to
MSAs, HRRs are classified based on where the majority of beneficiaries
within a zip code receive their hospital services for selected tertiary
types of care. The resulting HRRs represent the degree to which people
travel for tertiary care that generally requires the services of a
major referral center and not the size of the referral network for more
routine services, such as knee and hip arthroplasty procedures. In
addition, because HRRs are defined based on referrals for
cardiovascular surgical procedures and neurosurgery, they may not
reflect referrals for orthopedic procedures. Therefore, we believe that
MSAs as a geographic unit are preferable over HRRs for this model.
---------------------------------------------------------------------------

\5\ The Dartmouth Atlas of Healthcare, https://www.dartmouthatlas.org/data/region/. Accessed on April 9, 2015.
---------------------------------------------------------------------------

We also considered selecting states for the CCJR model. However, we
concluded that MSAs as a geographic unit are preferable over states for
the CCJR model. As mentioned in section III.A.4.b of this proposed
rule, we anticipate that hospitals that would otherwise be required to
participate in the CCJR model would be excluded from the model because
their relevant LEJR episodes are already being tested in BPCI. If we
were to select states as the geographic unit, there is a potential that
an entire state would need to be excluded because a large proportion of
hospitals in that state are episode initiators of LEJR episodes in
BPCI. In contrast, if we excluded a specific MSA due to BPCI
participation, as discussed in the next section, we could still select
another MSA within that same state. Likewise, if we chose states as the
geographic unit, we would automatically include hospitals in all rural
areas within the state selected. If MSAs are selected for the
geographic unit, we anticipate that fewer small rural hospitals would
be included in the model. Using a unit of selection smaller than a
state would allow for a more deliberate choice about the extent of
inclusion of rural or small population areas. Selecting states rather
than MSAs would also greatly reduce the number of independent
geographic areas subject to selection under the model, which would
decrease the statistical power of the model evaluation. Finally, MSAs
straddle state lines where providers and Medicare beneficiaries can
easily cross these boundaries for health care. Choosing states as the
geographic unit would potentially divide a hospital market and set up a
greater potential for patient shifting and steering to different
hospitals under the model. The decision that the MSA-level analysis was
more analytically appropriate was based on the specifics of this model
and not meant to imply that other levels of selection would not be
appropriate in a different model such as the proposed Home Health Value
Based Purchasing (HHVBP) model.
For the reasons previously discussed, we propose to require
participation in the CCJR model of all hospitals, with limited
exceptions as previously discussed in section III.A.2.of this proposed
rule, paid under the IPPS that are physically located in a county in an
MSA selected through a stratified random sampling methodology, outlined
in section III.A.3.b in this proposed rule, to test and evaluate the
effects of an episode-based payment approach for an LEJR episodes. We
propose to determine that a hospital is located in an area selected if
the hospital is physically located within the boundary of any of the
counties in that MSA as of the date the selection is made. Although
MSAs are revised periodically, with additional counties added or
removed from certain MSAs, we propose to maintain the same cohort of
selected hospitals throughout the 5 year performance period of the
model with limited exceptions as described later in this section. Thus,
we propose not to add hospitals to the model if after the start of the
model new counties are added to one of the selected MSAs or

[[Page 41208]]

remove hospitals from the model if counties are removed from one of the
selected MSAs. We believe that this approach will best maintain the
consistency of the participants in the model, which is crucial for our
ability to evaluate the results of the model. However, we retain the
possibility of adding a hospital that is opened or incorporated within
one of the selected counties after the selection is made and during the
period of performance. (See section III.C.of this proposed rule for
discussion of how target prices will be determined for such hospitals.)
Although we considered including hospitals in a given MSA based on
whether the hospitals were classified into the MSA for IPPS wage index
purposes, this process would be more complicated, and we could not find
any compelling reasons favoring this approach. For example, we assign
hospitals to metro divisions of MSAs when those divisions exist. See
our previous discussion of this issue. In addition, there is the IPPS
process of geographic reclassification by which a hospital's wage index
value or standardized payment amount is based on a county other than
the one where the hospital is located. For the purpose of this model,
it is simpler and more straightforward to use the hospital's physical
location as the basis of assignment to a geographic unit. This decision
would have no impact on a hospital's payment under the IPPS. We seek
comment on our proposal to include participant hospitals for the CCJR
model based on the physical location of the hospital in one of the
counties included in a selected MSA.
b. MSA Selection Methodology
We propose to select the MSAs to include in the CCJR model by
stratifying all of the MSAs nationwide according to certain
characteristics.
(1) Exclusion of Certain MSAs
Prior to assigning an MSA to a selection stratum, we examined
whether the MSA met specific proposed exclusion criteria. MSAs were
evaluated sequentially using the following 4 exclusion criteria: First,
MSAs in which fewer than 400 LEJR episodes (determined as we propose to
determine episodes included in this model, as discussed in section
III.B.2) occurred from July 1, 2013 through June 30, 2014 were removed
from possible selection. The use of the 400 LEJR cases in a year was
based on a simple one-sided power calculation to assess the number of
episodes that would be needed to detect a 5 percent reduction in
episode expenditures. Accordingly, cases in hospitals paid under either
the critical access hospital (CAH) methodology or the Maryland All-
Payer Model are not included in the count of eligible episodes. This
criterion removed 156 MSAs from possible selection.
Second, MSAs were removed from possible selection if there were
fewer than 400 non-BPCI LEJR episodes in the MSA in the reference year.
For the purposes of this exclusion, the number of BPCI episodes was
estimated as the number of potentially eligible cases during the
reference year that occurred in acute care hospitals participating in
BPCI Model 1, or in phase 2 of BPCI Models 2 or 4 as of July 1, 2015
and the number of LEJRs in 2013 and 2014 associated with these
hospitals was examined. This criterion removed an additional 24 MSAs
from potential selection.
Third, MSAs were also excluded from possible selection if the MSA
was dominated by BPCI Models 1, 2, 3, or 4 episodes to such a degree
that it would impair the ability of participants in either the CCJR
model or the BPCI models to succeed in the objectives of the initiative
or impair the ability to set accurate and fair prices. We anticipate
that some degree of overlap in the two programs will be mutually
helpful for both models. There are two steps to this exclusion. First,
we looked at the number of LEJR episodes at BPCI Model 1, 2 or 4
initiating hospitals and second, the number of LEJR episodes among BPCI
Model 3 SNF and HHA episode initiators. We set the first cut off for
this exclusion if, within an MSA, more than 50 percent of otherwise
qualifying proposed CCJR episodes were in Phase 2 of BPCI Model 2 or 4
with hospital initiators. We set the second cut off for BPCI Model 3,
based on if either SNF or HHA BPCI Model 3 initiating providers
accounted for more than 50 percent of LEJR referrals to that provider
type, the MSA would be eliminated from the possibility of selection. As
a result of this third criterion, 4 additional MSAs were removed from
possible selection. No MSAs were excluded based on Skilled Nursing
Facility (SNF) or Health Home Agency (HHA) participation in Model 3.
Finally, MSAs were removed if, after applying the previous 3
criteria they remained eligible for selection, but more than 50 percent
of estimated eligible episodes during the reference year were not paid
under the IPPS system. Please refer to the appenda for this proposed
rule for the status of each MSA based on these exclusion criteria,
available at https://innovation.cms.gov/initiatives/ccjr/. After
applying these four exclusions, 196 MSAs remained to be stratified for
purposes of our proposed selection methodology.
(2) Proposed Selection Strata
Numerous variables were considered as potential strata for
classifying MSAs included in the model. However, our proposal is
intended to give priority to transparency and understandability of the
strata. We propose creating selection strata based on the following two
dimensions: MSA average wage-adjusted historic LEJR episode payments
and MSA population size.
(a) MSA Average Wage-adjusted Historic LEJR Episode Payments.
We were interested in being able to classify and divide MSAs
according to their typical patterns of care associated with LEJR
episodes. As a straightforward measure of LEJR patterns of care, we
selected the mean MSA episode payment, as defined in this proposed
rule. MSAs vary in their average episode payments. The average episode
payments in an area may vary for a variety of reasons including--1) in
response to the MS-DRG mix and thus the presence of complicating
conditions; 2) readmission rates; 3) practice patterns associated with
type of PAC provider(s) treating beneficiaries; 4) variations of
payments within those PAC providers, and 5) the presence of any outlier
payments.
The measure of both mean episode payments and median episode
payments within the MSA was considered. We propose to stratify by mean
because it would provide more information on the variation in episode
payments at the high end of the range of payments. We are interested in
the lower payment areas for the purpose of informing decisions about
potential future model expansion. However, the CCJR model is expected
to have the greatest impact in areas with higher average episode
payments.
The average episode payments used in this analysis were calculated
based on the proposed episode definition for CCJR using Medicare claims
accessed through the Chronic Conditions Warehouse for 3 years with
admission dates from July 1, 2011 through June 30, 2014. Episode
payments were wage-adjusted using the FY 2014 hospital wage index
contained in the FY 2014 IPPS Final Rule, downloaded at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY-2014-IPPS-Final-Rule-Home-Page-Items/FY-2014-IPPS-Final-Rule-CMS-1599-F-Data-Files.html. The adjusted payment was
calculated by dividing the unadjusted payment by a factor equal to the
sum of 0.3 plus the

[[Page 41209]]

multiplicative product of 0.7 and the wage index value of the hospital
where the LEJR was performed. Episodes in the database with IPPS
payments less than $4,000 for the DRG 469 or 470 case were deleted as
indicating that the hospital did not receive full payment for the LEJR
procedure. We also truncated the episode payment at the 99.9th
percentile of the distribution ($135,000) to limit the impact of
extreme outliers.
(b) MSA Population Size
The second dimension proposed for the CCJR selection strata is the
number of persons in the MSA. In deciding how best to incorporate the
dimensions of urban density and availability of medical resources, a
variety of measures were considered, including overall population in
the included counties, overall population in the core area of the MSA,
population over the age of 65 in the MSA, the number of hospital beds
and the number of Medicare FFS LEJR procedures in a year. The reason we
decided to include this dimension in the strata definition is that
these factors are believed to be associated with the availability of
resources and variations in practice and referral patterns by the size
of the healthcare market. When examined, these alternative measures
were all very highly correlated with one another, which allowed the use
of one of these measures to be able to substitute for the others in the
definition of the stratum. From these alternative approaches, we choose
to use MSA population.
In operationalizing this measure, MSAs were classified according to
their 2010 census population.
(c) Analysis of Strata
The two proposed domains, MSA population and MSA historic LEJR
episode spending, were examined using a K-Means factor analysis. The
purpose of this factor analysis was to inform the process of which cut
points most meaningfully classify MSAs. Factor analysis attempts to
identify and isolate the underlying factors that explain the data using
a matrix of associations. Factor analysis is an interdependence
technique. Essentially, variables are entered into the model and the
factors (or clusters) are identified based on how the input variables
correlate to one another. The resulting clusters of MSAs produced by
this methodology suggested natural cut points for average episode
payments at $25,000 and $28,500. While not intentional, these divisions
correspond roughly to the 25th and 75th percentiles of the MSA
distribution. Cut points based on these percentiles seemed reasonable
from statistical and face validity perspectives in the sense that they
created groups that included an adequate number of MSAs and a
meaningful range of costs.
As a result of this analysis, we propose to classify MSAs according
to their average LEJR episode payment into four categories based the on
the 25th, 50th and 75th percentiles of the distribution of the 196
potentially selectable MSAs. This approach ranks the MSAs relative to
one another and creates four equally sized groups of 49. The population
distribution was divided at the median point for the MSAs eligible for
potential selection. This resulted in MSAs being divided into two equal
groups of 98. The characteristics of the resulting strata are shown in
Table 1.

Table 1--Summary Population and Episode Payment Statistics by MSA Group
----------------------------------------------------------------------------------------------------------------
Payment in
Payment in Payment in 2nd Payment in 3rd highest Total
lowest quarter lowest quarter lowest quarter quarter eligilble
----------------------------------------------------------------------------------------------------------------
MSAs with population less than
median:
Number of Eligible MSAs..... 33 19 22 24 98
Average of Population....... 251,899 238,562 268,331 254,154 253,554
Minimum MSA Population...... 96,275 55,274 106,331 96,024 55,274
Maximum MSA Population...... 425,790 416,257 424,858 428,185 428,185
Average Episode Payments ($) $22,994 $25,723 $27,725 $30,444 $26,410
Minimum Episode Payments.... $18,440 $24,898 $26,764 $29,091 $18,440
Maximum Episode Payments.... $24,846 $26,505 $28,679 $32,544 $32,544
MSAs with population more than
median:
Number of Eligible MSAs..... 16 30 27 25 98
Average of Population....... 1,530,083 1,597,870 1,732,525 2,883,966 1,951,987
Minimum MSA Population...... 464,036 436,712 434,972 439,811 434,972
Maximum MSA Population...... 4,335,391 5,286,728 12,828,837 19,567,410 19,567,410
Average Episode Payments ($) $23,192 $25,933 $27,694 $30,291 $27,082
Minimum Episode Payments.... $16,504 $25,091 $26,880 $28,724 $16,504
Maximum Episode Payments.... $24,819 $26,754 $28,659 $33,072 $33,072
-------------------------------------------------------------------------------
Total Eligible MSAs..... 49 49 49 49 ..............
----------------------------------------------------------------------------------------------------------------
Note: Population and episode payment means are un-weighted averages of the MSA values within each of the eight
MSA groups.

Please refer to the addenda for this proposed rule for information
on the non-excluded MSAs, their wage adjusted average LEJR episode
spending, their population and their resultant group assignment at:
https://innovation.cms.gov/initiatives/ccjr/.
(3) Factors Considered but Not Used in Creating Proposed Strata
In addition to the two dimensions we are proposing to use for the
selection groups previously discussed, a variety of possible
alternative measures and dimensions were considered. Many of these
variables are considered to be important but it was believed that it
was important to have a fairly straightforward and easily
understandable stratum definition. Simplicity, by definition, required
that only the most important variables would be used. If a market
characteristic under consideration was correlated with one of the
chosen dimensions or it was believed that variations in the
characteristic could be adequately captured by random selection within
the strata, is was not prioritized for inclusion.
Some of the factors considered that we are not proposing as
dimensions are--
Measures associated with variation in practice patterns
associated with LEJR episodes. In considering how to operationalize
this measure, a number of alternatives were considered including total
PAC LEJR payments in

[[Page 41210]]

an MSA, percent of LEJR episodes with a SNF claim in an MSA, percent of
LEJR episodes with an initial discharge to HHA, percent of LEJR
episodes with an IRF claim, and percent of LEJR episodes with claims
for two or more types of PAC providers;
Measures associated with relative market share of
providers with respect to LEJR episodes;
Healthcare supply measures of providers in the MSA
including counts of IRF beds, SNF beds, hospital beds, and number of
orthopedic surgeons;
MSA level demographic measures such as; average income,
distributions of population by age, gender or race, percent dually
eligible, percent of population with specific health conditions or
other demographic composition measures; and
Measures associated with the degree to which a market
might be more capable or ready to implement care redesign activities.
Examples of market level characteristics that might be associated with
anticipated ease of implementation include the MSA-level EHR meaningful
use levels, managed care penetration, ACO penetration and experience
with other bundling efforts.
It should be noted that, while these measures are proposed to be
part of the selection stratus, we acknowledge that these and other
market-level factors may be important to the proper understanding of
the evaluation of the impact of CCJR. It is the intention that these
and other measures will be considered in determining which MSAs are
appropriate comparison markets for the evaluation as well as considered
for possible subgroup analysis or risk adjustment purposes. The
evaluation will include beneficiary, provider, and market level
characteristics in how it examines the performance of this proposed
model.
(4) Sample Size Calculations and the Number of Selected MSAs
Analyses of the necessary sample size led us to conclude that we
need to select 75 MSAs of the 384 MSAs with eligible LEJR episodes to
participate in CCJR. The number and method of selection of these 75
MSAs from the 8 proposed groups is addressed in the following section.
In coming to the decision to target 75 MSAs, we are proposing a
conservative approach. Going below this threshold would jeopardize our
ability to be confident in our results and to be able to generalize
from the model to the larger national context. We discuss the
assumptions and modeling that went into our proposal to test the model
in 75 MSAs later in this section.
In calculating the necessary size of the model, a key consideration
was to have sufficient power to be able to detect the desired size
impact. The larger the anticipated size of the impact, the fewer MSAs
we would have to sample in order to observe it. However, a model sized
to be able to only detect large impacts runs the risk of not being able
to draw conclusions if the size of the change is less than anticipated.
The measure of interest used in estimating sample size requirements for
the CCJR model was wage-adjusted total episode spending. The data used
for the wage-adjusted total episode spending is the 3 year data pull
previously described that covers LEJR episodes with admission dates
from July 1, 2011 through June 30, 2014. For the purposes of the sample
size calculation the impact estimate assumed we wanted to be able to
detect a 2 percent reduction in wage adjusted episode spending after 1
year of experience. This amount was chosen because it is the
anticipated amount of the discount we propose to apply to target prices
in CCJR.
The next consideration in calculating the necessary sample size is
the degree of certainty we will need for the statistical tests that
will be performed. In selecting the right sample size, there are two
types of errors that need to be considered ``false negatives'' and
``false positives''. A false positive occurs if a statistical test
concludes that the model was successful (the model saved money) when it
was, in fact, not. A false negative occurs if a statistical test fails
to find statistically significant evidence that the model was
successful, but it was, in fact, successful. In considering the minimum
sample size needs of a model, a standard guideline in the statistical
literature suggests calibrating statistical tests to generate no more
than a 5 percent chance of a false positive and selecting the sample
size to ensure no more than a 20 percent chance of a false negative. In
contrast, the proposed sample size for this project was based on a 20
percent chance of a false positive and a 30 percent chance of a false
negative in order to be as conservative as was practicable.
A third consideration in the sample size calculation was the
appropriate unit of selection and whether it is necessary to base the
calculation on the number of MSAs, the number of hospitals, or the
number of episodes. As discussed later in this section, we are
proposing to base the sample size calculation at the MSA level.
The CCJR model is a nested comparative study, which has two key
features. First, the unit of assignment (to treatment and comparison
groups) is an identifiable group; such groups are not formed at random,
but rather through some physical, social, geographic, or other
connection among their members. Second, the units of observation are
members of those groups. In such designs, the major analytic problem is
that there is an expectation for a positive correlation (intra-class
correlation (ICC)) among observations of members of the same group
(MSA). That ICC reflects an extra component of variance attributable to
the group above and beyond the variance attributable to its members.
This extra variation will increase the variance of any aggregate
statistic beyond what would be expected with random assignment of
beneficiaries or hospitals to the treatment group.
In determining the necessary sample size, we need to take into
consideration the degrees of freedom. As part of this process, we
examined the number of beneficiaries, the number of hospitals, and the
number of MSAs and the level of correlation in episode payments between
each level. For example, while each beneficiary has their own episode
expenditure level, there are commonalities between those expenditure
amounts at the hospital level, based on hospital-specific practice and
referral patterns. The number of degrees of freedom needed for any
aggregate statistic is related to the number of groups (MSAs or
hospitals), not the number of observations (beneficiary episodes). If
we were to base the determination of the size of the model on
beneficiary episodes where correlation exists, we would have an
inflated false positive error rate and would overstate the impact of
the model. We empirically examined the level of correlation between
beneficiaries and hospitals and between hospitals and MSAs and
determined that the correlation was high enough to be of concern and
necessitate a MSA level unit of selection.
Using the aforementioned assumptions, a power calculation was run
which indicated we would need between 50 and 150 treatment MSAs to be
able to reliably detect a 2 percent reduction in payments after 1 year.
The lower end of this range assumes the ability of evaluation models to
substantially reduce variation through risk adjustment and modeling. We
anticipate that we will be able to use the conservative end of this
range, but assuming that evaluation modeling can achieve ``best''
results poses a real risk to our ability to draw conclusions. We want
to allow for some degree of flexibility and are thus proposing
proceeding with 75 MSAs. The 75 MSA

[[Page 41211]]

number is at the 25th percentile between the 50 and 150 treatment MSA
range. We narrowed the acceptable range to between 50 and 100, based on
the assumption that we will be able substantial improve our estimates
through modeling, and then chose a number in the middle of this reduced
range.
(5) Method of Selecting MSAs
As previously discussed, we are seeking to choose 75 MSAs from our
proposed 8 selection groups. We examined and considered a number of
possible approaches including equal selection in each of the eight
groups, equal selection in the four payment groups, selection
proportionate to the number of MSAs in each group, and a number of
approaches that differentially weighted the payment categories.
After consideration, it was decided that a methodology that
proportionally under-weighted more efficient MSAs and over-weighted
more expensive MSAs was the most appropriate approach to fulfilling the
overall priorities of this model to increase efficiencies and savings
for LEJR cases while maintaining or improving the overall quality of
care. This approach would make it less likely for the MSAs in the
lowest spending category to be selected for inclusion. We thought this
appropriate because the MSAs in the lowest expenditure areas have the
least room for possible improvement and are already performing
relatively efficiently compared to other geographic areas, which means
that experience with the model in these areas may be relatively less
valuable for evaluation purposes. At the same time, we believed it was
important to include some MSAs in this group in order to assess the
performance of this model in this type of circumstance. We also believe
it is appropriate for higher payment areas to be disproportionately
included because they are most likely to have significant room for
improvement in creating efficiencies. We expect more variation in
practice patterns among the more expensive areas. There are multiple
ways an MSA can be more relatively expensive, including through outlier
cases, higher readmission rates, greater utilization of physician
services, or through PAC referral patterns. A larger sample of MSAs
within the higher payment areas will allow for us to observe the impact
of the CCJR model on areas with these various practice patterns in the
baseline period.
The proposed method of disproportionate selection between the
strata is to choose 30 percent of the MSAs in the two groups in the
bottom quarter percentile of the payment distribution, 35 percent of
the MSAs in the two groups in the second lowest quartile, 40 percent in
the third quartile, and 45 percent in the highest episode payment
quartile. This proportion works out to an average of 38 percent
overall, which corresponds to 75 selected MSAs out of the 196 eligible.
The number of MSAs to be chosen in the eight selection groups is shown
in Table 2.

Table 2--Number of MSAs To Be Chosen From the Eight Selection Groups
----------------------------------------------------------------------------------------------------------------
Payment in
Payment in Payment in 2nd Payment in 3rd highest Total eligible
lowest quarter lowest quarter lowest quarter quarter MSAs
----------------------------------------------------------------------------------------------------------------
Selection Proportion............ 30% 35% 40% 45% ..............
Less Than Median Population (1) (2) (3) (4) ..............
(Group #)......................
Number Eligible MSAs........ 33 19 22 24 98
Proportion x Number......... 9.9 6.65 8.8 10.8 ..............
Number to be selected from 10 7 9 11 37
group......................
More Than Median Population (5) (6) (7) (8) ..............
(Group #)......................
Number Eligible MSAs........ 16 30 27 25 98
Proportion x Number......... 4.8 10.5 10.8 11.25 ..............
Number to be selected from 5 11 11 11 38
group......................
Total Eligible MSAs............. 49 49 49 49 196
Number to be selected....... 15 18 20 22 75
----------------------------------------------------------------------------------------------------------------

We selected the proposed MSAs for the CCJR model through random
selection. In the proposed method of selection, each MSA was assigned
to one of the eight selection groups previously identified. Based on
this sampling methodology, SAS Enterprise Guide 7.1 software was used
to run a computer algorithm designed to randomly select MSAs from each
strata. SAS Enterprise Guide 7.1 and the computer algorithm used to
conduct selection represents an industry-standard for generating
advanced analytics and provides a rigorous, standardized tool by which
to satisfy the requirements of randomized selection. The key SAS
commands employed include a ``PROC SURVEYSELECT'' statement coupled
with the ``METHOD=SRS'' option used to specify simple random sampling
as the sample selection method. A random number seed was generated for
each of the eight strata by using eight number seeds corresponding to
birthdates and anniversary dates of parties present in the room. The
random seeds for stratum one through eight were as follows: 907, 414,
525, 621, 1223, 827, 428, 524. Note that no additional stratification
was used in any of the eight groupings so as to produce an equal
probability of selection within each of the eight groups. For more
information on this procedure and the underlying statistical
methodology, please reference SAS support documentation at: https://support.sas.com/documentation/cdl/en/statug/63033/HTML/default/viewer.htm#statug_surveyselect_sect003.htm/. We also considered a
potential alternative approach to this random selection in which we
would generate a starting number within SAS and then choose every third
MSA within a group starting at this point until the relevant number of
MSAs were chosen. We opted to not utilize this feature for simplicity's
sake and alignment with other randomization methodologies used for CMS
models.
The selection of an MSA means that all hospitals that are
physically located anywhere within the counties that make up the MSA
are included. By definition, the entire county is included in an MSA
and hospitals that are in the relevant counties will be impacted even
if they are not part of the core urban area.
The MSAs selected may change if the methodology changes in response
to comments on the proposed methodology. Should the methodology we
propose in this rule change as a result of comments received during the
rulemaking process, it could result in different areas being selected
for the model. In such an event, we would

[[Page 41212]]

apply the final methodology and announce the selected MSAs in the final
rule. Therefore we seek comment from all interested parties in every
MSA on the randomized selection methodology proposed in this section.
In accordance with section 1115A of the Act, we are proposing to
codify these proposals in regulation in the new proposed part 510 of
the Code of Federal Regulations.

Table 3--Proposed MSAS Included in the CCJR Model
------------------------------------------------------------------------
MSA MSA Name
------------------------------------------------------------------------
10420............................. Akron, OH.
10740............................. Albuquerque, NM.
11700............................. Asheville, NC.
12020............................. Athens-Clarke County, GA.
12420............................. Austin-Round Rock, TX.
13140............................. Beaumont-Port Arthur, TX.
13900............................. Bismarck, ND.
14500............................. Boulder, CO.
15380............................. Buffalo-Cheektowaga-Niagara Falls,
NY.
16020............................. Cape Girardeau, MO-IL.
16180............................. Carson City, NV.
16740............................. Charlotte-Concord-Gastonia, NC-SC.
17140............................. Cincinnati, OH-KY-IN.
17820............................. Colorado Springs, CO.
17860............................. Columbia, MO.
18580............................. Corpus Christi, TX.
19500............................. Decatur, IL.
19740............................. Denver-Aurora-Lakewood, CO.
20020............................. Dothan, AL.
20500............................. Durham-Chapel Hill, NC.
21780............................. Evansville, IN-KY.
22420............................. Flint, MI.
22500............................. Florence, SC.
22660............................. Fort Collins, CO.
23540............................. Gainesville, FL.
23580............................. Gainesville, GA.
24780............................. Greenville, NC.
25420............................. Harrisburg-Carlisle, PA.
26300............................. Hot Springs, AR.
26900............................. Indianapolis-Carmel-Anderson, IN.
28140............................. Kansas City, MO-KS.
28660............................. Killeen-Temple, TX.
29820............................. Las Vegas-Henderson-Paradise, NV.
30700............................. Lincoln, NE.
31080............................. Los Angeles-Long Beach-Anaheim, CA.
31180............................. Lubbock, TX.
31540............................. Madison, WI.
32780............................. Medford, OR.
32820............................. Memphis, TN-MS-AR.
33100............................. Miami-Fort Lauderdale-West Palm
Beach, FL.
33340............................. Milwaukee-Waukesha-West Allis, WI.
33700............................. Modesto, CA.
33740............................. Monroe, LA.
33860............................. Montgomery, AL.
34940............................. Naples-Immokalee-Marco Island, FL.
34980............................. Nashville-Davidson--Murfreesboro--
Franklin, TN.
35300............................. New Haven-Milford, CT.
35380............................. New Orleans-Metairie, LA.
35620............................. New York-Newark-Jersey City, NY-NJ-
PA.
35980............................. Norwich-New London, CT.
36260............................. Ogden-Clearfield, UT.
36420............................. Oklahoma City, OK.
36740............................. Orlando-Kissimmee-Sanford, FL.
37860............................. Pensacola-Ferry Pass-Brent, FL.
38300............................. Pittsburgh, PA.
38940............................. Port St. Lucie, FL.
38900............................. Portland-Vancouver-Hillsboro, OR-WA.
39340............................. Provo-Orem, UT.
39740............................. Reading, PA.
40060............................. Richmond, VA.
40420............................. Rockford, IL.
40980............................. Saginaw, MI.
41860............................. San Francisco-Oakland-Hayward, CA.
42660............................. Seattle-Tacoma-Bellevue, WA.
42680............................. Sebastian-Vero Beach, FL.
43780............................. South Bend-Mishawaka, IN-MI.
41180............................. St. Louis, MO-IL.
44420............................. Staunton-Waynesboro, VA.
45300............................. Tampa-St. Petersburg-Clearwater, FL.
45780............................. Toledo, OH.
45820............................. Topeka, KS.
46220............................. Tuscaloosa, AL.
46340............................. Tyler, TX.
47260............................. Virginia Beach-Norfolk-Newport News,
VA-NC.
48620............................. Wichita, KS.
------------------------------------------------------------------------

B. Episode Definition for the Comprehensive Care for Joint Replacement
(CCJR) Model

1. Background
Coordinated Quality Care-Joint Replacement is an episode payment
model, focused on incentivizing health care providers to improve the
efficiency and quality of care for an episode of care as experienced by
a Medicare beneficiary by bundling payment for services furnished to
the beneficiary for an episode of care for a specific clinical
condition over a defined period of time. Key policies of such a model
include the definition of episodes of care. Episodes of care have two
significant dimensions--(1) a clinical dimension that describes what
clinical conditions and associated services comprise the episode; and
(2) a time dimension that describes the beginning, middle, and end of
an episode. We present our proposals for these two dimensions of CCJR
episodes in this section.
2. Clinical Dimension of Episodes of Care
a. Definition of the Clinical Conditions Included in the Episode
As discussed previously in section I.A. of this proposed rule, we
have identified LEJR episodes, primarily hip and knee replacements, as
the focus of this model. We believe that a straightforward approach for
hospitals and other providers to identify Medicare beneficiaries in
this payment model is important for the care redesign that is required
for model success, as well as to operationalize the proposed payment
and other model policies.
The vast majority of lower extremity joint replacements (LEJRs) are
furnished in the inpatient hospital setting, with a small fraction of
partial knee replacements occurring in the hospital outpatient
department (HOPD) setting. Most of the Current Procedural Terminology
(CPT) codes that physicians report for LEJR are on the hospital
Outpatient Prospective Payment System (OPPS) inpatient only list. The
CY 2015 OPPS inpatient only list is Addendum E of the CY 2015 Hospital
Outpatient Prospective Payment-Final Rule with Comment Period, which is
available on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices-Items/CMS-1613-FC.html. Thus, under current FFS payment policy, Medicare pays
hospitals for the facility services required for LEJR only when those
procedures are furnished in the inpatient hospital setting. Therefore,
we believe an episode payment model most appropriately focuses around
an inpatient hospitalization for these major surgical procedures, as
there is little opportunity for shifting the procedures under this
model to the outpatient setting.
We note further that LEJRs are paid for under the IPPS through the
following two Medicare Severity-Diagnosis Related Groups (MS-DRGs):
MS-DRG 469 (Major joint replacement or reattachment of
lower extremity with Major Complications or Comorbidities (MCC)).
MS-DRG 470 (Major joint replacement or reattachment of
lower extremity without MCC).
Multiple ICD-9-CM procedure codes that describe LEJR procedures and
other less common lower extremity procedures group to these MS-DRGs,
with their percentage distribution within the IPPS MS-DRGs 469 and 470
for the past 4 years outlined in Table 4.

[[Page 41213]]

Table 4--Distribution of Hospital Claims for Procedure Codes Mapping to MS-DRGS 469 and 470
----------------------------------------------------------------------------------------------------------------
ICD-9-CM procedure code Code descriptor FY 2014 % FY 2013 % FY 2012 % FY 2011 %
----------------------------------------------------------------------------------------------------------------
81.54........................... Total knee replacement............ 57 58 58 58
81.51........................... Total hip replacement............. 30 29 29 28
81.52........................... Partial hip replacement........... 12 13 13 14
81.56........................... Total ankle replacement........... 0 0 0 0
00.85........................... Resurfacing hip, total, acetabulum 0 0 0 0
and femoral head.
00.86........................... Resurfacing hip, partial, femoral 0 0 0 0
head.
00.87........................... Resurfacing hip, partial, 0 0 0 0
acetabulum.
84.27........................... Lower leg or ankle reattachment... 0 N/A N/A N/A
84.28........................... Thigh reattachment................ N/A N/A N/A 0
----------------------------------------------------------------------------------------------------------------
Note: Percentages or claim counts with ``N/A'' had no claims. percentages of 0% represent less than 0.5% of
total claims.

Additionally, we note that there are various types of claims-based
information available to CMS, hospitals, and other providers, that
could be used to identify beneficiaries in the model who receive LEJRs,
including the MS-DRGs for the acute care hospitalization for the
procedure, the ICD-9-CM procedure code on the hospital claim, or the
CPT code(s) reported by the orthopedic surgeon who furnishes the
surgical procedure. While we could utilize ICD-9-CM procedure codes or
CPT codes to identify beneficiaries included in the model, over 85
percent of procedures that group to MS-DRGs 469 and 470 are hip or knee
replacements. Additionally, the hospitals that would be participating
in this model receive payment under the IPPS, which is not determined
by CPT codes and is based on clinical conditions and procedures that
group to MS-DRGs. Finally, our review of the other low volume
procedures that group to these same MS-DRGs, aside from total or
partial hip and knee replacements, does not suggest that there is
significant clinical or financial heterogeneity within these two MS-
DRGs such that we would need to define care for included beneficiaries
by ICD-9-CM procedure codes.
Therefore, we propose that an episode of care in the CCJR model is
triggered by an admission to an acute care hospital stay (hereinafter
``the anchor hospitalization'') paid under MS-DRG 469 or 470 under the
IPPS during the model performance period. This approach offers
operational simplicity for providers and CMS, and is consistent with
the approach taken by the BPCI initiative to identify beneficiaries
whose care is included in the LEJR episode for that model. We seek
public comments on this proposal to define the clinical conditions that
are the target of CCJR.
b. Definition of Related Services Included in the Episode
For purposes of this model, as in BPCI, given the frequent
comorbidities experienced by Medicare beneficiaries and the generally
elective nature of LEJR, we are interested in testing inclusive
episodes to incentivize comprehensive, coordinated patient-centered
care for the beneficiary throughout the episode. We propose to exclude
only those Medicare items and services furnished during the episode
that are unrelated to LEJR procedures based on clinical justification.
During our experience with BPCI implementation, we reviewed a number of
narrow episode definitions for LEJR episodes that were recommended by
BPCI participants and other interested parties during the design phase
for this project. We concluded that these narrow definitions commonly
exclude many services that may be linked to the LEJR, as LEJR
beneficiaries, on average, are at higher risk for more clinical
problems than Medicare beneficiaries who have not recently undergone
such procedures.
Therefore, we propose that all CCJR episodes, beginning with the
admission for the anchor hospitalization under MS-DRG 469 or 470
through the end of the proposed episode, include all items and services
paid under Medicare Part A or Part B with the exception of certain
exclusions as proposed in this section that are excluded because they
are unrelated to the episode. The items and services ultimately
included in the episode after the exclusions are applied are called
related items and services. As proposed in sections III.C.4 and III.C.6
of this proposed rule, Medicare spending for related items and services
would be included in the historical data used to set target prices, as
well as in the calculation of actual episode spending that would be
compared against the target price to assess the performance of
participant hospitals. In contrast, Medicare spending for unrelated
items and services (excluded from the episode definition) would not be
included in the historical data used to set target prices or in the
calculation of actual episode spending.
Related items and services included in CCJR episodes would be the
following items and services paid under Medicare Part A or Part B,
after the exclusions are applied:
Physicians' services.
Inpatient hospital services (including readmissions), with
certain exceptions proposed later in this section.
Inpatient psychiatric facility (IPF) services.
LTCH services.
IRF services.
SNF services.
HHA services.
Hospital outpatient services.
Independent outpatient therapy services.
Clinical laboratory services.
Durable medical equipment (DME).
Part B drugs.
Hospice.
We note that under our proposed definition of related services
included in the episode, the episode could include certain per-member-
per-month model payments, as discussed in section III.C of this
proposed rule.
We propose to exclude from CCJR drugs that are paid outside of the
MS-DRG, specifically hemophilia clotting factors (Sec. 412.115),
identified through HCPCS code, diagnosis code, and revenue center on
IPPS claims. Hemophilia clotting factors, in contrast to other drugs
that are administered during an inpatient hospital stay and paid
through the MS-DRG, are paid separately by Medicare in recognition that
clotting factors are costly and essential to appropriate care for
certain beneficiaries. Thus, we believe there are no efficiencies to be
gained in the variable use of these high cost drugs when particular
beneficiaries receive

[[Page 41214]]

LEJR procedures who have significantly different medical needs for
clotting factors under an episode payment model, so we propose to
exclude these high cost drugs from the actual historical episode
expenditure data used to set target prices and from the hospital's
episode actual spending that is reconciled to the target price.
Similarly, we propose to exclude IPPS new technology add-on payments
for drugs, technologies, and services from CCJR episodes, excluding
them from both the actual historical episode expenditure data used to
set target prices and from the hospital's actual episode spending that
is reconciled to the target price. This proposal would apply to both
the anchor hospital stay and any related readmissions during the
episode. New technology add-on payments are made separately and in
addition to the MS-DRG payment under the IPPS for specific new drugs
technologies, and services that substantially improve the diagnosis or
treatment of Medicare beneficiaries and would be inadequately paid
otherwise under the MS-DRG system. Medicare pays a marginal cost factor
of 50 percent for the costs to hospitals of the new drugs,
technologies, or services. We do not believe it would be appropriate
for the CCJR model to potentially hamper beneficiaries' access to new
technologies that are receiving new technology add-on payments or to
burden hospitals who choose to use these new drugs, technologies, or
services with concern about these payments counting toward episode
actual expenditures. In addition, because new drugs, technologies, or
services approved for the add-on payments vary unpredictably over time
in their application to specific clinical conditions, we believe we
should exclude IPPS new technology add-on payments from CCJR episodes.
We followed a number of general principles in determining other
proposed excluded services from the CCJR episodes in order to promote
coordinated, high-quality, patient-centered care. Based on the broad
nature of these episodes, we propose to identify excluded (unrelated)
services rather than included (related) services based on the rationale
that all Part A and Part B services furnished during the episode are
related to the episode, unless they are unrelated based on clinical
justification as described in more detail later in this section. In
developing our proposals for exclusions for this model, we believe that
no Part A services, other than certain excluded hospital readmissions
during the episode as described in this section, furnished post-
hospital discharge during the episode should be excluded, as post-
hospital discharge Part A services are typically intended to be
comprehensive in nature. We also believe that no claims for services
with diagnosis codes that are directly related to the LEJR procedure
itself (for example, loosening of the joint prosthesis) based on
clinical judgment, and taking into consideration coding guidelines,
should be excluded. Furthermore, we believe that no claims for
diagnoses that are related to the quality and safety of care furnished
during the episode, especially the anchor hospitalization under MS-DRG
469 or 470, should be excluded, such as direct complications of post-
surgical care during the anchor hospitalization. Examples of diagnoses
that would not be excluded on this basis include surgical site
infection and venous thromboembolism. Finally, we believe that no
claims for services for diagnoses that are related to preexisting
chronic conditions such as diabetes, which may be affected by care
furnished during the episode, should be excluded. However, severe
exacerbations of chronic conditions (for example, some surgical
readmissions) that are unlikely to be affected by care furnished during
the episode should be excluded; thus, when a beneficiary is admitted to
the hospital during the episode for these circumstances, we would not
consider it to be a related readmission for purposes of CCJR. We also
believe that services for clinical conditions that represent acute
clinical conditions not arising from an existing chronic clinical
condition or complication of LEJR surgery occurring during an episode
of care, which would not be covered by the previous principles about
included services, should be excluded.
To operationalize these principles for CCJR, we propose to exclude
unrelated inpatient hospital admissions during the episode by
identifying MS-DRGs for exclusion. We propose to exclude unrelated Part
B services based on the ICD-9-CM diagnosis code (or their ICD-10-CM
equivalents when ICD-10-CM codes are implemented) that is the principal
diagnosis code reported on claims for services furnished during the
episode. More specifically, we propose to exclude specific inpatient
hospital admissions and services consistent with the LEJR episode
definition (also triggered by MS-DRGs 469 and 470) that is currently
used in BPCI Model 2. We note that the list of exclusions was initially
developed over 2 years ago for BPCI through a collaborative effort of
CMS staff, including physicians from medical and surgical specialties,
coding experts, claims processing experts, and health services
researchers. The list has been shared with thousands of entities and
individuals participating in one or more phases of BPCI, and has
undergone refinement over that time in response to stakeholder input
about specific diagnoses or MS-DRGs for exclusion, resulting in only
minimal changes over the last 2 years. Thus, the BPCI list of
exclusions for LEJR procedures has been vetted broadly in the health
care community; refined based on input from a wide variety of
providers, researchers and other stakeholders; and successfully
operationalized in the BPCI models. We are proposing its use in CCJR
based on our confidence related to our several of years of experience
that this definition is reasonable and workable for LEJR episodes, for
both providers and CMS.
With respect to the proposed inpatient hospital admission
exclusions for this model, we propose that all medical MS-DRGS for
readmissions be included in CCJR episodes as related services, with the
exception of oncology and trauma medical MS-DRGs. We propose that
admissions for oncology and trauma medical MS-DRGs be excluded from
CCJR episodes. Readmissions for medical MS-DRGs are generally linked to
the hospitalization for the LEJR procedure as a complication of the
illness that led to the surgery, a complication of treatment or
interactions with the health care system, or a chronic illness that may
have been affected by the course of care. We refer readers to section
III.D. of this proposed rule for background and discussion of the
complication rate measure proposed for CCJR that includes common
medical complications resulting from the aforementioned circumstances
following LEJR procedures and that may result in related hospital
readmissions. For readmissions for medical MS-DRGs, the selection of
the primary diagnosis code is not clear-cut, so we generally believe
they all should be included, and we strongly believe that providers
should focus on comprehensive care for beneficiaries during episodes.
We propose to include all disease-related surgical MS-DRGs for
readmissions, such as hip/knee revision, in CCJR episodes. We also
propose to include readmissions for all body system-related surgical
MS-DRGs as they are generally related to complications of the LEJR
procedures. An example of a readmission of this type would be for an
inferior vena cava filter placement for

[[Page 41215]]

treatment of thromboembolic complications of the LEJR. We propose to
exclude hospital admissions for chronic disease surgical MS-DRGs, such
as prostatectomy (removal of the prostate gland), as they are unrelated
to the clinical condition that led to the LEJR nor would they have been
precipitated by the LEJR. Finally, we propose that hospital admissions
for acute disease surgical MS-DRGs, such as appendectomy, be excluded
because they are highly unlikely to be related to, or precipitated by,
LEJR procedures and would not be affected by LEJR episode care
redesign.
With respect to the LEJR proposed diagnosis code exclusions for
Part B services for this model, we propose that ICD-9-CM codes be
excluded or included as a category and as identified by code ranges. We
propose that disease-related diagnoses, such as osteoarthritis of the
hip or knee, are included. We also propose that body system-related
diagnoses are included because they relate to complications that may
arise from interactions with the health care system. An example of this
would be pressure pre-ulcer skin changes. Additionally, we propose that
all common symptom diagnoses are included because providers have
significant discretion to select these as principal diagnosis codes. We
propose that acute disease diagnoses, such as severe head injury, are
excluded. Finally, we propose that chronic disease diagnoses be
included or excluded based on specific clinical and coding judgment as
described previously with respect to the original development of the
exclusions for LEJR episodes under BPCI, taking into consideration
whether the condition was likely to have been affected by the LEJR
procedure and recovery period and whether substantial services were
likely to have been provided for the chronic condition during the
episode. Thus, chronic kidney disease and cirrhosis would be included
in the episode, but glaucoma and chemotherapy would be excluded.
Exclusions from CCJR episodes are based on care for unrelated
clinical conditions represented by MS-DRGs for readmissions during the
episode and ICD-9 CM codes for Part B services furnished during the
episode after discharge from the anchor hospitalization. The complete
lists of proposed excluded MS-DRGs for readmissions and proposed
excluded ICD-9-CM codes for Part B services is posted on the CMS Web
site at https://innovation.cms.gov/initiatives/ccjr/.
We note that as CMS moves to implement ICD-10-CM we will make the
CCJR exclusions that would map to the final ICD-9-CM exclusions for
CCJR available in the ICD-10-CM format as well. We propose that all
Part A and B-covered items and services that would not be excluded
based on the exclusions list are included in the episode. Furthermore,
we propose to update the exclusions list without rulemaking on an
annual basis, at a minimum, to reflect annual changes to ICD-CM coding
and annual changes to the MS-DRGs under the IPPS, as well as to address
any other issues that are brought to our attention by the public
throughout the course of the model test.
We would first develop potential exclusions list revisions of MS-
DRGs for readmissions and ICD-9 (or ICD-10, as applicable) diagnosis
codes for Part B services based on our assessment against the following
standards:
We would not exclude any items or services that are--
++ Directly related to the LEJR procedure itself (such as loosening
of the joint prosthesis) or the quality or safety of LEJR care (such as
post-surgical wound infection or venous thromboembolism); and
++ For chronic conditions that may be affected by the LEJR
procedure or post-surgical care (such as diabetes). By this we mean
that where a beneficiary's underlying chronic condition would be
affected by the LEJR procedure, or where the beneficiary's LEJR or
post-LEJR care must be managed differently as a result of the chronic
condition, then those items and services would be related and would be
included in the episode.
We would exclude items and services for--
++ Chronic conditions that are generally not affected by the LEJR
procedure or post-surgical care (such as removal of the prostate). By
this we mean that where a beneficiary's underlying chronic condition
would not be affected by the LEJR procedure, or where the beneficiary's
LEJR or post-LEJR care need not be managed differently as a result of
the chronic condition, then those items and services would not be
related and would not be included in the episode; and
++ Acute clinical conditions not arising from existing episode-
related chronic clinical conditions or complications of LEJR surgery
from the episode (such as appendectomy).
We would post the potential revised exclusions, which could include
additions to or deletions from the exclusions list, to the CMS Web site
to allow for public input on our planned application of these
standards, and then adopt changes to the exclusions list with posting
to the CMS Web site of the final revised exclusions list after our
consideration of the public input.
We seek comment on our proposals for identifying excluded
readmissions and Part B-covered items and services, as well as our
proposed process for updating the exclusions list.
3. Duration of Episodes of Care
a. Beginning the Episode and Beneficiary Care Inclusion Criteria
While we propose to identify LEJR episodes by an acute care
hospitalization for MS-DRG 469 and 470, we recognize that the
beneficiary's care for an underlying chronic condition, such as
osteoarthritis, which ultimately leads to the surgical procedure,
typically begins months to years prior to the surgical procedure.
Because of the clinical variability leading up to the joint replacement
surgery and the challenge of identifying unrelated services given the
multiple chronic conditions experienced by many beneficiaries, we do
not propose to begin the episode prior to the anchor hospitalization
(that is, the admission that results in a discharge under MS-DRG 469 or
470). We believe the opportunities for care redesign and improved
efficiency prior to the inpatient hospital stay are limited for an
episode payment model of this type that focuses on a surgical procedure
and the associated recovery once the decision to pursue surgery has
been made, rather than an episode model that focuses on decision-making
and management of a clinical condition itself (such as osteoarthritis).
We propose to begin the episode with an inpatient anchor
hospitalization for MS-DRG 469 or MS-DRG 470 in accordance with the
methodology described. This proposal to begin the episode upon
admission for the anchor hospitalization is consistent with LEJR
episode initiation under Model 2 of BPCI. While we are not proposing to
begin the episode prior to the inpatient hospital admission, we note
that our proposed episode definition includes all services that are
already included in the IPPS payment based on established Medicare
policies, such as diagnostic services (including clinical diagnostic
laboratory tests) and nondiagnostic outpatient services related to a
beneficiary's hospital admission provided to a beneficiary by the
admitting hospital, or by an entity wholly owned or wholly operated by
the admitting hospital (or by another entity under arrangements with
the admitting hospital), within 3 days prior to and including the date
of the beneficiary's admission. For more

[[Page 41216]]

information on the 3-Day Payment Window payment policies, see CMS Pub.
100-04, Chapter 3, section 40.3 and Chapter 4, section 10.12.
We propose that the defined population of Medicare beneficiaries
whose care will be included in CCJR meet the following criteria upon
admission to the anchor hospitalization. We note that these criteria
are also consistent with Model 2 of BPCI, as well as most other
Innovation Center models that do not target a specific subpopulation of
beneficiaries. The LEJR episodes for all beneficiaries in the defined
population will be included in CCJR (although certain episodes may be
canceled for purposes of determining actual episode payments for
reasons discussed later in this proposed rule), and we refer readers to
section I.B.8 of this proposed rule for further discussion of
beneficiary notification and a beneficiary's ongoing right under CCJR
to obtain health services from any individual or organization qualified
to participate in the Medicare program.
The beneficiary is enrolled in Medicare Part A and Part B
throughout the duration of the episode.
The beneficiary's eligibility for Medicare is not on the
basis of End Stage Renal Disease.
The beneficiary must not be enrolled in any managed care
plan (for example, Medicare Advantage, Health Care Prepayment Plans,
cost-based health maintenance organizations).
The beneficiary must not be covered under a United Mine
Workers of America health plan, which provides healthcare benefits for
retired mine workers.
Medicare must be the primary payer.
Our proposal for inclusion of beneficiaries in CCJR is as broad as
feasible, representing all those LEJR episodes for which we believe we
have comprehensive historical Medicare payment data that allow us to
appropriately include Medicare payment for all related services during
the episode in order to set appropriate episode target prices. For
beneficiaries whose care we propose to exclude from the model, we are
unable to capture or appropriately attribute to the episode the related
Medicare payments because of Medicare's payment methodology. For
example, if a beneficiary is enrolled in a Medicare Advantage plan,
Medicare makes capitated payments (and providers do not submit complete
claims data to CMS), so we would not have a way to identify and
attribute the portion of those payments related to an LEJR episode.
More information on setting bundled payment target prices for episodes
under CCJR is available in section III.C.4.b of this proposed rule.
Including the broadest feasible array of Medicare beneficiaries'
admissions in the model would provide CMS with the most robust
information about the effects of this model on expenditures and quality
for beneficiaries of the widest variety of ages and comorbidities, and
allow the participant hospitals the greatest opportunity to benefit
financially from systematic episode care redesign because most Medicare
beneficiaries undergoing an LEJR procedure will be included in the
model and, therefore, subject to the policies we propose.
We seek comment on our proposal on when to begin the CCJR episode,
as well as to identify the care included for beneficiaries.
b. Middle of the Episode
We propose that once the episode begins for a beneficiary whose
care is included, the episode continues until the end as described in
the next section of this proposed rule, unless the episode is cancelled
because the beneficiary no longer meets the same inclusion criteria
proposed for the beginning of the episode at any point during the
episode. When an episode is cancelled, the services furnished to
beneficiaries prior to and following the episode cancellation will
continue to be paid by Medicare as usual but we will not calculate
actual episode spending that would otherwise under CCJR be reconciled
against the target price for the beneficiary's care (see section
III.C.6 of this proposed rule). As discussed in section III.C.10.a.(3)
of this proposed rule with comment period, waivers of program rules
applicable to beneficiaries in CCJR episodes would apply to the care of
beneficiaries who are in CCJR episodes at the time when the waiver is
used to bill for a service that is furnished to the beneficiary, even
if the episode is later cancelled.
We believe it would be appropriate to cancel the episode when a
beneficiary's status changes during the episode such that they no
longer meet the criteria for inclusion because the episode target price
reflects full payment for the episode, yet we would not have full
Medicare episode payment data for the beneficiary to reconcile against
the target price.
In addition, we propose that the following circumstances would also
cancel the episode:
The beneficiary is readmitted to an acute care hospital
during the episode and discharged under MS-DRG 469 or 470 (in this
case, the first episode would be cancelled and a new LEJR episode would
begin for the beneficiary).
The beneficiary dies during the anchor hospitalization.
The beneficiary initiates an LEJR episode under BPCI
Models 1, 2, 3 or 4.
In the case of beneficiary death during the anchor hospitalization,
we believe it would be appropriate to cancel the episode as there are
limited efficiencies that could be expected during the anchor hospital
stay itself. In the case of beneficiary readmission during the first
CCJR episode for another LEJR (typically a planned staged second
procedure), we do not believe it would be appropriate to include two
episodes in the model with some time periods overlapping, as that could
result in attribution of the Medicare payment for 2 periods of PAC to a
single procedure.
We seek comment on our proposals to cancel episodes once they have
begun but prior to their end.
c. End of the Episode
LEJR procedures are typically major inpatient surgical procedures
with significant associated morbidity and a prolonged recovery period
that often is marked by significant PAC needs, potential complications
of surgery, and more intense management of chronic conditions that may
be destabilized by the surgery. In light of the course of recovery from
LEJRs for Medicare beneficiaries, we propose that an episode in the
CCJR model end 90 days after discharge from the acute care hospital in
which the anchor hospitalization (for MS-DRG 469 or 470) took place.
Hereinafter, we refer to the proposed CCJR model episode duration as
the ``90-day post-discharge'' episode. To the extent that a Medicare
payment for included services spans a period of care that extends
beyond the episode duration, these payments would be prorated so that
only the portion attributable to care during the fixed duration of the
episode is attributed to the episode spending.
We note for the vast majority of beneficiaries undergoing a hip or
knee joint replacement, a 90-day post-discharge episode duration
encompasses the full transition from acute care and PAC to recovery and
return to activities. We believe the 90-day post-discharge episode
duration encourages acute care hospitals, physicians, and PAC providers
to promote coordinated, quality care as the patient transitions from
the inpatient to outpatient settings and the community.
In proposing the 90-day post-discharge duration for LEJR episodes
in CCJR, we took into consideration the literature regarding the
clinical

[[Page 41217]]

experiences of patients who have undergone THA or TKA procedures. In
2007-2008, the 30-day all-cause readmission rate for primary THA among
Medicare beneficiaries was 8.5 percent, while the 90-day all-cause
readmission rate was 11.9 percent, indicating that while the rate of
readmission begins to taper after 30 days, readmissions continue to
accrue throughout this 90 day window.\6\ In single center studies,
Schairer et al found unplanned 30-day hospital readmission rates were
3.5 percent and 3.4 percent and unplanned 90-day hospital admission
rates were 4.5 percent and 6 percent for primary THA and TKA,
respectively, demonstrating that the risk of readmission remains
significantly elevated from 30 through 90 days post-hospital
discharge.^{7 8} Further exploring the reasons for unplanned
admission for TKAs within 90 days of a knee replacement procedure,
Schairer et al found that 75 percent were caused by surgical causes
such as arthrofibrosis and surgical site infection. Additional
information on the common reasons for hospital readmission following
TKA or THA can be obtained from The American College of Surgeons
National Surgical Quality Improvement Program.\9\ These data identified
the top ten reasons for readmission within 30 days of a hip or knee
arthroplasty:
---------------------------------------------------------------------------

\6\ Cram P, Lu X, Kates SL, Singh JA, Li Y, Wolf BR. Total Knee
Arthroplasty Volume, Utilization, and Outcomes Among Medicare
Beneficiaries, 1 991-2010. JAMA. 2012;308(12):1227-1236.
doi:10.1001/2012.jama.11153.
\7\ Schairer WW, et al. Causes and frequency of unplanned
hospital readmission after total hip arthroplasty. Clin Orthop Relat
Res. 2014 Feb;472(2):464-70. doi: 1 0.1007/s11999-013-3121-5.
\8\ Schairer WW, et al. What are the rates and causes of
hospital readmission after total knee arthroplasty? Clin Orthop
Relat Res. 2014 Jan;472(1):181-7. doi: 1 0.1007/s11999-013-3030-7.
\9\ Merkow RP, Ju MH, Chung JW, et al. Underlying Reasons
Associated With Hospital Readmission Following Surgery in the United
States. JAMA. 2015;313(5):483-495. doi:10.1001/jama.2014.18614.
---------------------------------------------------------------------------

Surgical site infections (18.8 percent).
Prosthesis issues (7.5 percent).
Venous thromboembolism (6.3 percent).
Bleeding (6.3 percent).
Orthopedic related (5.1 percent).
Pulmonary (3.2 percent).
Cardiac (2.4 percent).
CNS or CVA (2.4 percent).
Ileus or Obstruction (2.3 percent).
Sepsis (2.1 percent).
In addition, the authors concluded that ``readmissions after
surgery were associated with new post-discharge complications related
to the procedure and not exacerbation of prior index hospitalization
complications, suggesting that readmissions after surgery are a measure
of post-discharge complications.'' Finally, with regard to the
potential for readmission for joint replacement revision within a 90-
day post-discharge episode, in a twelve-year study on Medicare patients
conducted by Katz, et al., the risk of revision after THA remained
elevated at approximately 2 percent per year for the first eighteen
months and then 1 percent per year for the remainder of the follow-up
period.\10\ This study suggests that a longer episode, as opposed to a
shorter episode, is more likely to simulate the increased risk of
revision LEJR patients face.
---------------------------------------------------------------------------

\10\ Katz JN, et al. Twelve-Year Risk of Revision After Primary
Total Hip Replacement in the U.S. Medicare Population. J Bone Joint
Surg Am. 2012 Oct 1 7; 94(20): 1 825-1832. doi: 1 0.2106/
JBJS.K.00569
---------------------------------------------------------------------------

In order to address the complication rates associated with elective
primary total hip or knee arthroplasty, we developed an administrative
claims- based measure (for a detailed description of the measure see
section III.D of this proposed rule). During the development of the
Hospital-level Risk-Standardized Complication Rate (RSCR) following
elective primary THA or TKA or both, complications of elective primary
total hip or knee replacement were identified to occur within specific
timeframes.\11\ For example, analyses done during the development of
the measure as well as Technical Expert Panel opinion found that--(1)
mechanical complications and periprosthetic joint infection/wound
infection are still attributable to the procedure for the 90 days
following admission for surgery; (2) death, surgical site bleeding, and
pulmonary embolism are still likely attributable to the hospital
performing the procedure for up to 30 days; and (3) medical
complications of acute myocardial infarction (AMI), pneumonia, and
sepsis/septicemia/shock are more likely to be attributable to the
procedure for up to 7 days.
---------------------------------------------------------------------------

\11\ Hospital Quality Initiatives. Measure Methodology.
Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. See Hip and Knee Arthroplasty Complications zip
file under downloads. Accessed on April 10, 2015.
---------------------------------------------------------------------------

Other factors further supporting a 90-day post-discharge episode
duration are the elevated risk of readmission throughout this time
period, as well as the fact that treatment for pneumonia is considered
by American Thoracic Society guidelines to be ``health care-
associated'' if it occurs up to 90 days following an acute care
hospitalization of at least 2 days.\12\ According to the American
Academy of Orthopedic Surgeons, patients undergoing total hip
replacement should be able to resume most normal light activities of
daily living within 3 to 6 weeks following surgery.\13\ In a small
randomized controlled trial of two approaches to hip arthroplasty,
average time to ambulation without any assistive device was 22-28
days.\14\ According to a 2011 systematic review of studies evaluating
physical functioning following THA, patients have recovered to about 80
percent of the levels of controls by 8 months after surgery.\15\
---------------------------------------------------------------------------

\12\ Guidelines for the management of adults with hospital-
acquired, ventilator-associated, and healthcare-associated
pneumonia. American Thoracic Society, Infectious Diseases Society of
America. Am J Respir Crit Care Med. 2005;171(4):388.
\13\ https://orthoinfo.aaos.org/topic.cfm?topic=A00377.
\14\ Taunton MJ, et al. Direct Anterior Total Hip Arthroplasty
Yields More Rapid Voluntary Cessation of All Walking Aids: A
Prospective, Randomized Clinical Trial The Journal of Arthroplasty.
Volume 29, Issue 9, Supplement, September 2014, Pages 169-172.
\15\ Vissers MM, et al. Recovery of Physical Functioning After
Total Hip Arthroplasty: Systematic Review and Meta-Analysis of the
Literature. Physical Therapy May 2011 vol. 91 no. 5 615-629.
---------------------------------------------------------------------------

We also refer readers to a study by the Assistant Secretary for
Planning and Evaluation (ASPE) in the U.S Department of Health and
Human Services that assessed the mean payments for acute care, PAC, and
physician services grouped in the MS-DRG 470.\16\ In this study, CMS
payment for services following an MS-DRG 470 hospitalization were
concentrated within the first 30 days following discharge, with
plateauing of payments between 60- or 90-days post-discharge.
---------------------------------------------------------------------------

\16\ Post-Acute Care Episodes Expanded Analytic File. Assistant
Secretary for Planning and Evaluation. U.S. Department of Health and
Human Services. April 2011.

---------------------------------------------------------------------------

[[Page 41218]]

[GRAPHIC] [TIFF OMITTED] TP14JY15.000

Finally, payment and length of stay analyses found the average
length of stay in PAC during a 90-day post-discharge episode for MS-DRG
470 to be 47.3 days, indicating that a longer period post-discharge of
90 days is reasonable as a proposal to end the episode of care.\17\ We
note that these analyses did not include any time between hospital
discharge and the start of PAC.
---------------------------------------------------------------------------

\17\ Analysis of Post Acute Care Episode Definitions File.
https://innovation.cms.gov/initiatives/bundled-payments/learning-area.html.

Table 5--Cost and Length of Stay Statistics for MS-DRG 470 for Various Episode Durations
----------------------------------------------------------------------------------------------------------------
Statistics for DRG 470 (2006 data) 30-day episode 60-day episode 90-day episode
----------------------------------------------------------------------------------------------------------------
Mean Medicare spending per hospital $18,838................ $20,343................ $21,125
discharge.
(acute+PAC+physician)................
Mean payment for anchor 10,463................. 10,463................. 10,463
hospitalization.
Mean payment for PAC................. 6,835.................. 8,339.................. 9,122
Mean payment for physicians (during 1,540.................. 1,540.................. 1,540
anchor hospitalization).
Mean payment for readmission 550.................... 929.................... 1,242
(includes all PAC users, even if no
readmission occurs during the
episode).
Mean length of stay (LOS) for PAC.... 25.5 days.............. 39.6 days.............. 47.3 days
----------------------------------------------------------------------------------------------------------------
Note: Data are per PAC user (88% of beneficiaries hospitalized under MS-DRG 470 are discharged to PAC). PAC
users are defined as beneficiaries discharged to SNF, IRF, or LTCH within 5 days of discharge from the index
acute hospitalization, or discharged to HHA or hospital outpatient therapy within 14 days of discharge from
the index acute hospitalization. Mean LOS for PAC does not include any gap between hospital discharge date and
start of PAC.

Other tests of bundled payment models for hip and knee replacement
have used 90-day post-discharge episodes.\18\ We also note that despite
BPCI Model 2 allowing participants a choice between 30-, 60-, or 90-day
post-discharge episodes, over 86 percent of participants have chosen
the 90-day post-discharge episode duration for the LEJR episode.
Further, a 90-day post-discharge episode duration aligns with the 90-
day global period included in the Medicare Physician Fee Schedule
payment for the surgical procedure.
---------------------------------------------------------------------------

\18\ -Ridgely MS, et al. Bundled Payment Fails To Gain A
Foothold In California: The Experience Of The IHA Bundled Payment
Demonstration. Health Affairs, 33, no.8 (2014):1345-1352.
---------------------------------------------------------------------------

We also considered proposing a 60-day post-discharge episode
duration, but the full transition of care following LEJR would exceed
this window for some beneficiaries, especially those who are discharged
to an institutional post-acute provider initially and then

[[Page 41219]]

transition to home health or outpatient therapy services for continued
rehabilitation. According to a report from ASPE on Medicare
beneficiaries receiving PAC following major joint replacement in 2006,
13 percent first receive SNF services and then receive HHA services--
with a total mean episode duration of 56.8 days.\19\ An additional 9.2
percent receive HHA services first and then receive outpatient therapy
services--with a total mean episode duration of 78.7 days. Finally, 6.7
percent receive IRF services first and then HHA services (total mean
length of stay 55.3 days), and 4.8 percent receive SNF services first
and then outpatient therapy services (total mean length of stay 71.5
days). The remainder only receives one type of PAC.
---------------------------------------------------------------------------

\19\ Examining Post Acute Care Relationships in an Integrated
Hospital. Assistant Secretary for Planning and Evaluation. U.S.
Department of Health and Human Services. February 2009.
---------------------------------------------------------------------------

Therefore, in order to be inclusive of most possible durations of
recovery, and services furnished to reach recovery, we propose the 90-
day post-discharge episode duration for CCJR. We believe that
beneficiaries will benefit from aggressive management and care
coordination throughout this episode duration, and hospitals will have
opportunities under CCJR to achieve efficiencies from care redesign
during the 90-day post-discharge episode period.
We seek comment on our proposal to end the episode 90 days after
the date of discharge from the anchor hospitalization, as well as on
the alternative we considered of ending the CCJR episode 60 days after
the date of discharge.
In accordance with section 1115A of the Act, we are proposing to
codify these proposals in regulation in the new proposed Part 510.

C. Proposed Methodology for Setting Episode Prices and Paying Model
Participants under the CCJR Model

1. Background
As described in section II.B of this proposed rule, we propose to
use the CCJR episode payment model to incentivize participant hospitals
to work with other health care providers to improve quality of care for
Medicare beneficiaries undergoing LEJR procedures and post-operative
recovery, while enhancing the efficiency with which that care is
provided. We propose to apply this incentive by paying participant
hospitals or holding them responsible for repaying Medicare based on
their CCJR episode quality and Medicare expenditure performance. The
following sections describe our proposals for--
How CCJR episodes would be attributed to a participant
hospital;
How the reconciliation of Medicare expenditures based on
actual episode spending in relation to the target price would be
structured and operationalized;
How Medicare actual episode payments under existing
payment systems would be compared against episode target prices;
How hospital quality of care for CCJR episodes would be
compared against quality thresholds Medicare establishes under this
model;
How payments to or repayment amounts from participant
hospitals would be determined so that, on average, the episode target
prices are paid by Medicare for CCJR episodes; and
What protections from excessive risk due to high payment
cases would be in place for participant hospitals.
2. Performance Years, Retrospective Episode Payment, and Two-sided Risk
Model
a. Performance Period
We propose that the CCJR model would have 5 performance years. The
performance years would align with calendar years, beginning January 1,
2016. Table 6 includes details on which episodes would be included in
each of the 5 performance years.

Table 6--Performance Years for CCJR Model
------------------------------------------------------------------------
Episodes included in
Performance year Calendar year performance year
------------------------------------------------------------------------
1............................. 2016 Episodes that start
on or after January
1, 2016, and end on
or before December
31, 2016.
2............................. 2017 Episodes that end
between January 1,
2017, and December
31, 2017, inclusive.
3............................. 2018 Episodes that end
between January 1,
2018, and December
31, 2018, inclusive.
4............................. 2019 Episodes that end
between January 1,
2019, and December
31, 2019, inclusive.
5............................. 2020 Episodes that end
between January 1,
2020, and December
31, 2020, inclusive.
------------------------------------------------------------------------

All episodes tested in this model will begin on or after January 1,
2016 and end on or before December 31, 2020. We note that this
definition results in performance year 1 being shorter than the later
performance years in terms of the length of time over which an anchor
hospitalization could occur under the model. We also note that some
episodes that begin in a given calendar year may be captured in the
following performance year due to the episodes ending after December
31st (for example, episode beginning in December 2016 and ending in
March 2017 would be part of performance year 2). We believe 5 years
would be sufficient time to test the CCJR model and gather sufficient
data to evaluate whether it improves the efficiency and quality of care
for an LEJR episode of care. Having fewer than 5 performance years may
not provide sufficient time or data for evaluation. The 5-year
performance period is consistent with the performance period used for
other CMMI models (for example, the Pioneer Accountable Care
Organization (ACO) Model).
b. Proposed Retrospective Payment Methodology
As described in section III.B of this proposed rule, we propose
that an episode in the CCJR model begins with the admission for an
anchor hospitalization and ends 90 days post-discharge from the anchor
hospitalization, including all related services covered under Medicare
Parts A and B during this timeframe, with limited exclusions and
adjustments, as described in sections III.B, III.C.3, and III.C.7 of
this proposed rule. The

[[Page 41220]]

episodes would be attributed to the participant hospital where the
anchor hospitalization occurred.
We propose to apply the CCJR episode payment methodology
retrospectively. Under this proposal, all providers and suppliers
caring for Medicare beneficiaries in CCJR episodes would continue to
bill and be paid as usual under the applicable Medicare payment system.
After the completion of a CCJR performance year, Medicare claims for
services furnished to beneficiaries in that year's non-cancelled
episodes would be grouped into episodes and aggregated, and participant
hospitals' CCJR episode quality and actual payment performance would be
assessed and compared against episode quality thresholds and target
prices, as described in sections III.C.5 and III.C.4 of this proposed
rule, respectively. After the participant hospitals' actual episode
performance in quality and spending are compared against the
aforementioned episode quality thresholds and target prices, we would
determine if Medicare would make a payment to the hospital
(reconciliation payments), or if the hospital owes money to Medicare
(resulting in Medicare repayment). The possibility for hospitals to
receive reconciliation payments or be subject to repayment (note:
participant hospitals would not be subject to repayment for performance
year 1) is further discussed in section III.C.2.c. of this proposed
rule.
We considered an alternative option of paying for episodes
prospectively by paying one lump sum amount to the hospital for the
expected costs of the 90-day episode. However, we believe such an
option would be challenging to implement at this time given the payment
infrastructure changes for both hospitals and Medicare that would need
to be developed to pay and manage prospective CCJR episode payments. We
note that a retrospective episode payment approach is currently being
utilized under BPCI Model 2. We believe that a retrospective payment
approach can accomplish the objective of testing episode payment in a
broad group of hospitals, including financial incentives to streamline
care delivery around that episode, without requiring core billing and
payment changes by providers and suppliers, which would create
substantial administrative burden. However, we seek comment on
potential ways to implement a prospective payment approach for CCJR in
future performance years of the model.
c. Proposed Two-Sided Risk Model
We propose to establish a two-sided risk model for hospitals
participating in the CCJR model. We propose to provide episode
reconciliation payments to hospitals that meet or exceed quality
performance thresholds and achieve cost efficiencies relative to CCJR
target prices established for them, as defined later in sections
III.C.4 and III.C.5 of this proposed rule. Similarly, we propose to
hold hospitals responsible for repaying Medicare when actual episode
payments exceed their CCJR target prices in each of performance years 2
through 5, subject to certain proposed limitations discussed in section
III.C.8 of this proposed rule. Target prices would be established for
each participant hospital for each performance year.
We propose that hospitals will be eligible to receive
reconciliation payments from Medicare based on their quality and actual
episode spending performance under the CCJR model in each of CCJR
performance years 1 through 5. Additionally, we propose to phase in the
responsibility for hospital repayment of episode actual spending if
episode actual spending exceeds their target price starting in
performance year 2 and continuing through performance year 5. Under
this proposal in performance year 1, participant hospitals would not be
required to pay Medicare back if episode actual spending is greater
than the target price.
We considered an episode payment structure in which, for all 5
performance years of the model, participant hospitals would qualify for
reconciliation payments if episode actual spending was less than the
episode target price, but would not be required to make repayments to
Medicare if episode actual spending was greater than the episode target
price. However, we believe not holding hospitals responsible for
repaying excess episode spending would reduce the incentives for
hospitals to improve quality and efficiency. We also considered
starting the CCJR payment model with hospital responsibility for
repaying excess episode spending in performance year 1 to more strongly
align participant hospital incentives with care quality and efficiency.
However, we believe hospitals may need to make infrastructure, care
coordination and delivery, and financial preparations for the CCJR
episode model, and that those changes can take several months or longer
to implement. With this consideration in mind, we propose to begin
hospitals' responsibility for repayment of excess episode spending
beginning in performance year 2 to afford hospitals time to prepare,
while still beginning some incentives earlier (that is, reconciliation
payments in year 1) to improve quality and efficiency of care for
Medicare beneficiaries. We solicit comment on the proposed incentive
structure for CCJR.
In an effort to further ensure hospital readiness to assume
responsibility for circumstances that could lead to a hospital repaying
to Medicare actual episode payments that exceed the episode target
price, we propose to begin to phase in this responsibility for
performance year 2, with full responsibility for excess episode
spending (as proposed in this rule) applied for performance year 3
through performance year 5. To carry out this ``phase in'' approach, we
propose during the first year of any hospital financial responsibility
for repayment (performance year 2) to set an episode target price that
partly mitigates the amount that hospitals would be required to repay
(see section III.C.4.b of this proposed rule), as well as more greatly
limits (as compared to performance years 3 through 5) the maximum
amount a hospital would be required to repay Medicare across all of its
episodes (see section III.C.8 of this proposed rule).
3. Adjustments to Payments Included in Episode
Medicare payments during the model's performance year for Parts A
and B claims for services included in the episode definition, as
discussed in section III.B of this proposed rule, would be summed
together for each non-cancelled CCJR episode that occurred to create
the actual episode payment amount. We propose three adjustments to this
general approach for--(1) special payment provisions under existing
Medicare payment systems; (2) payment for services that straddle the
end of the episode; and (3) high payment episodes. We note there would
be further adjustments to account for overlaps with other Innovation
Center models and CMS programs; we refer readers to section III.C.7 of
this proposed rule.
We do not propose to adjust hospital-specific or regional
components of target prices for any Medicare repayment or
reconciliation payments made under the CCJR model; CCJR repayment and
reconciliation payments would be not be included per the proposed
episode definition in section III.B of this proposed rule. Including
reconciliation payments and Medicare repayments in target price
calculations would perpetuate the initial set of target prices

[[Page 41221]]

once CCJR performance years are captured in the 3- historical-years of
data used to set target prices, as proposed in section III.C.4. of this
proposed rule, beginning with performance year 3 when performance year
1 would be part of the 3-historical-years. Including any prior
performance years' reconciliations or repayments in target price
calculations would approximately have the effect (excluding impact of
the proposed adjustments for high payment episodes (see section
III.C.3.c. of this proposed rule) and proposed limits or adjustments to
hospital financial responsibility (see section III.C.8. of this
proposed rule)) of Medicare paying hospitals the target price,
regardless of whether the hospital went below, above, or met the target
price in the prior performance years before accounting for the
reconciliation payments or repayments. We intend for target prices to
be based on historical patterns of service actually provided, so we do
not propose to include reconciliation payments or repayments for prior
performance years in target price calculations.
a. Proposed Treatment of Special Payment Provisions Under Existing
Medicare Payment Systems
Many of the existing Medicare payment systems have special payment
provisions that have been created by regulation or statute to improve
quality and efficiency in service delivery. IPPS hospitals are subject
to incentives under the HRRP, the Hospital Value-Based Purchasing
(HVBP) Program, the Hospital-Acquired Condition (HAC) Reduction
Program, and the Hospital Inpatient Quality Reporting Program (HIQR)
and Outpatient Quality Reporting Program (OQR). IPPS hospitals and CAHs
are subject to the Medicare EHR Incentive Program. Additionally, the
majority of IPPS hospitals receive additional payments for Medicare
Disproportionate Share Hospital (DSH) and Uncompensated Care, and IPPS
teaching hospitals can receive additional payments for Indirect Medical
Education (IME). IPPS hospitals that meet a certain requirements
related to low volume Medicare discharges and distance from another
hospital receive a low volume add-on payment. As mentioned in section
III.B.2.b of this proposed rule, acute care hospitals may receive new
technology add-on payments to support specific new technologies or
services that substantially improve the diagnosis or treatment of
Medicare beneficiaries and would be inadequately paid otherwise under
the MS-DRG system. Also, some IPPS hospitals qualify to be sole
community hospitals (SCHs) or Medicare-dependent hospitals (MDHs), and
they may receive enhanced payments based on cost-based hospital-
specific rates for services; whether a SCH or MDH receives enhanced
payments may vary year to year, in accordance with Sec. Sec. 419.43(g)
and 412.108(g), respectively.
Medicare payments to providers of post-acute services, including
IRFs, SNFs, IPFs, HHAs, LTCHs, and hospice facilities, are conditioned,
in part, on whether the provider satisfactorily reports certain
specified data to CMS: the Inpatient Rehabilitation Facility Quality
Reporting Program (IRF QRP), the Skilled Nursing Facility Quality
Reporting Program (SNF QRP), the Inpatient Psychiatric Facility Quality
Reporting Program (IPF QRP), the Home Health Quality Reporting Program
(HH QRP), the Long-Term Care Hospital Quality Reporting Program (LTCH
QRP), and the Hospice Quality Reporting Program. Additionally, IRFs
located in rural areas receive rural add-on payments, IRFs serving
higher proportions of low-income beneficiaries receive increased
payments according to their low-income percentage (LIP), and IRFs with
teaching programs receive increased payments to reflect their teaching
status. SNFs receive higher payments for treating beneficiaries with
human immunodeficiency virus (HIV). HHAs located in rural areas also
receive rural add-on payments.
Ambulatory Surgical Centers have their own Quality Reporting
Program (ASC QRP). Physicians also have a set of special payment
provisions based on quality and reporting: the Medicare EHR Incentive
Program for Eligible Professionals, the Physician Quality Reporting
System (PQRS), and the Physician Value-based Modifier Program.
The intent of the CCJR model is not to replace the various existing
incentive programs or add-on payments, but instead to test further
episode payment incentives towards improvements in quality and
efficiency beyond Medicare's existing policies. Therefore, we propose
that the hospital performance and potential reconciliation payment or
Medicare repayment be independent of, and not affect, these other
special payment provisions.
We propose to exclude the special payment provisions as discussed
previously when calculating actual episode payments, setting episode
target prices, comparing actual episode payments with target prices,
and determining whether a reconciliation payment should be made to the
hospital or funds should be repaid by the hospital.
Not excluding these special payment provisions would create
incentives that are not aligned with the intent of the CCJR model. Not
excluding the quality and reporting-related special payment provisions
could create situations where a high-quality or reporting compliant
hospital or both receiving incentive payments, or those hospitals that
discharge patients to PAC providers that receive incentives for being
reporting compliant, may appear to be ``high episode payment'' under
CCJR. Conversely, lower quality or hospitals not complying with
reporting programs or both that incur payment reduction penalties, or
hospitals that discharge to PAC providers that are not reporting
compliant, may appear to be ``low episode payment'' under CCJR. Such
outcomes would run counter to CCJR's goal of improving quality. Also,
not excluding add-on payments for serving more indigent patients,
having low Medicare hospital volume, being located in a rural area,
supporting greater levels of provider training, choosing to use new
technologies, and having a greater proportion of CCJR beneficiaries
with HIV from CCJR actual episode payment calculations may
inappropriately result in hospitals having worse episode payment
performance. Additionally, not excluding enhanced payments for MDHs and
SCHs may result in higher or lower target prices just because these
hospitals received their enhanced payments in one historical year but
not the other, regardless of actual utilization. We believe the
proposed approach of excluding special payment provisions would ensure
a participant hospital's actual episode payment performance is not
artificially improved or worsened because of payment reduction
penalties or incentives or enhanced or add-on payments, the effects of
which we are not proposing to test with CCJR.
In addition to the various incentive, enhanced, and add on
payments, sequestration came into effect for Medicare payments for
discharges on or after April 1, 2013, per the Budget Control Act of
2011 and delayed by the American Taxpayer Relief Act of 2012.
Sequestration applies a 2 percent reduction to Medicare payment for
most Medicare FFS services. Similar to the previously discussed
incentive, enhanced, and add-on payments, we intend CCJR to be
independent of the introduction and potential future elimination of
sequestration. We do not intend to have participant hospitals' episodes
appear to be ``low payment''

[[Page 41222]]

episodes relative to historical data, for part of which sequestration
may not have been in effect, just because of an across-the-board
Medicare payment reduction through sequestration. Therefore, we propose
to account for the effects of sequestration when calculating actual
episode payments, setting episode target prices, comparing actual
episode payments with target prices, and determining whether a
reconciliation payment should be made to the hospital or hospitals
should repay Medicare.
In order to operationalize the exclusion of the various special
payment provisions in calculating episode expenditures, we propose to
apply the CMS Price (Payment) Standardization Detailed Methodology
described on the QualityNet Web site at https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228772057350. This pricing standardization approach is the same as used for
the HVBP program's Medicare spending per beneficiary metric.
We solicit comment on this proposed approach to treating special
payment provisions in the various Medicare payment systems.
b. Proposed Treatment of Payment for Services That Extend Beyond the
Episode
As we proposed a fixed 90-day post-discharge episode as discussed
in section III.B of this proposed rule, we believe there would be some
instances where a service included in the episode begins during the
episode but concludes after the end of the episode and for which
Medicare makes a single payment under an existing payment system. An
example would be a beneficiary in a CCJR episode who is admitted to a
SNF for 15 days, beginning on Day 86 post-discharge from the anchor
CCJR hospitalization. The first 5 days of the admission would fall
within the episode, while the subsequent 10 days would fall outside of
the episode.
We propose that, to the extent that a Medicare payment for included
episode services spans a period of care that extends beyond the
episode, these payments would be prorated so that only the portion
attributable to care during the episode is attributed to the episode
payment when calculating actual Medicare payment for the episode. For
non-IPPS inpatient hospital (for example, CAH) and inpatient PAC (for
example, SNF, IRF, LTCH, IPF) services, we propose to prorate payments
based on the percentage of actual length of stay (in days) that falls
within the episode window. Prorated payments would also be similarly
allocated to the 30-day post-episode payment calculation in section
III.C.8.e. of this proposed rule. In the prior example, one-third of
the days in the 15-day length of stay would fall within the episode
window, so under the proposed approach, one-third of the SNF payment
would be included in the episode payment calculation, and the remaining
two-thirds (because the entirety of the remaining payments fall within
the 30 days after the episode ended) would be included in the post-
episode payment calculation.
For HHA services that extend beyond the episode, we propose that
the payment proration be based on the percentage of days, starting with
the first billable service date (``start of care date'') and through
and including the last billable service date, that fall within the CCJR
episode. Prorated payments would also be similarly allocated to the 30-
day post-episode payment calculation in section III.C.8.e of this
proposed rule. For example, if the patient started receiving services
from an HHA on day 86 after discharge from the anchor CCJR
hospitalization and the last billable home health service date was 55
days from the start of home health care date, the HHA claim payment
amount would be divided by 55 and then multiplied by the days (5) that
fell within the CCJR episode. The resulting, prorated HHA claim payment
amount would be considered part of the CCJR episode. Services for the
prorated HHA service would also span the entirety of the 30 days after
the CCJR episode spends, so the result of the following calculation
would be included in the 30-day post-episode payment calculation: HHA
claim payment amount divided by 55 and then multiplied by 30 days (the
number of days in the 30-day post-episode period that fall within the
prorated HHA service dates).
There may also be instances where home health services begin prior
to the CCJR episode start date, but end during the CCJR episode. In
such instances, we would also prorate HHA payments based on the
percentage of days that fell within the episode. Because these services
end during the CCJR episode, prorated payments for these services would
not be included in the 30-day post-episode payment calculation
discussed in section III.C.8.e. of this proposed rule. For example, if
the patient's start of care date for a home health 60-day claim was
February 1, the anchor hospitalization was March 1 through March 4
(with the CCJR episode continuing for 90 days after March 4), and the
patient resumed home care on March 5 with the 60-day home health claim
ending on April 1 (that is, April 1 was the last billable service
date), we would divide the 60-day home health claim payment amount by
60 and then multiply that amount by the days from the CCJR admission
through April 1 (32 days) to prorate the HHA payment. This proposed
prorating method for HHA claims is consistent with how partial episode
payments (PEP) are paid for on home health claims.
For IPPS services that extend beyond the episode (for example,
readmissions included in the episode definition), we propose to
separately prorate the IPPS claim amount from episode target price and
actual episode payment calculations as proposed in section III.C.8 of
this proposed rule, called the normal MS-DRG payment amount for
purposes of this proposed rule. The normal MS-DRG payment amount would
be pro-rated based on the geometric mean length of stay, comparable to
the calculation under the IPPS PAC transfer policy at Sec. Sec.
412.4(f) and as published on an annual basis in Table 5 of the IPPS/
LTCH PPS Final Rules. Consistent with the IPPS PAC transfer policy, the
first day for a subset of MS-DRGs (indicated in Table 5 of the IPPS/
LTCH PPS Final Rules) would be doubly weighted to count as 2 days to
account for likely higher hospital costs incurred at the beginning of
an admission. If the actual length of stay that occurred during the
episode is equal to or greater than the MS-DRG geometric mean, the
normal MS-DRG payment would be fully allocated to the episode. If the
actual length of stay that occurred during the episode is less than the
geometric mean, the normal MS-DRG payment amount would be allocated to
the episode based on the number of inpatient days that fall within the
episode. If the full amount is not allocated to the episode, any
remainder amount would be allocated to the 30 day post-episode payment
calculation discussed in section III.C.8.e of this proposed rule. The
proposed approach for prorating the normal MS-DRG payment amount is
consistent with the IPPS transfer per diem methodology.
The following is an example of prorating for IPPS services that
extend beyond the episode. If beneficiary has a readmission for MS-DRG
493--lower extremity and humerus procedures except hip, foot, and
femur, with complications--into an IPPS hospital on the 89th day after
discharge from a CCJR anchor hospitalization, and is subsequently
discharged after a length of stay of 5 days, Medicare payment for this
readmission would be prorated for inclusion in the episode. Based on
Table

[[Page 41223]]

5 of the IPPS/LTCH PPS Final Rule for FY 2015, the geometric mean for
MS-DRG 493 is 4 days, and this MS-DRG is indicated for double-weighting
the first day for proration. This readmission has only 2 days that
falls within the episode, which is less than the MS-DRG 493 geometric
mean of 4 days. Therefore, the normal MS-DRG payment amount associated
with this readmission would be divided by 4 (the geometric mean) and
multiplied by 3 (the first day is counted as 2 days, and the second day
contributes the third day), and the resulting amount is attributed to
the episode. The remainder one-fourth would be captured in the post-
episode spending calculation discussed in section III.C.8 of this
proposed rule. If the readmission occurred on the 85th day after
discharge from the CCJR anchor hospitalization, and the length of stay
was 7 days, the normal MS-DRG payment amount for the admission would be
included in the episode without proration because length of stay for
the readmission falling within the episode (6 days) is greater than or
equal to the geometric mean (4 days) for the MS-DRG.
We considered an alternative option of including the full Medicare
payment for all services that start during the episode, even if those
services did not conclude until after the episode ended, in calculating
episode target prices and actual payments. Previous research on bundled
payments for episodes of PAC services noted that including the full
payment for any claim initiated during the fixed episode period of time
will capture continued service use. However, prorating only captures a
portion of actual service use (and payments) within the bundle. \20\ As
discussed in section III.B of this proposed rule, the CCJR model
proposes an episode length that extends 90 days post-discharge, and
Table 5 in section III.B.3.c. of this proposed rule demonstrates that
the average length of stay in PAC during a 90-day episode with a MS-DRG
470 anchor hospitalization is 47.3 days. Therefore, the length of the
episode under CCJR (90 days) should be sufficient to capture the vast
majority of service use within the episode, even if payments for some
services that extend beyond the episode duration are prorated and only
partly attributed to the episode.
---------------------------------------------------------------------------

\20\ https://aspe.hhs.gov/health/reports/09/pacepifinal/report.pdf.
---------------------------------------------------------------------------

c. Proposed Pricing Adjustment for High Payment Episodes
Given the broad proposed LEJR episode definition and 90-day post-
discharge episode duration proposed for CCJR, we want to ensure that
hospitals have some protection from the variable repayment risk for
especially high payment episodes, where the clinical scenarios for
these cases each year may differ significantly and unpredictably. We do
not believe the opportunity for a hospital's systematic care redesign
of LEJR episodes has significant potential to impact the clinical
course of these extremely disparate high payment cases.
The BPCI Model 2 uses a generally similar episode definition as
proposed for CCJR and the vast majority of BPCI episodes being tested
for LEJR are 90 days in duration following discharge from the anchor
hospitalization. Similarly, we believe the BPCI distribution of Model 2
90-day LEJR episode payment amounts as displayed in Figure 1 provides
information that is relevant to policy development regarding CCJR
episodes.

[[Page 41224]]

[GRAPHIC] [TIFF OMITTED] TP14JY15.001

As displayed, the mean episode payment amount is approximately
$26,000. Five percent of all episodes are paid at two standard
deviations above the mean payment or greater, an amount that is
slightly more than 2 times the mean episode payment amount. While these
high payment cases are relatively uncommon, we believe that
incorporation of the full Medicare payment amount for such high payment
episodes in setting the target price and correspondingly in Medicare's
aggregate actual episode payment that is compared to the target price
for the episode may lead in some cases to excessive hospital
responsibility for these episode expenditures. This may be especially
true when hospital responsibility for repayment of excess episode
spending is introduced in performance year 2. The hospital may have
limited ability to moderate spending for these high payment cases. Our
proposal to exclude IPPS new technology add-on payments and separate
payment for clotting factors for the anchor hospitalization from the
episode definition limits excessive financial responsibility under this
model of extremely high inpatient payment cases that could result from
costly hospital care furnished during the anchor hospitalization.
However, we believe an additional pricing adjustment in setting episode
target prices and calculating actual episode payments is necessary to
mitigate the hospital responsibility for the actual episode payments
for high episode payment cases resulting from very high Medicare
spending within the episode during the period after discharge from the
anchor hospitalization, including for PAC, related hospital
readmissions, and other items and services related to the LEJR episode.
Thus, in order to limit the hospital's responsibility for the
aforementioned high episode payment cases, we propose to utilize a
pricing adjustment for high payment episodes that would incorporate a
high payment ceiling at two standard deviations above the mean episode
payment amount in calculating the target price and in comparing actual
episode payments during the performance year to the target prices.
Specifically, when setting target prices, we would first identify
for each anchor MS-DRG in each region (discussed further in section
III.C.4 of this proposed rule) the episode payment amount that is two
standard deviations above the mean payment in the historical dataset
used (discussed further in section III.C.4 of this proposed rule). Any
such identified episode would have its payment capped at the MS-DRG
anchor and region-specific value that is two standard deviations above
the mean, which would be the ceiling for purposes for calculating
target prices. We note that the calculation of the historical episode
high payment ceiling for each region and MS-DRG anchor would be
performed after other steps, including removal of effects of special
payment

[[Page 41225]]

provisions and others described in section III.C.4.c. of this proposed
rule.
When comparing actual episode payments during the performance year
to the target prices, episode payments for episodes in the performance
year would also be capped at two standard deviations above the mean.
The high episode payment ceiling for episodes in a given performance
year would be calculated based on MS-DRG anchor-specific episodes in
each region. We discuss further how the high episode payment ceiling
would be applied when comparing episode payments during the performance
year to target prices in section III.C.6. of this proposed rule.
While this approach generally lowers the target price slightly, it
provides a basis for reducing the hospital's responsibility for actual
episode spending for high episode payment cases during the model
performance years. When performing the reconciliation for a given
performance year of the model, we would array the actual episode
payment amounts for all episodes being tested within a single region,
and identify the regional actual episode payment ceiling at two
standard deviations above the regional mean actual episode payment
amount. If the actual payment for a hospital's episode exceeds this
regional ceiling, we would set the actual episode payment amount to
equal the regional ceiling amount, rather than the actual amount paid
by Medicare, when comparing a hospital's episode spending to the target
price. Thus, a hospital would not be responsible for any actual episode
payment that is greater than the regional ceiling amount for that
performance year. We propose to adopt this policy for all years of the
model, regardless of the reconciliation payment opportunity or
repayment responsibility in a given performance year, to achieve
stability and consistency in the pricing methodology. We believe this
proposal provides reasonable protection for hospitals from undue
financial responsibility for Medicare episode spending related to the
variable and unpredictable course of care of some Medicare
beneficiaries in CCJR episodes, while still fully incentivizing
increased efficiencies for approximately the 95 percent of episodes for
which we estimate actual episode payments to fall below this
ceiling.\21\ We seek comment on our proposal to apply a pricing
adjustment in setting target prices and reconciling actual episode
payments for high payment episodes.
---------------------------------------------------------------------------

\21\ Medicare FFS Parts A and B claims, CCJR episodes as
proposed, between October 1, 2013 and September 30, 2014.
---------------------------------------------------------------------------

4. Proposed Episode Price Setting Methodology
a. Overview
Whether a participant hospital receives reconciliation payments or
is made responsible to repay Medicare for the CCJR model will depend on
the hospital's quality and actual payment performance relative to
episode quality thresholds and target prices. Quality performance and
thresholds are further discussed in section III.C.5. of this proposed
rule, and the remainder of this section will discuss the proposed
approach to establishing target prices.
We propose to establish CCJR target prices for each participant
hospital. For episodes beginning in performance years 1, 3, 4, and 5, a
participant hospital would have eight target prices, one for each of
the following:
MS-DRG 469 anchored episodes that were initiated between
January 1 and September 30 of the performance year, if the participant
hospital successfully submits data on the voluntary patient reported
outcome measure proposed in section III.C.5. of this proposed rule.
MS-DRG 470 anchored episodes that were initiated between
January 1 and September 30 of the performance year, if the participant
hospital successfully submits data on the proposed voluntary patient
reported outcome measure.
MS-DRG 469 anchored episodes that were initiated between
October 1 and December 31 of the performance year, if the participant
hospital successfully submits data on the proposed voluntary patient-
reported outcome measure.
MS-DRG 470 anchored episodes that were initiated between
October 1 and December 31 of the performance year, if the participant
hospital successfully submits data on the proposed voluntary patient-
reported outcome measure.
MS-DRG 469 anchored episodes that were initiated between
January 1 and September 30 of the performance year, if the participant
hospital does not successfully submit data on the voluntary patient-
reported outcome measure.
MS-DRG 470 anchored episodes that were initiated between
January 1 and September 30 of the performance year, if the participant
hospital does not successfully submit data on the proposed voluntary
patient-reported outcome measure.
MS-DRG 469 anchored episodes that were initiated between
October 1 and December 31 of the performance year, if the participant
hospital does not successfully submit data on the proposed voluntary
patient-reported outcome measure.
MS-DRG 470 anchored episodes that were initiated between
October 1 and December 31 of the performance year, if the participant
hospital does not successfully submit data on the proposed voluntary
patient-reported outcome measure.
For episodes beginning in performance year 2, a participant
hospital would have 16 target prices. These would include the same
combinations as for the other 4 performance years, but one set for
determining potential reconciliation payments, and the other for
determining potential Medicare repayment amounts, as part of the
phasing in of two-sided risk discussed later in this section. Further
discussion on our proposals for different target prices for MS-DRG 469
versus MS-DRG 470 anchored episodes, for episodes initiated between
January 1 and September 30 versus October 1 and December 31, and for
participant hospitals that do and do not successfully submit data on
the proposed patient-reported outcome measure can be found in sections
III.C.4.b and III.C.5. of this proposed rule.
We intend to calculate and communicate episode target prices to
participant hospitals prior to the performance period in which they
apply (that is, prior to January 1, 2017, for target prices covering
episodes initiated between January 1 and September 30, 2017; prior to
October 1, 2017 for target prices covering episodes initiated between
October 1 and December 31, 2017). We believe prospectively
communicating prices to hospitals will help them make any
infrastructure, care coordination and delivery, and financial
refinements they may deem appropriate to prepare for the new episode
target prices.
The proposed approach to setting target prices incorporates the
following features:
Set different target prices for episodes anchored by MS-
DRG 469 versus MS-DRG 470 to account for patient and clinical
variations that impact hospitals' cost of providing care.
Use 3 years of historical Medicare payment data grouped
into episodes of care according to the episode definition proposed in
section III.B. of this proposed rule, hereinafter termed historical
CCJR episodes. The specific set of 3- historical-years used would be
updated every other performance year.

[[Page 41226]]

Apply Medicare payment system (for example, IPPS, OPPS,
IRF PPS, SNF, PFS, etc.) updates to the historical episode data to
ensure we incentivize hospitals based on historical utilization and
practice patterns, not Medicare payment system rate changes that are
beyond hospitals' control. Because different Medicare payment system
updates become effective at two different times of the year, we would
calculate separate target prices for episodes initiated between January
1 and September 30 versus October 1 and December 31.
Blend together hospital-specific and regional historical
CCJR episode payments, transitioning from primarily provider-specific
to completely regional pricing over the course of the 5 performance
years, to incentivize both historically efficient and less efficient
hospitals to furnish high quality, efficient care in all years of the
model. Regions would be defined as each of the nine U.S. Census
divisions.
Normalize for provider-specific wage adjustment variations
in Medicare payment systems when combining provider-specific and
regional historical CCJR episodes. Wage adjustments would be reapplied
when determining hospital-specific target prices.
Pool together CCJR episodes anchored by MS DRGs 469 and
470 to use a greater historical CCJR episode volume and set more stable
prices.
Apply a discount factor to serve as Medicare's portion of
reduced expenditures from the CCJR episode, with any remaining portion
of reduced Medicare spending below the target price potentially
available as reconciliation payments to the participant hospital where
the anchor hospitalization occurred.
Further discussion on each of the individual features can be found
in section III.C.4.b. of this proposed rule. In section III.C.4.c. of
this proposed rule, we also provide further details on the proposed
sequential steps to calculate target prices and how each of the pricing
features would fit together.
b. Proposed Pricing Features
(1) Different Target Prices for Episodes Anchored by MS-DRG 469 Versus
MS-DRG 470
For each participant hospital we propose to establish different
target prices for CCJR episodes initiated by MS-DRG 469 versus MS-DRG
470. MS-DRGs under the IPPS account for some of the clinical and
resource variations that exist and that impact hospitals' cost of
providing care. Specifically, MS-DRG 469 is defined to identify, and
provide hospitals a higher Medicare payment to reflect the higher
hospital costs for, hip and knee procedures with major complications or
comorbidities. Therefore, we propose to calculate separate target
prices for each participant hospital for CCJR episodes with MS-DRG 469
versus MS-DRG 470 anchor hospitalizations.
We considered adjusting the episode target prices by making
adjustments or setting different prices based on patient-specific
clinical indicators (for example, comorbidities). However, we do not
believe there is a sufficiently reliable approach that exists suitable
for CCJR episodes beyond MS-DRG-specific pricing, and there is no
current standard on the best approach. At the time of developing this
proposed rule Tennessee, Ohio, and Arkansas are launching multi-payer
(including Medicaid and commercial payers, excluding Medicare) bundles
and include hip and knee replacement as an episode ^{22 23 24}.
These states' hip and knee episode definitions and payment models are
consistent with, though not the same as, the proposed CCJR episode
described in this proposed rule. However, each of these three states
uses different risk adjustment factors. This variation across states
supports our belief that there is currently no standard risk adjustment
approach widely accepted throughout the nation that could be used under
CCJR, a model that would apply to hospitals across multiple states.
Therefore, we are not proposing to make adjustments based on patient-
specific clinical indicators.
---------------------------------------------------------------------------

\22\ Tennessee Health Care Innovation Initiative. https://www.tn.gov/HCFA/strategic.shtml. Accessed on April 16, 2015.
\23\ Ohio Governor's Office of Health Transformation.
Transforming Payment for a Healthier Ohio, June 8, 2014. https://www.healthtransformation.ohio.gov/LinkClick.aspx?fileticket=TDZUpL4a-SI%3d&tabid=138, Accessed on
April 16, 2014.
\24\ Total Joint Replacement Algorithm Summary, Arkansas Health
Care Payment Improvement Initiative, November 2012. https://www.paymentinitiative.org/referenceMaterials/Documents/TJR%20codes.pdf. Accessed on April 17, 2015.
---------------------------------------------------------------------------

We also considered making price adjustments based on the
participant hospital's average Hierarchical Condition Category (HCC)
score for patients with anchor CCJR hospitalizations. The CMS-HCC risk
adjustment model quantifies a beneficiary's risk by examining the
beneficiary's demographics and historical claims data and predicting
the beneficiary's total expenditures for Medicare Parts A and B in an
upcoming year. However, the CMS-HCC risk adjustment model's intended
use is to pay Medicare Advantage (MA) plans appropriately for their
expected relative costs. For example, MA plans that disproportionately
enroll the healthy are paid less than they would have been if they had
enrolled beneficiaries with the average risk profile, while MA plans
that care for the sickest patients are paid proportionately more than
if they had enrolled beneficiaries with the average risk profile. The
CMS-HCC risk adjustment model is prospective. It uses demographic
information (that is, age, sex, Medicare/Medicaid dual eligibility,
disability status) and a profile of major medical conditions in the
base year to predict Medicare expenditures in the next year.\25\ As
previously noted, the CMS-HCC risk adjustment model is used to predict
total Medicare expenditures in an upcoming year, and may not be
appropriate for use in predicting expenditures over a shorter period of
time, such as the CCJR episode, and may not be appropriate in instances
where its use is focused on lower extremity joint replacements.
Therefore, since we have not evaluated the validity of HCC scores for
predicting Medicare expenditures for shorter episodes of care or for
specifically lower extremity joint replacement beneficiaries, we are
not proposing to risk adjust the target prices using HCC scores for the
CCJR model.
---------------------------------------------------------------------------

\25\ Pope, C. et al., Evaluation of the CMS-HCC Risk Adjustment
Model Final Report. Report to the Centers for Medicare & Medicaid
Services under Contract Number HHSM-500-2005-00029I. RTI
International. Research Triangle Park, NC. March, 2011.
---------------------------------------------------------------------------

We also considered making adjustments or setting different prices
for different procedures, such as different prices or adjustments for
hip versus knee replacements, but we do not believe there would be
substantial variation in episode payments for these clinical scenarios
to warrant different prices or adjustments. Moreover, Medicare IPPS
payments, which account for approximately 50 percent \26\ of CCJR
episode expenditures, do not differentiate between hip and knee
procedures, mitigating procedure-specific variation for the anchor
hospitalization. Furthermore, there are no widely accepted clinical
guidelines to suggest that PAC intensity would vary significantly
between knee and hip replacements. We seek comment on our proposal to
price episodes based on the MS-DRG for the anchor hospitalization,
without further risk adjustment.
---------------------------------------------------------------------------

\26\ Medicare FFS Parts A and B claims, CCJR episodes, as
proposed in this rule, between October 2013 and September 2014.

---------------------------------------------------------------------------

[[Page 41227]]

(2) Three Years of Historical Data
We propose to use 3 years of historical CCJR episodes for
calculating CCJR target prices. The set of 3- historical-years used
would be updated every other year. Specifically--
Performance years 1 and 2 would use historical CCJR
episodes that started between January 1, 2012 and December 31, 2014;
Performance years 3 and 4 would use historical episodes
that started between January 1, 2014 and December 31, 2016; and
Performance year 5 would use episodes that started between
January 1, 2016 and December 31, 2018. We considered using fewer than 3
years of historical CCJR episode data, but we are concerned with having
sufficient historical episode volume to reliably calculate target
prices. We also considered not updating the historical episode data for
the duration of the model. However, we believe that hospitals' target
prices should be regularly updated on a predictable basis to use the
most recent available claims data, consistent with the regular updates
to Medicare's payment systems, to account for actual changes in
utilization. We are not proposing to update the data annually, given
the uncertainty in pricing this could introduce for participant
hospitals. We also note that the effects of updating hospital-specific
data on the target price could be limited as the regional contribution
to the target price grows, moving to two-thirds in performance year 3
when the first historical episode data update would occur.
(3) Proposed Trending of Historical Data to the Most Recent Year of the
Three
We acknowledge that some payment variation may exist in the 3 years
of historical CCJR episodes due to updates to Medicare payment systems
(for example, IPPS, OPPS, IRF PPS, SNF PPS, etc.) and national changes
in utilization patterns. Episodes in the third of the 3 historical
years may have higher average payments than those from the earlier 2
years because of Medicare payment rate increases over the course of the
3 historical years. We do not intend to have CCJR incentives be
affected by Medicare payment system rate changes that are beyond
hospitals' control. In addition to the changes in Medicare payment
systems, average episode payments may change year over year due to
national trends reflecting changes in industry-wide practice patterns.
For example, readmissions for all patients, including those in CCJR
episodes, may decrease nationally due to improved industry-wide
surgical protocols that reduce the chance of infections. We do not
intend to provide reconciliation payments to (or require repayments
from) hospitals for achieving lower (or higher) Medicare expenditures
solely because they followed national changes in practice patterns.
Instead, we aim to incentivize hospitals based on their hospital-
specific inpatient and PAC delivery practices for LEJR episodes.
To mitigate the effects of Medicare payment system updates and
changes in national utilization practice patterns within the 3 years of
historical CCJR episodes, we propose to follow an approach similar to
what is done in BPCI Model 2 and apply a national trend factor to each
of the years of historical episode payments. Specifically, we propose
to inflate the 2 oldest years of historical episode payments to the
most recent year of the 3 historical years described in section
III.C.4.b.(2) of this proposed rule. We propose to trend forward each
of the 2 oldest years using the changes in the national average CCJR
episode payments. We also propose to apply separate national trend
factors for episodes anchored by MS-DRG 469 versus MS-DRG 470 to
capture any MS-DRG-specific payment system updates or national
utilization pattern changes. For example, when using CY 2012-2014
historical episode data to establish target prices for performance
years 1 and 2, under our proposal we would calculate a national average
MS-DRG 470 anchored episode payment for each of the 3 historical years.
The ratio of the national average MS-DRG 470 anchored episode payment
for CY 2014 to that of CY 2012 would be used to trend 2012 MS-DRG 470
anchored episode payments to CY 2014. Similarly, the ratio of the
national average MS-DRG 470 anchored episode payment for CY 2014 to
that of CY 2013 would be used to trend 2013 episode payments to CY
2014. The aforementioned process would be repeated for MS-DRG 469
anchored episodes. Trending CY 2012 and CY 2013 data to CY 2014 would
capture updates in Medicare payment systems as well as national
utilization pattern changes that may have occurred.
We considered adjusting for regional trends in utilization, as
opposed to national trends. However, we believe that any Medicare
payment system updates and significant changes in utilization practice
patterns would not be region-specific but rather be reflected
nationally.
We seek comment on our proposal to nationally trend historical data
to the most recent year of the 3 being used to set the target prices.
(4) Update Historical Episode Payments for Ongoing Payment System
Updates
We propose to prospectively update historical CCJR episode payments
to account for ongoing Medicare payment system (for example, IPPS,
OPPS, IRF PPS, SNF, PFS, etc.) updates to the historical episode data
and ensure we incentivize hospitals based on historical utilization and
practice patterns, not Medicare payment system rate changes that are
beyond hospitals' control. Medicare payment systems do not update their
rates at the same time during the year. For example, IPPS, the IRF
prospective payment system, and the SNF payment system apply annual
updates to their rates effective October 1, while the hospital
outpatient prospective payment system (OPPS) and Physician Fee Schedule
(PFS) apply annual updates effective January 1. To ensure we
appropriately account for the different Medicare payment system updates
that go into effect on January 1 and October 1, we propose to update
historical episode payments for Medicare payment system updates and
calculate target prices separately for episodes initiated between
January 1 and September 30 versus October 1 and December 31 of each
performance year. The target price in effect as of the day the episode
is initiated would be the target price for the whole episode. Note that
in performance year 5, the second set of target prices would be for
episodes that start and end between and including October 1 and
December 31 because the fifth performance period of the CCJR model
would end on December 31, 2020. Additionally, a target price for a
given performance year may apply to episodes included in another
performance year. For example, an episode initiated in November 2016,
and ending in February 2017 would have a target price based on the
second set of 2016 target prices (for episodes initiated between
October 1 and December 31, 2016), and it would be captured in the CY
2017 performance year (performance year 2) because it ended between
January 1 and December 31, 2017. We refer readers to section III.C.3.c.
of this proposed rule for further discussion on the definition of
performance years.
We propose to update historical CCJR episode payments by applying
separate Medicare payment system update factors each January 1 and
October 1 to each of the following six components of each hospital's
historical CCJR payments:
Inpatient acute.

[[Page 41228]]

Physician.
IRF.
SNF.
HHA.
Other services.
A different set of update factors would be calculated for January 1
through September 30 versus October 1 through December 31 episodes each
performance year. The six update factors for each of the aforementioned
components would be hospital-specific and would be weighted by the
percent of the Medicare payment for which each of the six components
accounts in the hospital's historical episodes. The weighted update
factors would be applied to historical hospital-specific average
payments to incorporate ongoing Medicare payment system updates. A
weighted update factor would be calculated by multiplying the
component-specific update factor by the percent of the hospital's
historical episode payments the component represents, and summing
together the results. For example, let us assume 50 percent of a
hospital's historical episode payments were for inpatient acute care
services, 15 percent for physician services, 35 percent for SNF
services, and 0.0 percent for the remaining services. Let us also
assume for this example that the update factors for inpatient acute
care services, physician services, and SNF services are 1.02, 1.03, and
1.01, respectively. The weighted update factor in this example would be
the following: (0.5 * 1.02) + (0.15 * 1.03) + (0.35 * 1.01) = 1.018.
The hospital in this example would have its historical average episode
payments multiplied by 1.018 to incorporate ongoing payment system
updates. The specific order of steps, and how this step fits in with
others, is discussed further in section III.C.4.c. of this proposed
rule.
Each of a hospital's six update factors would be based on how
inputs have changed in the various Medicare payment systems for the
specific hospital. Additional details on these update factors will be
discussed later in this section.
Region-specific update factors for each of the aforementioned
components and weighted update factors would also be calculated in the
same manner as the hospital-specific update factors. Instead of using
historical episodes attributed to a specific hospital, region-specific
update factors would be based on all historical episodes initiated at
any CCJR eligible hospital within the region. For purposes of this
rule, CCJR eligible hospitals are defined as hospitals that were paid
under IPPS and not a participant in BPCI Model 1 or in the risk-bearing
period of Models 2 or 4 for LEJR episodes, regardless of whether or not
the MSAs in which the hospitals are located were selected for inclusion
in the CCJR model. CCJR episodes initiated at a CCJR eligible hospital
will for purposes of this rule be referred to as CCJR episodes
attributed to that CCJR eligible hospital.
We considered an alternative option of trending the historical
episode payments forward to the upcoming performance year using ratios
of national average episode payment amounts, similar to how we propose
to trend the 2 oldest historical years forward to the latest historical
year for historical CCJR episode payments in section III.C.4.b.(3) of
this proposed rule. Using ratios of national average episode payment
amounts would have the advantage of also capturing changes in national
utilization patterns in addition to payment system updates between the
historical years and the performance year. However, such an approach
would need to be done retrospectively, after average episode payments
can be calculated for the performance year, because it would rely on
the payments actually incurred in the performance period, data for
which would be not be available before the performance period. While
the proposed approach of using component-specific update factors may be
more complicated than the aforementioned alternative, we believe the
additional complication is outweighed by the value to hospitals of
knowing target prices before the start of an episode for which the
target price would apply. We seek comment on this proposed approach of
updating historical episode payments for ongoing Medicare payment
system changes.
We do not propose to separately and prospectively apply an
adjustment to account for changes in national utilization patterns
between the historical and performance years. If a prospective
adjustment factor for national utilization pattern changes were
applied, it may only be meaningful in performance years 2 and 4, when
the historical data used to calculate target prices would not be
updated, but another year of historical data would be available. In any
of the other 3 performance years, the latest available historical year
of data would already be incorporated into the target prices. Given
that we propose to refresh the historical data used to calculate target
prices every 2 years, we do not believe an additional adjustment factor
to account for national practice pattern changes is necessary to
appropriately incentivize participant hospitals to improve quality of
care and reduce episode payments.
(a) Proposed Inpatient Acute Services Update Factor
The proposed inpatient acute services update factor would apply to
payments for services included in the episode paid under the IPPS. This
would include payments for the CCJR anchor hospitalization, but not
payments for related readmissions at CAHs during the episode window.
Payments for related readmissions at CAHs would be captured under the
update factor for other services in section III.C.4.b.(f) of this
proposed rule.
The update factor applied to the inpatient acute services component
of each participant hospital and region's historical average episode
payments would be based on how inputs for the Medicare IPPS have
changed between the latest year used in the historical 3 years of
episodes and the upcoming performance period under CCJR. We propose to
use changes in the following IPPS inputs to calculate the inpatient
acute services update factor: IPPS base rate and average of MS-DRG
weights, as defined in the IPPS/LTCH Final Rules for the relevant
years. The average MS-DRG weight would be specific to each participant
hospital and region to account for hospital and region-specific
inpatient acute service utilization patterns. Hospital-specific and
region-specific average MS-DRG weights would be calculated by averaging
the MS-DRG weight for all the IPPS MS-DRGs included in the historical
episodes attributed to each participant hospital and attributed to CCJR
eligible hospitals in the region, respectively; including MS-DRGs for
anchor admissions as well as those for subsequent readmissions that
fall within the episode definition. Expressed as a ratio, the inpatient
acute services adjustment factor would equal the following:
The numerator is based on values applicable for the
upcoming performance period (PP) for which a target price is being
calculated.
The denominator is based on values applicable at the end
of the latest historical year used in the target price (TP)
calculations.
Therefore, the proposed inpatient acute services update factor
formula is shown as--

[[Page 41229]]

[GRAPHIC] [TIFF OMITTED] TP14JY15.002

(b) Proposed Physician Services Update Factor
The proposed physician services update factor would apply to
payments for services included in the episode paid under the Medicare
PFS for physician services. We propose to use changes in the following
PFS inputs to calculate the physician services update factor of each
participant hospital and region's historical average episode payments:
RVUs; work, practice expense, and malpractice liability geographic
practice cost indices (GPCIs); and national conversion factor, as
defined in the PFS Final Rule for the relevant years. Hospital-specific
and region-specific RVU-weighted GPCIs would be calculated to account
for hospital and region-specific physician service utilization
patterns. Hospital-specific and region-specific RVU-weighted GPCIs
would be calculated by taking the proportion of RVUs for work, practice
expense, and malpractice liability for physician services included in
the historical episodes and attributed to each participant hospital and
attributed to CCJR eligible hospitals in the region, respectively, and
multiplying each proportion by the relevant GPCI.
Expressed as a ratio, the physician services update factor would
equal the following:
The numerator is based on GPCI values applicable for the
upcoming performance period (PP) for which a target price is being
calculated.
The denominator is based on GPCI applicable at the end of
the latest year used in the target price (TP) calculations.
Therefore, the proposed physician services update factor formula is
shown as--
[GRAPHIC] [TIFF OMITTED] TP14JY15.003

(c) Proposed IRF Services Update Factor
The proposed IRF services update factor apply to payments for
services included in the episode paid under the Medicare inpatient
rehabilitation facility prospective payment system (IRF PPS). We
propose to use changes in the IRF Standard Payment Conversion Factor,
an input for the IRF PPS and defined in the IRF PPS Final Rule for the
relevant years, to update Medicare payments for IRF services provided
in the episode. The IRF Standard Payment Conversion Factor is the same
for all IRFs and IRF services, so there is no need to account for any
hospital-specific or region-specific IRF utilization patterns; each
participant hospital and region would use the same IRF services update
factor.
Expressed as a ratio, the IRF PPS update factor would equal the
following:
The numerator is based on values applicable for the
upcoming performance period (PP) for which a target price is being
calculated.
The denominator is based on values applicable at the end
of the latest historical year used in the target price (TP)
calculations:
Therefore, the proposed IRF services update factor formula is shown
as
[GRAPHIC] [TIFF OMITTED] TP14JY15.004

(d) Proposed SNF Services Update Factor
The proposed SNF services update factor would apply to payments for
services included in the episode and paid under the SNF PPS, including
payments for SNF swing bed services. The update factor applied to the
SNF services component of each participant hospital and region's
historical average episode payments would be based on how average
Resource Utilization Group (RUG-IV) Case-Mix Adjusted Federal Rates for
the Medicare SNF PPS (defined in the SNF PPS Final Rule) have changed
between the latest year used in the historical 3 years of episodes and
the upcoming performance period under CCJR. The average RUG-IV Case-Mix
Adjusted Federal Rates would be specific to each participant hospital
and region to account for hospital and region-specific SNF service
utilization patterns. Hospital-specific and region-specific average
RUG-IV Case-Mix Adjusted Federal Rates would be calculated by averaging
the RUG-IV Case-Mix Adjusted Federal Rates for all SNF services
included in the historical episodes attributed to each participant
hospital and attributed to CCJR eligible hospitals in the region,
respectively. We note that the RUG-IV Case-Mix Adjusted Federal Rate
may vary for the same RUG, depending on whether the SNF was categorized
as urban or rural.
Expressed as a ratio, the SNF services update factor would equal
the following:
The numerator is based on values applicable for the
upcoming performance period (PP) for which a target price is being
calculated.
The denominator is based on values applicable at the end
of the latest year used in the target price (TP) calculations:
Therefore, the proposed SNF services update factor formula is shown
as
[GRAPHIC] [TIFF OMITTED] TP14JY15.005

[[Page 41230]]

(e) Proposed HHA Services Update Factor
The proposed HHA services update factor would apply to payments for
services included in the episode and paid under the HH PPS, but exclude
payments for Low Utilization Payment Adjustment (LUPA) claims (claims
with four or fewer home health visits) because they are paid
differently and would instead be captured in the update factor for
other services in section III.C.4.b.(f) of this proposed rule. The
update factor applied to the home health services component of each
participant hospital and region's historical average episode payments
would be based on how inputs for the Medicare HH PPS have changed
between the latest year used in the historical 3 years of episodes and
the upcoming performance period under CCJR. We propose to use changes
in the HH PPS base rate and average of home health resource group
(HHRG) case-mix weight, inputs for the HHA PPS and defined in the HHA
PPS Final Rule for the relevant years, to calculate the home health
services update factor. The average HHRG case-mix weights would be
specific to each participant hospital and region to account for
hospital and region-specific home health service utilization patterns.
Hospital-specific and region-specific HHA services update factors would
be calculated by averaging the HHRG case-mix weights for all home
health payments (excluding LUPA claims) included in the historical
episodes attributed to each participant hospital and attributed to CCJR
eligible hospitals in the region, respectively.
Expressed as a ratio, the HHA adjustment factor would equal the
following:
The numerator is based on values applicable for the
upcoming performance period (PP) for which a target price is being
calculated.
The denominator is based on values applicable at the end
of the latest historical year used in the target price (TP)
calculations.
Therefore, the proposed HHA services update factor formula is shown
as--
[GRAPHIC] [TIFF OMITTED] TP14JY15.006

(f) Proposed Other Services Update Factor
The other services update factor would apply to payments for
services included in the episode and not paid under the IPPS, PFS, IRF
PPS, or HHA PPS (except for LUPA claims). This component would include
episode payments for home health LUPA claims and CCJR related
readmissions at CAHs. For purposes of calculating the other services
update factor, we propose to use the Medicare Economic Index (MEI), a
measure developed by CMS for measuring the inflation for goods and
services used in the provision of physician services.\27\ We would
calculate the other services update factor as the percent change in the
MEI between the latest year used in the TP calculation and its
projected value for the upcoming performance period. Because MEI is not
hospital or region-specific, each participant hospital and region would
use the same other services update factor.
---------------------------------------------------------------------------

\27\ Medicare Market Basket Data. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketData.html.
---------------------------------------------------------------------------

(5) Blend Hospital-specific and Regional Historical Data
We propose to calculate CCJR episode target prices using a blend of
hospital-specific and regional historical average CCJR episode
payments, including CCJR episode payments for all CCJR eligible
hospitals in the same U.S. Census division as discussed further in
section III.C.4.b.(6) of this proposed rule. Specifically, we propose
to blend two-thirds of the hospital-specific episode payments and one-
third of the regional episode payment to set a participant hospital's
target price for the first 2- performance years of the CCJR model (CY
2016 and CY 2017). For performance year 3 of the model (CY 2018), we
propose to adjust the proportion of the hospital-specific and regional
episode payments used to calculate the episode target price from two-
thirds hospital-specific and one-third regional to one-third hospital-
specific and two-thirds regional. Finally, we propose to use only
regional historical CCJR episode payments for performance years 4 and 5
of the model (CY 2019 and CY 2020) to set a participant hospital's
target price, rather than a blend between the hospital-specific and
regional episode payments. The specific order of steps, and how this
step fits in with others, is discussed further in section III.C.4.c. of
this proposed rule. We welcome comment on the appropriate blend between
hospital-specific and regional episode payments and the change in that
blend over time.
We considered establishing episode target prices using only
historical CCJR hospital-specific episode payments for all 5
performance years of the model (that is, episode payments for episodes
attributed to the participant hospital, as previously described in
section III.C.2. of this proposed rule). Using hospital-specific
historical episodes may be appropriate in other models such as BPCI
Model 2 where participation is voluntary and setting a region-wide
target price could lead to a pattern of selective participation in
which inefficient providers decline to participate, undermining the
model's ability to improve the efficiency and quality of care delivered
by those providers, while already-efficient providers receive windfall
gains even if they do not further improve efficiency. Because CCJR
model participants will be required to participate in the model, solely
using hospital-specific historical episode data is not necessary to
avoid this potential concern. Furthermore, using only hospital-specific
historical CCJR episode payments may provide little incentive for
hospitals that already cost-efficiently deliver high quality care to
maintain or further improve such care. These hospitals could receive a
relatively low target price because of their historical performance but
have fewer opportunities for achieving additional efficiency under
CCJR. They would not receive reconciliation payments for maintaining
high quality and efficiency, while other hospitals that were less
efficient would receive reconciliation payments for improving, even if
the less historically efficient hospitals did not reach the same level
of high quality and efficiency as the more historically efficient
hospitals. Using only hospital-specific historical CCJR episode
payments may also not be sufficient to curb inefficient care or
overprovision of services for hospitals with historically high CCJR
episode payments. In such instances, using hospital-specific historical
episode payments for the CCJR model could result in Medicare continuing
to pay an excessive amount for episodes of care provided by inefficient
hospitals, and inefficient hospitals would stand to

[[Page 41231]]

benefit from making only small improvements. Thus, we do not propose to
set target prices based solely on hospital-specific data for any
performance years of the model.
We considered establishing the episode target price using only
historical CCJR regional episode payments for all 5 performance years
of the model. Though regional target pricing would reward the most
efficient hospitals for continuing to provide high quality and cost
efficient care, we are concerned about providing achievable incentives
under the model for hospitals with high historical CCJR average episode
payments. We believe a lower regional price for such hospitals would
leave them with little financial incentive in performance year 1,
especially without any responsibility to repay payments in excess of
the target price as described in section III.C.3. of this proposed
rule. Thus, we do not propose to set target prices solely on regional
data for the entire duration of the model.
Therefore, we propose initially to blend historical hospital-
specific and regional-historical episode payments and then transition
to using regional-only historical episode payments in establishing
target prices to afford early and continuing incentives for both
historically efficient and less efficient hospitals to furnish high
quality, efficient care in all years of the model. Our proposal more
heavily weights a hospital's historical episode data in the first 2
years of the model (two-thirds hospital-specific, one-third regional),
providing a reasonable incentive for both currently efficient and less
efficient hospitals to deliver high quality and efficient care in the
early stages of model implementation. Beginning in performance year 3,
once hospitals have engaged in care redesign and adapted to the model
parameters, we propose to shift to a more heavily weighted regional
contribution (one-third hospital-specific, two-thirds regional in
performance year 3) and ultimately to a regional target price for
performance years 4 and 5. We believe that by performance year 4,
setting target prices based solely on regional historical data would be
feasible because hospitals would have had 3 years under this model to
more efficiently deliver high quality care, thereby reducing some of
the variation across hospitals. We believe transitioning to regional
only pricing in the latter years of the model would provide important
information about the reduction in unnecessary variation in LEJR
episode utilization patterns within a region that can be achieved.
We believe transitioning to regional-only pricing in the latter
years of the model may provide valuable information regarding potential
pricing strategies for successful episode payment models that we may
consider for expansion in the future. As discussed previously,
substantial regional and hospital-specific variation in Medicare LEJR
episode spending currently exists for beneficiaries with similar
demographic and health status, so we are proposing that the early CCJR
model years will more heavily weight historical hospital-specific
experience in pricing episode for a participant hospital. Once the
hospital has substantial experience with care redesign, we expect that
unnecessary hospital-specific variation in episode spending will be
minimized so that regional-only pricing would be appropriate as we have
proposed. We note that, like episode payment under the CCJR model,
Medicare's current payment systems make payments for bundles of items
and services, although of various breadths and sizes depending on the
specific payment system. For example, the IPPS pays a single payment,
based on national prices with geography-specific labor cost
adjustments, for all hospital services furnished during an inpatient
hospital stay, such as nursing services, medications, medical
equipment, operating room suites, etc. Under the IPPS, the national
pricing approach incentivizes efficiencies and has, therefore, led to a
substantial reduction in unnecessary hospital-specific variation in
resource utilization for an inpatient hospital stay. On the other hand,
the episode payment approach being tested under BPCI Model 2 relies
solely on provider-specific pricing over the lifetime of the model,
assuming the number of episode cases is sufficient to establish a
reliable episode price, an approach that has potential limitations were
expansion to be considered. Thus, we believe our proposal for CCJR will
provide new, important information regarding pricing for even larger
and broader bundles of services once unnecessary provider-specific
variation has been minimized that would supplement our experience with
patterns and pricing under existing payment systems and other episode
payment models. We expect that testing of CCJR will contribute further
information about efficient Medicare pricing strategies that result in
appropriate payment for providers' resources required to furnish high
quality, efficient care to beneficiaries who receive LEJR procedures.
This is essential information for any consideration of episode payment
model expansion, including nationally, in the future, where
operationally feasible and appropriate pricing strategies, including
provider-specific, regional, and national pricing approaches would need
to be considered.
We propose an exception to the blended hospital-specific and
regional pricing approach for hospitals with low historical CCJR
episode volume. We propose to define hospitals with low CCJR episode
volume as those with fewer than 20 CCJR episodes in total across the 3-
historical-years used to calculate target prices. We believe
calculating the hospital-specific component of the blended target price
for these historically low CCJR episode volume hospitals may be subject
to a high degree of statistical variation. Therefore, for each
performance year, we propose to use 100 percent regional target pricing
for participant hospitals who have fewer than twenty historical CCJR
episodes in the 3-historical-years used to calculate target prices, as
described in section III.C.4.b.(2) of this proposed rule. We note that
the 3-historical-years used to calculate target prices would change
over the course of the model, as described in section III.C.4.b.(2) of
this proposed rule, and when that happens, the twenty episode threshold
would be applied to the new set of historical years. If all IPPS
hospitals nationally participated (for estimation purposes, only) in
CCJR, we estimate about 5 percent of hospitals would be affected by
this proposed low historical CCJR episode volume provision. \28\ A
minimum threshold of twenty episodes is almost equal to the minimum
number of admissions required in the Medicare HRRP. HRRP payment
adjustment factors are, in part, determined by procedure/condition-
specific readmission rates for a hospital. HRRP requires at least 25
procedure/condition-specific admissions to calculate the procedure/
condition-specific readmission rate and to be included in the
hospital's overall HRRP payment adjustment factor. Though the proposed
minimum threshold of twenty episodes is slightly less than the 25
admissions required for HRRP, we believe that because we would not be
calculating infrequent events such as readmissions, we can achieve a
stable price with slightly fewer episodes.
---------------------------------------------------------------------------

\28\ Medicare FFS Parts A and B claims, CCJR episodes, as
proposed in this rule, between October 2013 and September 2014.
---------------------------------------------------------------------------

We also propose an exception to the blended hospital-specific and
regional

[[Page 41232]]

pricing approach for participant hospitals that received new CMS
Certification Numbers (CCNs) during the 24 months prior to the
beginning of, or during, the performance year for which target prices
are being calculated. These participant hospitals with new CCNs may
have formed due to a merger between or split from previously existing
hospitals, or may be new hospitals altogether. As a general principle,
we aim to incorporate into the target prices all the historical
episodes that would represent our best estimate of CCJR historical
payments for these participant hospitals with new CCNs. For participant
hospitals with new CCNs that formed from a merger between or split from
previously existing hospitals, we propose to calculate hospital-
specific historical payments using the episodes attributed to the
previously existing hospitals. These hospital-specific historical
payments would then be blended with the regional historical payments
according to the approach previously described in this section. For
participant hospitals with new CCNs that are new hospitals altogether,
we propose to use the approach previously described in this section for
hospitals with fewer than 20 CCJR episodes across the 3 historical
years used to calculate target prices. In other cases, due to an
organizational change a hospital may experience a change to an already
existing CCN during the 24 months prior to the beginning of, or during,
the performance year for which target prices are being calculated. For
example, one hospital with a CCN may merge with a second hospital
assigned a different CCN, and both hospitals would then be identified
under the single CCN of the second hospital. While there may be more
than 20 CCJR episodes under the second hospital's CCN in total across
the 3 historical years used to calculate target prices, in this
scenario our use of only those cases under the second hospital's CCN in
calculating hospital-specific historical payments would fail to meet
our general principle of incorporating into target prices all the
historical episodes that would represent our best estimate of CCJR
historical payments for these now merged hospitals. In this scenario,
we propose to calculate hospital-specific payments for the remaining
single CCN (originally assigned to the second hospital only) using the
historical episodes attributed to both previously existing hospitals.
These hospital-specific historical payments would then be blended with
the regional historical payments according to the approach previously
described in this section in order to determine the episode price for
the merged hospitals bearing a single CCN.
We seek comment on this proposed approach for blending hospital-
specific and regional historical payments.
(6) Define Regions as U.S. Census Divisions
In all 5 performance years we propose to define ``region'' as one
of the nine U.S. Census divisions \29\ in Figure 3.
---------------------------------------------------------------------------

\29\ There are four census regions--Northeast, Midwest, South,
and West. Each of the four census regions is divided into two or
more ``census divisions''. Source: https://www.census.gov/geo/reference/gtc/gtc_census_divreg.html. Accessed on April 15, 2015.
\30\ https://www.eia.gov/consumption/commercial/censusmaps.cfm.
[GRAPHIC] [TIFF OMITTED] TP14JY15.007

We considered using states, HRRs, and the entire U.S. as
alternative options to U.S. Census divisions in defining the region
used in blending provider-specific and regional historical episode data
for calculating target prices. However, HRR definitions are
specifically based on referrals for cardiovascular surgical procedures
and neurosurgery, and may not reflect referral patterns for orthopedic
procedures. Using the entire U.S. would not account for substantial
current regional variation in utilization, which is significant for
episodes that often involve PAC use, such as lower extremity joint
replacement procedures \31\. Finally, we considered

[[Page 41233]]

using states as regions but were concerned that doing so would not
allow for sufficient LEJR episode volume to set stable regional
components of target prices, especially for participant hospitals in
small states. We believe U.S. Census divisions provide the most
appropriate balance between very large areas with highly disparate
utilization patterns and very small areas that would be subject to
price distortions due to low volume or hospital-specific utilization
patterns.
---------------------------------------------------------------------------

\31\ Hussey PS, Huckfeldt P, Hirshman S, Mehrotra A. Hospital
and regional variation in Medicare payment for inpatient episodes of
care [published online April 13, 2015]. JAMA Intern Med.
doi:10.1001/jamainternmed.2015.0674.
---------------------------------------------------------------------------

We seek comment on our proposal to define a region as the U.S.
Census division for purposes of the regional component of blended
target prices under CCJR.
(7) Normalize for Provider-Specific Wage Adjustment Variations
We note that some variation in historical CCJR episode payments
across hospitals in a region may be due to wage adjustment differences
in Medicare's payments. In setting Medicare payment rates, Medicare
typically adjusts facilities' costs attributable to wages and wage-
related costs (as estimated by the Secretary from time to time) by a
factor (established by the Secretary) reflecting the relative wage
level in the geographic area of the facility or practitioner (or the
beneficiary residence, in the case of home health and hospice services)
compared to a national average wage level. Such adjustments are
essential for setting accurate payments, as wage levels vary
significantly across geographic areas of the country. However, having
the wage level for one hospital influence the regional-component of
hospital-specific and regional blended target prices for another
hospital with a different wage level would introduce unintended pricing
distortions not based on utilization pattern differences.
In order to preserve how wage levels affect provider payment
amounts, while minimizing the distortions introduced when calculating
the regional-component of blended target prices, we propose to
normalize for wage index differences in historical episode payments
when calculating and blending the regional and hospital-specific
components of blended target prices. Calculating blended target prices
from historical CCJR episodes would help ensure we incentivize
hospitals based on historical utilization and practice patterns, not
Medicare payment system rate changes that are beyond hospitals'
control.
We propose to normalize for provider-specific wage index variations
using the IPPS wage index applicable to the anchor hospitalization
(that is, the IPPS wage index used in the calculation of the IPPS
payment for the anchor hospitalization). The anchor hospitalization
accounts for approximately 50 percent of the total episode
expenditures, and the IPPS wage index is applied to IPPS payments in a
similar manner as wage indices for other Medicare payment systems are
applied to their respective payments.\32\ Therefore, we propose that
the IPPS wage index applicable to the anchor hospitalization for each
historical episode be used to normalize for wage index variations in
historical episode payments across hospitals when calculating blended
target prices. We propose to specifically perform this normalization
using the wage normalization factor (0.7 * IPPS wage index + 0.3) to
adjust the labor-related portion of payments affected by wage indices.
The 0.7 approximates the labor share in IPPS, IRF PPS, SNF, and HHA
Medicare payments. We would normalize for provider-specific wage index
variations by dividing a hospital's historical episode payments by the
wage normalization factor.
---------------------------------------------------------------------------

\32\ Medicare FFS Parts A and B claims, CCJR episodes, as
proposed in this rule, between October 2013 and September 2014.
---------------------------------------------------------------------------

We propose to reintroduce the hospital-specific wage variations by
multiplying episode payments by the wage normalization factor when
calculating the target prices for each participant hospital, as
described in section III.C.4.c. of this proposed rule. When
reintroducing the hospital-specific wage variations, the IPPS wage
index would be the one that applies to the hospital during the period
for which target prices are being calculated (for example, FY 2016 wage
indices for the target price calculations for episodes that begin
between January 1 and September 30, 2016). The specific order of steps,
and how this step fits in with others, is discussed further in section
III.C.4.c. of this proposed rule. We seek comment on our proposal to
normalize for wage index differences using participant hospitals' wage
indices in order to calculate blended target prices.
(8) Proposed Combination of CCJR Episodes Anchored by MS-DRGs 469 and
470
We propose to pool together CCJR episodes anchored by MS-DRGs 469
and 470 for target price calculations to use a greater historical CCJR
episode volume and set more stable target prices. We note that we would
still calculate separate target prices for episodes anchored by MS-DRGs
469 versus 470, described later in this section.
To pool together MS-DRG 469 and 470 anchored episodes, we propose
to use an anchor factor and hospital weights. The anchor factor would
equal the ratio of national average historical MS-DRG 469 anchored
episode payments to national average historical MS-DRG 470 anchored
episode payments. The national average would be based on episodes
attributed to any CCJR eligible hospital. The resulting anchor factor
would be the same for all participant hospitals. For each participant
hospital, a hospital weight would be calculated using the following
formula, where episode counts are participant hospital-specific and
based on the episodes in the 3 historical years used in target price
calculations:
[GRAPHIC] [TIFF OMITTED] TP14JY15.008

A hospital-specific pooled historical average episode payment would
be calculated by multiplying the hospital's hospital weight by its
combined historical average episode payment (sum of MS-DRG 469 and 470
anchored historical episode payments divided by the number of MS-DRG
469 and 470 historical episodes).
The calculation of the hospital weights and the hospital-specific
pooled historical average episode payments would be comparable to how
case mix indices are used to generate case mix-

[[Page 41234]]

adjusted Medicare payments. The hospital weight essentially would count
each MS-DRG 469 triggered episode as more than one episode (assuming
MS-DRG 469 anchored episodes have higher average payments than MS-DRG
470 anchored episodes) so that the pooled historical average episode
payment, and subsequently the target price, is not skewed by the
hospital's relative breakdown of MS-DRG 469 versus 470 anchored
historical episodes.
The hospital-specific pooled historical average payments would be
modified by blending and discount factors, as described in section
III.C.4.c. of this proposed rule. Afterwards, the hospital-specific
pooled calculations would be ``unpooled'' by setting the MS-DRG 470
anchored episode target price to the resulting calculations, and by
multiplying the resulting calculations by the hospital weight to
produce the MS-DRG 469 anchored target prices.
We would calculate region-specific weights and region-specific
pooled historical average payments following the same steps proposed
for hospital-specific weights and hospital-specific pooled average
payments. Instead of grouping episodes by the attributed hospital as is
proposed for hospital-specific calculations, region-specific
calculations would group together episodes that were attributed to any
CCJR eligible hospital located within the region. The hospital-specific
and region-specific pooled historical average payments would be blended
together as discussed in section III.C.4.b.(3) of this proposed rule.
The specific order of steps, and how this step fits in with others, is
discussed further in section III.C.4.c. of this proposed rule.
We considered an alternative option of independently setting target
prices for MS-DRG 470 and 469 anchored episodes without pooling them.
However, hospital volume for MS-DRG 469 was substantially less than for
MS-DRG 470. In 2013 across all IPPS hospitals, there were more than 10
times as many MS-DRG 470 anchored episodes as compared to MS-DRG 469
anchored episodes. \33\ In the same analysis, the median number of
episodes for a hospital with at least 1 episode for the MS-DRG anchored
episode was more than 80 for MS-DRG 470 anchored episodes, though fewer
than 10 for MS-DRG 469 anchored episodes. Calculating target prices for
MS-DRG 469 anchored episodes separately for each participant hospital
may result in too few historical episodes to calculate reliable target
prices. We also considered pooling together MS-DRG 469 and 470 anchored
episodes without any anchor factor or hospital weights. However,
internal analyses suggest that average episode payments for these two
MS-DRG anchored episodes significantly differed; CCJR episodes
initiated by MS-DRG 469 had payments almost twice as large as those
initiated by MS-DRG 470.\34\ This difference is reasonable given that
Medicare IPPS payments differ for MS-DRG 469 and 470 admissions, and
inpatient payments comprise approximately 50 percent of CCJR episode
payments. Thus, pooling together MS-DRG 469 and 470 anchored episodes
without any anchor factor or hospital weights would introduce
distortions due only to case-mix differences.
---------------------------------------------------------------------------

\33\ Source: CCW Part A and Part B claims for CCJR episodes
beginning in CY 2013.
\34\ Medicare FFS Parts A and B claims, CCJR episodes, as
proposed in this rule, between October 2013 and September 2014.
---------------------------------------------------------------------------

(9) Discount Factor
When setting an episode target price for a participant hospital, we
propose to apply a discount to a hospital's hospital-specific and
regional blended historical payments for a performance period to
establish the episode target price that would apply to the participant
hospital's CCJR episodes during that performance period and for which
the hospital would be fully, or partly, accountable for episode
spending in relationship to the target price, as discussed in section
III.C.3. of this proposed rule. We expect participant hospitals to have
significant opportunity to improve the quality and efficiency of care
furnished during episodes in comparison with historical practice,
because this model would facilitate the alignment of financial
incentives among providers caring for beneficiaries throughout the
episode. This discount would serve as Medicare's portion of reduced
expenditures from the CCJR episode, with any episode expenditure below
the target price potentially available as reconciliation payments to
the participant hospital where the anchor hospitalization occurred. We
propose to apply a 2 percent discount for performance years 1 through 5
when setting the target price. We believe that applying a 2 percent
discount in setting the episode target price allows Medicare to partake
in some of the savings from the CCJR model, while leaving considerable
opportunity for participant hospitals to achieve further episode
savings below the target price that they would be paid as
reconciliation payments, assuming they meet the quality requirements as
discussed in section III.C.5 of this proposed rule.
The proposed 2 percent discount is similar to the range of the
discounts used for episodes in the Medicare Acute Care Episode (ACE)
demonstration.\35\ In the Medicare ACE, a demonstration program that
included orthopedic procedures such as those included in CCJR,
participant hospitals negotiated with Medicare discounts of 2.5 to 4.4
percent of all Part A orthopedic services and 0.0 to 4.4 percent of all
Part B orthopedic services during the inpatient stay (excluding PAC).
Hospitals received the discounted payment and reported that they were
still able to achieve savings.\36\ We believe there is similar, if not
potentially more, opportunity for savings in the CCJR payment model
because it includes acute inpatient, as well as PAC, an area of episode
spending that accounts for approximately 25 percent of CCJR episode
payments and exhibits more than 2 times the episode payment variation
\37\ than that of acute inpatient hospitalization.\38\ We believe that
with the proposed 2 percent discount, participant hospitals have an
opportunity to create savings for themselves as well as Medicare, while
also maintaining or improving quality of care for beneficiaries.
---------------------------------------------------------------------------

\35\ IMPAQ International. Evaluation of the Medicare Acute Care
Episode (ACE) Demonstration: Final Evaluation Report. Columbia, MD:
IMPAQ International; May 2013. https://downloads.cms.gov/files/cmmi/ACE-EvaluationReport-Final-5-2-14.pdf. Accessed April 1 6, 2015.
\36\ IMPAQ International. Evaluation of the Medicare Acute Care
Episode (ACE) Demonstration: Final Evaluation Report. Columbia, MD:
IMPAQ International; May 2013. https://downloads.cms.gov/files/cmmi/ACE-EvaluationReport-Final-5-2-14.pdf. Accessed April 1 6, 2015.
\37\ Variation for purposes of this calculation refers to
standard deviation of inpatient and institutional post-acute episode
payments as a percentage of average inpatient and post-acute episode
payments, respectively.
\38\ Medicare FFS Parts A and B claims, CCJR episodes, as
proposed in this rule, between October 2013 and September 2014.
---------------------------------------------------------------------------

The proposed 2 percent discount also matches the discount used in
the BPCI Model 2 90-day episodes, and is less than the discount used in
BPCI Model 2 30-day and 60-day episodes (3 percent). Hundreds of
current BPCI participants have elected to take on responsibility for
repayment in BPCI Model 2 with a 2 to 3 percent discount. Because many
BPCI participants volunteered to participate in a bundled payment model
with a discount, we believe that a discount percent that is within, and
especially a discount of 2 percent that is at the lower end of, the
BPCI discount range would allow CCJR

[[Page 41235]]

participant hospitals to create savings for both themselves and
Medicare.
As mentioned previously in section III.C.3. of this proposed rule,
we propose to phase in the financial responsibility of hospitals for
repayment of actual episode spending that exceeds the target price
starting in performance year 2. In order to help hospitals transition
to taking on this responsibility, we propose to apply a reduced
discount of one percent in performance year 2 for purposes of
determining the hospital's responsibility for excess episode spending,
but maintain the 2 percent discount for purposes of determining the
hospital's opportunity to receive reconciliation payment for actual
episode spending below the target price. For example, under this
proposal in performance year 2, a hospital that achieves CCJR actual
episode payments below a target price based on a 2 percent discount
would retain savings below the target price, assuming the quality
thresholds for reconciliation payment eligibility are met (discussed in
section III.C.5. of this proposed rule) and the proposed performance
year stop-gain limit (discussed in section III.C.8. of this proposed
rule) does not apply. Medicare would hold responsible for repayment
hospitals whose CCJR actual episode payments exceed a target price
based on a one percent discount, assuming the proposed performance year
2 stop-loss limit (discussed in section III.C.8. of this proposed rule)
does not apply. Hospitals that achieve CCJR actual episode payments
between a 2 percent-discounted target price and 1 percent-discounted
target price would neither receive reconciliation payments nor be held
responsible for repaying Medicare. The decision on which percent-
discounted target price applies will be made by evaluating actual
episode payments in aggregate after the completion of performance year
2, and the same percent-discounted target price would apply to all
episodes that are initiated in performance year 2. We propose to apply
this reduced one percent discount for purposes of hospital repayment
responsibility only in performance year 2 and apply the 2 percent
discount for excess episode spending repayment responsibility for
performance years 3 through 5. Under this proposal, the discount for
determination of reconciliation payment for episode actual spending
below the target price would not deviate from 2 percent through
performance years 1 through 5.
In section III.C.5. of this proposed rule, we propose voluntary
submission of data for a patient-reported outcome measure. We propose
to incent participant hospitals to submit data on this measure by
reducing the discount percentage by 0.3 percentage points for
successfully submitting data, as defined in section III.D. of this
proposed rule. By successfully submitting data on this metric for
episodes ending in performance years 1, 2, 3, 4, and or 5, we would
adjust the discount percentage in the corresponding year(s) as follows:
For episodes beginning in performance year 2, set the
discount percentage in a range from 2 percent to 1.7 percent for
purposes of determining the hospital's opportunity to receive
reconciliation payment for actual episode spending below the target
price, and set the discount percentage in a range from 1 percent to 0.7
percent for purposes of determining the amount the hospital would be
responsible for repaying Medicare for actual episode spending above the
target price.
For episodes beginning in performance years 3 through 5,
set the discount percentage in a range from 2 percent to 1.7 percent
for purposes of reconciliation payment and Medicare repayment
calculations.
The determination of whether the hospital successfully submitted
data on the patient-reported outcome measure cannot be made until after
the performance year ends and data is reported. Therefore, participant
hospitals would be provided target prices for both scenarios whether
the successfully submit data or not and such determination will happen
at the time of payment reconciliation (discussed further in section
III.C.6. of this proposed rule).
We seek comment on our proposed discount percentage of 2 percent
for CCJR episodes, our proposal to reduce the discount to 1 percent on
a limited basis in performance year 2, and our proposal to reduce the
discount by 0.3 percentage points for successfully reporting patient-
reported outcomes data in the corresponding year.
c. Proposed Approach to Combine Pricing Features
In section III.C.4.(b) of this proposed rule we discuss the various
features we propose to incorporate into our approach to set target
prices. We refer readers to that section for more information on
rationale and alternatives considered for each feature. In this section
we discuss how the different pricing features, as well as the episode
definition (section III.B. of this proposed rule) and adjustments to
payments included in the episodes (section III.C.3. of this proposed
rule), would fit together and be sequenced to calculate CCJR episode
target prices for participant hospitals. As previously discussed in
sections III.C.4.a and III.C.4.b of this proposed rule, we propose to
calculate sixteen target prices for performance year 2, and eight
target prices for each of the other 4 performance years. The following
steps would be used to calculate MS-DRG 469 and 470 anchored episode
target prices for both January 1 through September 30 and October 1
through December 31 each performance year. The output of each step
would be used as the input for the subsequent step, unless otherwise
noted.
Calculate historical CCJR episode payments for episodes
that were initiated during the 3- historical-years (section
III.C.4.b.(2) of this proposed rule) for all CCJR eligible hospitals
for all Medicare Part A and B services included in the episode. We note
that specific PBPM payments may be excluded from historical episode
payment calculations as discussed in section III.C.7.d. of this
proposed rule.
Remove effects of special payment provisions (section
III.C.3.a. of this proposed rule).
Prorate Medicare payments for included episode services
that span a period of care that extends beyond the episode (section
III.C.3.b of this proposed rule.).
Normalize for hospital-specific wage adjustment variation
by dividing the episodes outputted in step (3) by the hospital's
corresponding wage normalization factor described in section
III.C.4.b.(7) of this proposed rule.
Trend forward 2 oldest historical years of data to the
most recent year of historical data. As discussed in section
III.C.4.b.(3) of this proposed rule, separate national trend factors
would be applied to episodes anchored by MS-DRG 469 versus MS-DRG 470.
Cap high episode payment episodes with a region and MS-DRG
anchor-specific high payment ceiling as discussed in section III.C.3.c.
of this proposed rule, using the episode output from the previous step.
Calculate anchor factor and participant hospital-specific
weights (section III.C.4.b.(8) of this proposed rule) using the episode
output from the previous step to pool together MS-DRG 469 and 470
anchored episodes, resulting in participant hospital-specific pooled
historical average episode payments. Similarly, calculate region-
specific weights to calculate region-specific pooled historical average
episode payments. We have posted region-specific pooled historical
average

[[Page 41236]]

episode payments on the CCJR proposed rule Web site at https://innovation.cms.gov/initiatives/ccjr/.
Calculate participant hospital-specific and region-
specific weighted update factors as described in section III.C.4.b.(4)
of this proposed rule. Multiply each participant hospital-specific and
region-specific pooled historical average episode payment by its
corresponding participant hospital-specific and region-specific
weighted update factors to calculate participant hospital-specific and
region-specific updated, pooled, historical average episode payments.
Blend together each participant hospital-specific updated,
pooled, historical average episode payment with the corresponding
region-specific updated, pooled, historical average episode payment
according to the proportions described in section III.C.4.b.(5) of this
proposed rule. Participant hospitals that do not have the minimum
episode volume across the historical 3 years would use 0.0 percent and
100 percent as the proportions for hospital and region, respectively.
Reintroduce hospital-specific wage variations by
multiplying the participant hospital-specific blended, updated, and
pooled historical average episode payments by the corresponding
hospital-specific wage normalization factor, using the hospital's IPPS
wage index that applies to the hospital during the period for which
target prices are being calculated (section III.C.4.b.(7) of this
proposed rule).
Multiply the appropriate discount factor, as discussed in
section III.C.4.b.(9) of this proposed rule to each participant
hospital's wage-adjusted, blended, updated, and pooled historical
average episode payment. For performance years 1, 3, 4, and 5, two
discount factors would be used, one if the hospital successfully
submits data on the patient-reported outcomes measure proposed in
section III.C.5 of this proposed rule, and one if the hospital does not
successfully submit the data. For performance year 2, 4 discount
factors would be used to account for the 4 combinations of the
following: a) whether or not the hospital successfully submits data on
the patient-reported outcomes measure; and b) for the different
discount factors proposed for purposes of calculating reconciliation
payments vs. calculating repayment amounts. The result of this
calculation would be the participant hospital-specific target prices
for MS-DRG 470 anchored episodes.
Multiply participant hospitals' target prices for MS-DRG
470 anchored episodes by the anchor factor (section III.C.4.b.(8) of
this proposed rule) to calculate hospitals' target prices for MS-DRG
469 anchored episodes.
The aforementioned steps would be used to calculate target prices
for episodes that begin between January 1 and September 30, as well as
for episodes that begin between October 1 and December 31, for each
performance year. The target price calculations for the two different
time periods each performance year would differ by the IPPS wage index
used in step (11) and the update factors used in step (8). By following
these eight steps, we would calculate eight target prices for each
participant hospital for performance years 1, 3, 4, and 5, and 16
target prices for performance year 2. We refer readers to section
III.C.4.b. of this proposed rule for further details on each of the
specific steps.
We seek comment on the proposed approach to sequence and fit
together the different pricing features, the episode definition
(section III.B. of this proposed rule), and adjustments to payments
included in the episodes (section III.C.3. of this proposed rule) to
calculate CCJR episode target prices for participant hospitals.
5. Proposed Use of Quality Performance in the Payment Methodology
a. Background
Over the past several years Medicare payment policy has moved away
from FFS payments unlinked to quality and towards payments that are
linked to quality of care. Through the Affordable Care Act, we have
implemented specific IPPS programs like the HVBP (subsection (o) of
section 1886 of the Act), the Hospital Acquired Conditions Reduction
Program (HACRP) (subsection (q) of section 1886) and the HRRP
(subsection (p) of section 1886), where quality of care is linked with
payment. We have also implemented the MSSP, an accountable care
organization program that links shared savings payment to quality
performance. Since the implementation of the HRRP in October 2012,
readmission rates for various medical conditions like THA and TKA (THA/
TKA) have improved. Trend analyses show a decrease in readmission rates
and specifically with THA/TKA risk-standardized readmissions rates
(RSRR) from 5.4 percent (July 2010-June 2011) to 4.8 percent (July
2012-June 2013).\39\ Additionally, hospital THA/TKA RSCR decreased from
3.4 percent (April 2010 through March 2011) to 3.1 percent (April 2012
through March 2013). Despite the downward trend of THA/TKA RSRRs and
RSCRs, the wide dispersion in these readmission rates suggests there is
still room for hospitals to improve their performance on these measures
as illustrated by a THA/TKA RSRR distribution of 2.8 to 9.4 percent
(July 2010-June 2013) and a THA/TKA RSCR distribution of 1.5 to 6.4
percent (April 2010-March 2013). We believe that the CCJR Model
provides another mechanism for hospitals to improve quality of care,
while also achieving cost efficiency. Incentivizing high-value care
through episode-based payments for LEJR procedures is a primary
objective of CCJR. Therefore, incorporating quality performance into
the episode payment structure is an essential component of the CCJR
model. We also believe that the financial opportunity proposed in
section III.C.3. of this proposed rule provides the appropriate
incentives necessary to reward a participant hospital's achievement of
episode savings when the savings are greater than the discounted target
price. For the reasons stated previously, we believe it is important
for the CCJR model to link the financial reward opportunity with
achievement in quality of care for Medicare beneficiaries undergoing
LEJR.
---------------------------------------------------------------------------

\39\ Hospital Quality Initiatives. CMS Hospital Quality
Chartbook 2014. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Medicare-Hospital-Quality-Chartbook-2014.pdf . Accessed
April 21, 2015.
---------------------------------------------------------------------------

As discussed in section III.C of this proposed rule, which outlines
the payment structure for the CCJR model, each participant hospital
will have target prices calculated for MS-DRG 469 and 470 anchored
episodes; each anchored episode includes an anchor hospitalization for
an LEJR procedure and a 90-day period after the date of discharge from
the anchor hospitalization. These episode target prices represent
expected spending all related Part A and Part B spending for such
episodes, with a discount. Hospitals who achieve actual episode
spending below a target price for a given performance period would be
eligible for a reconciliation payment from CMS, subject to the proposed
stop-gain limit policy as discussed in section III.C.8. of this
proposed rule.
In the next section of this proposed rule, we propose quality
performance standards that must also be met in order for a hospital to
be eligible to receive a reconciliation payment under CCJR.
Specifically, we describe our proposal to include a performance measure
result threshold on select outcomes-based quality measures as a
requirement for participants to receive a reconciliation payment if
actual episode spending is

[[Page 41237]]

less than the target price under CCJR in a performance year, in
addition to a payment adjustment for successful reporting of a
voluntary measure in development. Beginning in performance year one and
continuing throughout the duration of the model, we propose to make
reconciliation payments only to those CCJR hospital participants that
meet or exceed a minimum measure result threshold. We also discuss an
alternative approach to determining CCJR reconciliation payment
eligibility and adjusting payment based on a quality score developed
from performance on three outcomes-based quality measures and success
in reporting the voluntary measurement in development.
b. Proposed Implementation of Quality Measures for Reconciliation
Payment Eligibility
In section III.D. of this proposed rule we propose three measures
to assess quality of care of the hospitals participating in the CCJR
Model. We also propose voluntary data submission for a patient-reported
outcome measure. In this section we propose using three measures to
determine eligibility for a reconciliation payment, as well as propose
rewarding hospitals that voluntarily submit data for the patient-
reported outcome measure. We also discuss an alternative approach to
determining reconciliation payment eligibility and adjusting payment
based on a composite quality score calculated from the three required
outcome measures and success on reporting voluntary data on the
patient-reported outcome measure.
(1) General Selection of Proposed Quality Measures
The CCJR model is designed to provide financial incentives to
improve coordination of care for beneficiaries that we expect to lead
to avoidance of post-surgical complications and hospital readmissions,
as well as to improve patient experience through care redesign and
coordination. Furthermore, we acknowledge that achievement of savings
while ensuring high-quality care for Medicare FFS beneficiaries in LEJR
episodes will require close collaboration among hospitals, physicians,
PAC providers, and other providers. In order to encourage care
collaboration among multiple providers of patients undergoing THA and
TKA, we propose three measures, as described in detail in section
III.D.2. of this proposed rule, to determine hospital quality of care
and to determine eligibility for a reconciliation payment under the
CCJR model. The measures we are proposing are as follows:
Hospital-level 30-day, all-cause RSRR following elective
primary THA and/or TKA (NQF #1551), an administrative claims-based
measure.
Hospital-level RSCR following elective primary THA and/or
TKA (NQF #1550), an administrative claims-based measure.
HCAHPS Survey measure.
Beginning in performance year 1 and continuing throughout the
duration of the model, we propose to make reconciliation payments only
to those CCJR participant hospitals that meet or exceed a minimum
performance threshold on the measures previously listed. We propose
that hospitals must meet or exceed the measure reporting thresholds and
other requirements described in section III.C and III.D. of this
proposed rule on all three measures in order to be eligible for a
reconciliation payment.
These three outcome measures were chosen due to their: (1)
Alignment with the goals of the CCJR model; (2) hospitals' familiarity
with the measures due to their use in other CMS hospital quality
programs, including programs that tie payment to performance such as
HVBP and HRRP; and (3) assessment of CMS priorities to improve the rate
of LEJR complications and readmissions, while improving patient
experience. We believe the three quality measures we propose for
reconciliation payment eligibility reflect these goals and accurately
measure hospitals' level of achievement on such goals.
(2) Proposal To Adjust the Payment Methodology for Voluntary Submission
of Data for Patient-Reported Outcome Measure
During our consideration of quality metrics for the CCJR model, we
examined the feasibility of linking voluntary data submission of
patient-reported outcomes, beyond the current three required measures
proposed in section III.D.2. of this proposed rule for use in the
model, with the possibility of incentivizing participant hospitals
under the episode payment model to participate in this voluntary
submission of data. We specifically examined potential patient-reported
outcome measures since this type of outcome measure aligns with the
CCJR model goal of improving LEJR episode quality of care, including a
heightened emphasis on patient-centered care where patients provide
meaningful input to their care. Furthermore, the availability of
patient reported outcome data would provide additional information on a
participant hospital's quality performance, especially with respect to
a patient's functional status, beyond the current three required
measures proposed in section III.D.2. of this proposed rule for use in
the model. We note that we have a measure in development, the Hospital-
Level Performance Measure(s) of Patient-Reported Outcomes Following
Elective Primary THA or TKA measure or both (hence forth referred to as
``THA/TKA patient-reported outcome-based measure''), that would support
the National Quality Strategy domain of patient and family engagement,
and could capture meaningful information that would not otherwise be
available on patient outcomes that are related to the quality of LEJR
episodes under CCJR. We believe that incorporating this measure into
CCJR by adjusting the payment methodology for successful voluntary data
submission on the THA/TKA patient-reported outcome-based measure
(henceforth referred to as ``THA/TKA voluntary data'') would provide
participant hospitals with valuable information on functional outcomes
that would assist them in assessing an important patient-centered
outcome, engaging other providers and suppliers in care redesign for
LEJR episodes, as well as provide them with the potential for greater
financial benefit from improved LEJR episode efficiencies. We do not
believe it would be appropriate at this time to hold any participant
hospitals financially accountable for their actual THA/TKA voluntary
data, as we have proposed for the three required measures described in
section III.C.5.b.(2) of this proposed rule.
Instead, we propose to adjust the episode payment methodology for
participant hospitals that successfully submit THA/TKA voluntary data
by reducing the discount percentage used to set the target price from
2.0 percent to 1.7 percent of expected episode spending based on
historical CCJR episode data, hereinafter referred to as the voluntary
reporting payment adjustment. The proposed payment policies with
respect to reconciliation payment eligibility and the discount
percentage based on hospital voluntary data submission are summarized
in Table 7 for performance years 3 through 5 where hospitals have full
repayment responsibility. The specific percentages that would apply for
purposes of the repayment amount and reconciliation payment are
outlined for performance years 1 and 2 in the discussion that follows.

[[Page 41238]]

Table 7--Reconciliation Payment Eligibility and Discount Percentage
Included in the Target Price for Each Participant Hospital Based on
Quality Performance in Performance Years 3-5
------------------------------------------------------------------------
Does not meet
Discount percentage included in Meets thresholds thresholds for one
target price/reconciliation for all 3 required or more of 3
payment eligibility quality measures required quality
measures
------------------------------------------------------------------------
Successfully submits THA/TKA 1.7%/eligible..... 1.7%/ineligible.
voluntary data.
Does not successfully submit THA/ 2.0%/eligible..... 2.0%/ineligible.
KA voluntary data.
------------------------------------------------------------------------

We refer readers to section III.D.3. of this proposed rule for
further discussion of the THA/TKA patient-reported outcome-based
measure and our proposed definition of successful reporting. In
addition, we refer readers to section III.C.4.b.(9) of this proposed
rule for discussion of the proposed discount of 2.0 percent (without
the voluntary reporting payment adjustment) to establish the target
price. We believe that a voluntary reporting payment adjustment of 0.3
percent of expected episode spending would, on average, cover the
participant hospitals' additional administrative costs of voluntarily
reporting patient risk variables and patient-reported reported function
for outcome calculation. We estimate the value of this discount
reduction, on average, to be about $75 per LEJR episode at a
participant hospital, which we believe would be sufficient to pay
hospitals for the resources required to survey beneficiaries pre- and
post-operatively about functional status and report this information
required for measure development to CMS. We also believe that voluntary
reporting on this patient-reported outcome measure is integral to
implementation of the CCJR model, as it will allow us to further
develop and evaluate the measure for potential use in this model in the
future as a measure of quality that is important and not captured in
any other available measures.
The voluntary reporting payment adjustment would be available for
all years of the model, unless we find the measure to be unfeasible or
have adequately developed the measure such that continued voluntary
data collection is no longer needed for measure development during the
course of the model. In those situations, we would notify participant
hospitals that the voluntary reporting payment adjustment was no longer
available as we would cease collecting the data.
When we provide the episode target price to each participant
hospital at 2 times during the performance year, we would provide
different target prices reflecting the 2.0 percent and 1.7 percent
discounts. At the time of reconciliation for the performance year, we
would determine which participant hospitals successfully reported the
THA/TKA voluntary data for that performance year. The effects of this
voluntary reporting payment adjustment would vary for each year of the
model, depending on the proposed reconciliation payment and repayment
policies for that performance year. For hospitals that achieved
successful reporting of the THA/TKA voluntary data in performance year
3, 4, or 5,we would use the target price reflecting the 1.7 percent
discount (compared with the 2.0 percent discount for nonreporting or
unsuccessfully reporting hospitals) to calculate the hospital's
reconciliation payment or repayment amount. Based on this comparison,
consistent with the proposal described in section III.C.6. of this
proposed rule, we would make a reconciliation payment if actual episode
spending is less than the target price (and the thresholds for
reconciliation payment eligibility are met for the three required
quality measures) or make participant hospitals responsible for
repaying Medicare if actual episode spending exceeds the target price.
For performance year 2, when repayment responsibility is being phased-
in, for participant hospitals with successful THA/TKA voluntary data
reporting, we would use a target price reflecting the 1.7 percent
discount (compared with the 2.0 percent discount for nonreporting or
unsuccessfully reporting hospitals) to determine if actual episode
spending was below the target price, whereupon the participant hospital
would receive a reconciliation payment if the quality thresholds on the
three required measures are met. In order to help hospitals transition
to taking on repayment responsibility, we propose to apply a reduced
discount of 0.7 percent for successful THA/TKA voluntary data reporting
hospitals (compared with 1.0 percent for nonreporting or unsuccessfully
reporting hospitals) in performance year 2 for purposes of determining
the hospital's repayment responsibility for excess episode spending.
For performance year 1, when there is no repayment responsibility, for
participant hospitals with successful THA/TKA voluntary data reporting,
we would use a target price reflecting the 1.7 percent discount
(compared with the 2.0 percent discount for nonreporting or
unsuccessfully reporting hospitals) to determine if actual episode
spending was below the target price, whereupon the participant hospital
would receive a reconciliation payment if the quality thresholds on the
three required measures are met. We believe this proposed voluntary
reporting payment adjustment provides the potential for increased
financial benefit for participant hospitals due to a higher target
price (that reflects a lower discount percentage) that successfully
report the measure. Participant hospitals that successfully report the
voluntary data would be subject to a lower repayment amount (except for
performance year 1 when hospitals have no repayment responsibility) or
a higher reconciliation payment (assuming the thresholds are met on the
three required measures for reconciliation payment eligibility), than
hospitals that do not successfully report the voluntary data.
In general, participant hospitals that meet the performance
thresholds for the three required quality measures and reduce actual
episode spending below the target price, as well as successfully report
the THA/TKA voluntary data, would be eligible to retain an additional
0.3 percent of the reduced episode expenditures relative to participant
hospitals that successfully report the three required quality measures
but do not report voluntary data, funds which would offset additional
administrative costs that the participant hospitals would incur in
reporting on the measure. Additionally, for performance years 2-5 where
participant hospitals have payment responsibility, participant
hospitals with increased actual episode spending above the target price
would not be required to repay 0.3 percent of the increased episode
expenditures (relative to participant hospitals that do not report
voluntary data), funds that would offset additional administrative
costs that the participant hospitals would incur in reporting on the
measure. These costs would include the hospital staff time required for
training on the measure, as well as then gathering and reporting on
multiple patient risk variables from LEJR episode

[[Page 41239]]

beneficiaries' medical records and locating beneficiaries and
administering via phone survey questions on functional status, which
would also then be reported to CMS. Thus, we expect that the proposal
would encourage reporting by a number of participant hospitals, and it
has the potential to benefit those hospitals that successfully report
on the measure. Therefore, this proposal could financially benefit
reporting hospitals that would also collect valuable information on
patient functional outcomes that could inform their LEJR care redesign.
While this measure remains in development from our perspective to
ensure translation of data across care settings and the respective
hospital communities during the 90-day post-discharge episode of care,
participant hospitals would gain anecdotal, locally relevant
information regarding the patient-reported outcomes of their own
patients that could inform participant hospitals' continuous quality
improvement efforts.
We considered two alternative options to adjust the CCJR payment
methodology by modifying the required quality measure thresholds for
reconciliation payment eligibility for those participant hospitals that
successfully submit the THA/TKA voluntary data. First, we considered
adjusting the threshold that hospitals must meet on the three required
quality measures for reconciliation payment eligibility if reduced
episode spending is achieved from the unadjusted 30th percentile
threshold to the adjusted 20th percentile threshold for performance
years 1, 2, and 3, and from the unadjusted 40th percentile to the
adjusted 30th percentile for performance years 4 and 5. Second, we
considered only requiring hospitals to meet the 30th percentile
threshold on two of three outcome measures for performance years 1, 2,
and 3, and the 40th percentile threshold on two of three outcome
measures for performance years 4 and 5. These options would provide the
opportunity for some participant hospitals, specifically those that
missed the unadjusted percentile for one or more of the three required
quality measures by a specified margin, to receive reconciliation
payments if actual episode spending was less than the target price.
However, these options could benefit only a subset of participant
hospitals that successfully reported the THA/TKA voluntary data. For
the majority of participant hospitals that we expect would meet the
unadjusted thresholds for all three required measures, these options do
not provide any incentive to voluntarily report the data because the
hospitals would not benefit from voluntarily reporting the additional
measure. We decided not to propose either of these options to adjust
the CCJR payment methodology for participant hospitals that voluntarily
report data on the new measure because the limited benefit could result
in few hospitals choosing to report on the measure, thereby limiting
our progress in developing the measure. We note that these two
considered options and our proposal are not mutually exclusive.
We seek comment on the proposed voluntary reporting payment
adjustment of reducing the discount percentage from 2.0 percent to 1.7
percent for CCJR participant hospitals that voluntarily and
successfully report on the THA/TKA voluntary data. Given our interest
in robust hospital participation in reporting on the THA/TKA voluntary
data under CCJR, we are specifically interested in information on the
additional resources and their associated costs that hospitals would
incur to report THA/TKA voluntary data, as well as the relationship of
these costs to the potential financial benefit participant hospitals
could receive from the proposed reduced discount of 1.7 percent. Based
on such information, we would consider whether a change from the
proposed discount factor reduction due to successful voluntary data
submission would be appropriate. We also seek comment on whether the
alternative payment methodology adjustments considered, or combination
of adjustments, would more appropriately incentivize CCJR participant
hospitals to submit THA/TKA voluntary data. We believe that development
of the THA/TKA patient-reported outcome measure would benefit from
reporting by a broad array of participant hospitals, including those
that currently deliver high quality, efficient LEJR episode care and
those that have substantial room for improvement on quality and or
cost-efficiency.
Furthermore, in light of our interest in encouraging CCJR
participant hospital THA/TKA voluntary data reporting, we also
considered alternative approaches to collect this information or
provide hospitals with funds to help cover their associated
administrative costs other than adjustments to the CCJR model payment
methodology. One alternative would be for hospitals to collect and
report on patient pre-operative information collected 0 to 90 days
before surgery, while CMS would engage a contractor to collect and
report the post-operative information collected 9 to 12 months after
surgery. This approach would reduce some of the administrative burden
of collection and reporting on hospitals, although participant
hospitals would need to provide CMS with certain beneficiary
information, including contact information that would be needed for a
CMS contractor to contact the beneficiary at a later date. We seek
comment on this alternative, including whether hospitals would incur
significant additional administrative costs to report on the data prior
to surgery and how CMS could best provide funds to offset some of those
costs, through an adjustment to the CCJR payment methodology or other
means. We also seek comment on the information participant hospitals
would need to provide to CMS so a CMS contractor could collect and
report the post-operative data, and the most efficient ways for
hospitals to provide this information to us. Finally, we considered an
approach that would provide hospitals with separate payment outside of
an adjustment to the CCJR payment methodology to specifically assist in
covering their administrative costs of reporting THA/TKA voluntary
data, in order to achieve robust hospital participation in reporting.
We seek comment on the hospital administrative costs that would be
incurred for reporting, as well as on approaches we could take to
ensure that hospitals achieved successful reporting under such an
approach if separate payment was made. Finally, we are interested in
comments regarding the comparative strength of these various
alternatives in encouraging hospitals to participate in reporting THA/
TKA voluntary data.
For a detailed description of this measure see section III.D.3 of
this proposed rule
(3) Measure Risk-Adjustment and Calculations
All three proposed outcome measures are risk-adjusted and we refer
readers to section III.D.2 of this proposed rule for a full discussion
of these measures and risk-adjustment methodologies. We believe that
risk-adjustment for patient case-mix is important when assessing
hospital performance based on patient outcomes and experience and
understanding how a given hospital's performance compares to the
performance of other hospitals with similar case-mix.
(4) Applicable Time Period
We propose to use a 3-year rolling performance or applicable period
for the

[[Page 41240]]

Hospital-level 30-day, all-cause RSRR following elective primary THA
and/or TKA (NQF #1551) and the Hospital-level RSCR following elective
primary THA and/or TKA (NQF #1550) measures. We also specifically
propose to align with the HIQR program's 3-year rolling performance
period for the RSSR and RSCR measures since we believe that a 3-year
performance period yields the most consistently reliable and valid
measure results (FY 2015 IPPS/LTCH 70 FR 50208 through 50209). For the
HCAHPS Survey measure, we propose to follow the same performance period
as in the HIQR program (FY 2015 IPPS/LTCH Final rule 79 FR 50259).
HCAHPS scores are created from 4 consecutive quarters of survey data;
publicly reported HCAHPS results are also based on 4 quarters of data.
For the voluntary data collection for the proposed THA/TKA patient-
reported outcome-based performance measure, the optimal reporting time
period has not been determined. Therefore, we propose defining the
applicable time period as 12 month intervals that may begin between
July 1, 2016 and December 31, 2016, and continue in subsequent
performance years for a total of four or fewer performance periods.
Participant hospitals will submit required data to CMS in a mechanism
similar to the data submission process for the HIQR program within
sixty days of the end of each 12 month period. As described in section
III.C.5.b.(3) of this proposed rule, the proposed voluntary reporting
payment adjustment of reducing the discount percentage from 2.0 percent
to 1.7 percent for CCJR participant hospitals that successfully report
on the THA/TKA voluntary data would begin in year 2 and also apply to
subsequent years of the model.
(5) Criteria for Applicable Hospitals and Performance Scoring
(a) Identification of Participant Hospitals for the CCJR Model
As discussed in section III.A.2 of this proposed rule, all CCJR
participant hospitals would be IPPS hospitals.
(b) Methodology to Determine Performance on the Quality Measures
To determine performance on the quality measures, we propose to
calculate measure results for all three measures as outlined in the
Quality Measures section III.D.2 of this proposed rule. Performance on
the three measures for the CCJR model participant hospitals would be
compared to the national distribution of measure results for each of
these measures obtained through the HIQR program. The HIQR program is
an IPPS program in which public reporting is a focus of the program for
the nation's acute care hospitals, and we propose using the absolute
value of the CCJR model participant hospital's result to determine if
that participant hospital is eligible for a reconciliation payment. In
essence we intend to take the HIQR program measure results (also posted
publicly) for the proposed measures, identify the threshold as outlined
in section III.C.5.b.(3) of this proposed rule, and apply the
thresholds also outlined in section III.C.5.b.(7) of this proposed
rule. We believe it is reasonable to use the HIQR program distribution
of measure results to identify a measure result threshold because--(1)
the hospitals in the HIQR program represent most acute care hospitals
in the nation; (2) the CCJR model participant hospitals are a subset of
the hospitals in the HIQR program; and (3) the expectation that the
CCJR model participant hospitals meet a measure result threshold based
on a national distribution of measure results will encourage the CCJR
model participant hospitals to strive to attain measure results
consistent with or better than hospitals across the nation. For a
detailed description of how we will determine the measure result
thresholds for consideration of a reconciliation payment adjustment see
section III.C.5.b.(3) and III.C.7.of this proposed rule. We would not
want to encourage CCJR model participant hospitals to strive for
measure results or quality of care performance that may be lower than
the national measure results. Given that the CCJR participant hospitals
are a subset of the HIQR program participant hospitals, they are
familiar with these three measures and may have put into place
processes that will help to improve quality of care in the LEJR patient
population. Finally, once the measure results are calculated, we
propose to use these results to determine eligibility for
reconciliation payment, which is discussed in detail in the next
section.
To be considered to have successfully reported the voluntary data
collection and submission for the THA/TKA voluntary data, we propose
that successfully reporting will mean participant hospitals must meet
all of the following:
Submit the data elements listed in section III.D.3.a.(2)
of this proposed rule.
Data elements listed in section III.D.3.a.(2) of this
proposed rule must be submitted on at least 70 percent of their
eligible elective primary THA/TKA patients (patients eligible for pre-
operative THA/TKA voluntary data submission are those described in
section III.D.3.a.(3)of this proposed rule); patients eligible for
post-operative THA/TKA voluntary data submission are those described in
section III.D.3.a(3) of this proposed rule and also having a THA/TKA
procedure date during the anchor hospitalization at least 366 days
prior to the end of the data collection period. Therefore, hospitals
are not expected to collect and submit post-operative THA/TKA voluntary
data on patients who are fewer than 366 days from the date of surgery.
THA/TKA voluntary data submission must occur within 60
days of the end of the most recent 12 month period.
Hospitals meeting these three standards, and have successfully
submitted THA/TKA voluntary data, will be eligible for the proposed
voluntary reporting payment adjustment of reducing the discount
percentage from 2.0 percent to 1.7 percent for CCJR participant
hospitals that voluntarily and successfully report on the THA/TKA
voluntary data. Encouraging collection and submission of the THA/TKA
voluntary data through the CCJR model will increase availability of
patient-reported outcomes to both participant hospitals that collect
and submit data on their own patients in the model (and their patients
as well); further development of an outcomes measure that provides
meaningful information on patient-reported outcomes for THA/TKA
procedures that are commonly furnished to Medicare beneficiaries;
provide another quality measure that may be incorporated into the CCJR
model policy linking quality to payment in future performance years,
pending successful development of the measure; and inform the quality
strategy of future payment models. Collecting data on at least 70
percent of hospital's eligible THA/TKA patients would provide
sufficiently representative data to allow for development and testing
of the THA/TKA patient-reported outcome-based performance measure.
We invite public comment on the proposal to calculate measure
results for all three measures as outlined in the Quality Measures
section III.D.2 of this proposed rule. We also seek public comment on
our proposal for hospitals to meet three requirements, previously
outlined, in order to be considered as successfully submitting THA/TKA
voluntary data.

[[Page 41241]]

(c) Proposed Methodology To Link Quality and Payment
(i) Background
In proposing a methodology for linking payment for LEJR episodes to
quality under this model, we considered several alternatives.
Specifically, we considered making reconciliation payments to hospitals
tied to achievement and improvement in quality performance or,
alternatively, establishing minimum quality performance thresholds for
selected quality measures from the beginning of the model or a later
year, which would reward achievement but not necessarily improvement.
While we propose in section III.C.5.b.(6)(c) of this proposed rule to
establish minimum thresholds for participant hospital performance on
three selected quality measures for reconciliation payment eligibility
each performance year from the beginning of the model, we also discuss
in detail an alternative we considered, which would make quality
incentive payments related to hospital achievement and improvement on
the basis of a composite quality score developed for each performance
year. The composite quality score would affect reconciliation payment
eligibility and change the effective discount included in the target
price experienced by a participant hospital at reconciliation.
Similar to the proposal described in section III.C.5.b.(6)(c) of
this proposed rule, the alternatives considered would require a
determination of participant hospital performance on all three required
quality measures, described in section III.D. of this proposed rule,
based on the national distribution of hospital measure result
performance, but instead of identifying the participant hospital's
performance percentile for comparison with a threshold requirement, we
would do so for purposes of assigning points toward a hospital
composite quality score. Both the hospital-level 30-day, all cause
Risk-Standardized Readmission Rate (RSRR) following elective primary
THA and/or TKA (NQF #1551) measure and the hospital-level Risk-
Standardized Complication Rate (RSCR) following elective primary THA
and/or TKA (NQF #1550) measure directly yield rates for which a
participant hospital performance percentile could be determined and
compared to the national distribution in a straightforward manner. As
discussed in section III.D.2.c.of this proposed rule, we propose to use
the HCAHPS Linear Mean Roll Up (HLMR) score calculated using the HCAHPS
Survey (NQF #1661) measure. Once the HLMR scores are calculated, the
participant hospital performance percentile could also be determined
and compared to the national distribution in a straightforward manner.
In addition, the alternatives considered would account for the
successful submission of voluntary THA/TKA data on the patient-reported
outcome measure, as discussed in section III.C.5.b.(2) of this proposed
rule, in the calculation of the composite quality score.
(ii) Alternatives Considered To Link Quality and Payment
We considered assigning each participant hospital a composite
quality score, developed as the sum of the individual quality measure
scores described later in this section, which were set to reflect the
intended weights for each of the quality measures and the successful
submission of THA/TKA voluntary data in the composite quality score.
The participant hospital's composite quality score would affect
reconciliation payment eligibility and could also provide the
opportunity for quality incentive payments under the CCJR model. Each
quality measure would be assigned a weight in the composite quality
score and possible scores for the measures would be set to reflect
those weights. A composite quality score for each performance year
would be calculated for each participant hospital based on its own
performance that would affect reconciliation payment eligibility and
the hospital's opportunity to receive quality incentive payments under
the model. The composite quality score would also change the effective
discount included in the target price experienced by the hospital at
reconciliation for that performance year. We would weigh participant
hospital performance on each of the three measures and successful
submission of voluntary THA/TKA data according to the measure weights
displayed in Table 8.

Table 8--Quality Measure Weights in Composite Quality Score
------------------------------------------------------------------------
Weight in
composite
Quality measure quality score
%
------------------------------------------------------------------------
Hospital[dash]level 30[dash]day, all[dash]cause RSRR 20
following elective primary THA and/or TKA (NQF #1551)..
Hospital[dash]level RSCR following elective primary THA 40
and/or TKA (NQF #1550).................................
HCAHPS survey (NQF #1661)............................... 30
Voluntary THA/TKA data submission on 10
patient[dash]reported outcome measure..................
------------------------------------------------------------------------

We would assign the lowest weight of 10 percent to the successful
submission of THA/TKA data on the patient-reported outcome measure
because these data represent a hospital's meaningful participation in
advancing the quality measurement of LEJR patient-reported outcomes but
not actual outcome performance for LEJR episodes under the CCJR model.
We believe the three required measures that represent LEJR outcomes
deserve higher weights in the composite quality score. We would assign
a modest weight of 20 percent to the readmissions measure because,
while we believe that readmissions are an important quality measure for
LEJR episodes, the episode payment methodology under the model already
provides a strong financial incentive to reduce readmissions that
otherwise would contribute significantly to greater actual episode
payments. Furthermore, hospitals generally have already made
significant strides over the past several years in reducing
readmissions due to the inclusion of this measure in other CMS hospital
programs that make payment adjustments based on performance on this
measure. We believe that a higher weight than 20 percent would
overvalue the contribution of readmissions performance as an indicator
of LEJR episode quality in calculating the composite quality score.
Furthermore, other CMS hospital programs may also make a payment
adjustment based on hospital performance on the readmissions measure so
we would not want this measure to also strongly influence
reconciliation payment eligibility and the opportunity for quality
incentive payments under the CCJR model. We would assign a higher

[[Page 41242]]

weight of 30 percent to the HCAHPS survey measure because we believe
that incorporating this quality measure, which reflects performance
regarding patients' perspectives on care, including communication, care
transitions, and discharge information, is a highly meaningful outcome
measure of LEJR episode quality under the CCJR model. However, we do
not propose to assign the HCAHPS survey measure the highest weight of
the four measures, as the measure is not specific to LEJR episode care,
but rather to all clinical conditions treated by participant hospitals.
Finally, we would assign the highest weight, 40 percent, to the
complications measure. We believe this measure should be weighted the
most because it is specific to meaningful outcomes for primary THA and
TKA that are the major procedures included in LEJR episodes under the
CCJR model. The measure includes important complications of LEJR
episodes, such as myocardial infarction, pneumonia, surgical site
bleeding, pulmonary embolism, death, mechanical joint complications,
and joint infections occurring within various periods of time during
the LEJR episode. LEJR episodes under the CCJR model are broadly
defined so that reducing complications should be a major focus of care
redesign that improves quality and efficiency under this model, yet
because complications may not be as costly as readmissions, the payment
incentives under the model do not as strongly target reducing
complications as reducing readmissions. We seek comment on this
weighting of the individual quality scores in developing a composite
quality score for each participant hospital.
Under such an approach, we would first score individually each
participant hospital on the Hospital-level 30-day, all-cause RSRR using
the elective primary THA and/or TKA (NQF #1551) measure; Hospital-level
RSCR following using the elective primary THA and/or TKA (NQF #1550)
measure; and HCAPHS survey (NQF #1661) measure based on the participant
hospital's performance percentile as compared to the national
distribution of hospitals' measure performance, assigning scores
according to the point values displayed in Table 9 These individual
measure scores have been set to reflect the measure weights included in
Table 9 so they can ultimately be summed without adjustment in
calculating the composite quality score.

Table 9--Individual Scoring for Three Required Quality Measures
----------------------------------------------------------------------------------------------------------------
Complications HCAHPS survey Readmissions
Performance percentile measure quality quality score measure quality
score (points) (points) score (points)
----------------------------------------------------------------------------------------------------------------
>=90\th\............................................... 8.00 6.00 4.00
>=80\th\ and <90\th\................................... 7.40 5.55 3.70
>=70\th\ and <80\th\................................... 6.80 5.10 3.40
>=60\th\ and <70\th\................................... 6.20 4.65 3.10
>=50\th\ and <60\th\................................... 5.60 4.20 2.80
>=40\th\ and <50\th\................................... 5.00 3.75 2.50
>=30\th\ and <40\th\................................... 4.40 3.30 2.20
<30\th\................................................ 0.00 0.00 0.00
----------------------------------------------------------------------------------------------------------------

Given the current national distribution of hospital performance on
these measures, we believe that small point increments related to
higher measure performance deciles would be the most appropriate way to
assign more points to reflect meaningfully higher quality performance
on the measures. The absolute differences for each decile among the
three measures reflect the intended weight of the measure in the
composite quality score. We would assign any low volume participant
hospital without a reportable value for the measure to the 50th
performance percentile of the measure, so as not to disadvantage a
participant hospital based on its low volume alone because that
hospital may in actuality provide high quality care. These three
measures are well-established measures in use under CMS hospital
programs, so we do not believe that scores below the 30th percentile
reflect quality performance such that they should be assigned any
individual quality measure score points for LEJR episodes under CCJR.
However, we also considered reducing scores incrementally across the
bottom three deciles in order to provide greater incentives for quality
improvement for hospitals that may not believe they can attain the 30th
performance percentile on one or more of the three measures and to
avoid creating a ``cliff'' at the 30th performance percentile. We seek
comment on this scoring approach to the three required quality
measures.
Additionally, we would assign a measure quality score of one point
for participant hospitals that successfully submit THA/TKA voluntary
data and 0 points for participant hospitals that do not successfully
submit these data. Because we would not use the actual THA/TKA
voluntary data on the patient-reported outcome measure in assessing
LEJR episode quality performance under the model, we propose this
straightforward binary approach to scoring the submission of THA/TKA
voluntary data for the patient-reported outcome measure development.
We note that the MSSP utilizes a similar scoring and weighting
methodology, which is described in detail in the CY2011 Shared Savings
Program Final Rule (see Sec. 425.502). The HVBP and HACRP programs
also utilize a similar scoring methodology, which applies weights to
various measures and assigns an overall score to a hospital (79 FR
50049 and 50102).
We would sum the score on the three quality measures and the score
on successful submission of THA/TKA voluntary data to calculate a
composite quality score for each participant hospital. Then we would
incorporate this score in the model payment methodology by first,
requiring a minimum composite quality score for reconciliation payment
eligibility if the participant hospital's actual episode spending is
less than the target price and second, by making quality incentive
payments that change the effective discount percentage included in the
target price experienced by the hospital in the reconciliation process.
The payment policies we would apply are displayed in Tables 10, 11, and
12 for the performance years of the model. Under the CCJR model as
proposed, there is no participant hospital repayment responsibility in
performance year 1 and this responsibility begins to be phased-in in

[[Page 41243]]

performance year 2, with full implementation in performance year 3.

Table 10--Performance Year 1: Relationship of Composite Quality Score to Reconciliation Payment Eligibility and
the Effective Discount Percentage Experienced at Reconciliation
----------------------------------------------------------------------------------------------------------------
Effective
Eligible for Eligible for discount Effective discount
Composite quality score reconciliation quality incentive percentage for percentage for
payment payment reconciliation repayment amount
payment
----------------------------------------------------------------------------------------------------------------
<=5.00.......................... No................. No................ 3.0 Not applicable.
>5.00 and <=9.25................ Yes................ No................ 3.0 Not applicable.
>9.25 and <=15.20............... Yes................ Yes............... 2.0 Not applicable.
>15.20.......................... Yes................ Yes............... 1.5 Not applicable.
----------------------------------------------------------------------------------------------------------------

Table 11--Performance Year 2: Relationship of Composite Quality Score to Reconciliation Payment Eligibility and
the Effective Discount Percentage Experienced at Reconciliation
----------------------------------------------------------------------------------------------------------------
Effective
Eligible for Eligible for discount Effective
Composite quality score reconciliation quality incentive percentage for discount
payment payment reconciliation percentage for
payment repayment amount
----------------------------------------------------------------------------------------------------------------
<=5.00.......................... No................. No................. 3.0 2.0
>5.00 and <=9.25................ Yes................ No................. 3.0 2.0
>9.25 and <=15.20............... Yes................ Yes................ 2.0 1.0
>15.20.......................... Yes................ Yes................ 1.5 0.5
----------------------------------------------------------------------------------------------------------------

Table 12--Performance Years 3-5: Relationship of Composite Quality Score to Reconciliation Payment Eligibility
and the Effective Discount Percentage Experienced at Reconciliation
----------------------------------------------------------------------------------------------------------------
Effective
Eligible for Eligible for discount Effective
Composite quality score reconciliation quality incentive percentage for discount
payment payment reconciliation percentage for
payment repayment amount
----------------------------------------------------------------------------------------------------------------
<=5.00.......................... No................. No................. 3.0 3.0
>5.00 and <=9.25................ Yes................ No................. 3.0 3.0
>9.25 and <=15.20............... Yes................ Yes................ 2.0 2.0
>15.20.......................... Yes................ Yes................ 1.5 1.5
----------------------------------------------------------------------------------------------------------------

Under this approach, the CCJR model discount included in the target
price without consideration of the composite quality score would be 3.0
percent, not the 2.0 percent described under our payment proposal in
section III.C.4.b.(9) of this proposed rule. We believe that a discount
percentage of 3.0 percent without explicit consideration of episode
quality is reasonable as it is within the range of discount percentages
included in the ACE demonstration and it is the Model 2 BPCI discount
factor for 30 and 60 day episodes, where a number of BPCI participants
are testing LEJR episodes subject to the 3.0 percent discount factor.
Hospitals that provide high quality episode care would have the
opportunity to receive quality incentive payments that would reduce the
effective discount percentage as displayed in Tables 10, 11, and 12.
Depending on the participant hospital's actual composite quality score,
quality incentive payments could be valued at 1.0 percent to 1.5
percent of the hospital's benchmark episode price (that is, of the
expected episode spending prior to application of the discount factor
to calculate a target price).
Under this methodology, we would require hospitals to achieve a
minimum composite quality score of greater than 5.00 to be eligible for
a reconciliation payment if actual episode spending was less than the
target price. Participant hospitals with below acceptable quality
performance reflected in a composite quality score less than or equal
to 5.00 would not be eligible for a reconciliation payment if actual
episode spending was less than the target price. A level of quality
performance that is below acceptable would not affect participant
hospitals' repayment responsibility if actual episode spending exceeds
the target price. We believe that excessive reductions in utilization
that lead to low actual episode spending and that could result from the
financial incentives of an episode payment model would be limited by a
requirement that this minimum level of LEJR episode quality be achieved
for reconciliation payments to be made. This policy would encourage
hospitals to focus on appropriate reductions or changes in utilization
to achieve high quality care in a more efficient manner. Therefore,
these hospitals would be ineligible to receive a reconciliation payment
if actual episode spending was less than the target price.
For hospitals with composite quality scores of less than or equal
to 5.00, we also considered a potential alternative approach. Under
this approach, we would still permit this group of hospitals to receive
reconciliation payments but would impose a quality penalty that would
reduce their effective discount percentage to 4.0 percent for purposes
of calculating the reconciliation payment or recoupment amount in
performance years 3 through 5, 4.0 percent for calculating the
reconciliation payment and 3.0 percent for calculating the repayment
amount in performance year 2, and 4.0 percent for calculating the
reconciliation payment in performance year 1 where participant

[[Page 41244]]

hospitals have no repayment responsibility. A potential advantage of
this approach is that it would provide stronger incentives for quality
improvement for participant hospitals with low performance on quality,
even if they did not expect to be able to reduce actual episode
spending below the target price. In addition, this approach would
provide financial incentives to improve the efficiency of care even for
hospitals that did not expect to meet the minimum quality score for
reconciliation payment eligibility, while still providing strong
incentives to provide high-quality care. The disadvantage of this
approach is that it could provide reconciliation payments even to
hospitals that did not achieve acceptable quality performance.
Participant hospitals with an acceptable composite quality score of
>5.00 and <=9.25 would be eligible for a reconciliation payment if
actual episode spending was less than the target price because their
quality performance was at the acceptable level established for the
CCJR model. They would not be eligible for a quality incentive payment
at reconciliation because their episode quality performance, while
acceptable, was not good or excellent. Therefore, these hospitals would
be eligible to receive a reconciliation payment if actual episode
spending was less than the target price.
Participant hospitals with a good composite quality score of >9.25
and <=15.20 would be eligible for a quality incentive payment at
reconciliation if actual episode spending was less than the target
price because their quality performance exceeded the acceptable level
required for reconciliation payment eligibility under the CCJR model.
In addition, they would be eligible for a quality incentive payment at
reconciliation for good quality performance that equals 1.0 percent of
the participant hospital's benchmark price, thereby changing the
effective discount percentage included in the target price experienced
by the hospital at reconciliation. Thus, participant hospitals
achieving this level of quality for LEJR episodes under CCJR would
either have less repayment responsibility (that is, the quality
incentive payment would offset a portion of their repayment
responsibility) or receive a higher payment (that is, the quality
incentive payment would add to the reconciliation payment) at
reconciliation than they would have otherwise based on a comparison of
actual episode spending to the target price that reflects a 3.0 percent
discount. Therefore, these hospitals would be eligible to receive a
reconciliation payment if actual episode spending was less than the
target price and would also receive a quality incentive payment.
Finally, hospitals with an excellent composite score quality score
of >15.20 would be eligible to receive a reconciliation payment if
actual episode spending was less than the target price because their
quality performance exceeded the acceptable level required for
reconciliation payment eligibility under the CCJR model. In addition,
they would be eligible for a higher quality incentive payment at
reconciliation for excellent quality performance that equals 1.5
percent of the participant hospital's benchmark price, thereby changing
the effective discount percentage included in the target price
experienced by the hospital at reconciliation. Thus, participant
hospitals achieving this level of quality for LEJR episodes under CCJR
would either have less repayment responsibility (that is, the quality
incentive payment would offset a portion of their repayment
responsibility) or receive a higher payment (that is, the quality
incentive payment would add to the reconciliation payment) at
reconciliation than they would have otherwise based on a comparison of
actual episode spending to the target price that reflects a 3.0 percent
discount. Therefore, these hospitals would be eligible to receive a
reconciliation payment if actual episode spending was less than the
target price and would also receive a quality incentive payment.
Under this methodology, the proposed stop-loss and stop-gain limits
discussed in section III.C.8 of this proposed rule would not change. We
believe this approach to quality incentive payments based on the
composite quality score could have the effect of increasing the
alignment of the financial and quality performance incentives under the
CCJR model to the potential benefit of participant hospitals and their
collaborators as well as CMS, although it would substantially increase
the complexity of the methodology to link quality and payment. We seek
comment on this alternative approach to basing reconciliation payment
eligibility and quality incentive payments on the participant
hospital's composite quality score under the CCJR model, as well as the
composite quality scoring ranges applicable to the respective payment
policies.
While we describe in detail this alternative considered to link
quality to payment under CCJR, we are not proposing this methodology
for several reasons. First, the MSSP and HVBP program utilize many more
measures than we are proposing for the CCJR model. For example, the
MSSP incorporates thirty three measures across four quality domains (79
FR 67916 and 67917). The range of measures in the MSSP and the HVBP
program lends itself to a scoring approach, which can account for many
measures and allows providers to achieve a high score despite
performing well on some measures but achieving lower performance on
others. There is a detailed description of the MSSP scoring methodology
in the 2011 Shared Savings Program Final rule (76 FR 67895 through
67900). We believe that given the more limited set of measures chosen
for the CCJR model, a scoring approach such as the alternative
described in this section could diminish the importance of each
measure. Use of a scoring approach would not allow hospital performance
on two different outcomes to be easily reviewed and understood with
respect to the impact of individual measure performance on Medicare's
actual payment for the episode under the model. Second, we believe the
measures proposed for this model represent goals of clinical care that
should be achievable by all hospitals participating in the model that
heighten their focus on these measures, especially the readmissions and
complications measures, for LEJR episodes based on the financial
incentives in the model. Finally, we believe that a methodology that
assesses performance based on absolute values of a specific set of
measures that are already in use, as we are proposing for the CCJR
model, is the most appropriate methodology to provide achievable and
predictable quality targets for participant hospitals on measures that
monitor the most meaningful quality of care outcomes in a model where
some acute care hospitals that might not choose to participate in a
voluntary model are also included. Our proposed method as discussed in
the next section reflects our expectation that hospitals achieve a
certain level of performance on measures to ensure that hospitals
provide high-quality care under the model.
Finally, we also considered an approach whereby participant
hospitals would not be penalized with regard to their eligibility for
reconciliation payments in CCJR for failure to meet the specified
thresholds for the quality measures in performance year 1 of the model;
in other words, we would delay the proposal described in the next

[[Page 41245]]

section to performance year 2 rather than beginning in performance year
1. We considered calculating participant hospital performance on the
required measures for the model, and, if actual episode spending was
less than the target price, the participant hospital would receive a
full reconciliation payment of savings achieved beyond the target
price, regardless of performance on the quality measures. However, we
do not believe this would be appropriate for the CCJR model, given that
two of the measures are administrative claims-based and thus impose no
additional reporting burden on hospitals; rather, these two measures
are established measures in existing CMS quality programs, and a
central goal of the model is improving care for Medicare beneficiaries
in LEJR episodes. We note that the HCAHPS survey measure is also an
established measure in HIQR and would not impose additional reporting
burden on hospitals.
(iii) Proposal To Link Quality and Payment Through Thresholds for
Reconciliation Payment Eligibility
For the reasons outlined in the previous section, we do not propose
to use similar methodologies to other CMS programs that would tie CCJR
episode reconciliation payment eligibility and reconciliation payment
and Medicare repayment amounts to a composite quality score on
specified quality measures, but as discussed later in this section, we
instead propose to simply assess performance or achievement on a
quality measure by setting a measure result threshold for each measure
beginning in performance year 1 of the model.
The CCJR measure result threshold would be based on the measure
results from the HIQR program, a nationally-established program, and
would use its national distribution of measure results. These are the
same measure results posted on Hospital Compare or in the Hospital
Compare downloadable database (https://data.medicare.gov/data/hospital-compare) for the HIQR program. We refer readers to the earlier
discussion of the HIQR Program, which utilizes measures to assess most
acute care hospitals in the nation. Determining the CCJR model target
thresholds are discussed in the next section.
As previously described, the CCJR model proposes the following
three required measures to assess LEJR episode quality of care:
Hospital-level 30-day, all-cause RSRR following elective
primary THA and/or TKA (NQF #1551).
Hospital-level RSCR following elective primary THA and/or
TKA (NQF #1550).
HCAHPS survey (NQF #0166).
We also propose to make a voluntary reporting payment adjustment
for CCJR participant hospitals who successfully and voluntarily submit
data for the THA/TKA patient-reported outcome-based performance measure
(henceforth referred to as ``THA/TKA voluntary data'') as described in
sections III.C.5.b.(3) and III.D.3.a.(2) of this proposed rule. We
propose that participant CCJR hospitals must meet or surpass a
specified threshold for each required measure beginning for performance
year 1 of the model in order to be eligible for a reconcilation payment
if actual episode payments are less than the target price. The
calculation of the HCAHPS survey measure is described in section
III.D.2.c.of this proposed rule. We propose to use the individual
measure results calculated as specified in section III.D. of this
proposed rule for the three required measures to determine hospital
eligibility for reconciliation payment for each performance year of the
CCJR model. Also, as discussed in section III.C.4 of this proposed
rule, which outlines the payment structure for the CCJR model, target
prices for MS-DRG 470 anchored episodes and for MS-DRG 469 anchored
episodes will be calculated for hospitals participating in the model
for an episode of care extending 90-days after discharge from the
anchor hospitalization. Participant hospitals that achieve actual
episode payment below the specified target price for a given
performance period would be eligible for a reconciliation payment,
provided that the participant hospital also met episode quality
thresholds on the three required measures for the performance period.
We propose to use the following quality criterion to determine if a
participant hospital qualifies for a reconciliation payment based on
the episode quality thresholds on the three required measures:
The hospital's measure result is at or above the 30th percentile of
the national hospital measure results calculated for all HIQR-program
participant hospitals for each of the three required measures for each
performance period (for a detailed description of how we determined the
performance period and reconciliation payment eligibility, see section
III.C.5. of this proposed rule).
Using HIQR program's 3 year rolling period as outlined in section
III.D.2.a.(6) and III.D.2.b.(6) of this proposed rule, if a participant
hospital performed at or above the 30th percentile of all HIQR program
hospitals for each of the three required measures and if actual episode
payment was less than the target price for the specified performance
year, we would make a reconciliation payment to the hospital. Failure
to achieve the threshold on one or more measures would result in the
participant hospital not receiving a reconciliation payment regardless
of whether the actual episode payment was less than the target price
for that performance period. We propose that for hospitals with
insufficient volume to determine performance on an individual measure,
these hospitals will be considered to be performing at the threshold
level and their results will be publicly posted with all other
participant hospitals' measure results (for a detailed summary of
public reporting, see section III.D.5. of this proposed rule). We do
not believe it would be appropriate to potentially penalize high
quality, efficient hospitals due to their low volume, given that
meeting the required quality measure thresholds is required for
reconciliation payment eligibility.
We also propose for performance years 4 and 5 to increase the
measure result threshold to the 40th percentile. We believe that
increasing the measure result threshold to the 40th percentile would
encourage participants to strive for continued quality improvement
throughout the 5 performance years of the model. We seek comment on our
proposal to make a reconciliation payment to a participant hospital
that achieves actual episode spending below the target price for a
performance year and performs at or above the 30th percentile of HIQR
program participant hospitals for all three required quality measures
in performance years 1 through 3 or the 40th percentile in performance
years 4 and 5, as well as our proposal to consider low volume hospitals
to be performing at the threshold level.
We propose to require hospitals to meet the threshold for all three
measures for the following reasons. The measures chosen for this model
are fully developed, NQF-endorsed, and implemented measures in CMS IPPS
programs. These measures are also publicly reported on the Hospital
Compare Web site. Hospitals are familiar with the complications and
readmissions quality measures and with the HCAHPS Survey, as they are
currently included in HIQR, HVBP, and HRRP (79 FR 50031, 50062, 50208,
50209 and 50259), and we believe that there is minimal additional
administrative burden for hospitals. All three measures are widely
utilized nationally; thus, a nationally-based

[[Page 41246]]

threshold is an appropriate benchmark. In addition, the goal of the
CCJR model is LEJR episode care redesign that includes effective care
coordination and management of care transitions. Strategies to prevent
and efficiently manage post-procedure complications and hospital
readmissions following an LEJR procedure are consistent with the goals
of the model; a hospital cannot succeed in this model without engaging
in care redesign efforts that would address aspects of care included in
these measures. Failure to perform successfully on these key quality
measures (defined by meeting the minimum thresholds) would indicate
that hospitals are not achieving quality consistent with the goals of
the model to specifically incentivize greater improvement on these
measures than hospitals not participating in the CCJR model, and should
not be eligible to receive a reconciliation payment from Medicare even
if reduced episode spending is achieved. Finally, the approach we
propose is consistent with CMS' goal of moving hospitals and other
providers to value-based payment that ties payment to quality. In the 5
performance years of this model, performance on quality measures would
only be applied to determining eligibility for a reconciliation
payment; quality measures would not be used to determine participant
hospitals' financial responsibility, except for the proposed voluntary
reporting payment adjustment described in described in section
III.C.5.b.(3) of this proposed rule. In essence, participant hospitals'
responsibility to repay Medicare the difference between their target
price and their actual episode payment, should actual episode payments
exceed the target price, would not be impacted by performance on
quality measures.
Finally, we propose to increase the measure result thresholds for
the final 2 performance years of the model, to ensure that CCJR
participant hospitals continue to maintain a high level of quality
performance or improve performance on these measures as they gain
experience with implementation of this payment model. More
specifically, we propose that in order for a participant hospital to
receive a reconciliation payment for actual episode spending that is
less than the target price for performance years 4 and 5, the
participant hospital's measure result must be at or above the 40th
percentile of the national hospital measure results calculated for all
HIQR- program participant hospitals for each of the three required
measures for each performance period. As previously noted, we propose
to use the most recently available HCAHPS 4-quarter roll-up to
calculate the HLMR. We believe that holding the participant hospitals
to a set measure result threshold for the first 3 years, and increasing
this threshold for performance years 4 and 5, emphasize the need to
maintain and improve quality of care while cost efficiencies are
pursued. We seek comment on our proposed approach to incorporating
quality performance into eligibility for reconciliation payments under
the CCJR model for participant hospitals.
Table 13 displays the proposed thresholds that participant
hospitals must meet on the various measures over the 5 model
performance years.

Table 13--PROPOSED THRESHOLDS for Required Quality Measures To Determine Participant Hospital Reconciliation Payment Eligilbity Over 5 Years
--------------------------------------------------------------------------------------------------------------------------------------------------------
Measure PY1 threshold PY2 threshold PY3 threshold PY4 threshold PY5 threshold
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospital[dash]level 30[dash]day, 30th percentile....... 30th percentile....... 30th percentile...... 40th percentile...... 40th percentile.
all[dash]cause RSRR following
elective primary THA and/or TKA
(NQF #1551).
Hospital[dash]level RSCR following 30th percentile....... 30th percentile....... 30th percentile...... 40th percentile...... 40th percentile.
elective primary THA and/or TKA
(NQF #1550).
HCAHPS survey (NQF #0166).......... 30th percentile....... 30th percentile....... 30th percentile...... 40th percentile...... 40th percentile.
--------------------------------------------------------------------------------------------------------------------------------------------------------

We seek comment on our proposed methodology to utilize quality
measure performance in the payment methodology for CCJR, as well as the
proposed thresholds for participant hospital reconciliation payment
eligibility over the performance years of the model.
As discussed in section III.C.5.c.(3) of this proposed rule, we
also believe that hospitals that choose to submit THA/TKA voluntary
data should have the potential to benefit financially through an
adjustment to the payment methodology of the model. We propose a
voluntary reporting payment adjustment for hospitals that successfully
submit the THA/TKA voluntary data by reducing the discount percentage
incorporated into the target price from 2.0 percent to 1.7 percent.
This voluntary reporting payment adjustment would start in performance
year 1 and would be available through performance year 5 of the model
for each year that the hospital successfully reports THA/TKA voluntary
data. As proposed, reporting THA/TKA voluntary data would not affect
eligibility for a reconciliation payment if actual episode payments are
less than the target price. Participant hospitals would still need to
meet the 30th or 40th percentile threshold, as applicable to the given
performance year, on all three required quality measures (Table 13).
We considered, but are not proposing, two other alternatives to
adjust the payment methodology for participant hospitals that
successfully report the THA/TKA voluntary data as described in section
III.C.5.c.(3) of this proposed rule. These alternatives would change
the threshold percentile for the three required quality measures or,
alternatively, reduce the number of required measures in which the
threshold must be met provided that successful THA/TKA voluntary data
were reported for a performance year. First, we considered reducing the
threshold for reconciliation payment eligibility that participant
hospitals must meet on the three required quality measures from the
30th percentile threshold to the 20th percentile threshold for
performance years 1, 2, and 3, and from the 40th percentile to the 30th
percentile for performance year. Second, we considered only requiring
hospitals to meet the 30th percentile threshold on two of three outcome
measures for performance years 1, 2, and 3, and the 40th percentile
threshold on two of three outcome measures in performance years 4 and
5. Under both of these alternatives, the eligibility for reconciliation
payments could change based on the THA/TKA voluntary data. We seek
comment on these alternative payment methodology

[[Page 41247]]

adjustments that could impact reconciliation payment eligibility,
unlike the proposed voluntary reporting payment adjustment. We note
that the other alternative approaches to encouraging THA/TKA voluntary
data reporting for CCJR beneficiaries as discussed in section
III.C.5.c.(3) of this proposed rule that would not require adjustments
to the CCJR payment methodology would also not affect reconciliation
payment eligibility.
6. Proposed Process for Reconciliation
This section outlines our proposals on how we intend to reconcile
aggregate related Medicare payments for a hospital's beneficiaries in
CCJR episodes during a performance year against the applicable target
price in order to determine if reconciliation payment (or Medicare
repayment, beginning in performance year 2) is applicable under this
model. We refer readers to section III.B of this proposed rule for our
proposed definition of related services for lower extremity joint
replacement episodes under CCJR, to section III.C.2.a. of this proposed
rule for our proposed definition of performance years, and to section
III.C.4 of this proposed rule for our proposed approach to establish
target prices.
a. Net Payment Reconciliation Amount
After the completion of a performance year, we propose to
retrospectively calculate a participant hospital's actual episode
performance based on the episode definition. We note that episode
payments for purposes of the CCJR model would exclude the effects of
special payment provisions under existing Medicare payment systems
(section III.C.3.a. of this proposed rule), be subject to proration for
services that extend beyond the episode (section III.C.3.b. of this
proposed rule), and exclude PBPM payments for programs and models
specified in section III.C.7.d. of this proposed rule. Some episodes
may be excluded entirely from the CCJR model due to overlap with BPCI
episodes, as discussed in section III.C.7.b. of this proposed rule.
Finally, actual episode payments calculated for purposes of CCJR would
be capped at anchor MS-DRG and region-specific high episode payment
ceilings (section III.C.3.c. of this proposed rule). We would apply the
high episode payment ceiling policy to episodes in the performance year
similarly to how we propose to apply it to historical episodes (section
III.C.4.c. of this proposed rule). Episode payments for episodes
attributed to CCJR eligible hospitals would be divided by the wage
normalization factor, using the IPPS wage index applicable to the
anchor admission, and for each MS-DRG anchor and region, the high
episode payment ceiling would be calculated as two standard deviations
above the mean. Any actual episode payment amount above the high
payment ceiling would be capped at said ceiling. After applying the
cap, wage variations would be reapplied to episodes by multiplying them
by the same wage normalization factor, using the IPPS wage index
applicable to the anchor admission.
Each participant hospital's actual episode payment performance
would be compared to its target prices. We note that, as discussed in
section III.C.4. of this proposed rule, a participant hospital would
have multiple target prices for episodes ending in a given performance
year, based on the MS-DRG anchor (MS-DRG 469 versus MS-DRG 470), the
performance year when the episode was initiated, when the episode was
initiated within a given performance year (January 1 through September
30 of the performance year, October 1 through December 31 of the
performance year, October 1 through December 31 of the prior
performance year), and whether the participant hospital successfully
submitted THA/TKA voluntary data. The applicable target price for each
episode would be determined using the aforementioned criteria, and the
difference between each CCJR episode's actual payment and the relevant
target price (calculated as target price subtracted by CCJR actual
episode payment) would be aggregated for all episodes for a participant
hospital within the performance year, representing the raw Net Payment
Reconciliation Amount (NPRA). This amount would be adjusted per the
steps discussed later in this section, creating the NPRA.
The NPRA would include adjustments to account for post-episode
payment increases (section III.C.8.e. of this proposed rule). The NPRA
would also include adjustments for stop-loss and stop-gain limits
(section III.C.8.b. of this proposed rule), after adjustments are made
for the aforementioned post-episode payment increases. Any NPRA amount
greater than the proposed stop-gain limit would be capped at the stop-
gain limit, and any NPRA amount less than the proposed stop-loss limit
would be capped at the stop-loss limit.
We do not propose to include any CCJR reconciliation payments or
repayments to Medicare under this model for a given performance year in
the NPRA for a subsequent performance year. We want to incentivize
providers to provide high quality and efficient care in all years of
the model. If reconciliation payments for a performance year are
counted as Medicare expenditures in a subsequent performance year, a
hospital would experience higher Medicare expenditures in the
subsequent performance year as a consequence of providing high quality
and efficient care in the prior performance year, negating some of the
incentive to perform well in the prior year. Therefore, we propose to
not have the NPRA for a given performance year be impacted by CCJR
Medicare repayments or reconciliation payments made in a prior
performance year. However, as discussed in section III.C.6.b, during
the following performance year's reconciliation process, we propose to
account for additional claims run-out and overlap from the prior
performance year, and net that amount with the subsequent performance
year's NPRA to determine the reconciliation or repayment amount for the
current reconciliation.
b. Payment Reconciliation
We propose to reconcile payments retrospectively through the
following reconciliation process. We would reconcile a participant
hospital's CCJR actual episode payments against the target price 2
months after the end of the performance year. More specifically, we
would capture claims submitted by March 1st following the end of the
performance year and carry out the NPRA calculation as described
previously to make a reconciliation payment or hold hospitals
responsible for repayment, as applicable, in quarter 2 of that calendar
year.
To address issues of overlap with other CMS programs and models
that are discussed in section III.C.7. of this proposed rule, we also
propose that during the following performance year's reconciliation
process, we would calculate the prior performance year's episode
spending a second time to account for final claims run-out, as well as
overlap with other models as discussed in section III.C.7 of this
proposed rule. This would occur approximately 14 months after the end
of the prior performance year. As discussed later in this section, the
amount from this calculation, if different from zero, would be applied
to the NPRA for the subsequent performance year in order to determine
the amount of the payment Medicare would make to the hospital or the
hospital's repayment amount. We note that the subsequent reconciliation
calculation would be applied to the previous calculation of NPRA for a
performance year to ensure the stop loss and stop gain limits discussed
in section

[[Page 41248]]

III.C.8. of this proposed rule are not exceeded for a given performance
year.
For the performance year 1 reconciliation process, we would
calculate a participant's NPRA, as described above, and if positive,
the hospital would receive the amount as a reconciliation payment from
Medicare. If negative, the hospital would not be responsible for
repayment to Medicare, consistent with our proposal to phase in
financial responsibility beginning in performance year 2. Starting with
the CCJR reconciliation process for performance year 2, in order to
determine the reconciliation or repayment amount, the amount from the
subsequent reconciliation calculation would be applied to the NPRA. If
the amount is positive, and if the hospital meets the quality
thresholds for that performance year (discussed further in section
III.C.5. of this proposed rule), the hospital would receive the amount
as a reconciliation payment from Medicare. If the amount is negative,
Medicare would hold the participant hospital responsible for repaying
the absolute value of the repayment amount following the rules and
processes for all other Medicare debts. Note that given our proposal to
not hold participant hospitals financially responsible for repayment
for the first performance year, during the reconciliation process for
performance year 2 only, the subsequent calculation amount (for
performance year 1) would be compared against the performance year 1
NPRA to ensure that the sum of the NPRA calculated for performance year
1 and the subsequent reconciliation calculation for year 1 is not less
than zero. For performance years 2 through 5, though, Medicare would
hold the participant hospital responsible for repaying the absolute
value of the repayment amount following the rules and processes for all
other Medicare debts.
This reconciliation process would account for overlaps between the
CCJR model and other CMS models and programs as discussed in section
III.C.7 of this proposed rule, and would also involve updating
performance year episode claims data. For example, for performance year
1 for the CCJR model in 2016, we would capture claims submitted by
March 1st, 2017, and reconcile payments for participant hospitals
approximately 6 months after the end of the performance year in quarter
2 of calendar year 2017. We would carry out the subsequent calculation
in the following year in quarter 2 of calendar 2018, simultaneously
with the reconciliation process for the second performance year, 2017.
Table 14 provides the proposed reconciliation timeframes for the model.
Lastly, we propose that the reconciliation payments to or repayments
from the participant hospital would be made by the Medicare
Administrative Contractor (MAC) that makes payment to the hospital
under the IPPS. This approach is consistent with BPCI Model 2
operations.
We believe our proposed approach balances our goals of providing
reconciliation payments in a reasonable timeframe, while being able to
account for overlap and all Medicare claims attributable to episodes.
We believe that pulling claims 2 months after the end of the
performance year provides sufficient claims run-out to conduct the
reconciliation in a timely manner, given that our performance year
includes episodes ending, not beginning, by December 31st. We note that
in accordance with the regulations at Sec. 424.44 and the Medicare
Claims Processing Manual (Pub. L. 100-04), Chapter 1, Section 70,
Medicare claims can be submitted no later than 1 calendar year from the
date of service. We recognize that by pulling claims 2 months after the
end of the performance year to conduct reconciliation, we would not
have complete claims run-out. However, we believe that the 2 months of
claims run out would be an accurate reflection of episode spending and
consistent with the claims run-out timeframes used for reconciliation
in other payment models, such as BPCI Models 2 and 3. The alternative
would be to wait to reconcile until we have full claims run out 12
months after the end of the performance year, but we are concerned that
this approach would significantly delay earned reconciliation payments
under this model. Because we propose to conduct a second calculation to
account for overlap with other CMS models and programs, we can
incorporate updated claims data with 14 months run out at that time.
However, we do not expect that the updated data should substantially,
in and of itself, affect the reconciliation results assuming hospitals
and other providers furnishing services to Medicare beneficiaries in
CCJR episodes follow usual patterns of claims submission and do not
alter their billing practices due to this model.

Table 14--Proposed Timeframe for Reconciliation in CCJR
----------------------------------------------------------------------------------------------------------------
Second Second
Model Reconciliation Reconciliation calculation to calculation
Model performance performance claims submitted payment or address overlaps adjustment to
year period by repayment and claims run- reconciliation
out amount
----------------------------------------------------------------------------------------------------------------
Year 1*.......... Episodes ending March 1, 2017... Q2 2017............ March 1, 2018... Q2 2018
March 31, 2016
to December 31,
2016.
Year 2........... Episodes ending March 1, 2018... Q2 2018............ March 1, 2019... Q2 2019
January 1, 2017
through
December 31,
2017.
Year 3........... Episodes ending March 1, 2019... Q2 2019............ March 2, 2020... Q2 2020
January 1, 2018
through
December 31,
2018.
Year 4........... Episodes ending March 2, 2020... Q2 2020............ March 1, 2021... Q2 2021
January 1, 2019
through
December 31,
2019.
Year 5........... Episodes ending March 1, 2021... Q2 2021............ March 1, 2022... Q2 2022
January 1, 2020
through
December 31,
2020.
----------------------------------------------------------------------------------------------------------------
* Note that the reconciliation for Year 1 would not include repayment responsibility from CCJR hospitals.

[[Page 41249]]

7. Proposed Adjustments for Overlaps With Other Innovation Center
Models and CMS Programs
a. Overview
We acknowledge that there may be circumstances where a Medicare
beneficiary in a CCJR episode may also be assigned to an ACO
participating in the MSSP or otherwise accounted for in a payment model
being tested by the Innovation Center. Current or forthcoming programs
and models with potential overlap with CCJR are displayed in Table 15.
For purposes of this proposed rule, ``total cost of care'' models refer
to models in which episodes or performance periods include participant
financial responsibility for all Part A and Part B spending, as well as
some Part D spending in select cases. We use the term ``shared
savings'' in this proposed rule to refer to models in which the payment
structure includes a calculation of total savings and CMS and the model
participants each retain a particular percentage of that savings. We
note that there exists the possibility for overlap between CCJR
episodes and shared savings models such as the Pioneer ACO Model, other
total cost of care models such as the Oncology Care Model (OCM), other
Innovation Center payment models such as BPCI, and other models or
programs that incorporate per-beneficiary-per-month fees or other
payment structures.

Table 15--Current Programs and Models With Potential Overlap With Proposed CCJR Model
----------------------------------------------------------------------------------------------------------------
Per[dash]beneficiary-per-
Program/model Brief description Shared savings? month (PBPM) payments?
----------------------------------------------------------------------------------------------------------------
Pioneer............................. ACO shared savings Yes................ No.
program.
Medicare Shared Savings Program ACO shared savings Yes................ No.
(MSSP). program.
Next Generation ACO................. ACO shared savings Yes................ No.
program.
Comprehensive Primary Care Pays primary care Yes................ Yes.
initiative (CPCi). providers for improved
and comprehensive care
management.
Multi[dash]payer Advanced Primary Multi[dash]payer model Yes................ Yes.
Care Practice (MAPCP). for advanced primary
care practices, or
``medical homes''.
Bundled Payments for Care Bundled payment program No................. No.
Improvement (BPCI). for acute or
post[dash]acute
services or both.
Oncology Care Model (OCM)........... Multi[dash]payer model No................. Yes.
for oncology physician
group practices.
Comprehensive ESRD Care Initiative ACO for ESRD Medicare Yes................ No.
(CEC). beneficiaries.
Million Hearts...................... Model targeting No................. Yes.
prevention of heart
attack and stroke.
Medicare Care Choices Model......... Hospice concurrent care No................. Yes.
model.
----------------------------------------------------------------------------------------------------------------

Four different issues may arise in such overlap situations that
must be addressed under CCJR. First, beneficiaries in CCJR episodes
could also be part of BPCI Model 2 or 3 LEJR episodes, and the clinical
services provided as part of each episode may overlap entirely or in
part. Second, CCJR reconciliation payments and Medicare repayments that
are made under Part A and B and attributable to a specific
beneficiary's episode may be at risk of not being accounted for by
other models and programs when determining the cost of care under
Medicare for that beneficiary. Third, some Innovation Center models
make PBPM payments to entities for care coordination and other
activities, either from the Part A or B Trust or both, or from the
Innovation Center's own appropriation (see section 1115A(f) of the
Act). These payments may occur during a CCJR episode. Finally, there
could be instances when the expected Medicare savings for a CCJR
beneficiary's episode is not achieved by Medicare because part of that
savings is paid back to the hospital or another entity under a shared
savings program or other model in which the beneficiary is also
included. We seek comment on our proposals to account for overlap with
other models, including those listed in Table 15 as well as other CMS
models or programs.
b. CCJR Beneficiary Overlap With BPCI Episodes
BPCI is an episode payment model testing LEJR episodes, as well as
47 other episodes, in acute or PAC or both (Models 1, 2, 3 or 4). As
discussed in section III.A. of this proposed rule, we propose to
exclude from selection for participation in the CCJR payment model
those geographic areas where 50 percent or more of LEJR episodes are
initiated at acute care hospitals testing the LEJR episode in BPCI in
Models 1, 2 or 4 as of July 1, 2015. In that same section, we propose
that acute care hospitals in selected geographic areas participating in
BPCI under Model 1 (acute care only) and those participating as episode
initiators for the LEJR episode in Model 2 (acute and PAC from 30 to 90
days post-discharge) or Model 4 (prospective episode payment for the
LEJR anchor hospital stay and related readmissions for 30 days post-
discharge) be excluded from CCJR.
While we believe these proposals will mitigate the overlap of CCJR
beneficiaries with BPCI episodes, there may still be instances of model
overlap that we need to account for under CCJR. These include
circumstances when a beneficiary is admitted to a participating CCJR
hospital for an LEJR procedure where the beneficiary would also be in a
BPCI Model 2 episode under a physician group practice that would
initiate the episode under BPCI. In another example, a beneficiary
discharged from an anchor hospitalization under CCJR could enter a BPCI
Model 2 LEJR episode at another hospital for a phased second joint
replacement procedure or enter a BPCI Model 3 LEJR episode upon
initiation of PAC services at a BPCI post-acute provider episode
initiator for the LEJR episode. Similarly, a beneficiary in a BPCI
Model 2 or Model 3 LEJR episode could be admitted to a CCJR participant
hospital for a phased second joint replacement. In all such scenarios
in which there is overlap of CCJR beneficiaries with any BPCI LEJR
episodes, we propose that the BPCI LEJR episode under Models 1, 2, 3,
or 4 take precedence and we would cancel (or never initiate) the CCJR
episode. Because the cancellation (or lack of initiation) would only
occur for overlap with BPCI LEJR episodes, we expect that the
participant hospital and treating physician would generally be aware of
the beneficiary's care pathway that

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would cancel or not initiate the CCJR episode. Therefore, we would
exclude the CCJR episode from the CCJR participant hospital's
reconciliation calculations where we compare actual episode payments to
the target price under the CCJR model. If we were to allow both CCJR
and BPCI LEJR episodes to overlap, we would have no meaningful way to
apply the payment policies in two models with overlapping care redesign
interventions and episodes. Participants in BPCI have an expectation
that eligible episodes will be part of the BPCI model test, whereas
based on our proposal CCJR participants would be aware that episodes
may be canceled when there is overlap with BPCI episodes as previously
discussed in this section. We aim to preserve the integrity of ongoing
model tests without introducing major modifications (that is, CCJR
episode precedence) that could make evaluation of existing models more
challenging.
We considered that there may also be instances of overlap between
CCJR and BPCI Model 3 LEJR episodes where our proposal to give
precedence to all BPCI episodes could lead to undesirable patient
steering because the BPCI Model 3 episode does not begin until care is
initiated at an episode-initiating PAC provider. It could be possible
for a participating CCJR hospital to purposefully guide a beneficiary
to a BPCI Model 3 LEJR episode initiating PAC provider to exclude that
beneficiary's episode from CCJR. We considered giving precedence to the
CCJR episode in overlap with Model 3 beneficiaries because the CCJR
episode begins with admission for the anchor hospitalization and thus
includes more of the episode services. However, we believe the steering
opportunities would be limited due to the preservation of beneficiary
choice of provider in this model (as discussed in section III.E. of
this proposed rule). As outlined in section III.E. of this proposed
rule, CCJR hospitals must provide patients with a complete list of all
available PAC options. Moreover, BPCI Model 3 post-acute providers are
actively involved in the decision to admit patients to their
facilities. As episode initiators in BPCI, such providers are subject
to monitoring and evaluation under that model and would be vigilant
about not engaging in steering themselves or spurred by other
providers. Nevertheless, we will monitor CCJR hospitals to ensure
steering or other efforts to limit beneficiary access or move
beneficiaries out of the model are not occurring (see section III.F. of
this proposed rule).
We seek comment on the proposed approach to address overlap between
CCJR and BPCI episodes.
c. Accounting for CCJR Reconciliation Payments and Repayments in Other
Models and Programs
Under CCJR, we would annually, as applicable, make reconciliation
payments to or receive repayments from participating CCJR hospitals
based on their quality performance and Medicare expenditures, as
described in section III.C.6. of this proposed rule. While we propose
that these reconciliation payments or repayments would be handled by
MACs, the calculation of these amounts would be done separately before
being sent through the usual Medicare claims processing systems.
Nevertheless, it is important that other models and programs in which
providers are accountable for the total cost of care be able to account
for the full Medicare payment, including CCJR-related reconciliation
payments and repayments as described in section III.C.6. of this
proposed rule, for beneficiaries who are also in CCJR episodes.
Accordingly, it is necessary to have beneficiary-specific information
on CCJR-related reconciliation payments and repayments available when
those models and programs make their financial calculations. Thus, in
addition to determining reconciliation payments and repayments for the
participant hospitals in the CCJR model, we propose to also calculate
beneficiary-specific reconciliation payment or repayment amounts for
CCJR episodes to allow for those other programs and models, as their
reconciliation calculation timeframes permit, to determine the total
cost of care for overlapping beneficiaries. We would perform the
reconciliation calculations for CCJR hospitals and make information
about the CCJR reconciliation or repayment amounts available to other
programs and models, such as MSSP and Pioneer ACO, that begin
reconciliation calculations after CCJR. For example, this strategy is
currently in place to account for overlaps between beneficiaries
aligned to Pioneer and MSSP ACOs and BPCI model beneficiaries.
Beneficiary-specific reconciliation payment or repayment amounts are
loaded into a shared repository for use during each program or model's
respective reconciliations. However, we note that we would not make
separate payments to, or collect repayments from, participating CCJR
hospitals for each individual episode, but, instead, propose to make a
single aggregate reconciliation payment or repayment determination for
all episodes for a single performance year, as discussed in section
III.C.6. of this proposed rule.
As described in section III.C.6 of this proposed rule on the
Proposed Process for Reconciliation, we propose to conduct
reconciliation based on claims data available 2 months after the end of
the performance year and a second calculation based on claims data
available 14 months after the end of a performance year to account for
claims run-out and potential overlap with other models. The rationale
for this reconciliation process is to be able make payments to, and
recoup payments from, CCJR participant hospitals in a timely manner and
to be able to account for overlaps in other models and programs. In
addition, the timing of the reconciliation was determined giving
consideration to when the other total cost of care models conduct their
reconciliations so that when they perform their financial calculations,
they will have the information necessary to account for beneficiary-
specific payments/repayments made under the CCJR model. We intend to
report beneficiary-specific payments and repayment amounts made for the
CCJR model in the CMS Master Database Management System that generally
holds payments/repayment amounts made for CMS models and programs.
Other total cost of care models and programs can use the information on
CCJR payment/repayment amounts reported in the Master Database
Management System in their financial calculations such as in their
baseline or benchmark calculations or reconciliations, to the extent
that is consistent with their policies.
We seek comment on our proposed approach to ensuring that the full
CCJR episode payment for a beneficiary is accounted for when performing
financial calculations for other total cost of care and episode-based
payment models and programs.
d. Accounting for PBPM Payments in the Episode Definition
There are currently five CMS models that pay PBPM payments to
providers for new or enhanced services as displayed in Table 15. These
PBPM payments vary as to their funding source (Medicare Trust Funds or
Innovation Center appropriation), as well as to their payment
methodology.
In general, these PBPM payments are for new or enhanced provider or
supplier services that share the goal of improving quality of care
overall and reducing Medicare expenditures for services that could be
avoided through improved care coordination. Some of

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these PBPM payments may be made for services furnished to a beneficiary
that is in another Innovation Center model at the that same time that
the beneficiary is in a CCJR LEJR episode, but the clinical
relationship of services paid by the PBPM payments to the CCJR episode
will vary. For purposes of CCJR, we consider clinically related those
services paid by PBPMs that are for the purpose of care coordination
and care management of any beneficiary diagnosis or hospital
readmission not excluded from the CCJR episode definition, as discussed
in section III.B.2 of this proposed rule.
We would determine whether the services paid by PBPM payments are
excluded from the CCJR episode on a model by model basis based on their
funding source and clinical relationship to CCJR episodes. If we
determine a model's PBPM payments are for new or enhanced services that
are clinically related to the CCJR episode and the PBPM payment is
funded through the Medicare Part A or B Trust Fund, we would include
the services paid by the PBPM payment to the extent they otherwise meet
the proposed episode definition for the CCJR model. That is, we would
include the clinically related services paid by a PBPM payment if the
services would not otherwise be excluded based on the principal
diagnosis code on the claim, as discussed in section III.B.2 of this
proposed rule. The PBPM payments for clinically related services would
not be excluded from the historical CCJR episodes used to calculate
target prices when the PBPM payments are present on Part A or Part B
claims, and they would not be excluded from calculation of episode
actual expenditures during the performance period. PBPM model payments
that we determine are clinically unrelated would be excluded,
regardless of the funding mechanism or diagnosis codes on claims for
those payments. We note that in the case of PBPM model payments,
principal diagnosis codes on a Part B claim (which are used to identify
exclusions from CCJR episodes, as discussed in section III.B.), would
not denote the only mechanism for exclusion of a service from the CCJR
episode. All such PBPM model payments we determine are clinically
unrelated would be excluded as discussed in this proposal. Finally, all
services paid by PBPM payments funded through the Innovation Center's
appropriation under section 1115A of the Act would be excluded from
CCJR episodes, without a specific determination of their clinical
relationship to CCJR episodes. We believe including such PBPM payments
funded under the Innovation Center's appropriation and not included on
claims would be operationally burdensome and could significantly delay
any reconciliation payments and repayments for the CCJR model. In
addition, because these services are not paid for from the Medicare
Part A or B Trust Fund, we are not confident that they would be covered
by Medicare under existing law. Therefore, we believe the services paid
by these PBPM payments are most appropriately excluded from CCJR
episodes. Our proposal for the treatment of services paid through model
PBPM payments in CCJR episodes would pertain to all existing models
with PBPM payments, as well as future models and programs that
incorporate PBPM payments. We believe that this proposal is fully
consistent with our goal of including all related Part A and Part B
services in the CCJR episodes, as discussed in section III.B.2. of this
proposed rule.
Under this proposal, only one of the four existing models displayed
in Table 15 include services paid by PBPM payments that would not be
excluded from CCJR episodes. The MAPCP model makes PBPM payments that
are funded through the Trust Fund for new or enhanced services that
coordinate care, improve access, and educate patients with chronic
illnesses. We expect these new or enhanced services to improve quality
and reduce spending for services that may have otherwise occurred, such
as hospital readmissions, and consider them to be clinically related to
CCJR episodes because the PBPM payments would support care coordination
for medical diagnoses that are not excluded from CCJR episodes. Thus,
we propose that services paid by PBPM payments under the MAPCP model
not be excluded from CCJR episodes to the extent they otherwise meet
the proposed episode definition. While the OCM model will pay for new
or enhanced services through PBPM payments funded by the Medicare Part
B Trust Fund, we do not believe these services are clinically related
to CCJR episodes. The OCM model incorporates episode-based payment
initiated by chemotherapy treatment, a service generally reported with
ICD-9-CM codes that are specifically excluded from the proposed CCJR
episode definition in section III.B.2. of this proposed rule. We
believe the care coordination and management services paid by OCM PBPM
payments would be focused on chemotherapy services and their
complications, so the services would be clinically unrelated to CCJR
episodes. Therefore, we propose that services paid by PBPM payments
under the OCM model be excluded from CCJR episodes. Similarly, we
propose to exclude services paid by PBPM payments under the Medicare
Care Choices model, because the model's focus on palliative care for
beneficiaries with a terminal illness means the PBPM payments would pay
for services that are clinically unrelated to CCJR episodes. The
services paid by PBPM payments under this model would commonly pertain
to diagnoses that are excluded from the proposed CCJR episode
definition. Finally, new or enhanced services paid by PBPM payments
under the Comprehensive Primary Care initiative (CPCi) are paid out of
the Innovation Center's appropriation and thus would be excluded from
CCJR episodes according to this proposal.
We acknowledge there may be new models not included Table 15 that
could incorporate a PBPM payment for new or enhanced services. We would
plan to make our determination about whether services paid by a new
model PBPM payment that is funded under the Medicare Trust Funds are
clinically related to CCJR episodes through the same subregulatory
approach that we are proposing to use to update the episode definition
(excluded MS-DRGs and ICD-9-CM diagnosis codes). We would assess each
model's PBPM payment to determine if it would be primarily used for
care coordination or care management services for excluded clinical
conditions under the LEJR episode definition for CCJR based on the
standards we propose to use to update the episode definition that are
discussed in section III.B.2 of this proposed rule.
If we determine that the PBPM payment would primarily be used to
pay for services to manage an excluded clinical condition, we would
exclude the PBPM payment from the CCJR episode on the basis that it
pays for unrelated services. If we determine that the PBPM payment
could primarily be used for services to manage an included clinical
condition, we would include the PBPM payment in the CCJR episode if the
diagnosis code on the claim for the PBPM payment was not excluded from
the episode, following our usual process for determining excluded
claims for Part B services in accordance with the episode definition
discussed in section III.C.2 of this proposed rule. We would post our
proposed determination about whether the PBPM payment would be included
in the episode to the CMS Web site to allow for public input on our
planned application of these standards, and then adopt changes to

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the overlap list with posting to the CMS Web site of the final updated
list after our consideration of the public input.
We seek comment on our proposals to account for Innovation Center
model PBPM payments under CCJR.
e. Accounting for Overlap With Shared Savings Programs and Total Cost
of Care Models
In addition to the Medicare Shared Savings Program (MSSP) under
section 1899 of the Act, there are several ACO and other Innovation
Center models that make or will make, once implemented, providers
accountable for total cost of care over 6 to 12 months, including the
Pioneer ACO Model, Next Generation ACO, Comprehensive ESRD Care (CEC)
Model, CPCi, OCM, and the Multi-payer Advanced Primary Care Practice
(MAPCP) Demonstration. Some of these are shared savings models (or
programs, in the case of MSSP), while others are not shared savings but
hold participating providers accountable for the total cost of care
during a defined episode of care, such as OCM. Note that as discussed
in section III.C.7.a. of this proposed rule, for purposes of this
proposed rule, ``total cost of care'' models refer to models in which
episodes or performance periods include participant financial
responsibility for all Part A and Part B spending, as well as some Part
D spending in select cases. Each of these payment models holds
providers accountable for the total cost of care over the course of an
extended period of time or episode of care by applying various payment
methodologies. We believe it is important to simultaneously allow
beneficiaries to participate in broader population-based and other
total cost of care models, as well as episode payment models that
target a specific episode of care with a shorter duration, such as
CCJR. Allowing beneficiaries to receive care under both types of models
may maximize the potential benefits to the Medicare Trust Funds and
participating providers and suppliers, as well as beneficiaries.
Beneficiaries stand to benefit from care redesign that leads to
improved quality for LEJR episodes of care even while also receiving
care under these broader models, while entities that participate in
other models and programs that assess total cost of care stand to
benefit, at least in part, from the cost savings that accrue under
CCJR. For example, a beneficiary receiving an LEJR procedure may
benefit from a hospital's care coordination efforts with regard to care
during the inpatient hospital stay. The same beneficiary may be
attributed to a primary care physician affiliated with an ACO who is
actively engaged in coordinating care for all of the beneficiary's
clinical conditions throughout the entire performance year, beyond the
90-day post-discharge LEJR episode.
We propose that a beneficiary could be in a CCJR episode, as
defined in section III.B. of this proposed rule, by receiving an LEJR
procedure at a CCJR hospital, and also attributed to a provider
participating in a model or program in Table 15. For example, a
beneficiary may be attributed to a provider participating in the
Pioneer ACO model for an entire performance year, as well as have a
CCJR episode during the ACO's performance year. Each model incorporates
a reconciliation process, where total included spending during the
performance period or episode are calculated, as well as any potential
savings achieved by the model or program. Given that we are proposing
to allow for such beneficiary overlap, we believe it is important to
account for savings under CCJR and the other models and programs with
potential overlap in order that CMS can apply the respective individual
savings-related payment policies of the model or program, without
attributing the same savings to more than one model or program.
We believe that when overlap occurs, it is most appropriate to
attribute Medicare savings accrued during the CCJR time period
(hospital stay plus 90 days post-discharge) to CCJR to the extent
possible. The CCJR episode has a shorter duration and is initiated by a
major surgical procedure, requiring an inpatient hospitalization. In
contrast, the total cost of care models listed in Table 15 incorporate
6 to 12 month performance periods for participants and, in general,
have a broader focus on beneficiary health. Our intention is to ensure
that CCJR episodes are attributed the full expected savings to Medicare
to the extent possible. As such, we propose the following policies to
ensure that other models are able to account for the reconciliation
payments paid to CCJR hospitals to the extent possible prior to
performing their own reconciliation calculations and that, in all
appropriate circumstances, the CCJR model or the other model would make
an adjustment for savings achieved under the CCJR model and partially
paid back through shared savings/performance payments under other
initiatives to ensure that the full CCJR model savings to Medicare is
realized.
We propose that the total cost of care calculations under non-ACO
total cost of care models would be adjusted to the extent feasible to
account for beneficiaries that are aligned to participants in the model
and whose care is included in CCJR in order to ensure that the savings
to Medicare achieved under CCJR (the discount percentage) are not paid
back under these other models through shared savings or other
performance-based payment. Thus, the non-ACO total cost of care models
would adjust their calculations to ensure the CCJR discount percentage
is not paid out as savings or other performance-based payment to the
other model participants. As previously discussed, we believe that the
efficiencies achieved during the CCJR episode should be credited to the
entity that is closest to that care for the episode of care in terms of
time, location, and care management responsibility, rather than the
broader entity participating in a total cost of care model that spans a
longer duration. We propose that the non-ACO total cost of care models
to which this policy would apply would include CPCi, OCM, and MAPCP. We
seek comment on our proposal to account for overlap with those non-ACO
total cost of care models and any other current or forthcoming models.
We propose a different policy for accounting for overlap with MSSP
and other ACO models. We note that given the operational complexities
and requirements of the MSSP reconciliation process, it is not feasible
for MSSP to make an adjustment to account for the discount to Medicare
under a CCJR episode under existing program rules and processes.
Additionally, for programmatic consistency among ACO models and
programs, given that our ACO models generally are tested for the
purpose of informing future potential changes to MSSP, we believe that
the ACO model overlap adjustment policy should be aligned with the MSSP
policy. Thus, we propose that under CCJR, we would make an adjustment
to the reconciliation amount if available to account for any of the
applicable discount for an episode resulting in Medicare savings that
is paid back through shared savings under MSSP or any other ACO model,
but only when a CCJR participant hospital also participates in the ACO
and the beneficiary in the CCJR episode is also aligned to that ACO.
This adjustment would be necessary to ensure that the applicable
discount under CCJR is not reduced because a portion of that discount
is paid out in shared savings to the ACO and thus, indirectly, back to
the hospital.
However, we propose not to make an adjustment under CCJR when a

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beneficiary receives an LEJR procedure at a participant hospital and is
aligned to an ACO in which the hospital is not participating. While
this proposal would leave overlap unaccounted for in such situations,
we do not believe it would be appropriate to hold responsible for
repayment the hospital that managed the beneficiary during the episode
through a CCJR adjustment, given that the participant hospital may have
engaged in care redesign and reduced spending during the CCJR episode.
The participant hospital may be unaware that the beneficiary is also
aligned to an ACO. However, we recognize that as proposed this policy
would allow an unrelated ACO full credit for the Medicare savings
achieved during the episode. The evaluation of the CCJR model, as
discussed in section IV of this proposed rule, would examine overlap in
such situations and the potential effect on Medicare savings.
We note that our proposed policy as outlined in this proposed rule
would entail CCJR reclaiming from the participant hospital any discount
percentage paid out as shared savings for MSSP or ACO models only when
the hospital is an ACO participant and the beneficiary is aligned with
that ACO, while other total cost of care models such as CPCi would
adjust for the discount percentage in their calculations. While it is
operationally feasible for smaller total cost of care models in
testing, such as CPCi, to make an adjustment to account for any CCJR
discount percentage paid out as sharing savings or other performance-
based payments, the operational complexities and requirements of the
large permanent Medicare ACO program, MSSP, make it infeasible for that
program to make an adjustment in such cases, and we believe that other
ACO models in testing that share operating principles with the MSSP
should follow the same policies as the CCJR MSSP adjustment for certain
overlapping ACO beneficiaries. As the landscape of CMS models and
programs changes, we may revisit this policy through future rulemaking.
We seek comment on our proposals for adjustments to account for
overlap between CCJR and shared savings programs and total cost of care
models.
8. Proposals To Limit or Adjust Hospital Financial Responsibility
a. Overview
As discussed in section III.A of this proposed rule, we propose
designating as the financially responsible providers in CCJR all acute
care hospitals paid under the IPPS that are located in the selected
geographic areas for this test of 90-day post-discharge LEJR episodes,
with the exception of some hospitals that we propose to exclude because
of participation in BPCI (Models 1, 2, or 4) for LEJR episodes. We are
interested in ensuring a broad test of episode payment for this
clinical condition among different types of hospitals, including those
who may not otherwise choose to participate in an episode payment
model. Many of the participant hospitals would likely be key service
providers in their communities for a variety of medical and surgical
conditions extending well beyond orthopedic procedures. We want to gain
experience with this model before extending it to hospitals in uncommon
circumstances. In addition, we acknowledge that hospitals designated
for participation in CCJR currently vary with respect to their
readiness to function under an episode payment model with regard to
their organizational and systems capacity and structure, as well as
their beneficiary population served. Some hospitals may more quickly be
able to demonstrate high quality performance and savings than others,
even though we propose that the episode target prices be based
predominantly on the hospital's own historical episode utilization in
the early years of CCJR.
We also note that providers may be incentivized to excessively
reduce or shift utilization outside of the CCJR episode, even with the
quality requirements discussed in section III.C.5 of this proposed
rule. In order to mitigate any excessive repayment responsibility for
hospitals or reduction or shifting of care outside the episode,
especially beginning in performance year 2 of the model when we propose
to begin to phase in responsibility for repaying Medicare for excess
episode spending, we propose several specific policies that are also
referenced in section III.C.6.b. of this proposed rule.
b. Proposed Limit on to Raw NPRA Contribution to Repayment Amounts and
Reconciliation Payments
(1) Proposed Limit on Raw NPRA Contribution to Repayment Amounts
When hospital repayment responsibility begins in the second
performance year of CCJR, under this proposed rule, hospitals would be
required to repay Medicare for episode expenditures that are greater
than the applicable target price. As discussed in the section III.C.3.c
of this proposed rule regarding our proposed pricing adjustment for
high payment episodes, hospitals participating in CCJR would not bear
financial responsibility for actual episode payments greater than a
ceiling set at two standard deviations above the mean regional episode
payment. Nevertheless, hospitals would begin to bear repayment
responsibility beginning in performance year 2 for those episodes where
actual episode expenditures are greater than the target price up to the
level of the regional episode ceiling. In aggregate across all
episodes, the money owed to Medicare by a hospital for actual episode
spending above the applicable target price could be substantial if a
hospital's episodes generally had high payments. As an extreme example,
if a hospital had all of its episodes paid at two standard deviations
above the mean regional episode payment, the hospital would need to
repay Medicare a large amount of money, especially if the number of
episodes was large.
To limit a hospital's overall repayment responsibility for the raw
NPRA contribution to the repayment amount under this model, we propose
a 10 percent limit on the raw NPRA contribution to the repayment amount
in performance year 2 and a 20 percent limit on the raw NPRA
contribution to the repayment amount in performance year 3 and
subsequent years. Hereinafter we refer to these proposed repayment
limits as stop-loss limits. In performance year 2 as we phase in
repayment responsibility, the hospital would owe Medicare under the
proposed CCJR payment model no more than 10 percent of the hospital's
target price for the anchor MS-DRG multiplied by the number of the
hospital's CCJR episodes anchored by that MS-DRG during the performance
year, for each anchor MS-DRG in the model. Ten percent provides an even
transition with respect to maximum repayment amounts from performance
year 1, where the hospital bears no repayment responsibility, to the
proposed stop-loss limit in performance years 3 through 5 of 20
percent. In performance years 3 through 5 when repayment responsibility
is fully phased in, no more than 20 percent of the hospital's target
price for the MS-DRG multiplied by the number of the hospital's CCJR
episodes with that MS-DRG in that performance year would be owed by the
hospital to Medicare under the proposed CCJR payment model. The
proposed stop-loss percentage of 20 percent would be symmetrical in
performance years 3 through 5 with the proposed limit on the raw NPRA
contribution to reconciliation payments discussed in the following
section.
We believe that a stop-loss limit of 20 percent is appropriate when
the hospital bears full repayment responsibility,

[[Page 41254]]

based on our assessment of the changes in practice pattern and
reductions in quality of care that could lead to significant repayment
responsibility under the CCJR model, as compared to historical LEJR
episode utilization. We estimate that the IPPS payment for the anchor
hospital stay makes up approximately 50 percent of the episode target
price, and we expect that the anchor hospital stay offers little
opportunity for efficiencies to be achieved by reducing Medicare
expenditures. In contrast, we expect significant episode efficiencies
could be achieved in the 90 days following discharge from the anchor
hospital stay through reductions in related hospital readmissions and
increased utilization of appropriate lower intensity PAC providers,
specifically increased utilization of home health services and
outpatient therapy and reduced utilization of SNFs and IRFs. Hospital
readmissions and facility-based PAC increase the typical Medicare
episode payment by 30 to 45 percent over episodes that do not include
these services. The proposed 20 percent stop-loss limit related to the
total episode payment corresponds to approximately 40 percent of
episode payment for the post-discharge period only, where the major
opportunities for efficiency through care redesign occur. Thus, taking
into consideration the historical patterns used to set target prices,
we believe it is reasonable to hold participant hospitals responsible
for repayment of actual episode spending that is up to 20 percent
greater than the target price. If a participant hospital's repayment
amount due to the raw NPRA would otherwise have exceeded the stop-loss
limit of 20 percent (comparable to 40 percent of Medicare payment for
the post-discharge period), the hospital's episodes would include much
poorer episode efficiency as compared to the hospital's historical
episodes, with large proportions of episodes including related
readmissions and facility-based PAC, costly services that we do not
expect to be necessary for most beneficiaries whose care is well-
coordinated and appropriate throughout a high quality LEJR episode.
The following hypothetical example illustrates how the proposed
stop-loss percentage would be applied in a given performance year for
the episodes of a participant hospital. In performance year 3, a
participant hospital had ten episodes triggered by MS-DRG 469, with a
target price for these episodes of $50,000. The hospital's episode
actual spending for these ten episodes was $650,000. The hospital's raw
NPRA that would otherwise be $150,000 ((10 x $50,000)-$650,000) would
be capped at the 20 percent stop-loss limit of $100,000 (.2 x 10 x
$50,000) so the hospital would owe CMS $100,000, rather than $150,000.
In performance year 3, the same participant hospital also has 100
episodes triggered by MS-DRG 470, with a target price for these
episodes of $25,000. The hospital's episode actual spending for these
100 episodes was $2,800,000. The hospital's raw NPRA would be $300,000
((100 x $25,000)-$2,800,000), an amount that would be due to CMS in
full as it would not be subject to the 20 percent stop-loss limit of
$500,000 (.2 x 100 x $25,000).

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As illustrated in Figure 4 where we display results from our
national model for the proposed CCJR performance year 2 policies when
the phase-in of repayment responsibility begins and under the
assumption that utilization remains constant, we estimate that the 10
percent stop-loss limit would impact the amount of repayment due to the
raw NPRA for about 11 percent of hospitals. For performance year 3, the
20 percent stop-loss limit would affect significantly fewer hospitals,
only about 3 percent. We note that the stop-loss limit for years 3
through 5 where repayment responsibility is fully implemented is
consistent with the BPCI Model 2 policy. While Figure 3 assumes no
change in utilization patterns, under the model test we expect that the
proposed stop-loss limits could actually affect a smaller percentage of
hospitals in each performance year because we expect LEJR episode care
redesign incentivized by the model's financial opportunities to
generally reduce unnecessary utilization, thereby reducing actual
episode spending and, correspondingly, any associated repayment amounts
due to the raw NPRA. We note that we would include any post-episode
spending amount due to Medicare according to the policy proposed in
section III.C.8.d of this proposed rule in assessing the total
repayment amount due to the raw NPRA against the stop-loss limit for
the performance year to determine a hospital's total payment due to
Medicare, if applicable.
We seek comment on our proposal to adopt a 10 percent stop-loss
limit in performance year 2 and 20 percent stop-loss limit in
performance year 3 and beyond in CCJR as hospital repayment
responsibility for excess episode spending above the target price is
phased in and then maintained in the model.
(2) Proposed Limit on Raw NPRA Contribution to Reconciliation Payments
We believe a limit on reconciliation payments for CCJR would be
appropriate for several reasons. Due to the proposed nature of the CCJR
model during performance year 1, when hospitals have no repayment
responsibility for excess episode spending above the target price, CMS
bears full financial responsibility for Medicare actual episode
payments for an episode that exceed the target price, and we believe
our responsibility should have judicious limits. Therefore, we believe
it would be reasonable to cap a hospital's reconciliation payment due
to the raw NPRA as a percentage of episode payment on the basis of
responsible stewardship of CMS resources. In addition, we note that
beginning in performance year 1, participant hospitals would be
eligible for reconciliation payments due to the NPRA if actual episode
expenditures are

[[Page 41256]]

less than the target price, assuming the proposed quality thresholds
are met. This proposal for reconciliation payments due to the NPRA
provides a financial incentive to participant hospitals from the
beginning of the model to manage and coordinate care throughout the
episode with a focus on ensuring that beneficiaries receive the lowest
intensity, medically appropriate care throughout the episode that
results in high quality outcomes. Therefore, we also believe it would
be reasonable to cap a hospital's reconciliation payment due to the raw
NPRA based on concerns about potential excessive reductions in
utilization under the CCJR model that could lead to beneficiary harm.
In determining what would constitute an appropriate reconciliation
payment limit due to the raw NPRA, we believe it should provide
significant opportunity for hospitals to receive reconciliation
payments for greater episode efficiency that includes achievement of
quality care and actual episode payment reductions below the target
price, while avoiding creating significant incentives for sharply
reduced utilization that could be harmful to beneficiaries. Thus, for
all 5 performance years of the model, we propose a limit on the raw
NPRA contribution to the reconciliation payment of no more than 20
percent of the hospital's target prices for each MS-DRG multiplied by
the number of the hospital's episodes for that MS-DRG. Hereinafter we
refer to this proposed reconciliation payment limit as the stop-gain
limit. This proposed stop-gain limit is parallel to the 20 percent
stop-loss limit proposed for performance year 3 and beyond. We believe
that a parallel stop-gain and stop-loss limit is important to provide
proportionately similar protections to CMS and participant hospitals
for their financial responsibilities under CCJR, as well as to protect
the health of beneficiaries.
As illustrated in Figure 3 where we display results from our
national model for the proposed CCJR performance year 2 policies under
the assumption that utilization remains constant, we estimate that the
20 percent stop-gain limit would impact the reconciliation payment
amount due to the raw NPRA of almost no hospitals. We note that a stop-
gain limit of 20 percent is consistent with BPCI Model 2 policy. While
Figure 3 assumes no change in utilization patterns, under the model
test we expect that the proposed stop-gain limit could actually affect
a few hospitals in each performance year because we expect LEJR episode
care redesign incentivized by the model's financial opportunities to
generally reduce unnecessary utilization, thereby reducing actual
episode spending and, correspondingly, increasing any associated
reconciliation payment amounts due to the raw NPRA. Nevertheless, we
believe the proposed stop-gain limit of 20 percent provides substantial
opportunity for hospitals to achieve savings over the target price
without excessive reductions in utilization, and those savings would be
paid back to hospitals fully in most cases without being affected by
the stop-gain limit. We seek comment on our proposal to adopt a 20
percent stop-gain limit for all performance years of CCJR.
We note that we plan to monitor beneficiary access and utilization
of services and the potential contribution of the stop-gain limit to
any inappropriate reduction in episode services. We refer readers to
section III.F. of this proposed rule for our proposals on monitoring
and addressing hospital performance under CCJR.
c. Proposed Policies for Certain Hospitals To Further Limit Repayment
Responsibility
As discussed in section III.C.3. of this proposed rule, we propose
that participant hospitals would be subject to repayment responsibility
for episode actual spending in excess of the applicable target price
beginning in performance year 2. Hospitals participating in CCJR would
not be responsible for actual episode payments greater than a ceiling
set at two standard deviations above the mean regional episode payment
as described earlier in this section. Additionally, we propose a 10
percent limit on the raw NPRA contribution to the repayment mount in
performance year 2 and a 20 percent limit on the raw NPRA contribution
to the repayment amount in performance year 3 and beyond, as described
in the previous section of this proposed rule.
Though our proposals provide several safeguards to ensure that
participant hospitals have limited repayment responsibility due to the
raw NPRA, we are proposing additional protections for certain groups of
hospitals that may have a lower risk tolerance and less infrastructure
and support to achieve efficiencies for high payment episodes.
Specifically, we are proposing additional protections for rural
hospitals, SCHs, Medicare Dependent Hospitals and Rural Referral
Centers (RCCs). We note that these categories of hospitals often have
special payment protections or additional payment benefits under
Medicare because we recognize the importance of preserving Medicare
beneficiaries' access to care from these hospitals. In MedPAC's Report
to the Congress in June 2012, MedPAC examined issues related to rural
Medicare beneficiaries and found that ``The primary objective of rural
special payments is to ensure that Medicare does its part to support
the financial viability of rural providers that are necessary for
beneficiaries' access to care. Some form of special payments will be
needed to maintain access in areas with low population density where
providers inevitably have low patient volumes and lack economies of
scale.'' \40\
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\40\ MedPAC Report to Congress June 2012, Chapter 5, page 121.
---------------------------------------------------------------------------

We propose that a rural hospital would have additional protections
under the stop-loss limit proposal. For the purpose of this model, we
are proposing to define a rural hospital as an IPPS hospital that is
either located in a rural area in accordance with Sec. 412.64(b) or in
a rural census tract within an MSA defined at Sec. 412.103(a)(1) or
has reclassified to rural in accordance with Sec. 412.103 Such rural
hospitals would have additional protections under the stop-loss limit
proposal. Consistent with the findings in MedPAC's June 2012 Report to
the Congress, we believe rural hospitals may have a lower risk
tolerance and less infrastructure and support to achieve efficiencies
for high payment episodes, particularly if they are the rural hospital
is the only hospital in an area.
Our preliminary analysis examining national spending for MS-DRGs
469 and 470 from October 1, 2013 to September 30, 2014 showed that MS-
DRGs 469 and 470 cases represent a slightly higher proportion of cases
and spending for rural hospitals than the national average (for
example, MS-DRG 470 episode spending represents 12 percent of IPPS
spending for rural hospitals and represents 9 percent of IPPS spending
nationally).\41\ Additionally, our analysis on the distribution of
national spending of MS-DRGs 469 and 470 episodes by service type (that
is inpatient, outpatient, SNF, Home Health, Physician Part B, DME),
found that on average, inpatient services account for the most spending
for an MS-DRGs 469 and 470 episode (53 percent of spending for an MS-
DRG 469 episode and 55 percent of spending for MS-DRG 470 episode). SNF
services account for 27 percent of spending for MS-DRG 469 and 18
percent of spending for MS-DRG 470. The spending distribution for all
rural IPPS hospitals also differs from the

[[Page 41257]]

national average. For rural hospitals, inpatient services for CCJR
episodes account for more spending than the national average (56
percent for MS-DRG 469 and 57 percent for MS-DRG 470 for rural
hospitals) and SNF spending is higher than the national average (29
percent for MS-DRG 469 and 21 percent for MS-DRG 470 for rural
hospitals). It is evident that this category of hospitals has different
spending patterns than the national average. Furthermore, hospitals in
rural areas often face other unique challenges. Rural hospitals may be
the only source of healthcare services for beneficiaries living in
rural areas, and beneficiaries have limited alternatives should rural
hospitals be subject to financial changes under this model.
Additionally, because rural hospitals may be in areas with fewer
providers including fewer physicians and PAC facilities, rural
hospitals may have more limited options in coordinating care and
reducing spending while maintain quality of care under this model. We
believe that urban hospitals may not have similar concerns as they are
often in areas with many other providers and have greater opportunity
to develop efficiencies under this model. Given that rural hospitals
have different episode spending patterns, have different challenges in
coordinating care and reducing cost than urban hospitals and serve as a
primary access to care for beneficiaries, we believe that we should
have a more protective stop-loss limit policy as described later in
this section.
---------------------------------------------------------------------------

\41\ Medicare FFS Parts A and B claims, CCJR episodes as
proposed, between October 1, 2013 and September 30, 2014.
---------------------------------------------------------------------------

Additionally, we propose to provide additional protections for SCHs
as defined in Sec. 412.92, Medicare Dependent Hospitals as defined in
Sec. 412.108 and RRCs as defined in Sec. 412.96. Hospitals paid under
the IPPS can qualify for SCH status if they meet one of the following
criteria:
Located at least 35 miles from other like hospitals.
Located in a rural area, located between 25 and 35 miles
from other like hospitals, and no more than 25 percent of residents or
Medicare beneficiaries who become hospital inpatients in the hospital's
service area are admitted to other like hospitals located within a 35-
mile radius of the hospital or the hospital has fewer than 50 beds and
would meet the 25 percent criterion if not for the fact that some
beneficiaries or residents were forced to seek specialized care outside
of the service area due to the unavailability of necessary specialty
services at the hospital.
Hospital is rural and located between 15 and 25 miles from
other like hospitals but because of local topography or periods of
prolonged severe weather conditions, the other like hospitals are
inaccessible for at least 30 days in each of 2 out of 3 years.
Hospital is rural and the travel time between the hospital
and the nearest like hospital is at least 45 minutes.
If an IPPS hospital qualifies to be a SCH, the hospital can be paid
the higher of the federal payment rate paid to IPPS hospitals or a
cost-based hospital-specific rate as described in Sec. 412.78. Under
OPPS, a rural SCH can receive a 7.1 percent add on payment for most
services with certain exceptions, in accordance with Sec. 419.43(g).
These criteria to qualify for SCH status demonstrate that SCHs are
likely to be the sole hospital in an area. Furthermore, additional
payments provided under Medicare FFS for SCHs, demonstrates Medicare's
interest in ensuring these hospitals are able to provide services to
the Medicare beneficiaries who may have limited access to providers in
their area. As a result, we believe that we should provide SCHs
additional protections from hospital responsibility for repayment in
this model. We note that we propose to exclude these add-on payments
for SCHs, as described in section III.C.3.a of this proposed rule.
MDHs are defined as a hospital that meets the following criteria:
Located in a rural area.
Has 100 beds or less.
Is not a SCH.
Sixty percent of the hospital's inpatient days or
discharges were attributable to individuals entitled to Medicare Part A
benefits during specified time periods as provided in Sec. 412.108.
MDHs also qualify for special additional payments under the IPPS
where an MDH can receive the higher of a payment under the federal
standard rate for IPPS hospitals or the payment under federal standard
rate for IPPS hospitals plus 75 percent of the difference in payments
between a cost based hospital-specific rate and the federal standard
rate as described in Sec. 412.108(c). These criteria demonstrate that
MDHs are small, rural hospitals that have a high Medicare case mix
percentage and receive additional payments under the IPPS to ensure
financial stability and preserve beneficiary access to care to these
hospitals. Thus, we believe these factors demonstrate that we should
provide additional safeguards from hospital responsibility for
repayment in order to preserve access to care. We note that we propose
to exclude these payment enhancements for MDHs, as described in section
III.C.3.a. of this proposed rule.
RRCs are defined as IPPS hospitals with at least 275 beds that meet
the following criteria:
Fifty percent of the hospital's Medicare patients are
referred from other hospitals or from physicians who are not on the
staff of the hospital.
At least 60 percent of the hospital's Medicare patients
live more than 25 miles from the hospital.
At least 60 percent of all services the hospital furnishes
to Medicare patients are furnished to patients who live more than 25
miles from the hospital.
If a hospital does not meet the criteria described previously, a
hospital can also qualify for RRC status if a hospital meets the
following criteria:
For specified period of time, the hospital has a case-mix
that equals the lower of the median case mix index (CMI) value for all
urban hospitals nationally; or the median CMI value for urban hospitals
located in its region, excluding those hospitals receiving indirect
medical education payments.
Its number of discharges is at least--
++ 5,000 (or 3,000 for an osteopathic hospital); or
++ The median number of discharges for urban hospitals in the
census region in which it is located, set by the CMS through IPPS
rulemaking.
Additionally, a hospital must meet one of the following
criteria:
++ More than 50 percent of its active medical staff are specialists
who meet the conditions specified at Sec. 412.96(c)(3).
++ At least 60 percent of all discharges are for inpatients who
reside more than 25 miles from the hospital.
++ At least 40 percent of all inpatients treated are referred from
other hospitals or from physicians who are not on the hospital's staff.
As an RRC, a hospital can qualify for several additional payments
under the IPPS. For example, an RRC is not subject to the 12 percent
cap on Medicare Disproportionate Share Hospital payments that a rural
hospital would otherwise be subject to, in accordance with Sec.
412.106(d). Although RRCs are larger and have a higher Medicare patient
mix, they often serve as the sole provider to treat higher acuity
cases, as demonstrated by the RRC qualification criteria. As a result
of these unique characteristics of these hospitals, RRCs can receive
additional payments under Medicare FFS. Thus, it is also important to
provide additional protections for RRCs such that participation in this
model does not

[[Page 41258]]

result in significant financial loss that may reduce access for
Medicare beneficiaries.
For these reasons, we propose a stop-loss limit of 3 percent of
episode payments for these categories of hospitals in performance year
2 and a stop-loss limit of 5 percent of episode payments for
performance years 3 through 5. More specifically, in performance year
2, a rural hospital, SCH, RRC or MDH that is a participant hospital
would owe Medicare due to the raw NPRA no more than 3 percent of the
hospital's target price for the anchor MS-DRG multiplied by the number
of the hospital's CCJR episodes with that anchor MS-DRG in the
performance year. Additionally, in performance years 3 through 5, a
rural hospital, SCH, RRC or MDH that is a participant hospital would
owe Medicare due to the raw NPRA no more than 5 percent of the
hospital's target price for the anchor MS-DRG multiplied by the number
of the hospital's CCJR episodes with that anchor MS-DRG in the
performance year. We believe a different stop-loss limit policy is
warranted given the different spending patterns and the unique hospital
characteristics for these groups of hospitals as described earlier. We
believe this proposal strikes an appropriate balance between protecting
hospitals that often serve as the only access of care for Medicare
beneficiaries and having these hospitals meaningfully participate in
the model. We note that this proposal does not impact the proposed
stop-gain policy for these categories of hospitals. Rural hospitals,
SCHs, MDHs and RRCs still have the opportunity to participate in full
gains at 20 percent similar to other hospitals.
Hospitals can apply for SCH, MDH and RRC status through their MACs
and Regional Office at any time. MACs maintain the list of SCHs, MDHs,
and RRCs in the CMS Provider Specific File, which they update on a
quarterly basis. The special hospital designations recorded in the
Provider Specific File are used in Medicare claims pricing to ensure
that these hospitals are paid according to their special hospital
designation. Additionally, CMS can identify which hospitals are
considered rural for the purpose of this policy, using the Provider
Specific File to identify physical geographic location of a hospital
and the MACs to identify whether an urban hospital has reclassified to
rural under 42 CFR 412.103 or located in a rural census tract of an MSA
defined under 42 CFR 412.103(a)(1). Thus, we propose to identify rural
hospitals, MDHs, SCHs and RRCs at the time of reconciliation using the
Provider Specific File updated in December of the end of the
performance year and information from the MACs, and those hospitals
would be subject to the 3 percent stop-loss limit policy for that
performance year 2, and 5 percent stop-loss limit policy in performance
years 3 through 5. For example, to identify the hospitals that would
receive a 3 percent stop-loss limit for performance year 2, we would
use the Provider Specific File updated in December 2017. We note that
the special Medicare payment designation of MDH status has been
extended through FY 2017 by legislation under the Medicare Access and
CHIP Reauthorization Act of 2015. As a result, the proposed additional
protections for hospital responsibility for repayment for MDHs would
only apply to the extent that MDH status exists under Medicare. In
other words, should MDH expire on or after September 30, 2017, we would
not identify hospitals as MDHs to receive the 5-percent stop-loss limit
policy for performance year 3. Though MDH status is set to expire after
the third quarter of 2017, we would still identify MDHs to receive the
3-percent stop loss limit policy for all of performance year 2.
We note that we also considered excluding rural hospitals, SCHs,
MDHs and RRCs from the CCJR model altogether due to our concerns of
placing significant responsibility for actual episode payment above the
target price on these hospitals. Additionally, we were also concerned
that from an evaluation perspective, we would not have sufficient
sample size of CCJR episodes from these categories of hospitals to have
significant results of how these groups of hospitals perform under this
model. We weighed our reasons for excluding these hospitals with the
potential qualitative information we would gain from payment innovation
tests on rural hospitals in this model. We concluded that because the
CCJR model strives to test episode payment for a broad variety of
hospitals, it would be preferable to include these hospitals in the
CCJR model and provide additional protections from a large repayment
responsibility. We welcome public comment on our proposed stop-loss
limit for rural hospitals, SCHs, MDHs and RRCs and on our alternative
consideration to exclude these hospitals entirely from the CCJR model.
d. Proposed Hospital Responsibility for Increased Post-Episode Payments
We noted that while the proposed CCJR episode would extend 90-days
post-discharge from the anchor hospitalization, some hospitals may have
an incentive to withhold or delay medically necessary care until after
an episode ends to reduce their actual episode payments. We do not
believe this would be likely, especially given the relatively long
episode duration. However, in order to identify and address such
inappropriate shifting of care, we propose to calculate for each
performance year the total Medicare Parts A and B expenditures in the
30-day period following completion of each episode for all services
covered under Medicare Parts A and B, regardless of whether or not the
services are included in the proposed episode definition (section III.B
of this proposed rule), as is consistent with BPCI Model 2. Because we
base the proposed episode definition on exclusions, identified by MS-
DRGs for readmissions and ICD-9-CM diagnosis codes for Part B services
as discussed in section III.B. of this proposed rule, and Medicare
beneficiaries may typically receive a wide variety of related (and
unrelated) services during the CCJR episode that extends 90 days
following discharge from the anchor hospitalization, there is some
potential for hospitals to inappropriately withhold or delay a variety
of types of services until the episode concludes, without attending
carefully to the episode definition, especially for Part B services
where diagnosis coding on claims may be less reliable. This
inappropriate shifting could include both those services that are
related to the episode (for which the hospital would bear financial
responsibility as they would be included in the actual episode spending
calculation) and those that are unrelated (which would not be included
in the actual episode spending calculation), because a hospital engaged
in shifting of medically necessary services outside the episode for
potential financial reward may be unlikely to clearly distinguish
whether the services were related to the episode or not in the
hospital's decisions.
This calculation would include prorated payments for services that
extend beyond the episode as discussed in section III.C.3.b. of this
proposed rule. Specifically, we would identify whether the average 30-
day post-episode spending for a participant hospital in any given
performance year is greater than three standard deviations above the
regional average 30-day post-episode spending, based on the 30-day
post-episode spending for episodes attributed to all CCJR eligible
hospitals in the same region as the participant hospital. We propose
that beginning in performance year 2, if the hospital's average post-
episode spending exceeds

[[Page 41259]]

this threshold, the participant hospital would repay Medicare for the
amount that exceeds such threshold, subject to the stop-loss limits
proposed elsewhere in this proposed rule. We seek comment on this
proposal to make participant hospitals responsible for making
repayments to Medicare based on high spending in the 30 days after the
end of the episode and for our proposed methodology to calculate the
threshold for high post-episode spend.
9. Proposed Appeal Procedures
Under the CCJR model, we propose that we would determine target
prices for episodes of care using the methodology described in section
III.C. of this proposed rule. We propose to institute a reconciliation
payment process as described in section III.C.6, of this proposed rule,
and we propose to retrospectively calculate a participant hospital's
actual episode performance relative to its target price after the
completion of each performance year. The difference between the actual
episode spending of each CCJR episode and the target price of that
episode (calculated as target price subtracted by CCJR actual episode
payment) would be aggregated for all episodes initiated at a
participant hospital during each performance year. This calculation for
a participant hospital would be adjusted for post-episode payment
increases and stop gain and stop loss limits, as described in section
III.C.6.a. of this proposed rule. We propose to use quality measure
percentiles to determine hospital eligibility to receive the
reconciliation payment and use the successful reporting of the
voluntary PRO THA/TKA data to adjust the reconciliation payment, as
described in section III.C.5. of this proposed rule. The NPRA would be
reflected in a report sent to the participant hospital called the CCJR
Reconciliation Report.
We also propose to institute appeals processes for the CCJR model
that would allow participant hospitals to appeal matters related to
reconciliation and payment (that are previously discussed in this
section), as well as non-payment related issues, such as enforcement
matters detailed in section III.C.12.
a. Payment Processes
The proposed processes with regard to reconciliation, payment, use
of quality measures to determine payment, and stop-loss and stop-gain
policies are set forth in detail in sections III.C.5-8. In this
section, we propose an appeals processes that will apply to the matters
addressed in sections III.C.5-8, as well as matters not related to
payment or reconciliation. These appeals processes will apply to the
following payment and reconciliation processes:
Starting with the CCJR Reconciliation Report for
performance year 1, if the CCJR Reconciliation Report indicates the
reconciliation amount is positive, CMS would issue a payment, in a form
and manner specified by CMS, for that amount to the awardee within 30
calendar days from the issue date of the CCJR Reconciliation Report,
unless the participant hospital selects to pursue the calculation error
and reconsideration review processes, in which case payment will be
delayed as detailed later in this section.
For performance year 1, if the CCJR reconciliation report
indicates a repayment amount, the participant hospital would not be
required to make payment for that amount to CMS, as we have proposed
not to hold hospitals financially responsible for negative NPRAs for
the first performance year. In addition, if it is determined that a
CCJR hospital has a positive NPRA for performance year 1, and the
subsequent calculation for performance year 1 the following year, as
described in section III.C.6. of this proposed rule, determines that in
aggregate the performance year 1 NPRA and the subsequent calculation
amount for performance year 1 is a negative value (adding together the
NPRA amount from the reconciliation for performance year 1 as well as
the amount determined in the subsequent calculation, which would be
detailed on the CCJR reconciliation report for performance year 2), the
hospital would only be financially responsible for a repayment amount
that would net the performance year 1 NPRA and subsequent calculation
for year 1 to zero. This would be true for performance year 1 only,
given our proposal to begin phasing in financial responsibility in year
2 of the model as discussed in section III.C.2.c. of this proposed
rule. For performance years 2 through 5 of the model, for example, if
the NPRA for performance year 1 for a given hospital were $3,000, and
the subsequent calculation performed in Q2 2018 to account for claims
run-out and overlaps determined a repayment amount of $3,500 for claims
incurred and overlap during performance year 1, $3,000 would be applied
to the CCJR reconciliation report for performance year 2. If the NPRA
for performance year 2 were $5,000, the repayment amount of $3,000
would be netted against the $5,000, and the reconciliation payment for
performance year 2 would be $2,000. Given that downside risk has been
waived for performance year 1, the remaining $500 would not be added to
the CCJR reconciliation report for performance year 2. However,
beginning with the reconciliation process for performance year 3, any
repayment amounts generated through the subsequent calculation process
detailed in section III.C.6.b. would be netted against any repayment or
reconciliation amount on the respective CCJR reconciliation reports for
performance years 2, 3, 4, and 5. Starting with the reconciliation for
performance year 2, if the CCJR Reconciliation Report indicates the
NPRA is negative, the participant hospital would make payment for the
absolute value of that amount to CMS within 30-calendar days from the
issue date of the CCJR Reconciliation Report, in a form and manner
specified by CMS. Where the participant hospital does not issue payment
within 30-calendar days, we will issue a demand letter requiring
payment be made immediately.
The reconciliation or repayment amount may include
adjustments, arising from matters from the previous performance year,
as necessary to account for subsequent calculations performed for
performance years that were specified in earlier CCJR Reconciliation
Reports, as discussed in section III.C.6. of this proposed rule. For
example, we would potentially make determinations of additional monies
owed by Medicare to participant hospitals or vice versa in subsequent
periods based on the availability of updated Medicare administrative
data. These subsequent calculations would be contained in the
succeeding reconciliation report. For example, the subsequent
calculations applicable to performance year 1 would be contained in the
reconciliation report for performance year 2.
If the participant hospital fails to pay CMS the amount
owed by the date indicated in the demand letter, CMS will recoup owed
monies from participant hospital's present and future Medicare payments
to collect all monies due to CMS. While we propose that a participant
hospital may enter into financial arrangements with CCJR collaborators
that allow for some risk-sharing, as discussed in section III.C. of
this proposed rule, the participant hospital would be solely liable for
the repayment of the negative repayment amount to CMS. Where the
participant hospital fails to repay CMS in full for all monies owed,
CMS would invoke all legal means to collect the debt, including
referral of the remaining debt to the United States Department of the
Treasury, pursuant to 31 U.S.C. 3711(g).

[[Page 41260]]

b. Calculation Error
We propose the following calculation error process for participant
hospitals to contest matters related to payment or reconciliation, of
which the following is a non-exhaustive list: The calculation of the
participant hospital's reconciliation amount or repayment amount as
reflected on a CCJR reconciliation report; the calculation of NPRA; the
calculation of the percentiles of quality measure performance to
determine eligibility to receive a reconciliation payment; and the
successful reporting of the voluntary PRO THA/TKA data to adjust the
reconciliation payment. Participant hospitals would review their CCJR
reconciliation report and be required to provide written notice of any
error, in a calculation error form that must be submitted in a form and
manner specified by CMS. Unless the participant provides such notice,
the reconciliation report would be deemed final within 30 calendar days
after it is issued, and CMS would proceed with payment or repayment. If
CMS receives a timely notice of an error in the calculation, CMS would
respond in writing within 30 calendar days to either confirm or refute
the calculation error, although CMS would reserve the right to an
extension upon written notice to the participant hospital. We propose
that if a participant hospital does not submit timely notice of
calculation error in accordance with the timelines and processes
specified by CMS, the participant hospital would be precluded from
later contesting any of the following matters contained in the CCJR
reconciliation report for that performance year: any matter involving
the calculation of the participant hospital's reconciliation amount or
repayment amount as reflected on a CCJR reconciliation report; any
matter involving the calculation of NPRA; the calculation of the
percentiles of quality measure performance to determine eligibility to
receive a reconciliation payment; and the successful reporting of the
voluntary PRO THA/TKA data to adjust the reconciliation payment.
c. Dispute Resolution
(1) Limitations on Review
In accordance with section 1115A(d) of the Act, there is no
administrative or judicial review under sections 1869 or 1878 of the
Act or otherwise for the following:
The selection of models for testing or expansion under
section 1115A of the Act.
The selection of organizations, sites or participants to
test those models selected.
The elements, parameters, scope, and duration of such
models for testing or dissemination.
Determinations regarding budget neutrality under
subsection 1115A(b)(3).
The termination or modification of the design and
implementation of a model under subsection 1115A(b)(3)(B).
Decisions about expansion of the duration and scope of a
model under subsection 1115A(c), including the determination that a
model is not expected to meet criteria described in paragraph (1) or
(2) of such subsection.
(2) Matters Subject to Dispute Resolution
We propose that a participant hospital may appeal an initial
determination that is not precluded from administrative or judicial
review by requesting reconsideration review by a CMS official. The
request for review must be submitted for receipt by CMS within 10 days
of the notice of the initial determination. Initial determinations that
are not precluded from administrative or judicial review would include
the involuntary termination of a participant hospital's participation
in the CCJR model.
(3) Dispute Resolution Process
We propose the following dispute resolution process. First, we
propose that only a participant hospital may utilize the dispute
resolution process. Second, in order to access the dispute resolution
process a participant hospital must have timely submitted a calculation
error form, as previously discussed, for any matters related to
payment. We propose these matters would include any amount or
calculation indicated on a CCJR reconciliation report, including
calculations not specifically reflected on a CCJR reconciliation report
but which generated figures or amounts reflected on a CCJR
reconciliation report. The following is a non-exhaustive list of the
matters we propose would need to be first adjudicated by the
calculation error process as previously detailed: calculations of
reconciliation or repayment amounts; calculations of NPRA; and any
calculations or percentile distribution involving quality measures that
we propose could affect reconciliation or repayment amounts. If a
participant hospital wants to engage in the dispute resolution process
with regard to one of these matters, we propose it would first need to
submit a calculation error form. Where the participant hospital does
not timely submit a calculation error form, we propose the dispute
resolution process would not be available to the participant hospital
with regard to those matters for the reconciliation report for that
performance year.
If the participant hospital did timely submit a calculation error
form and the participant hospital is dissatisfied with CMS's response
to the participant hospital's notice of calculation error, the hospital
would be permitted to request reconsideration review by a CMS
reconsideration official. The reconsideration review request would be
submitted in a form and manner and to an individual or office specified
by CMS. The reconsideration review request would provide a detailed
explanation of the basis for the dispute and include supporting
documentation for the participant hospital's assertion that CMS or its
representatives did not accurately calculate the NPRA or post-episode
spending amount in accordance with CCJR rules. The following is a non-
exhaustive list of representative payment matters:
Calculations of NPRA, post-episode spending amount, target
prices or any items listed on a reconciliation report.
The application of quality measures to a reconciliation
payment, including the calculation of the percentiles thresholds of
quality measure performance to determine eligibility to receive
reconciliation payments, or the successful reporting of the voluntary
PRO THA/TKA data to adjust the reconciliation payment.
Any contestation based on the grounds that CMS or its
representative made an error in calculating or recording such amounts.
Where the matter is unrelated to payment, such as termination from
the model, the participant hospital need not submit a calculation error
form. We propose to require the participant hospital to timely submit a
request for reconsideration review, in a form and manner to be
determined by CMS. Where such request is timely received, we propose
CMS would process the request as discussed later in this section.
We propose that the reconsideration review would be an on-the-
record review (a review of briefs and evidence only). The CMS
reconsideration official would make reasonable efforts to notify the
hospital in writing within 15 calendar days of receiving the
participant hospital's reconsideration review request of the date and
time of the review, the issues in dispute, the review procedures, and
the procedures (including format and deadlines) for submission of
evidence (the ``Scheduling Notice''). The CMS reconsideration official
would make reasonable efforts to schedule the

[[Page 41261]]

review to occur no later than 30 days after the date of the Scheduling
Notice. The provisions at Sec. 425.804(b), (c), and (e) (as in effect
on the publication date of this proposed rule) would apply to reviews
conducted pursuant to the reconsideration review process for CCJR. The
CMS reconsideration official would make reasonable efforts to issue a
written determination within 30 days of the review. The determination
would be final and binding.
We solicit comment on our proposals related to appeals rights under
this model. The two-step appeal process for payment matters--(1)
calculation error form, and (2) reconsideration review--is used broadly
in other CMS models. We seek comment on whether we should develop an
alternative appeal process. We are also interested in whether there
should be appeal rights for reductions or eliminations of NPRA as a
result of enforcement actions, as discussed in section III.C.12 of this
proposed rule, and if so, whether the process for such appeals should
differ from the processes proposed here.
In accordance with section 1115A of the Act, we are proposing to
codify these proposals in regulation in the new proposed part 510 of
the CFR.
10. Proposed Financial Arrangements and Beneficiary Incentives
a. Financial Arrangements and Beneficiary Incentives
As discussed earlier in this proposed rule, we propose that CCJR
would be a retrospective episode payment model, under which Medicare
payments for services included in an episode of care would continue to
be made to all providers and suppliers under the existing payment
systems, and episode payment would be based on later reconciliation of
episode actual spending under those Medicare payment systems to the
episode target price. If the episode actual spending is less than the
target price, the participant hospital would receive a reconciliation
payment, assuming quality performance thresholds are met and the stop-
gain threshold is not exceeded. If the episode actual spending exceeds
the target price, beginning in performance year 2 hospitals would repay
the difference to Medicare up to the stop-loss threshold.
We believe that participant hospitals may wish to enter into
financial arrangements with providers and suppliers caring for
beneficiaries in CCJR episodes in order to align the financial
incentives of those providers and suppliers with the model goals of
improving quality and efficiency for LEJR episodes. For example, given
that the proposed episode duration is 90 days following discharge from
the anchor hospital stay and the episodes are broadly defined (see
section III.B of this proposed rule), many providers and suppliers
other than the participant hospital will furnish related services to
beneficiaries during episodes. Those providers and suppliers may
include physicians, physician group practices, skilled nursing
facilities (SNFs), home health agencies (HHAs), inpatient
rehabilitation facilities (IRFs), long term care hospitals (LTCHs),
outpatient therapy providers, and others. We expect that participant
hospitals will identify key providers and suppliers for CCJR
beneficiaries in their communities and then establish close
partnerships with them to assist the hospital in redesigning care for
LEJR episodes to improve quality and efficiency, coordinating and
managing care for beneficiaries, monitoring episode performance, and
refining care pathways. These providers and suppliers may invest
substantial time and other resources in these activities, yet they
would neither be the direct recipients of any reconciliation payments
from Medicare, nor directly responsible for repaying Medicare for
excess episode spending. Therefore, we believe it is possible that a
participant hospital that may receive a reconciliation payment from
Medicare or may need to repay Medicare may want to enter into financial
arrangements with other providers and suppliers to share risks and
rewards under CCJR.
In addition to providers and suppliers with which the participant
hospital may want to enter into financial arrangements to share risks
and reward, we expect that participant hospitals may choose to engage
with organizations that are neither providers nor suppliers to assist
with matters such as: episode data analysis; local provider and
supplier engagement; care redesign planning and implementation;
beneficiary outreach; CCJR beneficiary care coordination and
management; monitoring participant hospital compliance with the terms
and conditions of the CCJR model; or other model-related activities.
These organizations may play important roles in a hospital's plans to
implement the CCJR model based on the experience these organizations
may bring to the hospital's successful participation in the model, such
as prior experience with bundled payment initiatives, care coordination
expertise, familiarity with the local community, and knowledge of
Medicare claims data. We expect that all relationships established
between participant hospitals and these organizations for purposes of
the CCJR model would only be those permitted under existing law and
regulation, including any relationships that would include the
participant hospital's sharing of CCJR model risks and rewards with
these organizations. We would expect that all of these relationships
would solely be based on the level of engagement of the organization's
resources to directly support the participant hospitals' CCJR model
implementation.
Additionally, because the proposed broadly defined LEJR episodes
extend 90-days post-discharge from the anchor hospital stay, we believe
that participant hospitals caring for CCJR beneficiaries may want to
offer beneficiary incentives to encourage beneficiary adherence to
recommended treatment and active patient engagement in recovery. Such
incentives should be closely related to the provision of high quality
care during the episode and advance a clinical goal for a CCJR
beneficiary, and should not serve as inducements to beneficiaries to
seek care from the participant hospital or other specific suppliers and
providers. Such incentives may help participant hospitals reach their
quality and efficiency goals for CCJR episodes, while benefitting
beneficiaries' health and the Medicare Trust Fund if hospital
readmissions and complications are reduced while recovery continues
uninterrupted or accelerates.
(1) Financial Arrangements Under the CCJR Model
As previously noted, we believe that given the financial incentives
of episode payment in CCJR, participant hospitals in the model may want
to engage in financial arrangements to share reconciliation payments or
hospital internal cost savings or both, as well as responsibility for
repaying Medicare, with providers and suppliers making contributions to
the hospital's episode performance on spending and quality. Such
arrangements would allow the participant hospitals to share all or some
of the reconciliation payments they may be eligible to receive from
CMS, or the participant hospital's internal cost savings that result
from care for beneficiaries during a CCJR episode. Likewise, such
arrangements could allow the participant hospitals to share the
responsibility for the funds needed to repay Medicare with providers
and suppliers engaged in caring for CCJR beneficiaries, if those
providers and suppliers have a role in the hospital's episode spending
or quality performance. We propose to use the term ``CCJR
collaborator'' to refer to

[[Page 41262]]

such providers and suppliers, who may include the following:
SNFs.
HHAs.
LTCHs.
IRFs.
Physician Group Practices (PGPs).
Physicians, nonphysician practitioners, and outpatient
therapy providers.
We believe that CCJR collaborators should have a role in the
participant hospital's episode spending or quality performance.
Accordingly, we propose that the CCJR collaborator would directly
furnish related items or services to a CCJR beneficiary during the
episode and/or specifically participate in CCJR model LEJR episode care
redesign activities, such as attending CCJR meetings and learning
activities; drafting LEJR episode care pathways; reviewing CCJR
beneficiaries' clinical courses; developing episode analytics; or
preparing reports of episode performance, under the direction of the
participant hospital or another CCJR collaborator that directly
furnishes related items and services to CCJR beneficiaries. Note that
we propose later in this section a limit on Gainsharing Payments (as
that term is defined later in this section) to physician or
nonphysician CCJR collaborators, as well as to physician group
practices, related to PFS payments for services furnished to CCJR
beneficiaries. Therefore, in addition to playing a role in the
participant hospital's episode spending or quality performance,
physician, nonphysician, and physician group practice CCJR
collaborators must additionally directly furnish services to CCJR
beneficiaries in order to receive a Gainsharing Payment as result of
their financial arrangement with the participant hospital. We seek
comment on our proposed definition of CCJR collaborators, as well as
our proposed definition of a provider's or supplier's role in the
participant hospital's episode spending or quality performance.
We propose that certain financial arrangements between a
participant hospital and a CCJR collaborator be termed a ``CCJR Sharing
Arrangement,'' and that the terms of each CCJR Sharing Arrangement be
set forth in a written agreement between the participant hospital and
the CCJR collaborator. We propose to use the term ``Participation
Agreement'' to refer to such agreements. We propose that a ``CCJR
Sharing Arrangement'' would be a financial arrangement contained in a
Participation Agreement to share only the following: (1) CCJR
reconciliation payments (as that term is defined in section III.C of
this proposed rule); (2) the participant hospital's internal cost
savings (as that term is defined later in this section); and (3) the
participant hospital's responsibility for repayment to Medicare, as
discussed later in this section. Where a payment from a participant
hospital to a CCJR collaborator is made pursuant to a CCJR Sharing
Arrangement, we propose to define that payment as a ``Gainsharing
Payment.'' A Gainsharing Payment may only be only composed of the
following: (1) Reconciliation payments; (2) internal cost savings; or
(3) both. Where a payment from a CCJR collaborator to a participant
hospital is made pursuant to a CCJR Sharing Arrangement, we propose to
define that payment as an ``Alignment Payment.'' We propose that CCJR
Sharing Arrangements that provide for Alignment Payments would not
relieve the participant hospital of its ultimate responsibility for
repayment to CMS. Many of the programmatic requirements discussed later
in this proposed rule for Gainsharing Payments and Alignment Payments
are similar to those in Model 2 of the BPCI initiative.
The CCJR Sharing Arrangements between participant hospitals and
CCJR collaborators must be solely related to the contributions of the
CCJR collaborators to care redesign that achieve quality and efficiency
improvements under this model for CCJR beneficiaries. All Gainsharing
Payments or Alignment Payments between participant hospitals and CCJR
collaborators resulting from these arrangements must be auditable by
HHS, as discussed later in this section, to ensure their financial and
programmatic integrity. We emphasize that any CCJR collaborator that
receives a Gainsharing Payment or makes an Alignment Payment must have
furnished services included in the episode to CCJR beneficiaries.
Furthermore, the payment arrangements for Gainsharing Payments or
Alignment Payments contained in a CCJR Sharing Arrangement must be
actually and proportionally related to the care of beneficiaries in a
CCJR episode, and the CCJR collaborator must be contributing to the
care redesign strategies of the participant hospital.
We considered whether CCJR collaborators should be termed
``participants'' in this model, or whether the term ``participant''
should refer only to the participant hospitals located in MSAs selected
for participation. If CCJR collaborators are participants in the model,
we propose that their activities with regard to CCJR beneficiaries
would be regulated directly by CMS. However, if CCJR collaborators are
not participants, but rather are participating entities and individuals
in the CCJR model through signed agreements with participant hospitals,
their activities with regard to CCJR beneficiaries would be governed by
the Participation Agreement between a CCJR collaborator and a
participant hospital. Given the large number of potential CCJR
collaborators, the expected varied nature of their respective
arrangements with participant hospitals, and the potential
administrative burden in reporting information to CMS, we believe the
activities of CCJR collaborators with regard to CCJR beneficiaries
would be best managed by participant hospitals. As we discussed earlier
in this proposed rule, one justification for proposing that acute care
hospitals be the provider type financially responsible under the CCJR
model is the position of the hospital with respect to other providers
and suppliers, in terms of coordinating care for CCJR beneficiaries.
Given that position, we propose that where participant hospitals enter
into Participation Agreements that contain CCJR Sharing Arrangements
with CCJR collaborators, the participant hospital must also be
responsible for ensuring that those providers and suppliers comply with
the terms and requirements of this proposed rule. We seek comments on
this proposal; specifically, whether CCJR collaborators should be
termed participants in this model and subject to the applicable
requirements, or whether the responsibility for compliance with the
model's requirements is better managed by participant hospitals. We are
particularly interested in comments that address the advantages and
disadvantages of making CCJR collaborators participants in the model,
and whether there are certain provider or supplier types that CMS
should consider including as ``participants'' in the model.
The following discussion outlines our proposed requirements and
responsibilities of participant hospitals that engage in such CCJR
Sharing Arrangements. We believe these proposed requirements and
responsibilities are essential to ensuring that all CCJR Sharing
Arrangements are for the sole purpose of aligning the financial
incentives of collaborating providers and suppliers with those of the
participant hospital toward the CCJR model goals of improved LEJR
episode care quality and efficiency. We believe that the rationale for
and details of these arrangements must be documented and auditable by
HHS, with a direct tie between the arrangements and the

[[Page 41263]]

participant hospital's episode performance. Finally, we believe that
the proposed limitations to the arrangements, as described later in
this section, are necessary to ensure the integrity of the CCJR model
by minimizing incentives for problematic behaviors, such as patient
steering. We seek comments on all proposed requirements regarding CCJR
Sharing Arrangements.
With respect to whether certain entities or individuals should be
prevented from participating in the CCJR model, either as participant
hospitals or CCJR collaborators, we considered whether CMS should
conduct screening for program integrity purposes. Many CMS models
conduct screening during the application process and periodically
thereafter. These screenings examine provider and supplier program
integrity history, including any history of Medicare program exclusions
or other sanctions and affiliations with individuals or entities that
have a history of program integrity issues. Where a screening reveals
that a provider or supplier has a history of program integrity issues
or affiliations with individuals or entities that have a history of
program integrity issues, we may remove that provider or supplier from
the model. We utilize these screening processes for many CMS models,
including the BPCI initiative.
For several reasons, we believe that this type of screening for
participant hospitals is inapplicable to the CCJR model. Most
importantly, this model seeks to evaluate the performance in the model
of hospitals located in a particular MSA. We believe it is important
that all hospitals that meet the criteria for participation in the
model be included, even if those hospitals have a history of program
integrity issues. Further, we propose that CMS would evaluate the
quality of care and institute beneficiary protections in ways that
would go beyond some of the efforts of previous or existing CMS models.
We solicit comments on this proposal, including whether screening of
participant hospitals or CCJR collaborators might be appropriate or
useful in aiding HHS' program integrity efforts and identifying
untrustworthy parties or parties with program integrity history
problems.
(a) CCJR Sharing Arrangement Requirements
We propose that each CCJR Sharing Arrangement must include and set
forth in writing at a minimum--
A specific methodology and accounting formula for
calculating and verifying internal cost savings, if the participant
hospital elects to share internal cost savings through Gainsharing
Payments with CCJR collaborators. We propose to define internal cost
savings as the measurable, actual, and verifiable cost savings realized
by the participant hospital resulting from care redesign undertaken by
the participant hospital in connection with providing items and
services to beneficiaries within specific CCJR episodes of care.
Internal cost savings would not include savings realized by any
individual or entity that is not the participant hospital. Each CCJR
Sharing Arrangement must include specific methodologies for accruing
and calculating internal cost savings of the participant hospital,
where the hospital intends to share internal cost savings through a
CCJR Sharing Arrangement with a CCJR collaborator. The specific
methodologies for accruing and calculating internal cost savings must
be transparent, measurable, and verifiable in accordance with Generally
Accepted Accounting Principles (GAAP) and Government Auditing Standards
(The Yellow Book). The methodology must set out the specific care
redesign elements to be undertaken by the participant hospital or the
CCJR collaborator or both;
A description of the methodology and accounting formula
for calculating the percentage or dollar amount of a reconciliation
payment received from CMS that will be paid as a Gainsharing Payment
from the participant hospital to the CCJR collaborator;
A description of the methodology, frequency or dates of
distribution, and accounting formula for distributing and verifying any
and all Gainsharing Payments;
A description of the arrangement between the participant
hospital and the CCJR collaborator regarding Alignment Payments, where
the hospital and CCJR collaborator agree through a CCJR Sharing
Arrangement to share risk for repayment amounts due to CMS, as
reflected on a CCJR reconciliation report. The description of this
arrangement must include safeguards to ensure that such Alignment
Payments are made solely for purposes related to sharing responsibility
for funds needed to repay Medicare in the CCJR model. This description
should also include a methodology, frequency of payment, and accounting
formula for payment and receipt of any and all Alignment Payments;
A provision requiring the participant hospital to recoup
Gainsharing Payments paid to CCJR collaborators if Gainsharing Payments
were based on the submission of false or fraudulent data;
Plans regarding care redesign, changes in care
coordination or delivery that are applied to the participant hospital
or CCJR collaborators or both, and any description of how success will
be measured;
Management and staffing information, including type of
personnel or contactors that will be primarily responsible for carrying
out changes to care under the model;
The participant hospital must maintain records identifying
all CCJR collaborators, and the participant hospital's process for
determining and verifying the eligibility of CCJR collaborators to
participate in Medicare; and
All CCJR Sharing Arrangements must require compliance,
from both the participant hospital and the CCJR collaborator, with the
proposed polices regarding beneficiary notification set forth in
section III.F of this proposed rule.
With respect to these requirements for Participation Agreements and
CCJR Sharing Arrangements, we considered whether we should require
participant hospitals and CCJR collaborators to periodically report
this information to CMS for purposes of enforcement of these proposed
regulations. However, we are mindful of the administrative burden in
reporting this information as well as the challenges associated with
creating a universal collection tool that would account for all the
various iterations of financial arrangements into which participant
hospitals and CCJR collaborators may enter. Therefore, we are proposing
to require participant hospitals to retain this documentation as
previously described, as well as in section III.C.10(d) of this
proposed rule. We seek comment on this proposal as well as whether CMS
should require participant hospitals and CCJR collaborators to
periodically report data such as: Gainsharing Payments and/or Alignment
Payments distributed and received; name and identifier (NPI, CCN, TIN)
of all CCJR collaborators; and any other relevant information related
to Participation Agreements and CCJR Sharing Arrangements that would
assist HHS with enforcement of these regulations.
We solicit comments about all of the requirements set out in the
preceding discussion, including whether additional or different
safeguards would be needed to ensure program integrity, protect against
abuse, and ensure that the goals of the model are met.

[[Page 41264]]

(b) Participation Agreement Requirements
We propose that the Participation Agreement must obligate the
parties to comply, and must obligate the CCJR collaborator to require
any of its employees, contractors or designees to comply, without
limitation, to with the following requirements:
Each individual's or entity's participation in the CCJR
Sharing Arrangement is voluntary and without penalty for
nonparticipation.
Any Gainsharing Payments made pursuant to a CCJR Sharing
Arrangement must be made only from the participant hospital to the CCJR
collaborator with whom the participant hospital has signed a
Participation Agreement containing a CCJR Sharing Arrangement.
Additionally, we propose to require the following for all CCJR Sharing
Arrangements between a participant hospital and a CCJR collaborator
that is a physician group practice:
++ Where a Gainsharing Payment is made to a CCJR collaborator that
is a physician group practice, all monies contained in such a
Gainsharing Payment must be shared only with physician or nonphysician
practitioners that furnished a service to a CCJR beneficiary during an
episode of care in the calendar year from which the Net Payment
Reconciliation Amount (NPRA), as that term is defined in section
III.C.6. of this proposed rule, or internal cost savings was generated,
either or both of which are the only permitted sources of funds for a
Gainsharing Payment. We further propose that each CCJR Sharing
Arrangement between a participant hospital and a CCJR collaborator that
is physician group practice must stipulate that the physician group
practice may not retain any portion of a Gainsharing Payment or
distribute, by any method, any portion of a Gainsharing Payment to
physician or nonphysician practitioners who did not furnish a service
to a CCJR beneficiary during an episode of care in the calendar year
from which the NPRA or internal cost savings was generated.
Any Alignment Payments made pursuant to a CCJR Sharing
Arrangement may be made only to the participant hospital from the
entity or individual with whom the participant hospital has signed a
Participation Agreement containing a CCJR Sharing Arrangement.
Each CCJR Sharing Arrangement must require that the CCJR
collaborator be in compliance with all Medicare provider enrollment
requirements at Sec. 424.500 et seq., including having a valid and
active TIN or NPI.
Any internal cost savings or reconciliation payments that
the participant hospital seeks to share through CCJR Sharing
Arrangements must meet the requirements set forth in the final CCJR
rule (as finalized) and be administered by the participant hospital in
accordance with GAAP. In no event may the participant hospital
distribute any amounts pursuant to a CCJR Sharing Arrangement that are
not comprised of either internal cost savings or a reconciliation
payment, as those terms are defined in this proposed rule. All amounts
determined to be internal cost savings by the participant hospital must
reflect actual, internal cost savings achieved by the participant
hospital through implementation of care redesign elements identified
and documented by the participant hospital. In no case may internal
cost savings reflect ``paper'' savings from accounting conventions or
past investment in fixed costs.
Any Alignment Payments that the participant hospital
receives through a CCJR Sharing Arrangement must meet the requirements
set forth in the final CCJR rule (as finalized) and be administered by
the participant hospital in accordance with GAAP.
CCJR Sharing Arrangements must not include any amounts
that are not Alignment Payments or Gainsharing Payments.
Further, we propose that each Participation Agreement--
++ Between the participant hospital and a CCJR collaborator must
obligate the CCJR collaborator to provide the participant hospital and
HHS access to the CCJR collaborator's records, information, and data
for purposes of monitoring and reporting and any other lawful purpose.
Records, information, and data regarding the CCJR Sharing Arrangement
must have sufficient detail to verify compliance with all material
terms of the CCJR Sharing Arrangement and the terms of the CCJR model;
++ Must require the participant hospital and the CCJR collaborator
to include in their compliance programs specific oversight of their
CCJR participation agreements and compliance with the requirements of
the CCJR mode;
++ Must require compliance, from both the participant hospital and
the CCJR collaborator, with the proposed polices regarding beneficiary
notification set forth in section III.F; and
++ Must require the board or other governing body of the
participant hospital to have responsibility for overseeing the
participant hospital's participation in the model, its arrangements
with CCJR collaborators, its payment of Gainsharing Payments and
receipt of Alignment Payments, and its use of beneficiary incentives in
the CCJR model.
Participation Agreements must require all CCJR
collaborators to comply with any evaluation, monitoring, compliance,
and enforcement activities performed by HHS or its designees for the
purposes of operating the CCJR model.
Each Participation Agreement must require the CCJR
collaborator to permit site visits from CMS, or one of its designees,
for purposes of evaluating the model.
We solicit comments about all of the requirements set out in the
preceding discussion, including whether additional or different
safeguards would be needed to ensure program integrity, protect against
abuse, and ensure that the goals of the model are met.
(c) Gainsharing Payment and Alignment Payment Conditions and
Restrictions
We propose the following conditions and restrictions concerning
Gainsharing Payments and Alignment Payments made pursuant to a CCJR
Sharing Arrangement:
No entity or individual, whether or not a party to a
Participation Agreement, may condition the opportunity to receive
Gainsharing Payments in CCJR on the volume or value of past or
anticipated referrals or other business generated to, from, or among a
participant hospital, any CCJR collaborators, and any individual or
entity affiliated with a participant hospital or CCJR collaborator.
Participant hospitals would not be required to share
reconciliation payments, internal cost savings, or responsibility for
repayment to CMS with other providers and suppliers. However, where a
participant hospital elects to engage in those activities, we propose
that such activities be limited to the provisions prescribed in this
proposed rule.
We propose that Gainsharing Payments must be distributed
on an annual basis, and are required to meet the following criteria:
++ Must be clearly identified and comply with all provisions in
this proposed rule, as well as all applicable laws, statutes, and
rules;
++ Must not be a loan, advance payments, or payments for referrals
or other business; and
++ Must be made by electronic funds transfer (EFT).
We propose that Alignment Payments from a CCJR
collaborator to a

[[Page 41265]]

participant hospital may be made at any interval, and are required to
meet the following criteria:
++ Must be clearly identified and comply with all provisions in
this proposed rule, as well as all applicable laws, statutes, and
rules;
++ Must not be issued, distributed, or paid prior to the
calculation by CMS of a reconciliation report reflecting a negative Net
Payment Reconciliation Amount (NPRA);
++ Must not be a loan, advance payments, or payments for referrals
or other business; and
++ Must be made by electronic funds transfer (EFT).
We propose that each CCJR Sharing Arrangement stipulate
that any CCJR collaborator that is subject to any action involving
noncompliance with the provisions of this propose rule, engaged in
fraud or abuse, providing substandard care, or have other integrity
problems not be eligible to receive any Gainsharing Payments related to
NPRA generated during the time that coincides with the action involving
any of the issues previously listed until the action has been resolved.
No entity or individual, as whether or not a party to a
Participation Agreement, may condition the opportunity to make or
receive Alignment Payments in CCJR on the volume or value of past or
anticipated referrals or other business generated to, from, or among a
participant hospital, any CCJR collaborators, and any individual or
entity affiliated with a participant hospital or CCJR collaborator.
In a calendar year, the aggregate amount of the total
Gainsharing Payments distributed by the participant hospital that are
derived from a CCJR reconciliation payment may not exceed the amount of
the reconciliation payment that the participant hospital received from
CMS.
In a calendar year, the aggregate amount of the total
Alignment Payments received by the participant hospital may not exceed
50 percent of the participant hospital's repayment amount due to CMS.
If no repayment amount is due, then no Alignment Payments may be
received by the participant hospital.
We propose that the participant hospital must retain at
least 50 percent of its responsibility for repayment to CMS, pursuant
to the repayment amount reflected in each annual reconciliation report,
under the CCJR model. Given that the participant hospital will be
responsible for developing and coordinating care redesign strategies in
response to its participation in the CCJR model, we believe it is
important that the participant hospital retain a significant portion of
its responsibility for repayment to CMS. For example, upon receipt of a
reconciliation report indicating that the participant hospital owes
$100 to CMS, the participant hospital would be permitted to receive no
greater than $50 in Alignment Payments, in the aggregate, from its CCJR
collaborators.
Further, we propose that a CCJR Sharing Arrangement must
limit the amount a single CCJR collaborator may make in Alignment
Payments to a single participant hospital. We propose that a single
CCJR collaborator not make an Alignment Payment to a participant
hospital that represents an amount greater than 25 percent of the
repayment amount reflected on the participant hospital's annual
reconciliation report. For example, upon receipt of a reconciliation
report indicating that the participant hospital owes $100 to CMS, the
participant hospital would be permitted to receive no more than $25 in
an Alignment Payment from a single entity or individual who is a CCJR
collaborator of the participant hospital.
Gainsharing Payments and Alignment Payments must not
induce the participant hospital, CCJR collaborators, or the employees,
contractors, or designees of the participant hospital or CCJR
collaborators to reduce or limit medically necessary services to any
Medicare beneficiary.
Individual physician and nonphysician practitioners,
whether or not a party to a CCJR Sharing Arrangement, must retain their
ability to make decisions in the best interests of the patient,
including the selection of devices, supplies, and treatments.
Entities furnishing services to beneficiaries during a
CCJR episode, whether or not a party to a CCJR Sharing Arrangement,
must retain their ability to make decisions in the best interests of
the patient, including the selection of devices, supplies, and
treatments.
Gainsharing methodologies for calculating Gainsharing
Payments and Alignment Payments must not directly account for volume or
value of referrals, or business otherwise generated, between or among a
participant hospital, any CCJR collaborators, and any individual or
entity affiliated with a participant hospital or CCJR collaborator.
Gainsharing Payments must be derived solely from
reconciliation payments or internal cost savings or both.
The total amount of Gainsharing Payments for a calendar
year paid to an individual physician or nonphysician practitioner who
is a CCJR collaborator must not exceed a cap. The cap is 50 percent of
the total Medicare approved amounts under the Physician Fee Schedule
(PFS) for services furnished to the participant hospital's CCJR
beneficiaries during a CCJR episode by that physician or nonphysician
practitioner. This cap of 50 percent on Gainsharing Payments to
individual physician or nonphysician practitioner is consistent with
the same policy for the BPCI initiative. The purpose of this cap is to
limit the amount of Gainsharing Payments an individual practitioner may
receive due to his/her provision of services included in the CCJR
model.
The total amount of Gainsharing Payments for a calendar
year paid to an physician group practice that is a CCJR collaborator
must not exceed a cap. The cap is 50 percent of the sum of the total
Medicare approved amounts under the Physician Fee Schedule (PFS) for
services furnished by physician or nonphysician practitioner members of
the physician group practice to the participant hospital's CCJR
beneficiaries during a CCJR episode by those physicians or nonphysician
practitioners.
We solicit comments about all of the requirements set out in the
preceding discussion, including whether additional or different
safeguards would be needed to ensure program integrity, protect against
abuse, and ensure that the goals of the model are met.
(d) Documentation and Maintenance of Records
We propose to require participant hospitals and CCJR collaborators
to comply with audit and document retention requirements similar to
those required by the Medicare Shared Savings Program, BPCI Model 2,
and other Innovation Center models. Specifically, with respect to all
Participation Agreements and CCJR Sharing Arrangements, the participant
hospital and CCJR collaborator must:
Comply with the retention requirements regarding
Participation Agreements and CCJR Sharing Arrangements set forth in
subsection III.C.10(a)-(d).
Maintain and give CMS, the Office of Inspector General of
the Department of Health and Human Services (OIG), and the Comptroller
General or their designee(s) access to all books, contracts, records,
documents, and other evidence (including data related to utilization
and payments, quality performance measures, billings, and CCJR Sharing
Arrangements related to

[[Page 41266]]

CCJR) sufficient to enable the audit, evaluation, inspection, or
investigation of the participant hospital's compliance, as well as the
compliance of any CCJR collaborator that has a CCJR Sharing Arrangement
with the participant hospital, with CCJR requirements, the
Participation Agreement, the quality of services furnished, the
obligation to repay any reconciliation payments owed to CMS, the
calculation, distribution, receipt, or recoupment of Gainsharing
Payments or Alignment Payments.
Maintain such books, contracts, records, documents, and
other evidence for a period of 10 years from the last day of the
participant hospital's participation in the CCJR model or from the date
of completion of any audit, evaluation, inspection, or investigation,
whichever is later, unless--
++ CMS determines there is a special need to retain a particular
record or group of records for a longer period and notifies the
participant hospital or CCJR collaborator at least 30 calendar days
before the normal disposition date; or
++ There has been a dispute or allegation of fraud or similar fault
against the participant hospital or any CCJR collaborator in which case
the records must be maintained for an additional 6 years from the date
of any resulting final resolution of the dispute or allegation of fraud
or similar fault.
Notwithstanding any CCJR Sharing Arrangements between the
participant hospital and CCJR collaborators, the participant hospital
must have ultimate responsibility for adhering to and otherwise fully
complying with all provisions of the CCJR model.
OIG Authority is not limited or restricted by the
provisions of the CCJR model, including the authority to audit,
evaluate, investigate, or inspect the participant hospital, CCJR
collaborators, or any other person or entity or their records, data, or
information, without limitation.
None of the provisions of the CCJR model limits or
restricts any other government authority permitted by law to audit,
evaluate, investigate, or inspect the participant hospital, CCJR
collaborators, or any other person or entity or their records, data, or
information, without limitation.
We solicit comments about all of the requirements set out in the
preceding discussion, including whether additional or different
safeguards would be needed to ensure program integrity, protect against
abuse, and ensure that the goals of the model are met.
(2) Beneficiary Incentives Under the CCJR Model
We believe that the CCJR model will incent participant hospitals to
furnish directly and otherwise coordinate services throughout the
episode that lead to higher quality care for the beneficiary and lower
episode spending. We believe that one mechanism that may be useful to
the participant hospital in achieving these goals is the provision of
certain items and services to the beneficiary during the episode of
care. We also considered whether this policy on beneficiary incentives
should extend to providers and suppliers, other than the participant
hospital, that furnish services during the CCJR episode of care.
However, as discussed in section III.A, given our belief that the
participant hospital is best positioned to coordinate the care of
beneficiaries, we believe they are also better suited than other
providers and suppliers to provide beneficiary incentives. Thus, we
propose to include in the CCJR model certain in-kind patient engagement
incentives to the beneficiary, subject to the following conditions:
The incentive must be provided by the participant hospital
to the beneficiary during CCJR episode of care.
There must be a reasonable connection between the item or
service and the beneficiary's medical care.
The item or service must be a preventive care item or
service or an item or service that advances a clinical goal for a CCJR
beneficiary, including the following: Increasing the beneficiary's
engagement in the management of his or her own health care; adherence
to a treatment or drug regimen; adherence to a follow-up care plan;
reduction of readmissions and complications resulting from LEJR
procedures; and management of chronic diseases and conditions that may
be affected by the LEJR procedure.
Items of technology comply with certain safeguards
regarding value, as discussed later in this section.
The participant hospital must maintain contemporaneous
documentation of the incentives provided to beneficiaries for a period
of 10 years.
The cost of the incentives is not shifted to another
federal health care program.
For example, under this proposal, participant hospitals could
provide incentives such as post-surgical monitoring equipment to track
patient weight and vital signs for post-surgical patients discharged
directly to home, but they could not provide theater tickets, which
would bear no reasonable connection to the patient's medical care.
Similarly, we are proposing that participant hospitals might provide
post-surgical monitoring equipment, but not broadly used technology
that is more valuable to the beneficiary than equipment that is
reasonably necessary for the patient's post-surgical care. In such
circumstances, a reasonable inference arises that the technology would
not be reasonably connected to the medical care of the patient. Among
other things, this safeguard precludes incentives that might serve to
induce beneficiaries inappropriately to receive other medical care that
is not included in the episode.
We propose that participant hospitals would be required to maintain
contemporaneous documentation of such items and services furnished that
exceed $10, including the date and identity of the beneficiary to whom
the item or service was provided. We further propose that the required
documentation be maintained for a period of 10 years.
We propose that items and services involving technology provided to
beneficiaries may not exceed $1,000 in retail value at the time of
donation for any one beneficiary in any one CCJR episode. Items of
technology exceeding $50 in retail value at the time of donation must
remain the property of the participant hospital and must be retrieved
from the beneficiary at the end of the episode, with the documentation
of the date of retrieval. In addition, the amount and nature of the
technology must be the minimum necessary to achieve the goals
previously noted earlier in this section. Finally, we propose that
beneficiary incentives may not be tied to the receipt of services
outside the episode of care and that the cost of the incentives cannot
be shifted to a federal health care program. The aforementioned
proposals regarding beneficiary incentives are consistent with the
policies on beneficiary incentives in other CMS models, such as the
BPCI initiative.
We seek comment on our proposal for beneficiary incentives under
CCJR. In addition to general comments on the proposal, we are
interested in comments on whether the $1,000 limit on technology items
and services is necessary, reasonable, and appropriate. We also solicit
comment on whether retrieving technology valued at more than $50 is too
burdensome and whether elimination of that requirement will prevent
abuse. We also solicit comment on the documentation requirement for
items and services furnished that exceed $10, or whether a different
amount would be more

[[Page 41267]]

appropriate and less burdensome. We welcome comments on additional
program integrity safeguards for these arrangements.
(3) Compliance With Fraud and Abuse Laws
Certain arrangements between and among participant hospitals and
third parties or beneficiaries may implicate the civil monetary penalty
(CMP) law (sections 1128A(a)(5), (b)(1) and (b)(2) of the Act), the
Federal Anti-kickback statute (section 1128B(b)(1) and (2) of the Act),
or the physician self-referral prohibition (section 1877 of the Act).
In many cases, arrangements that implicate these laws can be structured
to comply with them by using existing safe harbors and exceptions.
Section 1115A(d)(1) of the Act authorizes the Secretary to waive
certain specified fraud and abuse laws as may be necessary solely for
purposes of testing of payment models under section 1115A(b) of the
Act. A waiver is not needed for an arrangement that does not implicate
the fraud and abuse laws or that implicates the fraud and abuse laws
but either fits within an existing exception or safe harbor, as
applicable, or does not otherwise violate the law. Accordingly,
pursuant to section 1115A(d)(1) of the Act, the Secretary will consider
whether waivers of certain fraud and abuse laws are necessary to test
the CCJR model as the model develops. The vehicle for promulgating
waivers, if any, is under consideration. Such waivers, if any, would be
promulgated separately from this proposed regulation by OIG (as to
sections 1128A and 1128B of the Act) and CMS (as to section 1877 of the
Act), to which the respective authorities have been delegated.
The requirements of the CCJR final rule will bear on the need for
and scope of any fraud and abuse waivers that might be granted for the
CCJR model. Because of the close nexus between the final regulations
governing the structure and operations of the CCJR model and the
development of any fraud and abuse waivers necessary to carry out the
provisions of the model, CMS and OIG may, when considering the need for
or scope of any waivers, consider comments submitted in response to
this proposed rule and the provisions of the CCJR final rule.
11. Proposed Waivers of Medicare Program Rules
a. Overview
We believe it may be necessary and appropriate to provide
additional flexibilities to hospitals participating in CCJR, as well as
other providers that furnish services to beneficiaries in CCJR
episodes. The purpose of such flexibilities would be to increase LEJR
episode quality and decrease episode spending or internal costs or both
of providers and suppliers that results in better, more coordinated
care for beneficiaries and improved financial efficiencies for
Medicare, providers, and beneficiaries. These possible additional
flexibilities could include use of our waiver authority under section
1115A of the Act, which provides authority for the Secretary to waive
such requirements of title XVIII of the Act as may be necessary solely
for purposes of carrying out section 1115A of the Act with respect to
testing models described in section 1115A(b) of the Act. This provision
affords broad authority for the Secretary to waive statutory Medicare
program requirements as necessary to carry out the provisions of
section 1115A of the Act.
As we have stated elsewhere in sections I.B and III.A of this
proposed rule, our previous and current efforts in testing episode
payment models have led us to believe that models where entities bear
financial responsibility for total Medicare spending for episodes of
care hold the potential to incentivize the most substantial
improvements in episode quality and efficiency. As discussed in section
III.C of this proposed rule, we are proposing that hospitals
participating in this model be eligible for reconciliation payments
based on improved performance starting in performance year 1, and we
would phase-in repayment responsibility for excess episode spending
starting in performance year 2. We believe that where participant
hospitals bear repayment responsibility for excess episode spending
beyond the target price while high quality care is valued, they will
have an increased incentive to coordinate care furnished by the
hospital and other providers and suppliers throughout the episode to
improve the quality and efficiency of care. With these incentives
present, there may be a reduced likelihood of over-utilization of
services that could otherwise result from waivers of Medicare program
rules. Given these circumstances, waivers of certain program rules for
providers and suppliers furnishing services to CCJR beneficiaries may
be appropriate to offer more flexibility than under existing Medicare
rules for such providers and suppliers, so that they may provide
appropriate, efficient care for beneficiaries. An example of such a
program rule that could be waived to potentially allow more efficient
LEJR episode care would be the 3-day inpatient hospital stay
requirement prior to a covered SNF stay for beneficiaries who could
appropriately be discharged to a SNF after less than a 3-day inpatient
hospital stay.
In addition, we believe that waivers of certain Medicare program
rules are necessary to make reconciliation payments to or recoup
payments from participant hospitals as a result of the Net Payment
Reconciliation Amount (NPRA) for each performance year as discussed in
section III.C.6.a. of this proposed rule, as well as to exclude
beneficiary cost-sharing from these reconciliation payments or
recoupments.
We welcome comments on possible waivers under section 1115A of the
Act of certain Medicare program rules beyond those specifically
discussed in this proposed rule that might be necessary to test this
model. We will consider the comments that are received during the
public comment period and our early model implementation experience and
may make future proposals regarding program rule waivers during the
course of the model test. We are especially interested in comments
explaining how such waivers could provide providers and suppliers with
additional ways that are not permitted under existing Medicare rules to
increase quality of care and reduce unnecessary episode spending, but
that could be appropriately used in the context of CCJR where
participant hospitals bear full responsibility for total episode
spending by performance year 3. We are also interested in receiving
comments regarding the timing and manner in which such waivers, were
they to be offered, would be implemented. For example, would it be
necessary and appropriate to offer program waivers early in the model
test to allow providers and suppliers adequate time to adjust their
care coordination strategies to implement changes permitted by the
waivers, despite there being no full repayment responsibility for
excess episode spending until performance year 3? What program
integrity and beneficiary protection risks could be introduced by
waivers of the program rules described later in this section of this
proposed rule and how could we mitigate those risks? What other issues
should be considered when making use of waiver authority with respect
to program rules? What operational issues do CMS and providers and
suppliers furnishing services to beneficiaries in the model need to
consider and what processes would need to be in place to implement
these alternative program policies?

[[Page 41268]]

What implications would there be for provider and supplier
infrastructure, including IT and other systems and processes? What
provider education would be needed? We note that any waivers included
in a final rule would be offered to participant hospitals, but
depending on the specifics of each waiver, might be applied to services
furnished by providers and suppliers other than the hospital. Where
that is the case, we seek input on how we may best educate and
disseminate information using methods effective in reaching providers
and suppliers. Additionally, we seek comment on how we would
appropriately and accurately track the use of waivers by providers and
suppliers other than participant hospitals.
Specific program rules for which we propose waivers under the CCJR
model to support provider and supplier efforts to increase quality and
decrease episode spending and for which we invite comments are included
in the sections that follow. We propose that these waivers of program
rules would apply to the care of beneficiaries who are in CCJR episodes
at the time when the waiver is used to bill for a service that is
furnished to the beneficiary, even if the episode is later cancelled as
described in section III.B.3.b of this proposed rule. If a service is
found to have been billed and paid by Medicare under circumstances only
allowed by a program rule waiver for a beneficiary not in the CCJR
model at the time the service was furnished, CMS would recoup payment
for that service from the provider or supplier who was paid, and
require that provider and supplier to repay the beneficiary for any
coinsurance previously collected.
We also generally seek comment on any additional Medicare program
rules that it may be necessary to waive using our authority under
section 1115A of the Act in order to effectively test the CCJR model
that we could consider in the context of our early model implementation
experience to inform any future proposals we may make.
b. Post-Discharge Home Visits
We expect that the broadly defined LEJR episodes with a duration of
90 days following hospital discharge as we propose in section III.B. of
this proposed rule will result in participant hospitals redesigning
care by increasing care coordination and management of beneficiaries
following surgery. This will require participant hospitals to pay close
attention to any underlying medical conditions that could be affected
by the anchor hospitalization and improving coordination of care across
care settings and providers. Beneficiaries may have substantial
mobility limitations during LEJR episodes following discharge to their
home or place of residence that may interfere with their ability to
travel easily to physicians' offices or other health care settings.
Adopting new strategies to increase beneficiary adherence to and
engagement with recommended treatment and follow-up care following
discharge from the hospital or PAC setting will also be important to
high quality episode care. Scientific evidence exists \42\ to support
the use of home nursing visits among Medicare beneficiaries in
improving care coordination following hospital discharge. In addition,
we believe the financial incentives in this episode payment model will
encourage hospitals to closely examine the most appropriate PAC
settings for beneficiaries so that the clinically appropriate setting
of the lowest acuity is recommended following discharge from the anchor
hospitalization. We expect that all these considerations will lead to
greater interest on the part of hospitals and other providers and
suppliers caring for CCJR beneficiaries in furnishing services to
beneficiaries in their home or place of residence. Such services could
include visits by licensed clinicians other than physicians and
nonphysician practitioners
---------------------------------------------------------------------------

\42\ Naylor MD, Brooten D, Campbell R, Jacobsen BS, Mezey MD,
Pauly MV, Schwartz JS. JAMA. 1999:281(7):613-620. doi:10/1001/
jama.281.7.613
---------------------------------------------------------------------------

In order for Medicare to pay for home health services, a
beneficiary must be determined to be ''home-bound''. Specifically,
sections 1835(a) and 1814(a) of the Act require that a physician
certify (and recertify) that in the case of home health services under
the Medicare home health benefit, such services are or were required
because the individual is or was ''confined to the home'' and needs or
needed skilled nursing care on an intermittent basis, or physical or
speech therapy or has or had a continuing need for occupational
therapy. A beneficiary is considered to be confined to the home if the
beneficiary has a condition, due to an illness or injury, that
restricts his or her ability to leave home except with the assistance
of another individual or the aid of a supportive device (that is,
crutches, a cane, a wheelchair or a walker) or if the beneficiary has a
condition such that leaving his or her home is medically
contraindicated. While a beneficiary does not have to be bedridden to
be considered confined to the home, the condition of the beneficiary
must be such that there exists a normal inability to leave home and
leaving home requires a considerable and taxing effort by the
beneficiary. Absent this condition, it would be expected that the
beneficiary could typically get the same services in an outpatient or
other setting. Thus, the homebound requirement provides a way to help
differentiate between patients that require medical care at home versus
patients who could more appropriately receive care in a less costly
outpatient setting. Additional information regarding the homebound
requirement is available in the Medicare Benefit Manual (Pub 100-02);
Chapter 7, ``Home Health Services,'' Section 30.1.1, ``Patient Confined
to the Home.''
We considered whether a waiver of the homebound requirement would
be appropriate under the CCJR model, particularly beginning in
performance year 2, where hospitals begin to bear repayment
responsibility for excess episode spending. Waiving the homebound
requirement would allow additional beneficiaries to receive home health
care services in their home or place of residence. As previously
discussed, physician certification that a beneficiary meets the
homebound requirement is a prerequisite for Medicare coverage of home
health services, and waiving the homebound requirement could result in
lower episode spending in some instances. For example, if a beneficiary
is allowed to have home health care visits, even if the beneficiary is
not considered homebound, the beneficiary may avoid a hospital
readmission. All other requirements for the Medicare home health
benefit would remain unchanged. Thus, under such a waiver, only
beneficiaries who otherwise meet all program requirements to receive
home health services would be eligible for coverage of home health
services without being homebound.
However, we are not proposing to waive the homebound requirement
under CCJR for several reasons. Based on the typical clinical course of
beneficiaries after LEJR procedures, we believe that many beneficiaries
would meet the homebound requirement for home health services
immediately following discharge from the anchor hospitalization or
following discharge to their home or place of residence from a SNF that
furnished PAC services immediately following the hospital discharge, so
they could receive medically necessary home health services under
existing program rules. Home health episodes are 60 days in duration,
and payment adjustments are made for beneficiaries who require only a
few visits during the episode or who

[[Page 41269]]

are discharged during the episode. For those CCJR beneficiaries who
could benefit from home visits by a licensed clinician for purposes of
assessment and monitoring of their clinical condition, care
coordination, and improving adherence with treatment but who are not
homebound, we do not believe that paying for these visits as home
health services under Medicare is necessary or appropriate, especially
given that Medicare payments for home health services are set based on
the clinical care furnished to beneficiaries who are truly homebound.
Finally, in other CMS episode payment models, such as BPCI, we have not
waived the homebound requirement for home health services.
In BPCI, we have provided a waiver of the ``incident to'' rule to
allow a physician or nonphysician practitioner participating in care
redesign under a participating BPCI provider to bill for services
furnished to a beneficiary who does not qualify for Medicare coverage
of home health services as set forth under Sec. 409.42 where the
services are furnished in the beneficiary's home during the episode
after the beneficiary's discharge from an acute care hospital. The
``incident to'' rules are set forth in Sec. 410.26(b)(5), which
requires services and supplies furnished incident to the service of a
physician or other practitioner must be provided under the direct
supervision (as defined at Sec. 410.32(b)(3)(ii)) of a physician or
other practitioner.
In BPCI, the waiver is available only for services that are
furnished by licensed clinical staff under the general supervision (as
defined at Sec. 410.32(b)(3)(i)) of a physician (or other
practitioner), regardless of whether the individual is an employee,
leased employee, or independent contractor of the physician (or other
practitioner), or of the same entity that employs or contracts with the
physician (or other practitioner), and while the services may be
furnished by licensed clinical staff they must be billed by the
physician (or other practitioner) in accordance with CMS instructions
using a Healthcare Common Procedures Coding System (HCPCS) G-code
created by CMS specifically for the BPCI initiative. As discussed in
section III.B of this proposed rule, participants in the BPCI
initiative are permitted to select the duration of an episode as either
30 days, 60 days or 90 days. In the case of the incident to waiver
under BPCI, the waiver allows physician and nonphysician practitioners
to furnish the services not more than once in a 30-day episode, not
more than twice in a 60-day episode, and not more than three times in a
90-day episode. All other Medicare coverage and payment criteria must
be met.
For the CCJR model, we propose to waive the ``incident to'' rule
set forth in Sec. 410.26(b)(5), to allow a CCJR beneficiary who does
not qualify for home health services to receive post-discharge visits
in his or her home or place of residence any time during the episode.
The waiver would not apply for beneficiaries who would qualify for home
health services under the Medicare program, as set forth under Sec.
409.42. Therefore these visits could not be billed for such
beneficiaries. We propose to allow licensed clinicians, such as nurses,
either employed by a hospital or not, to furnish the service under the
general supervision of a physician, who may be either an employee or a
contractor of the hospital. We propose to allow services furnished
under such a waiver to be billed under the PFS by the physician or
nonphysician practitioner or by the hospital to which the supervising
physician has reassigned his or her benefits. In the latter scenario,
we note that the post-discharge home visit services would not be
``hospital services,'' even when furnished by clinical staff of the
hospital.
We propose that up to 9 post-discharge home visits could be billed
and paid during each 90-day post-anchor hospitalization CCJR episode.
Given the average PAC length of stay of approximately 45 days for these
episodes and the incentives under CCJR to improve efficiency, which may
shorten PAC stays, 9 visits would represent a home visit on average of
once per week for two-thirds of the 90-day episode duration, the period
of time when the typical beneficiary may have concluded PAC in an
efficient episode. We believe that a home visit of once a week to a
non-homebound beneficiary who has concluded PAC and who could also
receive services in the physician's office or hospital outpatient
department as needed, along with telehealth visits in the home from a
physician or NPP as proposed in the next section, should be sufficient
to allow comprehensive assessment and management of the beneficiary
throughout the LEJR episode. We propose that the service be billed with
HCPCS code GXXXX (Coordinated quality care--joint replacement model
home visit for patient assessment performed by a qualified health care
professional for an individual not considered homebound, including, but
not necessarily limited to patient assessment of clinical status,
safety/fall prevention, functional status/ambulation, medication
reconciliation/management, compliance with orders/plan of care,
performance of activities of daily living, and making beneficiary
connections to community and other services; (for use only in the
Medicare-approved coordinated quality care--joint replacement model);
may not be billed for a 30-day period covered by a transitional care
management code) and paid at approximately $50 under the PFS. The
standard PFS ratesetting methodologies establish relative value units
(RVUs) based on the resources required to furnish the typical service.
Final RVUs under the CY 2016 PFS for the proposed new HCPCS code for
CCJR home visits will be included in the CCJR final rule. In addition,
we propose to update the values each year to correspond to final values
established under the PFS.
The waiver would not apply with respect to a CCJR beneficiary who
has qualified, or would qualify, for home health services when the
visit was furnished. We expect that the visits by licensed clinicians
could include patient assessment, monitoring, assessment of functional
status and fall risk, review of medications, assessment of adherence
with treatment recommendations, patient education, communication and
coordination with other treating clinicians, care management to improve
beneficiary connections to community and other services, etc. These
post-discharge home visits would remove barriers to follow-up care
outside of the home with providers and suppliers and allow the
beneficiary to be treated in his or her home environment or place of
residence, where potential safety concerns, such as tripping hazards,
could quickly be identified and remediated. Given these occasions for
further patient assessment and intervention, we believe that where such
post-discharge home visits are furnished, there are opportunities to
increase patient-centered care coordination and decrease episode
spending, potentially resulting in higher quality care for
beneficiaries and increased episode efficiency which may benefit the
beneficiaries, the Medicare Trust Fund, and participant hospitals.
We also propose to waive current Medicare billing rules in order to
allow the separate reporting of these post-discharge home visits during
surgical global periods. The PFS payment for the surgical procedure
includes 90 days of post-operative care furnished by the surgeon. Post-
operative follow-up care is not separately billable by the surgeon or,
unless there is a transfer of care, by another practitioner. The
current construction of the global packages included in PFS payments
reflects a

[[Page 41270]]

narrow view of surgical follow-up care that does not encompass broader,
more comprehensive models of post-operative care, such as an episode
model like CCJR. As we have noted in the past, it is also difficult to
determine the appropriate valuation of the various components of the
current global packages (2015 Physician Fee Schedule 79 FR 67584). We
do not believe that the CCJR post-discharge home visits, which can
include nursing assessments for chronic conditions for which care may
be affected by the surgery, would replace or substantially duplicate
the kind of post-operative visits involved in furnishing post-operative
follow-up care for the global surgery procedure under the PFS. Instead,
we anticipate that the work of these post-discharge visits will be
similar to the work furnished by the physician coordinating the
patient's overall episode care. Therefore, we propose to waive the
global surgery billing rules to allow the surgeon or other
practitioners to furnish and bill for the post-discharge home visits
during surgical global periods.
We plan to monitor utilization patterns of post-discharge home
visits under CCJR to monitor for overutilization and significant
reductions in medical home health services. We seek comments on the
proposed waiver of the ``incident to'' rule to pay for a maximum number
of post-discharge home visits to beneficiaries who do not qualify for
home health services by licensed clinicians under the general
supervision of a physician.
c. Billing and Payment for Telehealth Services
As discussed in the previous section, we expect that the CCJR model
design features will lead to greater interest on the part of hospitals
and other providers and suppliers caring for CCJR beneficiaries in
furnishing services to beneficiaries in their home or place of
residence, including physicians' professional services. While
physicians may furnish and be paid by Medicare for home visits under
the PFS, few visits are actually furnished to Medicare beneficiaries
because of the significant physician resources required for such visits
and the general structure of most physician office-based practices. For
example, in 2014 only 2.6 million physician or nonphysician
practitioner home visits were furnished to Medicare beneficiaries in
contrast to almost 250 million office or other outpatient evaluation
and management visits furnished by physicians or nonphysician
practitioners. CCJR would create new incentives for comprehensive
episode care management for beneficiaries, including early
identification and intervention regarding changes in health status
following discharge from the anchor hospitalization. We understand that
participant hospitals may want to engage physicians in furnishing
timely visits to homebound or non-homebound CCJR beneficiaries in their
homes or places of residence to address concerning symptoms or
observations raised by beneficiaries themselves, clinicians furnishing
home health services, or licensed clinicians furnishing post-discharge
home visits, while physicians committed to LEJR care redesign may not
be able to revise their practice patterns to meet this home visit need
for CCJR beneficiaries.
Under section 1834(m) of the Act, Medicare pays for telehealth
services furnished by a physician or practitioner under certain
conditions even though the physician or practitioner is not in the same
location as the beneficiary. The telehealth services must be furnished
to a beneficiary located in one of the eight types of originating sites
specified in section 1834(m)(4)(C)(ii) of the Act and the site must
satisfy at least one of the requirements of section 1834(m)(4)(C)(i)(I)
through (III) of the Act. Generally, for Medicare payment to be made
for telehealth services under the Physician Fee Schedule several
conditions must be met, as set forth under Sec. 410.78(b).
Specifically, the service must be on the Medicare list of telehealth
services and meet all of the following other requirements for payment:
The service must be furnished via an interactive
telecommunications system.
The service must be furnished to an eligible telehealth
individual.
The individual receiving the services must be in an
eligible originating site.
When all of these conditions are met, Medicare pays a facility fee
to the originating site and provides separate payment to the distant
site practitioner for the service. Section 1834(m)(4)(F)(i) of the Act
defines Medicare telehealth services to include professional
consultations, office visits, office psychiatry services, and any
additional service specified by the Secretary, when furnished via a
telecommunications system. For the list of approved Medicare telehealth
services, see the CMS Web site at www.cms.gov/Medicare/Medicare-General-information/telehealth/. Under section 1834(m)(4)(F)(ii) of the
Act, CMS has an annual process to consider additions to and deletions
from the list of telehealth services. We do not include any services as
telehealth services when Medicare does not otherwise make a separate
payment for them.
Some literature suggests that technologies that enable health care
providers to deliver care to patients in locations remote from
providers are being increasingly used to complement face-to-face
patient-provider encounters in both urban and rural areas.\43\ In these
cases, the use of remote access technologies may improve the
accessibility and timeliness of needed care, increase communication
between providers and patients, enhance care coordination, and improve
the efficiency of care. We note that certain professional services that
are commonly furnished remotely using telecommunications technology are
paid under the same conditions as in-person physicians' services, and
thus do not require a waiver to be considered as telehealth services.
Such services that do not require the patient to be present in person
with the practitioner when they are furnished are covered and paid in
the same way as services delivered without the use of
telecommunications technology when the practitioner is in person at the
medical facility furnishing care to the patient.
In other CMS episode payment models, such as BPCI Models 2 and 3,
we determined it was necessary to waive the geographic site
requirements of section 1834(m)(4)(C)(i)(I) through (III) of the Act.
This waiver allows telehealth services to be furnished to eligible
telehealth individuals when they are located at one of the eight
originating sites at the time the service is furnished via a
telecommunications system but without regard to the site meeting one of
the geographic site requirements. For CCJR, we propose a waiver of this
same provision as well as waiver of the requirement that the eligible
telehealth individual be in an originating site when the otherwise
eligible individual is receiving telehealth services in his or her home
or place of residence. This waiver would allow providers and suppliers
furnishing services to CCJR beneficiaries to utilize telemedicine for
beneficiaries that are not classified as rural and to allow the
greatest degree of efficiency and communication between providers and
suppliers and beneficiaries by allowing beneficiaries to receive
telehealth services at their home or place of residence. We believe
that these waivers are essential to maximize the opportunity to improve
the quality of care and efficiency for LEJR episodes under CCJR.

[[Page 41271]]

Specifically, like the telehealth waiver for BPCI, we propose to
waive the geographic site requirements of section 1834(m)(4)(C)(i)(I)
through (III) of the Act that limit telehealth payment to services
furnished within specific types of geographic areas or in an entity
participating in a federal telemedicine demonstration project approved
as of December 31, 2000. Waiver of this requirement would allow
beneficiaries located in any region to receive services related to the
episode to be furnished via telehealth, as long as all other Medicare
requirements for telehealth services are met. Any service on the list
of Medicare approved telehealth services and reported on a claim with
an ICD-9 principal diagnosis code that is not excluded from the
proposed CCJR episode definition (see section III.B.2 of this proposed
rule) could be furnished to a CCJR beneficiary, regardless of the
beneficiary's geographic location. Under CCJR, this waiver would
support care coordination and increasing timely access to high quality
care for all CCJR beneficiaries, regardless of geography. Additionally,
we propose, only for the purpose of testing the CCJR model, waiving the
originating site requirements of section 1834(m)(4)(C)(ii)(I)-(VIII) of
the Act that specify the particular sites at which the eligible
telehealth individual must be located at the time the service is
furnished via a telecommunications system. Specifically, we propose to
waive the requirement only when telehealth services are being furnished
in the CCJR' beneficiary's home or place of residence during the
episode. Any service on the list of Medicare approved telehealth
services and reported on a claim with an ICD-9 principal diagnosis code
that is not excluded from the proposed CCJR episode definition (see
section III.B.2 of this proposed rule) could be furnished to a CCJR
beneficiary in his or her home or place of residence, unless the
service's HCPCS code descriptor precludes delivering the service in the
home or place of residence. For example, subsequent hospital care
services could not be furnished to beneficiaries in their home since
those beneficiaries would not be inpatients of the hospital.
The existing set of codes used to report evaluation and management
(E/M) visits are extensively categorized and defined by the setting of
the service, and the codes describe the services furnished when both
the patient and the practitioner are located in that setting. Section
1834(m) of the Act provides for particular conditions under which
Medicare can make payment for office visits when a patient is located
in a health care setting (the originating sites authorized by statute)
and the eligible practitioner is located elsewhere. However we do not
believe that the kinds of E/M services furnished to patients outside of
health care settings via real-time, interactive communication
technology are accurately described by any existing E/M codes. This
would include circumstances when the patient is located in his or her
home and the location of the practitioner is unspecified. Therefore, in
order to create a mechanism to report E/M services accurately under the
CCJR model, we propose to create a specific set of HCPCS G-codes to
describe the E/M services furnished to CCJR beneficiaries in their
homes via telehealth.
Among the existing E/M visit services, we envision these services
would be most similar to those described by the office and other
outpatient E/M codes. Therefore, we propose to structure the new codes
similarly to the office/outpatient E/M codes but adjusted to reflect
the location as the beneficiary's residence and the virtual presence of
the practitioner. Specifically, we propose to create a parallel
structure and set of descriptors currently used to report office or
other outpatient E/M services, (CPT codes 99201 through 99205 for new
patient visits and CPT codes 99212 through 99215 for established
patient visits.) For example, the proposed G-code for a level 3 E/M
visit for an established patient would be a telehealth visit for the
evaluation and management of an established patient in the patient's
home, which requires at least 2 of the following 3 key components:
An expanded problem focused history;
An expanded problem focused examination;
Medical decision making of low complexity.
Counseling and coordination of care with other physicians, other
qualified health care professionals or agencies are provided consistent
with the nature of the problem(s) and the patient's or family's needs
or both. Usually, the presenting problem(s) are of low to moderate
severity. Typically, 15 minutes are spent with the patient or family or
both via real-time, audio and video intercommunications technology.
We note that we are not proposing a G-code to parallel the level 1
office/outpatient visit for an established patient, since that service
does not require the presence of the physician or other qualified
health professional. We also believe this would duplicate the home
visits for non-homebound beneficiaries previously proposed in this
section.
We propose to develop payment rates for these new telehealth G-
codes for E/M services in the patient's home that are similar to the
payment rates for the office/outpatient E/M services, since the codes
will describe the work involved in furnishing similar services.
Therefore, we propose to include the resource costs typically incurred
when services are furnished via telehealth. In terms of the relative
resource costs involved in furnishing these services, we believe that
the efficiencies of virtual presentation generally limit resource costs
other than those related to the professional time, intensity, and
malpractice risk to marginal levels. Therefore, we propose to adopt
work and malpractice (MP) RVUs associated with the corresponding level
of office/outpatient codes as the typical service because the
practitioner's time and intensity and malpractice liabilities when
conducting a visit via telehealth are comparable to the office visit.
Final RVUs under the CY 2016 PFS will be included in the CCJR final
rule. Additionally, we propose to update these values each year to
correspond to final values established under the PFS. We considered
whether each level of visit typically would warrant support by
auxiliary licensed clinical staff within the context of the CCJR model.
The cost of such staff and any associated supplies, for example, would
be incorporated in the practice expense (PE) RVUs under the PFS. For
the lower level visits, levels 1 through 3 for new and 2 and 3 for
established visits, we did not believe that the visit would necessarily
require auxiliary medical staff to be available in the patient's home.
We anticipate these lower level visits would be the most commonly
furnished and would serve as a mechanism for the patient to consult
quickly with a practitioner for concerns that can be easily described
and explained by the patient. We do not propose to include PE RVUs for
these services, since we do not believe that virtual visits envisioned
for this model typically incur the kinds of costs included in the PE
RVUs under the PFS. For higher level visits, we typically would
anticipate some amount of support from auxiliary clinical staff. For
example, wound examination and minor wound debridement would be
considered included in an E/M visit and would require licensed clinical
staff to be present in the beneficiary's home during the telehealth
visit in order for

[[Page 41272]]

the complete service to be furnished. We believe it would be rare for a
practitioner to conduct as complex and detailed a service as a level 4
or 5 E/M home visit via telehealth for CCJR beneficiaries in LEJR
episodes without licensed clinical staff support in the home.
However, we also note that this proposed model already includes
several avenues for licensed clinical staff to be in the patient's
home, either through a separately paid home visit as proposed for the
model or through home health services as discussed earlier in this
section of this proposed rule. Therefore, although we consider support
by auxiliary clinical staff to be typical for level 4 or 5 E/M visits
furnished to CCJR beneficiaries in the home via telehealth, we do not
propose to incorporate these costs through PE RVUs. Given the
anticipated complexity of these visits, we would expect to observe
level 4 and 5 E/M visits to be reported on the same claim with the same
date of service as a home visit or during a period of authorized home
health care. If neither of these occurs, we propose to require the
physician to document in the medical record that auxiliary licensed
clinical staff were available on site in the patient's home during the
visit and if they were not, to document the reason that such a high-
level visit would not require such personnel.
We note that because the services described by the proposed G-
codes, by definition, are furnished remotely using telecommunications
technology, they therefore are paid under the same conditions as in-
person physicians' services and they do not require a waiver to the
requirements of section 1834(m) of the Act. We also note that because
these home telehealth services are E/M services, all other coverage and
payment rules regarding E/M services would continue to apply.
Under CCJR, this proposal to waive the originating site
requirements and create new home visit telehealth HCPCS codes would
support the greatest efficiency and timely communication between
providers and beneficiaries by allowing beneficiaries to receive
telehealth services at their places of residence.
With respect to home health services paid under the home health
prospective payment system (HH PPS), we emphasize that telehealth
visits under this model cannot substitute for in-person home health
visits per section 1895(e)(1)(A) of the Act. Furthermore, telehealth
services by social workers cannot be furnished for CCJR beneficiaries
who are in a home health episode of care because medical social
services are included as home health services per section 1861(m) of
the Act and paid for under the Medicare HH PPS. However, telehealth
services permitted under section 1834 of the Act and furnished by
physicians or other practitioners, specifically physician assistants,
nurse practitioners, clinical nurse specialists, certified nurse
midwives, nurse anesthetists, psychologists, and dieticians, can be
furnished for CCJR beneficiaries who are in a home health episode of
care. Finally, sections 1835(a) and 1814(a) of the Act require that the
patient has a face-to-face encounter with the certifying physician or
an allowed nonphysician practitioner (NPP) working in collaboration
with or under the supervision of the certifying physician before the
certifying physician certifies that the patient is eligible for home
health services. Under Sec. 424.22(a)(1)(v), the face-to-face
encounter can be performed up to 90 days prior to the start of home
health care or within 30 days after the start of home health care.
Section 424.22(a)(1)(v)(A) also allows a physician, with privileges,
who cared for the patient in an acute or PAC setting (from which the
patient was directly admitted to home health) or an allowed NPP working
in collaboration with or under the supervision of the acute or PAC
physician to conduct the face-to-face encounter.
Although sections 1835(a) and 1814(a) of the Act allow the face-to-
face encounter to be performed via telehealth, we are not proposing
that the waiver of the telehealth geographic site requirement for
telehealth services and the the originating site requirement for
telehealth services furnished in the CCJR beneficiary's home or place
of residence would apply to the face-to-face encounter required as part
of the home health certification when that encounter is furnished via
telehealth. In other words, when a face-to-face encounter furnished via
telehealth is used to meet the requirement for home health
certification, the usual Medicare telehealth rules apply with respect
to geography and eligibility of the originating site. We expect that
this policy will not limit CCJR beneficiaries' access to medically
necessary home health services because beneficiaries receiving home
health services during a CCJR episode will have had a face-to-face
encounter with either the physician or an allowed NPP during their
anchor hospitalization or a physician or allowed NPP during a post-
acute facility stay prior to discharge directly to home health
services.
Under the proposed waiver of the geographic site requirement and
originating site requirement, all telehealth services would be required
to be furnished in accordance with all Medicare coverage and payment
criteria, and no additional payment would be made to cover set-up
costs, technology purchases, training and education, or other related
costs. The facility fee paid by Medicare to an originating site for a
telehealth service would be waived if there is no facility as an
originating site (that is, the service was originated in the
beneficiary's home). Finally, providers and suppliers furnishing a
telehealth service to a CCJR beneficiary in his or her home or place of
residence during the episode would not be permitted to bill for
telehealth services that were not fully furnished when an inability to
provide the intended telehealth service is due to technical issues with
telecommunications equipment required for that service. Beneficiaries
would be able to receive services furnished pursuant to the telehealth
waivers only during the CCJR LEJR episode.
We plan to monitor patterns of utilization of telehealth services
under CCJR to monitor for overutilization or reductions in medically
necessary care, and significant reductions in face-to-face visits with
physicians and NPPs. We plan to specifically monitor the distribution
of new telehealth home visits that we are proposing, as we anticipate
greater use of lower level visits. Given our concern that auxiliary
licensed clinical staff be present for level 4 and 5 visits, we will
monitor our proposed requirement that these visits be billed on the
same claim with the same date of service as a home nursing visit,
during a period authorized home health care, or that the physician
document the presence of auxiliary licensed clinical staff in the home
or an explanation as to the specific circumstances precluding the need
for auxiliary staff for the specific visit. We seek comments on the
proposed waivers with respect to telehealth services, and the proposed
creation of the home visit telehealth codes.
d. SNF 3-Day Rule
We expect that the CCJR model will encourage participant hospitals
and their provider and supplier partners to redesign care for LEJR
episodes across the continuum of care extending to 90 days post-
discharge from the anchor hospital stay. We believe that hospitals will
seek to develop and refine the most efficient care pathways so
beneficiaries

[[Page 41273]]

receive the lowest intensity, clinically appropriate care at each point
in time throughout the episode. We understand that in some cases,
particularly younger beneficiaries undergoing total knee replacement,
certain beneficiaries receiving LEJR procedures may be appropriately
discharged from the acute care hospital to a SNF in less than the 3
days required under the Medicare program for coverage of the SNF stay.
While total knee arthroplasty (TKA) remains payable by Medicare to the
hospital only when furnished to hospital inpatients, we have heard from
some stakeholders that these procedures may be safely furnished to
hospital outpatients with a hospital outpatient department stay of only
24 hours. Finally, we note that the current geometric mean hospital
length of stay for LEJR procedures for beneficiaries without major
complications or comorbidities (MS-DRG 470) is only 3 days and that for
MS-DRG 469 for beneficiaries with such complications or comorbidities
is 6 days. Thus, we believe it is possible that hospitals working to
increase episode efficiency may identify some CCJR beneficiaries who
could be appropriately discharged from the hospital to a SNF in less
than 3 days, but that early discharge would eliminate Medicare coverage
for the SNF stay unless a waiver of Medicare requirements were provided
under CCJR.
The Medicare SNF benefit is for beneficiaries who require a short-
term intensive stay in a SNF, requiring skilled nursing or skilled
rehabilitation care or both. Pursuant to section 1861(i) of the Act,
beneficiaries must have a prior inpatient hospital stay of no fewer
than 3-consecutive days in order to be eligible for Medicare coverage
of inpatient SNF care. We refer to this as the SNF 3-day rule. We note
that the SNF 3-day rule has been waived or is not a requirement for
Medicare SNF coverage under other CMS models or programs, including
BPCI Model 2. BPCI Model 2 awardees that request and are approved for
the waiver can discharge Model 2 beneficiaries in less than 3 days from
an anchor hospital stay to a SNF, where services are covered under
Medicare Part A as long as all other coverage requirements for such
services are satisfied.
Currently, FFS Medicare beneficiary discharge patterns to a SNF
immediately following hospitalization for an LEJR procedure vary
regionally across the country, from a low of approximately 10 percent
of Medicare beneficiaries to a high of approximately 85 percent.\44\
Additionally, a study of Medicare beneficiaries has shown that over the
period of time between 1991 and 2008, as the inpatient hospital length-
of-stay for total hip arthroplasty (THA) decreased from an average of
9.1 days to an average of 3.7 days, the average percentage of primary
THA patients discharged directly to home declined from 68 percent to 48
percent while the proportion discharged directly to skilled care
(primarily SNFs) increased from 17.8 percent to 34.3 percent.\45\
During this same period of time, 30-day all-cause readmission increased
from 5.8 percent to 8.5 percent. Similar to the CCJR payment policies
we propose in section III.C of this proposed rule, which would require
participating CCJR hospitals to repay Medicare for excess episode
spending beginning in performance year 2, participants in BPCI Model 2
assume financial responsibility for episode spending for beneficiaries
included in a Model 2 episode. Episode payment models like BPCI and
CCJR have the potential to mitigate the existing incentives under the
Medicare program to overuse SNF benefits for beneficiaries, as well as
to furnish many fragmented services that do not reflect significant
coordinated attention to and management of complications following
hospital discharge. The removal of these incentives in an episode
payment model lays the groundwork for offering participant hospitals
greater flexibility around the parameters that determine SNF stay
coverage. BPCI participants considering the early discharge of a
beneficiary pursuant to the waiver during a Model 2 episode must
evaluate whether early discharge to a SNF is clinically appropriate and
SNF services are medically necessary. Next, they must balance that
determination and the potential benefits to the hospital in the form of
internal cost savings due to greater financial efficiency with the
understanding that a subsequent hospital readmission, attributable to
premature discharge or low quality SNF care, could substantially
increase episode spending while also resulting in poorer quality of
care for the beneficiary. Furthermore, early hospital discharge for a
beneficiary who would otherwise not require a SNF stay (that is, the
beneficiary has no identified skilled nursing or rehabilitation need
that cannot be provided on an outpatient basis) following a hospital
stay of typical length does not improve episode efficiency under an
episode payment model such as BPCI or CCJR.
---------------------------------------------------------------------------

\44\ ``Analysis of Medicare claims with admission dates from
July 1, 2013 through June 30, 2014 accessed through the Chronic
Conditions Warehouse.''
\45\ Cram P, Lu X, Kaboli PJ, et al. Clinical Characteristics
and Outcomes of Medicare Patients Undergoing Total Hip Arthroplasty,
1991-2008. JAMA. 2011;305(15):1560-1567.
---------------------------------------------------------------------------

Because of the potential benefits we see for participating CCJR
hospitals, their provider partners, and beneficiaries, we propose to
waive in certain instances the SNF 3-day rule for coverage of a SNF
stay following the anchor hospitalization under CCJR beginning in
performance year 2 of the model when repayment responsibility for
actual episode spending that exceeds the target price begins. We
propose to use our authority under section 1115A of the Act with
respect to certain SNFs that furnish Medicare Part A post-hospital
extended care services to beneficiaries included in an episode in the
CCJR model. We believe this waiver is necessary to the model test so
that participant hospitals can redesign care throughout the episode
continuum of care extending to 90 days post-discharge from the anchor
hospital stay in order to maximize quality and hospital financial
efficiency, as well as reduce episode spending under Medicare. However,
we are not proposing to waive this requirement in performance year 1,
when participating hospitals are not responsible for excess actual
episode spending. We believe that there is some potential for early
hospital discharge followed by a SNF stay to increase actual episode
spending over historical patterns unless participant hospitals are
particularly mindful of this potential unintended consequence. Without
participant hospital repayment responsibility in performance year 1, we
are concerned that Medicare would be at full risk under the model for
increased episode spending because, without a financial incentive to
closely manage care, hospitals might be more likely to discharge
beneficiaries to SNFs early leading to increased episode spending for
which the hospital would bear no responsibility. Beginning in
performance year 2 and continuing through performance year 5, we
propose to waive the SNF 3-day rule because participant hospitals will
bear partial or full responsibility (capped at the proposed stop-loss
limit described in section III.C. of this proposed rule) for excess
episode actual spending, thereby providing a strong incentive in those
years for participant hospitals to redesign care with both quality and
efficiency outcomes as priorities. All other Medicare rules for
coverage and payment of Part A-covered SNF services would continue to
apply to CCJR

[[Page 41274]]

beneficiaries in all performance years of the model.
In addition, because the average length of stay for Medicare
beneficiaries hospitalized for LEJR procedures without major
complications or comorbidities is already relatively short at 3 days
and in view of our concerns over protecting immediate CCJR beneficiary
safety and optimizing health outcomes, we propose to require that
participant hospitals may only discharge a CCJR beneficiary under this
proposed waiver of the SNF 3-day rule to a SNF rated an overall of
three stars or better by CMS based on information publicly available at
the time of hospital discharge. Problem areas due to early hospital
discharge may not be discovered through model monitoring and evaluation
activities until well after the episode has concluded, and the
potential for later negative findings alone may not afford sufficient
beneficiary protections. CMS created a Five-Star Quality Rating System
for SNFs to allow SNFs to be compared more easily and to help identify
areas of concerning SNF performance. The Nursing Home Compare Web site
(www.medicare.gov/NursingHomeCompare/) gives each SNF an overall rating
of between 1 and 5 stars. Skilled nursing facilities with 5 stars are
considered to have much above average quality, and SNFs with one star
are considered to have quality much below average. Published SNF
ratings include distinct ratings of health inspection, staffing, and
quality measures, with ratings for each of the three sources combined
to calculate an overall rating. These areas of assessment are all
relevant to the quality of SNF care following discharge from the anchor
hospitalization initiating a CCJR episode, especially if that discharge
occurs after less than three days in the hospital. A study of the
clinical factors that kept patients in a Danish hospital unit dedicated
to discharge in three days or fewer following total hip and knee
arthroscopy procedures found that that pain, dizziness, and general
weakness were the main clinical reasons for longer hospitalization, as
well as problems with personal care and walking 70 meters with
crutches.\46\ Medicare beneficiaries discharged from the hospital to a
SNF in less than three days may be at higher risk of these
uncomfortable symptoms and disabling functional problems not being
fully resolved at hospital discharge, although we expect that under the
CCJR episode payment model participant hospitals will have a strong
interest in ensuring appropriate discharge timing so that hospital
readmissions and complications are minimized. Nevertheless, because of
the potential greater risks following early inpatient hospital
discharge, we believe it is appropriate that all CCJR beneficiaries
discharged from the participant hospital to a SNF in less than 3 days
be admitted to a SNF that has demonstrated that it is capable of
providing quality care to patients with significant unresolved post-
surgical symptoms and problems. We believe such a SNF would need to
provide care of at least average overall quality, which would be
represented by an overall SNF 3-star or better rating.
---------------------------------------------------------------------------

\46\ Husted H, Lunn TH, Troelsen A, Gaarm-Larsen L, Kristensen
BB, Kehlet H. Why still in hospital after fast-track hip and knee
arthroplasty? Acta Orthopaedica. 2011; 82(6)679-684.
---------------------------------------------------------------------------

We propose that the waiver be available for the CCJR beneficiary's
care. The SNF would insert a Treatment Authorization Code on the claim
for a beneficiary in the model where the SNF seeks to the use the
waiver. This process would promote coordination between the SNF and the
participant hospital, as the SNF would need to be in close
communication with the participant hospital to ensure that the
beneficiary is in the model at the time the waiver is used. We propose
that where the beneficiary would be eligible for inclusion in a CCJR
episode of care at the time of hospital discharge, use of the waiver
would be permitted where it is medically necessary and appropriate to
discharge the beneficiary to a SNF prior to a 3-day inpatient stay.
Beneficiaries would be eligible to receive services furnished under
the 3-Day Rule waiver only during the CCJR episode. We plan to monitor
patterns of SNF utilization under CCJR, particularly with respect to
hospital discharge in less than 3 days to a SNF, to ensure that
beneficiaries are not being discharged prematurely to SNFs and that
they are able to exercise their freedom of choice without patient
steering. We seek comment on our proposal to waive the SNF 3-day stay
rule for stays in SNFs rated overall as three stars or better following
discharge from the anchor hospitalization in CCJR episodes.
e. Waivers of Medicare Program Rules To Allow Reconciliation Payment or
Repayment Actions Resulting From the Net Payment Reconciliation Amount
In order to make reconciliation payment to or carry out recoupment
from a participant hospital that results from the NPRA calculation for
each performance year as discussed in section III.C.6.a. of this
proposed rule, we believe we would need to waive certain Medicare
program rules. Therefore, in accordance with the authority granted to
the Secretary in section 1115A(d)(1) of the Act, we would waive
requirements of the Act for all Medicare Part A and Part B payment
systems only to the extent necessary to make reconciliation payments or
receive repayments based on the NPRA that reflect the episode payment
methodology under this proposed payment model for CCJR participant
hospitals selected in accordance with CMS's proposed selection
methodology. In addition, we do not propose that reconciliation
payments or repayments change beneficiary cost-sharing from the regular
Medicare program cost-sharing for the related Part A and Part B
services that were paid for CCJR beneficiaries and aggregated to
determine actual episode spending in the calculation of the NPRA. We
therefore would waive the requirements of sections 1813 and 1833(a) of
the Act to the extent that they would otherwise apply to reconciliation
payments or repayments from a participant hospital under the CCJR
model. We seek comment on our proposed waivers related to repayment and
recoupment actions as a result of the NRPA calculated.
12. Proposed Enforcement Mechanisms
CMS must have certain mechanisms to enforce compliance with the
requirements of the model, either by the participant hospital, or by an
entity or individual participating in the CCJR model by furnishing a
service to a beneficiary during a CCJR episode. The following
discussion details the enforcement mechanisms we propose to make
available to CMS for the CCJR model.
We propose an enforcement structure that would be consistent with
other CMMI models. We believe that Model 2 of the BPCI initiative is an
appropriate model for comparison, given that Model 2 and CCJR share
many of the same policy characteristics, particularly with respect to
episode definition. For example, the participation agreement between
CMS and a participant (called an Awardee) in BPCI Model 2 provides that
CMS may immediately or with advance notice terminate the awardee's
participation in the model or require the Awardee to terminate its
agreement (``participant agreement'') with a participating provider or
supplier that is not in compliance with BPCI requirements. In such
circumstances, CMS may direct the Awardee to terminate its participant
agreement with a participating provider or supplier because the Awardee
has a participation agreement with CMS, whereas the participating
provider or supplier does

[[Page 41275]]

not. CMS may require termination of the Awardee or a participating
provider or supplier if--
CMS determines that it no longer has the funds to support
the BPCI model;
CMS terminates the model pursuant to section
1115A(b)(3)(B) of the Act; or
The BPCI awardee or an individual or entity participating
in BPCI under the awardee does any of the following:
++ Takes any action that threatens the health or safety of
patients; avoids at-risk Medicare beneficiaries, as this term is
defined in Sec. 425.20; or avoids patients on the basis of payer
status.
++ Is subject to sanctions or final actions of an accrediting
organization or federal, state or local government agency that could
lead to the inability to comply with the requirements and provisions of
the BPCI agreement.
++ Takes or fails to take any action that CMS determines for
program integrity reasons is not in the best interests of the BPCI
initiative.
++ Is subject to action by HHS (including OIG and CMS) or the
Department of Justice to redress an allegation of fraud or significant
misconduct, including intervening in a False Claims Act qui tam matter,
issuing a pre-demand or demand letter under a civil sanction authority,
or similar actions.
Under the terms of the BPCI agreement, upon CMS's termination of
the agreement for any of the reasons previously listed in this section,
CMS may immediately cease the distribution of positive reconciliation
payments to the awardee and the awardee must immediately cease the
distribution of any gainsharing payments.
Many CMMI models also allow for CMS to impose remedial actions to
address noncompliance by either a participant that has a direct
relationship (participation agreement) with CMS, or by any individual
or entity participating in the CMMI model pursuant to an agreement with
the participant hospital. For example, with respect to the BPCI Model
2, where CMS determines that there may be noncompliance, CMS may take
any or all of the following actions:
Notify the BPCI awardee of the specific performance
problem.
Require the awardee to provide additional data to CMS or
its designees.
Require the awardee to stop distributing funds to a
particular individual or entity.
Require the awardee to forego the receipt of any positive
reconciliation payments from CMS.
Request a corrective action plan from the awardee.
++ If CMS requests a corrective action plan, then the following
requirements apply to awardees in the BPCI initiative:

-- The awardee must submit a corrective action plan for CMS approval by
the deadline established by CMS.
-- The corrective action plan must address what actions the awardee
will take within a specified time period to ensure that all
deficiencies are corrected and that it remains in compliance with the
BPCI agreement.

Under the CCJR model, we propose that CMS would have the
enforcement mechanisms detailed in this section available for use
against participant hospitals and any entity or individual furnishing a
service to a beneficiary during a CCJR episode, where the participant
hospital or such entity or individual: (1) Does not comply with the
CCJR model requirements; or (2) are identified as noncompliant via CMS'
monitoring of the model or engage in behavior related to any of the
reasons previously described that apply to the BPCI initiative. These
mechanisms will support the goals of CCJR to maintain or improve
quality of care. Given that participant hospitals may receive
reconciliation payments, and choose to distribute or share those
payments with other providers or suppliers (``CCJR collaborators'') we
believe that enhanced scrutiny and monitoring of participant hospitals
and CCJR collaborators under the model is necessary and appropriate.
Participant hospitals and CCJR collaborators will also be subject to
all existing requirements and conditions for Medicare participation not
otherwise waived under section 1115A(d)(1) of the Act.
We propose that CMS would have the option to use any one or more of
the following enforcement mechanisms for participant hospitals in CCJR.
We further propose that these enforcement mechanisms could be
instituted and applied in any order, as is consistent with other CMMI
models:
Warning letter--We propose to give CMS the authority to
issue a warning letter to participant hospitals to put them on notice
of behavior that may warrant additional action by CMS. This letter
would inform participant hospitals of the issue or issues identified by
CMS leading to the issuance of the warning letter.
Corrective Action Plan--We propose to give CMS the
authority to request a corrective action plan from participant
hospitals. We propose the following requirements for corrective action
plans:
++ The participant hospital would be required to submit a
corrective action plan for CMS approval by the deadline established by
CMS.
++ The corrective action plan would be required to address what
actions the participant hospital will take within a specified time
period to correct the issues identified by CMS.
++ The corrective action plan could include provisions requiring
that the participant hospital terminate Participation Agreements with
CCJR collaborators that are determined by HHS to be engaging in
activities involving noncompliance with the provisions of this proposed
rule, engaged in fraud or abuse, providing substandard care, or
experiencing other integrity problems.
++ The participant hospital's failure to comply with the corrective
action plan within the specified time period could result in additional
enforcement action, including: (1) Termination; (2) automatic
forfeiture of all or a portion of any reconciliation payments as that
term is defined in section III.C. of this proposed rule; (3) CMS's
discretionary reduction or elimination of all or a portion of the
hospital's reconciliation payment; or (4) a combination of such
actions.
Reduction or elimination of reconciliation amount--We
propose to give CMS the authority to reduce or eliminate a participant
hospital's reconciliation amount based on noncompliance with the
model's requirements, negative results found through CMS' monitoring
activities, or the participant hospital's noncompliance associated with
a corrective action plan (as noted previously). For example, where CMS
requires a participant hospital to submit a corrective action plan, the
result of the participant hospital's failure to timely comply with that
requirement could be a 50 percent reduction in the reconciliation
amount due to the participant hospital at the end a performance year,
where the participant hospital's reconciliation report reflects a
positive reconciliation amount. We solicit comments on whether negative
monitoring results and noncompliance with program requirements or
corrective action plans should result in automatic forfeiture of all or
a portion of positive NPRA, the amount that could be forfeited or
reduced, the number of performance periods over which NPRA may be
forfeited or reduced per instance or episode of noncompliance, whether
the amount should be a fixed percentage of NPRA or a variable amount
depending on the nature and severity of the noncompliance, and the
criteria

[[Page 41276]]

CMS should use in deciding the severity of noncompliance.
Where the participant hospital's reconciliation report reflects a
repayment amount, forfeiture of a reconciliation amount would not be an
option for that performance year. In such a case, we considered whether
CMS would require the participant hospital to forfeit a certain
percentage of a reconciliation amount in the reconciliation report for
a future performance year. However, in the case of a failure to comply
with the model's requirements, presence of negative results found
through CMS's monitoring activities, or noncompliance associated with a
corrective action plan, we believe a policy that would increase the
amount of repayment amount on the reconciliation report for the
performance year in which the noncompliance occurred by the participant
hospital is more likely to result in compliance from the hospital.
Therefore, we propose to add 25 percent to a repayment amount on a
reconciliation report, where the participant hospital fails to timely
comply with a corrective action plan or is noncompliant with the
model's requirements, We seek comments on this forfeiture policy,
including the percentage to be added to a repayment amount on a
reconciliation report; the number of performance periods over which a
reconciliation amount may be forfeited or reduced per instance or
episode of noncompliance; whether the amount should be a fixed
percentage of a reconciliation amount or repayment amount, as
applicable, or a variable amount depending on the nature and severity
of the noncompliance; and the criteria CMS should use in deciding the
severity of noncompliance.
Termination from the model--Given the provisions we have
proposed outlining the participation of hospitals in the model, we
believe that, in contrast to other CMS models, termination from the
CCJR model would contradict the model's design. As a result, in some
circumstances termination from the model may be unlikely to be a
sufficient mechanism to deter noncompliance by participant hospitals.
While we believe termination is a remedy unlikely to be frequently used
by CMS in this model, we nonetheless leave open the possibility that in
extremely serious circumstances termination might be appropriate, and
for that reason, we propose to include it as an available enforcement
option. Where a participant hospital is terminated from the CCJR model,
we propose that the hospital would remain liable for all negative NPRA
generated from episodes of care that occurred prior to termination. We
propose that CMS may terminate the participation in CCJR of a
participant hospital when the participant hospital, or a CCJR
collaborator that has a Participation Agreement with a participant
hospital and performs functions or services related to CCJR activities,
fails to comply with any of the requirements of the CCJR model. We
further propose that CMS could terminate the participant hospital's
participation in the model, or require a participant hospital to
terminate a Participation Agreement with a CCJR collaborator for
reasons including, but not limited to the following:
CMS determines that it no longer has the funds to support
the CCJR model.
CMS terminates the model pursuant to section
1115A(b)(3)(B) of the Act.
The CCJR participant hospital, or an individual or entity
participating in CCJR under the participant hospital does any of the
following:
++ Takes any action that threatens the health or safety of
patients; avoids at-risk Medicare beneficiaries, as this term is
defined in Sec. 425.20; or avoids patients on the basis of payor
status.
++ Is subject to sanctions or final actions of an accrediting
organization or federal, state or local government agency that could
lead to the inability to comply with the requirements and provisions of
this proposed rule.
++ Takes or fails to take any action that CMS determines for
program integrity reasons is not in the best interests of the CCJR
model.
++ Is subject to action by HHS (including OIG and CMS) or the
Department of Justice to redress an allegation of fraud or significant
misconduct, including intervening in a False Claims Act qui tam matter,
issuing a pre-demand or demand letter under a civil sanction authority,
or similar actions.
++ Is subject to action involving violations of the physician self-
referral prohibition, civil monetary penalties law, federal anti-
kickback statute, antitrust laws, or any other applicable Medicare
laws, rules, or regulations that are relevant to the CCJR model
Other Enforcement Mechanisms--We seek to incorporate
policies regarding enforcement mechanisms that are necessary and
appropriate to test the CCJR model. Thus, we seek public comment on
additional enforcement mechanisms that would contribute to the
following goals:
++ Allow CMS to better operate or monitor the model.
++ Appropriately engage and encourage all entities and individuals
furnishing a service to a beneficiary during a CCJR episode to comply
with the requirements and provisions of the CCJR model.
++ Preserve the rights of Medicare beneficiaries to receive
medically necessary care, to not be endangered by providers and
suppliers engaging in noncompliant activities, and to be able to choose
from whom they want to receive care.
We seek public comment on these proposals and invite commenters to
propose additional safeguards we should consider in this proposed rule.

D. Quality Measures and Display of Quality Metrics Used in the CCJR
Model

1. Background
a. Purpose of Quality Measures in the CCJR Model
The priorities of the National Quality Strategy \47\ include making
care safer and more affordable, promoting effective communication and
coordination as well as engaging patients and families in their care.
We believe quality measures that encourage providers to focus on the
National Quality Strategy priorities will ultimately improve quality of
care and cost efficiencies. As described earlier in section III.C.5 of
this proposed rule, we are proposing that in order for a hospital in
the CCJR model to receive a reconciliation payment for the applicable
performance year, the participant hospital's measure results must meet
or exceed certain thresholds compared to the national hospital measure
results calculated for all HIQR-participant hospitals for all three
measures for each performance period. More specifically, for
performance years 1 through 3, a participant hospital's measure results
must be at or above the 30th percentile of the national hospital
measure results calculated for all hospitals under the HIQR Program for
each of the three measures for each performance period (for a detailed
discussion see section III.C.5.b of this proposed rule. For performance
years 4 and 5, a participant hospital's measure results must be at or
above the 40th percentile of the national hospital measure results (for
a detailed discussion see section III.C.5.b. of this proposed rule). In
this section, we fully describe the proposed quality measures that will
be used for public reporting and to determine whether a participant

[[Page 41277]]

hospital is eligible for the reconciliation payment under the CCJR
model. We are proposing a complication measure, readmission measure,
and a patient experience survey measure for the CCJR model. We note
that these measures will assess the priorities of safer care,
transitions of care and effective communication, and engagement of
patients in their care, respectively. Specifically, we are proposing
the following three CMS outcome measures:
---------------------------------------------------------------------------

\47\ National Quality Strategy. Working for Quality: About the
National Quality Strategy. Available at: https://www.ahrq.gov/workingforquality/about.htm#develnqs. Accessed on April 15, 2015.
---------------------------------------------------------------------------

The Hospital-level risk-standardized complication rate
(RSCR) following elective primary total hip arthroplasty (THA) and/or
total knee arthroplasty (TKA) (NQF #1550) (as referred to as THA/TKA
Complications measure (NQF #1550)).
The Hospital-level 30-day, all-cause risk-standardized
readmission rate (RSRR) following elective primary total hip
arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1551) (as
referred to as THA/TKA Readmissions measure (NQF #1551)).
HCAHPS Survey (NQF #0166).
For the inpatient hospital settings, these fully developed measures
are endorsed by the National Quality Forum (NQF), and recommended by
the NQF Measure Application Partnership (MAP) with subsequent
implementation in the HIQR Program, HVBP Program, and the HRRP (see FY
2015 IPPS/LTCH final rule 79 FR 50031, 50062, 50208 and 50209, and
50259). These measures are also publicly reported on Hospital Compare.

An important purpose of the proposed quality measures for the CCJR
model is to provide transparent information on hospital performance for
the care of patients undergoing eligible elective joint replacement
surgery and to ensure that care quality is either maintained or
improved. The proposed measures assess the following key outcomes for
patients undergoing elective joint replacement surgery:
Serious medical and surgical complications.
Unplanned readmissions.
Patient experience.
We note that complications and unplanned readmissions result in
excess inpatient and post-acute spending, and reductions in these
undesirable events will improve patient outcomes while simultaneously
lowering healthcare spending. The THA/TKA Complications measure (NQF
#550) will inform quality improvement efforts targeted towards
minimizing medical and surgical complications during surgery and the
postoperative period. The THA/TKA Readmission measure (NQF #1551)
captures the additional priorities of care provided in the transition
to outpatient settings and communication with patients and providers
during and immediately following inpatient admission. Improved quality
of care, specifically achieved through coordination and communication
among providers and with their patients and their caregivers, can
favorably influence performance on these measures. We believe
improvement in measure performance will also mean improved quality of
care and reduced cost.
Additionally, we continue to focus on patient experience during
hospitalizations, and believe that the HCAHPS Survey measure provides
not only the opportunity for patients to share their lower extremity
joint replacement hospital experience, but also for hospitals to
improve quality of care based on patient experience. For example, the
HCAHPS Survey ``categories of patient experience'' specifically
provides areas (for example, communication with doctors and nurses,
responsiveness of hospital staff, pain management) in which a hospital
could improve transition of care and increase patient safety (for
detailed description of patient experience areas covered by HCAHPS
surveys see section III.D.2.c. of this proposed). Additionally, the
survey includes measures related to nurse and physician communication,
pain management, timeliness of assistance, explanation of medications,
discharge planning and cleanliness of the hospitals to provide specific
areas for hospitals to improve on.\48\ Specific questions on provider
communication include the following:
---------------------------------------------------------------------------

\48\ Manary MP, Boulding W, Staelin R, Glickman SW. The Patient
Experience and Health Outcomes. New England Journal of Medicine. Jan
2013; 368(3):201-203.
---------------------------------------------------------------------------

How often the patient believed providers listened
carefully to his or her questions?
Whether the purpose of medications and associated adverse
events were explained?
Whether discussions on post-discharge instructions and
plans occurred so that the patient had a clear understanding of how to
take medications and an understanding of his or her responsibilities in
managing his or her health post-discharge?
All of these areas of patient experience would be invaluable to
improving hospital quality of care. We note that Manary, et al.\2\
suggest that by focusing on patient outcomes we can improve patient
experience and that timeliness of measuring patient experience is
important due to the potential for recall inaccuracies; survey
administration for HCAHPS surveys must begin between 2 and 42 days
after discharge from a hospital.
We are aware that there is concern whether there is a relationship
between patient satisfaction and quality of surgical care. To address
this question Tsai et al.\49\ recently assessed patient satisfaction
using the HCAHPS Survey results and correlated quality performance
using nationally implemented structural, process and outcome surgical
measures (that is, structural, process and outcome surgical measures in
the Hospital Value Based Purchasing, and the Hospital Readmission
Reduction Programs). The study found a positive relationship between
patient experience of care and surgical quality of care, among the
2,953 hospitals that perform six high cost and high frequency surgical
procedures that are also associated with morbidity and mortality in
Medicare beneficiaries. The study included hip replacement procedures,
and specifically noted that those hospitals with high patient
satisfaction also had high performance on nationally implemented
surgical quality measures (such as the Surgical Care Improvement
Project measures and 30-day risk-adjusted readmission and peri-
operative mortality outcome measures). Finally, we note that although
the HCAHPS Survey measure is not specific to joint replacements, the
survey provides all patients the opportunity to comment on their
hospital experience, including patients who have received lower
extremity joint replacements, which helps to inform hospitals on areas
for improvement. While HCAHPS scores are aggregated at the hospital
level, the surgical service line is one of three service lines
encompassed by the survey.\50\
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\49\ Tsai TC, Orav EJ, Jha AK. Patient Satisfaction and quality
of surgical care in US hospitals. Annals of Surgery. 2015; 261:2-8.
\50\ Giordano LA, Elliott MN, Goldstein E, Lehrman WG, Spencer
PA. Development, Implementation, and Public Reporting of the HCAHPS
Survey. Medical Care Research and Review. 2010;67(1):27-37.
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We strive to align as many measures and programs as is feasibly
possible. We believe proposing fully developed measures that are used
in other CMS hospital quality programs will minimize the burden on
participant hospitals for having to become familiar with new measures
and will allow us to appropriately capture quality data for the CCJR
model.

[[Page 41278]]

b. Public Display of Quality Measures in the CCJR Model
We believe that the display of measure results is an important way
to educate the public on hospital performance and increase the
transparency of the model. As discussed later in this section of this
proposed rule, for the CCJR model, we are proposing to display quality
measure results on the Hospital Compare Web site (https://www.hospitalcompare.hhs.gov/). We believe that the public and hospitals
are familiar with this Web site and how the information is displayed.
The proposed measures have been displayed on Hospital Compare over the
past few years. Finally, while also aligning the display of data for
the CCJR model with other CMS hospital quality programs, we believe
that the public and 'hospitals' familiarity with the Hospital Compare
Web site will make it simpler to access data.
2. Proposed Quality Measures for Performance Year 1 (CY 2016) and
Subsequent years
a. Hospital-Level Risk-Standardized Complication Rate (RSCR) Following
Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee
Arthroplasty (TKA) (NQF #1550)
(1) Background
THA and TKA are commonly performed procedures for the Medicare
population that improve quality of life. Between 2009 and 2012, there
were 337,419 total hip arthroplasty (THA) procedures and 750,569 total
knee arthroplasty (TKA) procedures for Medicare FFS patients 65 years
and older.\51\ The post-operation complications of these procedures are
high considering these are elective procedures, and usually, the
complications are devastating to patients. For example, rates for
periprosthetic joint infection, a rare but devastating complication,
have been reported at 2.3 percent for THA/TKA patients with rheumatoid
arthritis after 1 year of follow-up \52\ and 1.6 percent in Medicare
patients undergoing TKA after 2 years of follow up.\53\ Two studies
reported 90-day death rates following THA at 0.7 percent \54\ and 2.7
percent, respectively.\55\ Reported rates for pulmonary embolism
following TKA range from 0.5 percent to 0.9 percent.^{56 57 58}
Reported rates for septicemia range from 0.1 percent, during the index
admission\59\ to 0.3 percent, 90 days following discharge for primary
TKA.\60\ Rates for bleeding and hematoma following TKA have been
reported at 0.94 percent \61\ to 1.7 percent.\62\ Combined, THA and TKA
procedures account for the largest payments for procedures under
Medicare.\63\ Both hip and knee arthroplasty procedures improve the
function and quality of life of patients with disabling arthritis, and
the volume and cost associated with these procedures are very high. We
believe it is important to assess the quality of care provided to
Medicare beneficiaries who undergo one or both of these procedures.
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\51\ Suter L, Grady JL, Lin Z et al.: 2013 Measure Updates and
Specifications: Elective Primary Total Hip Arthroplasty (THA) And/Or
Total Knee Arthroplasty (TKA) All-Cause Unplanned 30-Day Risk-
Standardized Readmission Measure (Version 2.0). 2013. https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
\52\ Bongartz, T, Halligan CS, Osmon D, et al. Incidence and
risk factors of prosthetic joint infection after total hip or knee
replacement in patients with rheumatoid arthritis. Arthritis Rheum.
2008; 59(12): 1713-1720.
\53\ Kurtz S, Ong K, Lau E, Bozic K, Berry D, Parvizi J.
Prosthetic joint infection risk after TKA in the Medicare
population. Clin Orthop Relat Res. 2010;468:5.
\54\ Cram P, Vaughan-Sarrazin MS, Wolf B, Katz JN, Rosenthal GE.
A comparison of total hip and knee replacement in specialty and
general hospitals. J Bone Joint Surg Am. Aug 2007;89(8):1675-1684.
Soohoo NF, Farng E, Lieberman JR, Chambers L, Zingmond, DS. Factors
That Predict Short-term Complication Rates After Total Hip
Arthroplasty. Clin Orthop Relat Res. Sep 2010;468(9):2363-2371.
\55\ Soohoo NF, Farng E, Lieberman JR, Chambers L, Zingmond, DS.
Factors That Predict Short-term Complication Rates After Total Hip
Arthroplasty. Clin Orthop Relat Res. Sep 2010;468(9):2363-2371. Cram
P, Vaughan-Sarrazin MS, Wolf B, Katz JN, Rosenthal GE. A comparison
of total hip and knee replacement in specialty and general
hospitals. J Bone Joint Surg Am. Aug 2007;89(8):1675-1684.
\56\ Mahomed NN, Barrett JA, Katz JN, et al. Rates and outcomes
of primary and revision total hip replacement in the United States
medicare population. J Bone Joint Surg Am. Jan 2003;85- A(1):27-32.
\57\ Khatod M, Inacio M, Paxton EW, et al. Knee replacement:
epidemiology, outcomes, and trends in Southern California: 17,080
replacements from 1995 through 2004. Acta Orthop. Dec
2008;79(6):812-819.
\58\ Solomon DH, Chibnik LB, Losina E, et al. Development of a
preliminary index that predicts adverse events after total knee
replacement. Arthritis & Rheumatism. 2006;54(5):1536-1542.
\59\ Browne, JA, Cook C, Hofmann A, Bolognesi MP. Postoperative
morbidity and mortality following total knee arthroplasty with
computer navigation. Knee. 2010;17(2): 152-156.
\60\ Cram P, Vaughan-Sarrazin MS, Wolf B, Katz JN, Rosenthal GE.
A comparison of total hip and knee replacement in specialty and
general hospitals. J Bone Joint Surg Am. Aug 2007;89(8):1675-1684.
\61\ Browne, JA, Cook C, Hofmann A, Bolognesi MP. Postoperative
morbidity and mortality following total knee arthroplasty with
computer navigation. Knee. 2010;17(2): 152-156.
\62\ Huddleston JI, Maloney WJ, Wang Y, Verzier N, Hunt DR,
Herndon JH. Adverse Events After Total Knee Arthroplasty: A National
Medicare Study. The Journal of Arthroplasty. 2009;24(6, Supplement
1): 95-100.
\63\ Bozic KJ, Rubash HE, Sculco TP, Berry DJ., An analysis of
Medicare payment policy for total joint arthroplasty. J
Arthroplasty. Sep 2008; 23(6 Suppl 1):133-138.
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The proposed measure developed by CMS, and currently implemented in
the Hospital IQR and Hospital Value-Based Purchasing Program, assesses
a hospital's risk standardized complication rate, which is the rate of
complications occurring after elective primary THA and TKA surgery. The
measure outcome is the rate of complications occurring after THA and
TKA during a 90-day period that begins with the date of the index
admission for a specific hospital; an index admission is the
hospitalization to which the complications outcome is attributed. The
following outcomes (either one or more) are considered complications in
this measure: Acute myocardial infarction, pneumonia, or sepsis/
septicemia within 7 days of admission; surgical site bleeding,
pulmonary embolism or death within 30 days of admission; or mechanical
complications, periprosthetic joint infection or wound infection within
90 days of admission. The data indicated that the median hospital-level
risk-standardized complication rate for 2008 was 4.2 percent, with a
range from 2.2 percent to 8.9 percent in hospitals. The variation in
complication rates suggests that there are important differences in the
quality of care delivered across hospitals, and that there is room for
quality improvement. In 2010, we developed the proposed measure of
hospital-level risk-standardized complication rate (RSCR) following
elective primary THA and TKA surgery, which was later endorsed by the
NQF (NQF #1550). In its Pre-Rulemaking Report for 2012,\64\ the Measure
Application Partnership (MAP) also recommended the inclusion of this
measure in the HIQR Program; we have not submitted this measure for use
in the post-acute care settings as the measure was developed for the
acute care hospital setting. This measure has been publicly reported on
Hospital Compare since FY 2014 and in the HIQR Program since FY 2015
(FY 2015 IPPS/LTCH final rule 79 FR 50062). Finally, we note a
comparison of the median hospital-level risk-standardized complication
rates for hospitals between April 1, 2011 and March 31, 2014
illustrates a performance gap (median RSCR of 3.1 percent with a range
from 1.4 percent to 6.9 percent) indicating

[[Page 41279]]

there is still room for quality improvement.\65\
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\64\ National Quality Forum. MAP Final Reports. Available at:
https://www.qualityforum.org/Publications/2012/02/MAP_Pre-Rulemaking_Report__Input_on_Measures_Under_Consideration_by_HHS_for_2012_Rulemaking.aspx. Accessed on April 1 6, 2015, page 78.
\65\ Suter L, Zang W, Parzynski C, et al. 2015 Procedure-
Specific Complication Measures Update and Specifications: Elective
Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty
(TKA) Risk-Standardized Complication Measure (Version 4.0). 2015.
---------------------------------------------------------------------------

(2) Data Sources
We propose to use Medicare Part A and Part B FFS claims submitted
by the participant hospital as the data source to calculate the
measure. Index admission diagnoses and in-hospital comorbidities are
assessed using Medicare Part A claims. Additional comorbidities prior
to the index admission are assessed using Part A inpatient, outpatient,
and Part B office visit Medicare claims in the 1 to 2 months prior to
the index (initial) admission. Enrollment and post-discharge mortality
status are obtained from Medicare's enrollment database which contains
beneficiary demographic, benefits/coverage, and vital status
information.
(3) Cohort
The THA/TKA Complication measure (NQF #1550) includes Medicare FFS
beneficiaries, aged 65 years or older, admitted to non-federal acute
care hospitals for elective primary THA or TKA. THA and TKA procedures
eligible for inclusion are defined using ICD-9-CM codes 81.51 and
81.54, respectively. We propose that the cohort will include all
hospitals included in the CCJR model, but the CCJR model cohort may
differ slightly from the hospital cohort that is currently captured in
the measures through the HIQR program. That is, the CCJR model cohort
is a randomly selected group of acute care hospitals and therefore may
not include all of the HIQR program acute care hospitals (for a
detailed discussion on selection of hospitals for the model see section
III.A.4. of this proposed rule).
(4) Inclusion and Exclusion Criteria
An index admission is the hospitalization to which the complication
outcome is attributed. The measure includes the following index
admissions for patients:
Enrolled in Medicare FFS.
Aged 65 or over.
Enrolled in Part A and Part B Medicare for the 12 months
prior to the date of index admission and during the index admission.
Having a qualifying elective primary THA/TKA procedure;
elective primary THA/TKA procedures are defined as those procedures
without any of the following:
++ Femur, hip, or pelvic fractures coded in principal or secondary
discharge diagnosis fields of the index admission.
++ Partial hip arthroplasty (PHA) procedures with a concurrent THA/
TKA.
++ Revision procedures with a concurrent THA/TKA.
++ Resurfacing procedures with a concurrent THA/TKA.
++ Mechanical complication coded in the principal discharge
diagnosis field.
++ Malignant neoplasm of the pelvis, sacrum, coccyx, lower limbs,
or bone/bone marrow or a disseminated malignant neoplasm coded in the
principal discharge diagnosis field.
++ Removal of implanted devices/prostheses.
++ Transfer from another acute care facility for the THA/TKA.
The following admissions would be excluded from the measure:
Admissions for patients discharged against medical advice
(AMA).
Admissions for patients with more than two THA/TKA
procedure codes during the index hospitalization.
Consistent with the FY 2016 IPPS/LTCH proposed rule,
admissions for patients without at least 90 days post-discharge
enrollment in FFS Medicare; this exclusion is an update to the measure
signaled in the HIQR program section of the FY2016 IPPS/LTCH proposed
rule (80 FR 24572 through 24574) to ensure that disproportionate
Medicare FFS disenrollment does not bias the measure results.
After applying these exclusion criteria, we randomly select one
index admission for patients with multiple index admissions in a
calendar year. Therefore, we exclude the other eligible index
admissions in that year. Identification and use of a single index
admission in a calendar year is done because this measure includes
mortality as an outcome and the probability of death increases with
each subsequent admission, preventing each episode of care from being
mutually independent. Therefore only one index admission is selected to
maintain measure integrity.
We note that THA/TKA Complication measure (NQF #1550) does not
capture patients undergoing partial hip arthroplasty procedures. We
excluded partial hip arthroplasty procedures primarily because partial
hip arthroplasty procedures are done for hip fractures. Therefore, they
are not elective procedures. Also, partial hip arthroplasty procedures
are typically performed on patients who are older, frailer, and have
more comorbid conditions. Although this exclusion is not fully
harmonized with MS-DRG 469 and 470, which includes partial hip
arthroplasty procedures, this measure will still provide strong
incentive for improving and maintaining care quality across joint
replacement patients as hospitals typically develop protocols for lower
extremity joint arthroplasty that will address peri-operative and post-
operative care for both total and partial hip arthroplasty procedures.
As previously cited in the Episode Definition of the CCJR model
(section III.B. of this proposed rule) the frequency of administrative
claims data using ICD-9 codes for 2014 indicated that partial hip
arthroplasty (ICD-9 code: 81.52) accounted for 12 percent of the
administrative claims, while Total Hip replacement (ICD-9 code: 81.51)
and Total Knee replacement (ICD-9 code: 81.54) accounted for 87 percent
of the administrative claims for 2014. We also note that the same
surgeons and care teams frequently perform both procedures. Therefore,
quality improvement efforts initiated in response to the THA/TKA
Complication measure (NQF #1550) are likely to benefit patients
undergoing similar elective procedures, such as partial hip
arthroplasty and revision THA/TKA procedures, and possibly even non-
elective THA/TKA procedures, such as fracture-related THA.
(5) Risk-Adjustment
We note that CCJR-we chose to align this measure with the risk-
adjustment methodologies adopted for the HIQR program and the HRRP in
accordance with section 1886(b)(3)(B)(viii)(VIII) of the Act (FY 2013
IPPS/LTCH final rule 77 FR 53516 through 53518 and FY 2015 IPPS/LTCH
final rule; 79 FR 50024, 50031, and 50202). We note that the risk-
adjustment takes into account the patient case-mix to assess hospital
performance. The patient risk factors are defined using the
Hierarchical Condition Categories (CC), which are clinically relevant
diagnostic groups of ICD-9-CM codes.\66\ The CCs used in the risk
adjustment model for this measure, are provided on the CMS QualityNet
Web site (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228772783162). We note that the measure uses all Part A and B administrative
claims ICD-9 codes for the year prior to and including the index
admission. The Part A and B administrative claims ICD-9 codes are

[[Page 41280]]

used to inform the risk prediction for each patient; diagnostic codes
from post-acute care settings are included in the measure, but this
information is only used to identify a hospital's patient case mix in
order to adequately adjust for differences in case mix across
hospitals. Use of the Part A and B data does not mean the measures are
applicable to post-acute care settings, only that they use
comprehensive data to predict the risk of the outcome and adjust for
hospital patient case mix. The measure would meet the requirement if it
applied since risk-adjustment adjusts for hospital patient mix,
including age and comorbidities, to ensure that hospitals that care for
a less healthy patient population are not penalized unfairly. The
measure methodology defines ''complications'' as acute myocardial
infarction (AMI); pneumonia; sepsis/septicemia; pulmonary embolism;
surgical site bleeding; death; wound infection; periprosthetic joint
infection; and mechanical complication within 0 to 90 days post the
index date of admission, depending on the complication. The decision on
the appropriate follow-up period of 0 to 90 days was based on our
analysis of 90-day trends in complication rates using the 2008 Medicare
FFS Part A Inpatient Data. We found that rates for mechanical
complications are elevated until 90 days post the date of index
admission. We found that the rates for four other complications--death,
surgical site bleeding, wound infection, and pulmonary embolism--are
elevated for 30 days, and that rates for AMI, pneumonia, and sepsis/
septicemia level off 7 days after the date of index admission.
---------------------------------------------------------------------------

\66\ Pope G, Ellis R, Ash A, et al., Principal Inpatient
Diagnostic Cost Group Models for Medicare Risk Adjustment. Health
Care Financing Review. 2000;21(3):26.
---------------------------------------------------------------------------

(6) Calculating the Risk-Standardized Complication Rate and Performance
Period
Analogous to how we calculate hospital risk-standardized
readmission rates with all readmission measures and risk-standardized
mortality rates with the mortality measures used in CMS hospital
quality programs, we calculate the hospital risk-standardized
complication rate by producing a ratio of the number of ``predicted''
complications (that is, the adjusted number of complications at a
specific hospital based on its patient population) to the number of
``expected'' complications (that is, the number of complications if an
average quality hospital treated the same patients) for each hospital
and then multiplying the ratio by the national raw complication rate.
The 3-year rolling performance period would be consistent with that
used for HIQR (FY 2015 IPPS/LTCH final rule 79 FR 50208 and 50209). For
performance year-one of the CCJR model, we propose that the performance
period for the THA/TKA Complication measure (NQF #1550) we propose to
be April 2013 through March 2016. As noted in this proposed rule, the
THA/TKA Readmissions measure (NQF #1551) uses a 30-day window of
follow-up, which is different from the 90-day window of follow-up used
in the THA/TKA Complications measure (NQF #1550). Section III.D.4. of
this proposed rule, Form and Manner, summarizes performance periods for
years 1 through 5 of the CCJR JR model.
We seek public comment on this proposal to assess quality
performance through implementation of the Hospital-level risk-
standardized complication rate (RSCR) following elective primary total
hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1550)
measure.
b. Hospital-Level 30-Day, All-Cause Risk-Standardized Readmission Rate
(RSRR) Following Elective Primary Total Hip Arthroplasty (THA) and/or
Total Knee Arthroplasty (TKA) (NQF #1551)
(1) Background
The objective of CMS's Hospital-level 30-day, all-cause risk-
standardized readmission rate (RSRR) following elective primary total
hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1551)
(as referred to as THA/TKA Readmission measure (NQF #1551)) measure is
to assess readmission from any cause within 30 days of discharge from
the hospital following elective primary THA and TKA. As previously
stated, outcome measures such as complications and readmissions are the
priority areas for the HIQR Program. Elective primary THA and TKA are
commonly performed procedures that improve quality of life. THA and TKA
readmissions are disruptive to patients' quality of life, costly to the
Medicare program, and data support that readmission rates can be
improved through better care coordination and other provider
actions.\67\ Furthermore, we believe that there is an opportunity for
hospitals to improve quality of life for the patient. From July 1, 2011
to June 30, 2014, Medicare FFS claims data indicate that 30-day
hospital-level risk-standardized readmission rates ranged from 2.6
percent to 8.5 percent among hospitals with a median rate of 4.8
percent. The mean risk-standardized readmission rate was 4.9
percent.\68\ This variation suggests there are important differences in
the quality of care received across hospitals, and that there is room
for improvement. A measure that addresses readmission rates following
THA and TKA provides an opportunity to provide targets for efforts to
improve the quality of care and reduce costs for patients undergoing
these elective procedures. The measure also increases transparency for
consumers and provides patients with information that could guide their
choices. We believe that a risk-adjusted readmission outcome measure
can provide a critical perspective on the provision of care, and
support improvements in care for the Medicare patient population
following THA/TKA hospitalization. We note that the THA/TKA Readmission
measure (NQF #1551) has wide stakeholder support, with NQF endorsement
in January 2012, and support by the MAP for the HIQR Program (2012 Pre-
Rulemaking report \19\), and for HRRP (2013 Pre-Rulemaking report
\69\). Finally, THA/TKA Readmission Measure (NQF #1551) has been
publicly reported since FY 2014 (79 FR 50062), and was implemented in
both the HIQR program (77 FR 53519 through 53521) and HRRP (78 FR 50663
and 50664).
---------------------------------------------------------------------------

\67\ Mistiaen P, Francke AL, Poot E. Interventions aimed at
reducing problems in adult patients discharged from hospital to
home: a systematic meta-review. BMC Health Services Research.
2007;7:47.
\68\ Suter L, Desai N, Zang W, et al. 2015 2015 Procedure-
Specific Readmission Measures Updates and Specifications Report:
Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee
Arthroplasty (TKA) Risk-Standardized Readmission Measure (Version
4.0), Isolated Coronary Artery Bypass Graft (CABG) Surgery--Version
2.0. 2015; https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
\69\ National Quality Forum. MAP Final Reports. Available at:
https://www.qualityforum.org/Publications/2013/02/MAP_Pre-Rulemaking_Report_-_February_2013.aspx. Accessed on April 16, 2015,
page 143.
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(2) Data Sources
We propose to use Medicare Part A and Part B FFS claims submitted
by the participant hospital as the data source for calculation of the
THA/TKA Readmission measure (NQF #1551). Index admission diagnoses and
in-hospital comorbidity data are assessed using Medicare Part A claims.
Additional comorbidities prior to the index admission are assessed
using Part A inpatient, outpatient, and Part B office visit Medicare
claims in the 12 months prior to index (initial) admission. Enrollment
status is obtained from Medicare's enrollment database which contains
beneficiary demographic,

[[Page 41281]]

benefit/coverage, and vital status information.
(3) Cohort
The THA/TKA Readmission measure (NQF #1551) includes Medicare FFS
beneficiaries, aged 65 years or older, admitted to non-federal acute
care hospitals for elective primary THA or TKA. THA and TKA procedures
eligible for inclusion are defined using ICD-9-CM codes 81.51 and
81.54, respectively. We propose that the cohort will include all
hospitals included in the CCJR model, but the CCJR model cohort may
differ slightly from the hospital cohort that is currently captured in
the measures through the HIQR program. That is, the CCJR model cohort
is a randomly selected group of acute care hospitals and therefore may
not include all of the HIQR program acute care hospitals (for a
detailed discussion on selection of hospitals for the model see section
III.A. of this proposed rule.)
(4) Inclusion and Exclusion Criteria
We propose that an index admission is the anchor hospitalization to
which the readmission outcome is attributed. The measure includes index
admissions for patients:
Enrolled in Medicare FFS.
Aged 65 or over.
Discharged from non-federal acute care hospitals alive.
Enrolled in Medicare Part A and Part B for the 12 months
prior to the date of index admission and during the index admission.
Having a qualifying elective primary THA/TKA procedure;
elective primary THA/TKA procedures are defined as those procedures
without any of the following:
++ Femur, hip, or pelvic fractures coded in principal or secondary
discharge diagnosis fields of the index admission.
++ Partial hip arthroplasty (PHA) procedures with a concurrent THA/
TKA.
++ Revision procedures with a concurrent THA/TKA.
++ Resurfacing procedures with a concurrent THA/TKA.
++ Mechanical complication coded in the principal discharge
diagnosis field.
++ Malignant neoplasm of the pelvis, sacrum, coccyx, lower limbs,
or bone/bone marrow or a disseminated malignant neoplasm coded in the
principal discharge diagnosis field.
++ Removal of implanted devices/prostheses.
++ Transfer from another acute care facility for the THA/TKA.
This measure excludes index admissions for patients:
++ Without at least 30 days post-discharge enrollment in FFS
Medicare.
++ Discharged against medical advice (AMA).
++ Admitted for the index procedure and subsequently transferred to
another acute care facility.
++ With more than two THA/TKA procedure codes during the index
hospitalization.
Finally, for the purpose of this measure, admissions within 30 days
of discharge from an index admission are not eligible to also be index
admissions. Thus, no hospitalization will be counted as both a
readmission and an index admission in this measure.
This measure does not capture patients undergoing partial hip
arthroplasty procedures, as partial hip arthroplasties are primarily
done for hip fractures and are typically performed on patients who are
older, frailer, and have more comorbid conditions. Although this
exclusion is not fully harmonized with MS-DRG 469 and 470, which
includes partial hip arthroplasty procedures, this measure would still
provide strong incentive for improving and maintaining care quality
across joint replacement patients. We believe the THA/TKA Readmission
measure (NQF #1551) provides strong incentive for quality improvement
because hospitals typically develop protocols for lower extremity joint
arthroplasty that will address peri-operative and post-operative care
for both total and partial hip arthroplasties, and the same surgeons
and care teams frequently perform both procedures. Therefore, quality
improvement efforts initiated in response to the THA/TKA Readmission
measure (NQF #1551) are likely to benefit patients undergoing similar
elective procedures, such as partial hip arthroplasty and revision THA/
TKA procedures, and possibly even non-elective THA/TKA procedures, such
as fracture-related THA.
(5) Risk-Adjustment
We note that CCJR-we chose to align this measure with the risk-
adjustment methodologies adopted for Readmission measure (NQF #1551)
under the HIQR Program in accordance with section
1886(b)(3)(B)(viii)(VIII) of the Act, as finalized in FY 2013 IPPS/LTCH
PPS final rule (77 FR 53519 through 53521). We also note that the
measure risk- adjustment takes into account patient age and
comorbidities to allow a fair assessment of hospital performance. The
measure defines the patient risk factors for readmission using
diagnosis codes collected from all patient claims 1 year prior to
patient index hospitalization for THA and TKA. As previously noted in
the THA/TKA Complication measure (NQF #1550), Part A and B
administrative claims ICD-9 codes are used to inform the risk
prediction for each patient; diagnostic codes from post-acute care
settings are included in the measure, but this information is only used
to identify a hospital's patient case mix in order to adequately adjust
for differences in case mix across hospitals. Use of the Part A and B
data does not mean the measures are applicable to post-acute care
settings, only that they use comprehensive data to predict the risk of
the outcome and adjust for hospital patient case mix. We note that the
patient diagnosis codes are grouped using Hierarchical Condition
Categories (CCs), which are clinically relevant diagnostic groups of
ICD-9-CM codes.\70\ The CCs used in the risk adjustment model for this
measure, are provided on the CMS QualityNet Web site (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1219069856694). In summary, age and comorbidities present at the time of
admission are adjusted for differences in hospital case mix (patient
risk factors). The measure uses the hierarchical logistic regression
model (HLM) statistical methodology for risk adjustment.
---------------------------------------------------------------------------

\70\ Pope G, Ellis R, Ash A, et al., Principal Inpatient
Diagnostic Cost Group Models for Medicare Risk Adjustment. Health
Care Financing Review. 2000;21(3):26.
---------------------------------------------------------------------------

(6) Calculating the Risk-Standardized Readmission Rate and Performance
period
We propose to calculate hospital risk-standardized readmission
rates consistent with the methodology used to risk standardize all
readmission measures and mortality measures used in CMS hospital
quality programs. Using HLM, we calculate the hospital-level elective
primary THA/TKA risk-standardized readmission rate by producing a ratio
of the number of ''predicted'' readmissions (that is, the adjusted
number of readmissions at a specific hospital) to the number of
''expected'' readmissions (that is, the number of readmissions if an
average quality hospital treated the same patients) for each hospital
and then multiplying the ratio by the national raw readmission rate.
The 3-year rolling performance period would be consistent with that
used for the HIQR program (FY 2015 IPPS/LTCH final rule 79 FR 50208 and
50209). For performance year-one of the CCJR model, we propose that the
performance period for the THA/TKA Readmission measure (NQF

[[Page 41282]]

#1551) would be July 2013 through June 2016. As noted in this proposed
rule for the section on the THA/TKA Complications measure (NQF #1550),
there is a 90-day window of follow-up which is different from the THA/
TKA Readmissions measure (NQF #1551). Section III.D.4.Form and Manner,
of this proposed rule summarizes performance periods for years 1
through 5 of the CCJR model years.
We invite public comments on this proposal to include Hospital-
level 30-day, all-cause risk-standardized readmission rate (RSRR)
following elective primary total hip arthroplasty (THA) and/or total
knee arthroplasty (TKA) (NQF #1551) or both in the CCJR model to assess
quality performance. We also invite public comment on inclusion of
other potential quality measures in the model.
c. Hospital Consumer Assessment of Healthcare Providers and Systems
(HCAHPS) Survey
(1) Background
The HCAHPS Survey (NQF #0166) is a CMS survey and a national,
standardized, publicly reported survey of patients' experience of
hospital care. The HCAHPS Survey is endorsed by the NQF (#0166); CMS is
the measure steward. The HCAHPS survey, also known as CAHPS[supreg]
Hospital Survey, is a survey instrument and data collection methodology
for measuring patients' perceptions of their hospital experience. The
HCAHPS Survey asks recently discharged patients 32 questions about
aspects of their hospital experience that they are uniquely suited to
address. The core of the survey contains 21 items that ask ``how
often'' or whether patients experienced a critical aspect of hospital
care. The survey also includes four items to direct patients to
relevant questions, five items to adjust for the mix of patients across
hospitals, and two items that support Congressionally-mandated reports
(see 77 FR 53513 through 53515). Eleven HCAHPS measures (seven
composite measures, two individual items and two global items) are
currently publicly reported on the Hospital Compare Web site for each
hospital participating in the HIQR Program (see 79 FR 50259.) Each of
the seven currently reported composite measures is constructed from two
or three survey questions. The seven composites summarize the
following:
How well doctors communicate with patients.
How well nurses communicate with patients.
How responsive hospital staff are to patients' needs.
How well hospital staff helps patients manage pain.
How well the staff communicates with patients about
medicines.
Whether key information is provided at discharge.
How well the patient was prepared for the transition to
post-hospital care.
Lastly, the two individual items address the cleanliness and
quietness of patients' rooms, while the two global items report
patients' overall rating of the hospital, and whether they would
recommend the hospital to family and friends. We propose to adopt a
measure in the CCJR model that uses HCAHPS survey data to assess
quality performance and capture patient experience of care.
(2) Data Sources
The HCAHPS Survey is administered to a random sample of adult
inpatients between 48 hours and 6 weeks after discharge. As previously
discussed in section III.D.5. of this proposed rule, the HCAHPS survey
data is collected on inpatient experience, is not limited to Medicare
beneficiaries, and does not distinguish between types of Medicare
beneficiaries. Patients admitted in the medical, surgical and maternity
care service lines are eligible for the survey; the survey is not
restricted to Medicare beneficiaries. Hospitals may use an approved
survey vendor, or collect their own HCAHPS data (if approved by CMS to
do so) (for a detailed discussion see 79 FR 50259). To accommodate
hospitals, the HCAHPS Survey can be implemented using one of the
following four different survey modes:
Mail.
Telephone.
Mail with telephone follow-up.
Active Interactive Voice Recognition (IVR).
Regardless of the mode used, hospitals are required to make
multiple attempts to contact patients. Hospitals may use the HCAHPS
Survey alone, or include additional questions after the 21 core items
discussed previously. Hospitals must survey patients throughout each
month of the year, and hospitals participating in the HIQR Program must
target at least 300 completed surveys over 4 calendar quarters in order
to attain the reliability criterion CMS has set for publicly reported
HCAHPS scores (see 79 FR 50259). The survey itself and the protocols
for sampling, data collection, coding, and file submission can be found
in the current HCAHPS Quality Assurance Guidelines manual, available on
the HCAHPS Web site located at: https://www.hcahpsonline.org. (The
HCAHPS Survey is available in several languages, and all official
translations of the HCAHPS Survey instrument are available in the
current HCAHPS Quality Assurance Guidelines at https://www.hcahpsonline.org/qaguidelines.aspx.)
(3) Cohort
Hospitals, or their survey vendors, submit HCAHPS data in calendar
quarters (3 months). Consistent with other quality reporting programs,
we propose that HCAHPS scores would be publicly reported on Hospital
Compare based on 4 consecutive quarters of data. For each public
reporting, the oldest quarter of data is rolled off, and the newest
quarter is rolled on (see 79 FR 50259).
(4) Inclusion and Exclusion Criteria
The HCAHPS Survey is broadly intended for patients of all payer
types who meet the following criteria:
Eighteen years or older at the time of admission.
Admission includes at least one overnight stay in the
hospital.
Non-psychiatric MS-DRG/principal diagnosis at discharge.
Alive at the time of discharge.
There are a few categories of otherwise eligible patients who are
excluded from the sample frame as follows:
``No-Publicity'' patients--Patients who request that they
not be contacted.
Court/Law enforcement patients (that is, prisoners);
patients residing in halfway houses are included.
Patients with a foreign home address (U.S. territories--
Virgin Islands, Puerto Rico, Guam, American Samoa, and Northern Mariana
Islands are not considered foreign addresses and are not excluded).
Patients discharged to hospice care (Hospice-home or
Hospice-medical facility).
Patients who are excluded because of state regulations.
Patients discharged to nursing homes and skilled nursing
facilities.
The HCAHPS Survey is intended for short-term, acute care hospitals.
Both IPPS and Critical Access Hospitals participate in the survey;
specialty hospitals, psychiatric hospitals and children's hospitals do
not.
(5) Case-Mix-Adjustment
To ensure that HCAHPS scores allow fair and accurate comparisons
among hospitals, CMS adjusts for factors that are not directly related
to hospital performance but which affect how patients answer survey
items. This includes the mode of survey administration and
characteristics of

[[Page 41283]]

patients that are out of a hospital's control. Patient-mix adjustments
(also known as case-mix adjustment) control for patient characteristics
that affect ratings and that are differentially distributed across
hospitals. Most of the patient-mix items are included in the ``About
You'' section of the survey, while others are taken from hospital
administrative records. Based on the HCAHPS mode experiment,\71\ and
consistent with previous studies of patient-mix adjustment in HCAHPS
and in previous hospital patient surveys, we employ the following
variables in the patient-mix adjustment model:
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\71\ The Effects of Survey Mode, Patient Mix, and Nonresponse on
CAHPS Hospital Survey Scores.'' M.N. Elliott, A.M. Zaslavsky, E.
Goldstein, W. Lehrman, K. Hambarsoomian, M.K. Beckett and L.
Giordano. Health Services Research, 44 (2): 501-518. 2009.
---------------------------------------------------------------------------

Self-reported general health status (specified as a linear
variable).
Education (specified as a linear variable).
Type of service (medical, surgical, or maternity care).
Age (specified as a categorical variable).
Admission through emergency room (discontinued in 2010).
Lag time between discharge and survey.
Age by service line interaction.
Language other than English spoken at home.
Once the data are adjusted for patient-mix, there is a fixed
adjustment for the mode of survey administration (mail, telephone, mail
with telephone follow-up, and active Interactive Voice Response).
Information on patient-mix adjustment (risk adjustment) and survey
mode adjustment of HCAHPS scores can be found at https://www.hcahpsonline.org/modeadjustment.aspx.
(6) HCAHPS Scoring
Regarding the HCAHPS survey measure, we identified the methodology
used to assess hospitals in the HIQR program as reasonable for use in
the CCJR model since this is a survey that many hospitals and patients
are familiar with. In determining HCAHPS performance, we propose to
utilize the HCAHPS Linear Mean Roll-up (HLMR) score. The HLMR
summarizes performance across the 11 publicly reported HCAHPS measures
for IPPS hospitals with 100 or more completed HCAHPS surveys in a 4-
quarter period. The HLMR is calculated by taking the average of the
linear mean scores (LMS) for each of the 11 publicly reported HCAHPS
measures. The LMS, which was created for the calculation of HCAHPS Star
Ratings, summarizes all survey responses for each HCAHPS measure; a
detailed description of LMS can be found in HCAHPS Star Rating
Technical Notes, at https://www.hcahpsonline.org/StarRatings.aspx.
We propose that hospitals participating in the CCJR model also have
at least 100 completed HCAHPS surveys over a given 4-quarter period to
be evaluated on HCAHPS for the CCJR model.
The responses to the survey items used in each of the 11 HCAHPS
measures described previously are combined and converted to a 0 to 100
linear-scaled score (LMS) as follows:
``Never'' = 0; ``Sometimes'' = 33\1/3\; ``Usually'' =
66\2/3\; and ``Always'' = 100 (For HCAHPS Survey items 1-9, 11, 13-14,
and 16-17).
``No'' = 0; and ``Yes'' = 100 (For items 19 and 20).
Overall Rating ``0'' = 0; Overall Rating ``1'' = 10;
Overall Rating ``2'' = 20; . . .; Overall Rating ``10'' = 100 (For item
21).
``Definitely No'' = 0; ``Probably No'' = 33\1/3\;
``Probably Yes'' = 66\2/3\; and ``Definitely Yes'' = 100 (For item 22).
``Strongly Disagree'' = 0; ``Disagree'' = 33\1/3\;
``Agree'' = 66\2/3\; and ``Strongly Agree'' = 100 (For items 23, 24,
and 25).
The 0 to 100 linear-scaled HCAHPS scores are then adjusted for
patient mix, survey mode, and quarterly weighting, see https://www.hcahpsonline.org/files/HCAHPS_Stars_Tech_Notes_Apr2015.pdf.
The HLMR summarizes performance across the 11 HCAHPS measures by
taking an average of each of the LMS of the 11 HCAHPS measures, using a
weight of 1.0 for each of the 7 HCAHPS composite measures, and a weight
of 0.5 for each of the single item measures (Cleanliness, Quietness,
Overall Hospital Rating and Recommend the Hospital). The HLMR is
calculated to the second decimal place. Once the HLMR score is
determined for a participant hospital, the hospital's percentile of
performance can be determined based on the national distribution of
hospital performance on the score.
(7) Performance Period
We propose to be consistent with the HIQR program, which uses four
quarters of data (79 FR 50259). For the CCJR model, we propose to use
the most recently available HCAHPS 4-quarter roll-up to calculate the
HLMR score for the initial year of the CCJR model. The performance
period would assess data on patients discharged from July 1, 2015
through June 30, 2016. Section III.D.4 of this proposed rule, Form and
Manner, summarizes performance periods for years 1 through 5 of the
CCJR model years.
We invite public comments on this proposal to include HCAHPS Survey
in the CCJR model to assess quality performance and capture patient
experience of care.
d. Applicable Time Period
In order to align as much as is reasonably possible with other CMS
hospital quality and public reporting programs in which these three
measures are implemented, we propose for the THA/TKA Complication
measure (NQF #1550) and the THA/TKA Readmission measure (NQF #1551)
performance time periods to be consistent with the HIQR, HVBP and HRRP
programs. These programs use a 3-year rolling performance (see section
III.D.2.b.(6). of this proposed rule) or applicable period for the
Hospital-level 30-day, all-cause risk-standardized readmission rate
(RSRR) following elective primary total hip arthroplasty (THA) and/or
total knee arthroplasty (TKA) (NQF #1551) and the Hospital-level risk-
standardized complication rate (RSCR) following elective primary total
hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1550)
measures. We similarly propose a 3-year rolling performance period for
the THA/TKA Complication measure (NQF #1550) and the THA/TKA
Readmission measure (NQF #1551) because a 3-year performance period
yields the most consistently reliable and valid measure results. We
also propose the 3-year rolling performance periods for the THA/TKA
Complication measure (NQF #1550) and the THA/TKA Readmission measure
(NQF #1551) because hospitals are intimately familiar with these
measures. We note that reconciliation payments to hospitals as part of
the CCJR are dependent upon both cost and quality outcome measures, and
that making reconciliation payments solely based on cost has the
potential to lead to reduced access and stinting of care. In order to
address these possibilities the inclusion of performance on outcome
measures is critical to ensure access and high quality care for
patients undergoing these procedures. The only way to include reliable
quality measures in the model upon which to base reconciliation
payments for 2016 is to use measures that have a performance period
that precedes the effective date of the model. Furthermore, from a
measure reliability and validity perspective, it is imperative to have
at least 4 quarters of data for HCAHPS survey measures and

[[Page 41284]]

3 years of data for the THA/TKA readmission and complications measures.
We intentionally chose outcome and patient experience measures for
which hospitals that are already financially accountable in other IPPS
programs. Consequently, the performance periods are the same periods
for the THA/TKA readmission and complications measures between the CCJR
model, HIQR, HVBP and HRRP programs. For the HCAHPS survey measures,
there is overlap with the performance periods for the CCJR model and
HIQR. Given that there is no downward payment adjustment associated
with the CCJR model, that hospitals are already familiar with these
measures as part of the Hospital IQR program, Hospital VBP program, and
the Hospital readmission reduction program, and that hospitals are
already held financially accountable for these measures, we believe it
is appropriate and necessary to use performance periods that precede
the effective date of the CCJR model. For the HCAHPS Survey measure, we
would continue to use a 4 quarter performance period as in the HIQR
program, but would not align with the Hospital IQR program performance
period. We initially considered using the same Hospital IQR program
performance period for the HCAHPS survey measures but realized that
should we use the same Hospital IQR program performance periods for the
CCJR model, other CCJR model timeframes and policy goals would not be
met. Such policy goals like calculating reconciliation payment
adjustments in a timely fashion during the 2nd quarter of each year. We
note that HCAPHS survey results are not available until the 3rd quarter
of each year. For this reason, we are not proposing that the HCAHPS
survey performance period follow the HIQR program performance periods.
We also propose that HCAHPS survey scores be calculated from 4
consecutive quarters of survey data; publicly reported HCAHPS results
are also based on 4 quarters of data (79 FR 50259).
3. Possible New Outcomes for Future Measures
a. Hospital-Level Performance Measure(s) of Patient-Reported Outcomes
Following Elective Primary Total Hip and/or Total Knee Arthroplasty
(1) Background
As part of our goal to move towards outcome measures that assess
patient reported outcomes, we have begun development on a measure to
assess improvement in patient-reported outcomes following THA/TKA
procedures. The Hospital-Level Performance Measure(s) of Patient-
Reported Outcomes Following Elective Primary Total Hip and/or Total
Knee Arthroplasty (hereinafter referred to as ''THA THA/TKA patient-
reported outcome-based measure'') is currently under development. We
specifically chose to focus on THA/TKA procedures since THA/TKAs are
important, effective procedures performed on a broad population, and
the patient outcomes for these procedures (for example, pain, mobility,
and quality of life) can be measured in a scientifically sound way and
are also influenced by a range of improvements in
care.^{72 73 74} We also note that THA/TKA procedures are
specifically intended to improve function and reduce pain, making
patient-reported outcomes the most meaningful outcome metric to assess
for these common, costly procedures. Patient-reported outcomes will be
assessed separately for THA and TKA procedures, though these results
may be combined into a single composite measure for reporting.
Therefore, we will refer to a single measure, but acknowledge the
possibility of two measures, one for THA patients and one for TKA
patients.
---------------------------------------------------------------------------

\72\ Monticone M, Ferrante S, Rocca B, et al. Home-based
functional exercises aimed at managing kinesiophobia contribute to
improving disability and quality of life of patients undergoing
total knee arthroplasty: a randomized controlled trial. Archives of
physical medicine and rehabilitation. Feb 2013;94(2):231-239.
\73\ Galea MP, Levinger P, Lythgo N, et al. A targeted home- and
center-based exercise program for people after total hip
replacement: a randomized clinical trial. Archives of physical
medicine and rehabilitation. Aug 2008;89(8):1442-1447.
\74\ Moffet H, Collet JP, Shapiro SH, Paradis G, Marquis F, Roy
L. Effectiveness of intensive rehabilitation on functional ability
and quality of life after first total knee arthroplasty: A single
blind randomized controlled trial. Archives of physical medicine and
rehabilitation. Apr
2004;85(4):546-556.
---------------------------------------------------------------------------

During measure development, we discovered that in order to complete
measure development, we would need access to a nationally
representative sample of THA and TKA inpatient surgical procedure
patient-reported outcome data set that is also consistently collected
at the hospital-level and contains risk variables identified by
orthopedists. The rationale for requesting access to a national THA and
TKA inpatient surgical procedures patient-reported data source are
twofold: (1) A national data source would provide us with hospital-
level data representative of the total number of THA and TKA procedures
performed in hospitals, as well as representative data on hospital-
level case-mix; and (2) access to a national THA and TKA inpatient
surgical procedures patient-reported data source would allow us to
assess and identify a set of parsimonious data elements that will
minimize the data collection burden by patients, physicians and
hospitals. We believe access to such data would allow for completion
and testing of the current measure under development that can be
appropriately used for nationwide hospital performance evaluation. We
also believe the CCJR model provides a unique opportunity to resolve
these measure development issues through the collection of THA and TKA
patient--reported outcome data. Access to this data through the CCJR
Model would address the following:
Current data sources are not consistently collected nor
collected in a uniform process and in a standardized format (that is,
data elements are not consistently defined across different data
sources). We note that currently available data sources tend to be
limited to single hospitals or regional registries which are associated
with complex data access sharing requirements.
Current lack of uniform hospital-level data that can be
used in measure development.
Lack of incentive for physicians and hospitals to collect
patient-reported outcome data such as that through the model's
financial incentives associated with voluntary data submission.
Current lack of a technically simple and feasible
mechanism for hospitals to submit patient-reported data to CMS. This
model would help create and optimize such a mechanism, potentially
enabling future measure implementation.
In summary, the voluntary data collection initiative in the CCJR
model would provide data from the patient's perspective that is
necessary to finalize and test the measure specifications, including
the risk model. Access to this national representative voluntarily
submitted data would enable us to do the following:
Determine a parsimonious set of risk factors that are
statistically adequate for risk adjustment for patient-reported
outcome.
Examine the differences in hospital performance related to
different components in the patient-reported outcome (such as
functional status, pain, etc.) to finalize the statistical modeling
methodology for risk adjustment.
Evaluate the reliability of the patient-reported outcome
measure.
Examine validity of the patient-reported outcome measure
upon finalization of the risk adjustment

[[Page 41285]]

model via potential testing methods such as face validity testing with
national experts, comparing the measure results to similar results
based on other data sources if feasible, etc.
In order to encourage participation with voluntary data submission
of patient-reported outcome data, we are proposing to seek and reward
voluntary participation in submission of THA/TKA patient-reported
outcome-based measure data as outlined in section III.D.5.b. of this
proposed rule. We note that we would not publicly report the THA/TKA
voluntary data.
Finally, we intend to use a fully tested and completed THA/TKA
patient-reported outcome-based measure in CMS models or programs when
appropriate. If there is a decision to implement the fully developed
THA/TKA patient-reported outcome-based measure, such as in the CCJR
model, we would propose to adopt the measure through notice and comment
rulemaking. We refer reviewers to draft measure specifications in the
downloads section of the Measure Methodology Web page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
(2) Data Sources
As previously discussed, this measure is under development, and we
are proposing to reward participant hospitals that volunteer to submit
provider- and patient- level data elements. We note that there is
currently little uniformity across hospitals regarding collection of
specific provider- and patient-level data elements that are used to
assess patient outcomes after THA and TKA inpatient procedures. In the
voluntary data submission for the THA/TKA patient-reported outcome-
based measure, we are trying to identify a uniform set of provider- and
patient-level data elements that are accurate, valid, and reliable
pieces of information that can be used in the determination of
improvement in various patient characteristics like those previously
listed (that is, pain, mobility, and quality of life). Furthermore, in
order to minimize provider and hospital burden associated with data
collection and submission of provider- and hospital-level data
elements, we propose using a variety of data sources for measure
development. We anticipate using the following data sources are:
Patient-reported data;
Administrative claims-based data; and
One or both physician-reported and electronic health
record data.
Through this voluntary data submission proposal, we hope to
identify a uniform set of provider- and patient-level data elements
while also identifying data sources that are the least burdensome for
the patients, providers, and hospitals. We propose to request that
participant hospitals provide administrative claims-based data whenever
possible, in order to minimize burden on patients, providers, and
hospitals. Additionally, we propose to request that participant
hospitals submit either hospital documentation, chart abstraction, or
abstraction from the electronic health records. We propose to request
submission of the following data elements:
Pre-operative Assessments (to be collected between 90 and
0 days prior to THA/TKA procedure):
++ Age.
++ Date of Birth.
++ Gender.
++ Ethnicity.
++ THA or TKA procedure.
++ Date of admission to anchor hospitalization.
++ Date of discharge from anchor hospitalization.
++ Date of eligible THA/TKA procedure.
++ Medicare Health Insurance Claim Number.

--PROMIS Global (all items).
++ VR-12 (all items.)

++ For TKA patients Knee injury and Osteoarthritis Outcome Score
(KOOS \75\) (all items).
---------------------------------------------------------------------------

\75\ What is the KOOS? Available at: https://www.koos.nu/koospresentation.html. Accessed on April 15, 2015.
---------------------------------------------------------------------------

++ For THA patients Hip disability and Osteoarthritis Outcome Score
(HOOS \76\) (all items).
---------------------------------------------------------------------------

\76\ What is the HOOS? Available at: https://www.koos.nu/hoospres.html. Accessed on April 15, 2015.
---------------------------------------------------------------------------

++ Body Mass Index.
++ Presence of live-in home support, including spouse.
++ Use of chronic (>= 90 day) narcotics.

--American Society of Anesthesiologists (ASA) physical status
classification.

++ Charnley Classification.
++ Presence of retained hardware.

--Total painful joint count.
--Quantified spinal pain.

++ Joint range of motion in degrees (specify hip or knee).
++ Use of gait aides.
++ For THA patients abductor muscles strength.
++ For THA patients presence of Trendelenberg gait.
++ For THA patients history of congenital hip dysplasia or other
congenital hip disease.
++ For THA patients presence of angular, translational, or
rotational deformities of the proximal femur (in degrees).
++ For TKA patients anatomic angle (femoro-tibial angle) in degrees
with varus/valgus.
++ For TKA patients knee extensor strength.
++ Single Item Health Literacy Screening (SILS2) questionnaire.\77\
---------------------------------------------------------------------------

\77\ Wallace LS, Rogers ES, Roskos SE., Holiday DB, Weiss BD.
Screening items to identify patients with limited health literacy
skills. J Gen Intern Med. 2006;21:874-7.
---------------------------------------------------------------------------

Post-operative Assessments (To be collected between 270
and 365 days following THA/TKA procedure):
++ Age.
++ Date of Birth.
++ Gender.
++ Date of admission to anchor hospitalization.
++ Date of discharge from anchor hospitalization.
++ Date of eligible THA/TKA procedure
++ Medicare Health Insurance Claim Number

--PROMIS Global (all items).

++ VR-12 (all items).

--For TKA patients, Knee injury and Osteoarthritis Outcome Score (KOOS
\78\) (all items).
---------------------------------------------------------------------------

\78\ Roos EM, Roos HP, Lohmander LS, Ekdahl C, Beynnon BD. Knee
Injury and Osteoarthritis Outcome Score (KOOS)--development of a
self-administered outcome measure. J Orthop Sports Phis There. 1998
Aug;28(2):88-96.
---------------------------------------------------------------------------

--For THA patients, Hip disability and Osteoarthritis Outcome Score
(HOOS \79\) (all items).
---------------------------------------------------------------------------

\79\ What is the HOOS? Available at: https://www.koos.nu/hoospres.html. Accessed on April 15, 2015.

Finally, we note that as the measure continues to undergo
development that the list of data elements may be simplified. As stated
earlier in this section entitled Data Sources, we intend identify a
uniform set of provider- and patient-level data elements that are
accurate, valid and reliable pieces of information that can be used in
the determination of improvement in various patient-reported outcomes
like those previously listed (that is, pain, mobility, and quality of
life). We anticipate, via public comment and experience with the
voluntary data submission, that the set of data elements listed
previously will be simplified.
In accordance with, and to the extent permitted by, the HIPAA
Privacy Rule and other applicable law, we propose to request that
participant hospitals submit

[[Page 41286]]

the data specified in the request, which we would limit to the minimum
data necessary for us to conduct quality assessment and improvement
activities. Regarding the process for data collection, we propose the
THA/TKA voluntary data will be submitted to and collected by a CMS
contractor in a manner and format similar to existing CMS data
submission processes. For example, CMS would supply applicable
hospitals with a file template and instructions for populating the file
template with data and submitting the data; the hospitals will populate
the template, log in to a secure portal, and transmit the file to the
appropriate CMS contractor; the CMS contractor would also match the
submitted data to Medicare administrative claims-based data and
calculate completeness for determination of the reconciliation payment
as noted in section III.C.5 of this proposed rule (or validated
subscales or abbreviated versions of these instruments). We believe
that participation in the submission of THA/TKA--voluntary data will
provide the minimum information we would need that would inform us on
how to continuously improve the currently specified measure in
development.
We note that some of these data elements are closely aligned with
data elements in e-clinical measures submitted by eligible
professionals for the Medicare EHR Incentives Program for Eligible
Professionals. Specifically these EHR Incentives Program measures for
eligible professionals are: (1) Functional Status Assessment for Knee
replacement (CMS 66); and (2) Functional Status Assessment for Hip
replacement (CMS 56). We refer reviewers to CMS.gov EHR Incentives
Program 2014 Eligible Professional June 2015 zip file update at https://cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/Downloads/eCQM_2014_EP_June2015.zip for full measure specifications. We
believe it is possible that many health IT vendors are already
certified to capture, calculate and report these provider-level
measures of functional status on total knee and total hip arthroplasty,
and therefore we anticipate that the provider-level data elements that
are identical to the THA/TKA patient-reported outcome voluntary data
elements previously listed may not be as burdensome for the CCJR model
participant hospitals to voluntarily submit.
(3) Cohort
The measure cohort(s) includes Medicare FFS beneficiaries, aged 65
years or older, admitted to non-federal acute care hospitals for
elective primary THA or TKA. We would exclude from the cohort patients
with fractures and mechanical complications or those undergoing
revision procedures. THA and TKA patient-reported outcomes will be
assessed separately but may be combined into a single composite measure
for reporting.
(4) Inclusion and Exclusion Criteria
The measure cohort inclusion criteria are all patients undergoing
elective primary THA/TKA procedures. Exclusion criteria will consist of
patients undergoing non-elective procedures (that is, patients with
fractures resulting in THA/TKA), as it is unfeasible to routinely
capture pre-operative patient-reported assessments in these patients;
patients with mechanical complications of prior hip and knee joint
procedures and those undergoing revision THA/TKA will also be excluded,
as their patient-reported outcomes may be influenced by prior care
experiences and therefore may not adequately represent care quality of
the hospital performing the revision procedure.
(5) Outcome
The measure will assess change between pre- and post-operative
patient-reported outcomes for THA and TKA separately or as a composite
measure for both procedures. The measure will use one or more of the
following patient-reported outcome instruments (or validated subscales
or abbreviated versions of these instruments) to calculate the measure
score: the Patient Reported Outcomes Measurement Information Systems
(PROMIS)-Global or the Veterans Rand 12 Item Health Survey (VR-12), and
the Hip dysfunction and Osteoarthritis Outcome Score/Knee injury and
Osteoarthritis Outcome Score (HOOS/KOOS) instruments to measure pre-
and postoperative improvement or both. These candidate instruments were
selected by a Technical Expert Panel based upon their meaningfulness to
patients and clinicians, performance characteristics such as
reliability, responsiveness and validity, and their perceived burden to
both patients and providers. The pre-operative data collection
timeframe will be 90 to 0 days before surgery, and the post-operative
data collection timeframe will be 270 to 365 days following surgery.
The approach to calculating the improvement or worsening of patient
outcomes represented by the pre- and postoperative patient-reported
survey results has not yet been determined, but will use one or more
surveys to define the improvement or worsening of patient-reported
outcomes to reliably identify differences between hospitals of varying
performance.
(6) Risk-Adjustment (If Applicable)
We note that the measure's risk model has yet to be developed. In
order to develop the risk model, final risk variable selection for the
risk model will involve empirical testing of candidate risk variables
as well as consideration of the feasibility and reliability of each
variable. The risk model will account for the hospital level response
rate as well as measureable patient-level factors relevant to patient-
reported outcomes following elective THA/TKA procedures. To the extent
feasible, the risk model methodology will adhere to established
statistical recommendations.\80\
---------------------------------------------------------------------------

\80\ Ash AS, Fiengerg SE., Louis TA, Normand ST, Stukel TA, Utts
J. STATISTICAL ISSUES IN ASSESSING HOSPITAL PERFORMANCE,
Commissioned by the Committee of Presidents of Statistical
Societies. Original report submitted to CMS on November 28, 2011,
Revised on January 27, 2012. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Downloads/Statistical-Issues-in-Assessing-Hospital-Performance.pdf. Accessed on April 15, 2015.
---------------------------------------------------------------------------

(7) Calculating the Risk-Standardized Rate
We note that the approach to reporting this measure(s) has yet to
be developed. The measure will assess change in patient-reported
outcomes between the pre-operative (90 to 0 days prior to the elective
primary THA/TKA procedure) and post-operative (270-365 days following
the elective primary THA/TKA procedure) periods.
We invite public comments on this proposal to seek voluntary
participation in submitting data for a Hospital-Level Performance
Measure of Patient-Reported Outcomes Following Elective Primary Total
Hip and/or Total Knee Arthroplasty. We also welcome comments on the
appropriateness of this voluntary data collection for this model and
the specific data collection requirements (see section III.D.3.a.(9) of
this proposed rule) and data elements proposed.
(8) Performance Period
We propose defining performance periods for each year of the model
as outlined in Table 16. A performance period for the voluntary THA/TKA
data submission, are those timeframes in which an anchor hospital
admission occurs for eligible THA/TKA voluntary data submission
procedure. For the first year of the CCJR model, hospitals voluntarily
submitting data will only be

[[Page 41287]]

asked to submit data for a 3-month period. The 3-month period for THA/
TKA voluntary data reporting was identified due to data processing and
coordination of other proposed timelines in this model. Data submitted
for the first year would be for cases that fulfill the measure
specifications described in section III.D.3.a. of this proposed rule,
and would be restricted to the pre-operative data elements on cases
performed between April 1, 2016 and June 30, 2016. The proposed timing
allows matching of the patient-reported data with relevant
administrative claims-based data in order to accurately calculate the
percent of eligible elective primary THA/TKA patients for which THA/TKA
voluntary data was successfully submitted. The April 1st date
acknowledges the measure requirement of the 90-day window prior to
surgery during which hospitals can collect pre-operative data. The June
30th end date was selected because it correlates with the THA/TKA
readmission measure performance period end date currently implemented
for the HIQR program and the HRRP. Both of these dates provide the
greatest feasibility for data collection.
For year 2, THA/TKA voluntary data reporting would be 3 months of
post-operative data for cases performed between April 1, 2016 and June
30, 2016, and 12 months of pre-operative data for cases performed
between July 1, 2016 and June 30, 2017.
For year 3 and subsequent years of the model, the performance
periods for submission of voluntary data will consist of 12-month time
periods.

Table 16--Example of Potential Performance Periods for Pre- and Post-Operative THA/TKA Voluntary Data Submission
----------------------------------------------------------------------------------------------------------------
Patient population eligible Requirements for successful
CCJR model year Performance period for THA/TKA voluntary data THA/TKA voluntary data
submission submission *
----------------------------------------------------------------------------------------------------------------
2016................... April 1, 2016 through All patients undergoing Submit PRE[dash]operative
June 30, 2016. elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
April 1, 2016 and June 30, procedures performed between
2016. April 1, 2016 and June 30,
2016.
2017................... April 1, 2016 through All patients undergoing Submit POST[dash]operative
June 30, 2016. elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
April 1, 2016 and June 30, procedures performed between
2016. April 1, 2016 and June 30,
2016.
2017................... July 1, 2016 through June All patients undergoing Submit PRE[dash]operative
30, 2017. elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
July 1, 2016 and June 30, procedures performed between
2017. July 1, 2016 and June 30,
2017.
2018................... July 1, 2016 through June All patients undergoing Submit POST[dash]operative
30, 2017. elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
July 1, 2016 and June 30, procedures performed between
2017. July 1, 2016 and June 30,
2017.
2018................... July 1, 2017 through June All patients undergoing Submit PRE[dash]operative
30, 2018. elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
July 1, 2017 and June 30, procedures performed between
2018. July 1, 2017 and June 30,
2018.
2019................... July 1, 2017 through June All patients undergoing Submit POST[dash]operative
30, 2018. elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
July 1, 2017 and June 30, procedures performed between
2018. July 1, 2017 and June 30,
2018.
2019................... July 1, 2018 through June All patients undergoing Submit PRE[dash]operative
30, 2019. elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
July 1, 2018 and June 30, procedures performed between
2019. July 1, 2018 and June 30,
2019.
2020................... July 1, 2018 through June All patients undergoing Submit POST[dash]operative
30, 2019. elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
July 1, 2018 and June 30, procedures performed between
2019. July 1, 2018 and June 30,
2019.
2020................... July 1, 2019 through June All patients undergoing Submit PRE[dash]operative
30, 2020. elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
July 1, 2019 and June 30, procedures performed between
2020. July 1, 2019 and June 30,
2020.
2016................... 3 months................. All patients undergoing Submit PRE[dash]operative
elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
April 1, 2016 and June 30, procedures performed between
2016. April 1, 2016 and June 30,
2016.
2017................... 15 months................ All patients undergoing 1. Submit POST[dash]operative
elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
April 1, 2016 and June 30, procedures performed between
2017. April 1, 2016 and June 30,
2016.
2. Submit PRE[dash]operative
data on primary elective THA/
TKA procedures for >=80% of
procedures performed between
July 1, 2016 and June 30,
2017.
2018................... 24 months................ All patients undergoing 1. Submit POST[dash]operative
elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
July 1, 2016 and June 30, procedures performed between
2018. July 1, 2016 and June 30,
2017.

[[Page 41288]]

2. Submit PRE[dash]operative
data on primary elective THA/
TKA procedures for >=80% of
procedures performed between
July 1, 2017 and June 30,
2018.
2019................... 24 months................ All patients undergoing 1. Submit POST[dash]operative
elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
July 1, 2017 and June 30, procedures performed between
2019. July 1, 2017 and June 30,
2018.
2. Submit PRE[dash]operative
data on primary elective THA/
TKA procedures for >=80% of
procedures performed between
July 1, 2018 and June 30,
2019.
2020................... 24 months................ All patients undergoing 1. Submit POST[dash]operative
elective primary THA/TKA data on primary elective THA/
procedures performed between TKA procedures for >=80% of
July 1, 2018 and June 30, procedures performed between
2020. July 1, 2018 and June 30,
2019.
2. Submit PRE[dash]operative
data on primary elective THA/
TKA procedures for >=80% of
procedures performed between
July 1, 2019 and June 30,
2020.
----------------------------------------------------------------------------------------------------------------
* Requirements for determining successful submission of THA/TKA voluntary data are located in section
III.D.3.a.(9) of this proposed rule.

The proposed performance period enables hospitals to receive
incentives for data collection starting in performance year-one, even
though complete pre-operative and post-operative data collection
requires a minimum 9 through 12 month time period. This 9 through 12
month time period, between the procedure and post-operative data
collection, was defined through clinician and stakeholder input and
provides for both sufficient elapsed time for maximum clinical benefit
of THA/TKA procedures on patient-reported outcomes and accommodates
common clinical care patterns in which THA/TKA patients return to their
surgeon one year after surgery. We invite public comments on our
proposal of defining performance year-one episodes for a participating
hospital as an anchor hospital admission for an eligible THA/TKA
procedure between April 1, 2016 and June 30, 2016, with subsequent year
performance time periods each being 12-month periods and starting every
July 1st.
(9) Requirements for ``Successful'' Submission of THA/TKA Voluntary
Data
In order for CMS to assess if participant hospitals are eligible
for reconciliation payment after receiving the THA/TKA voluntary data,
requirements to determine if the submitted data will inform measure
development have been identified. We believe that the following
criteria should be used to determine if a participant hospital has
successfully submitted THA/TKA voluntary data. We note that successful
THA/TKA voluntary data submission, as stated briefly in section
III.C.5. of this proposed rule, requires completion of all of the
following:
Submission of the data elements listed in section
III.D.3.a.(2).of this proposed rule.
Data elements listed in section III.D.3.a.(2) of this
proposed rule must be submitted on at least 80 percent of their
eligible elective primary THA/TKA patients (as described in section
III.D.3.a.(3) of this proposed rule).
THA/TKA voluntary data submission must occur within 60
days of the end of the most recent data collection period.
To fulfill THA/TKA voluntary data collection criteria for
performance year-one, only pre-operative data collection and submission
on at least 80 percent of eligible elective primary THA/TKA patients is
required. To successfully submit THA/TKA voluntary data for performance
years 2 through 5, hospitals must submit both pre-operative and post-
operative patient reported outcome data on at least 80 percent of
eligible elective primary THA/TKA patients. A potential example of the
performance periods for which we would like to have THA/TKA voluntary
data is summarized in section III.D.3.a.of this proposed rule.
Table 16 also summarizes the performance periods for pre-operative
and post-operative THA/TKA voluntary data. Finally, hospitals
volunteering to submit THA/TKA data will be required to submit pre-
operative data on all eligible patients and post-operative data
elements only on those patients at least 366 days out from surgery.
Therefore, hospitals are not expected to collect and submit post-
operative THA/TKA voluntary data on patients who are fewer than 366
days from the date of surgery.
We previously described a THA/TKA eligible patient in section
III.D.3.a.(2) of this proposed rule. This description is important as
these patients are those in which we seek submission of voluntary data.
We also selected the requirement of submitting 80 percent of eligible
elective primary THA/TKA patients' data because this volume of cases
will result in a high probability that we will have a have a national
sample of THA/TKA patient data representative of each hospital's
patient case mix. Having 80 percent of the eligible elective primary
THA/TKA patients will enable an accurate and reliable assessment of
patient-reported outcomes for use in measure development. We note that
data used for outcome measure development must adequately represent the
population that is anticipated to be measured and in this case that
population would be those experiencing elective primary THA/TKA
inpatient surgical procedures. Data that more accurately reflects the
patient outcomes and case mix of the population to be measured will
allow, during measure development, a more scientifically accurate and
reliable measure. Having 80 percent of eligible elective primary THA/
TKA recipient data will result in a more reliable measure that is
better

[[Page 41289]]

able to assess hospital performance than a measure created from a less
representative patient sample. Furthermore, we considered setting the
requirement at 100 percent of the eligible elective primary THA/TKA
patients, but concluded that a requirement of 100 percent data
collection may not be feasible for all hospitals or may be excessively
burdensome to achieve. Therefore we set the requirement at 80 percent
of the eligible elective primary THA/TKA patients. We believe
acquisition of 80 percent of the eligible elective primary THA/TKA
patients will provide representative data for measure development while
decreasing patient, provider and hospital burden. We seek public
comment of these requirements to determine successful voluntary
submission of THA/TKA data. We also seek public comment specifically on
the requirement for data on 80 percent of the eligible elective primary
THA/TKA patients.
b. Measure That Captures Shared Decision-Making Related to Elective
Primary Total Hip and/or Total Knee Arthroplasty
In addition to the patient-reported functional status outcomes, we
note that shared-decision making is an important aspect of care around
elective procedures such as primary total hip and total knee
arthroplasty. We also note that lower episode expenditures achieved
through improved efficiency may yield the unintended consequence of a
compensatory increase in the number of episodes initiated. Use of
shared decision-making prior to episode initiation can serve as an
important tool to ensure appropriate care. Though there are no
developed measures, we seek feedback on the opportunity to capture
quality data related to shared decision-making between patients and
providers. Examples of such a measure could include concepts such as a
trial of conservative medical therapy prior to elective procedures or
broader shared decision-making measures. We invite public comment on
whether such a measure concept would be appropriate for the CCJR model.
If we develop a measure that captures shared decision-making related to
elective primary total hip and total knee arthroplasty or both, we
would propose through rulemaking or other means to add that measure to
the CCJR model.
c. Future Measures Around Care Planning
The person-centered shared care plan is an important tool that can
help providers across settings collaborate around a customized plan
that reflects a patient's goals and offers providers critical
information about all of the treatment a beneficiary has received.
Health IT solutions are increasingly supporting the exchange of care
plan information across settings so that providers and individuals have
access to necessary information whenever and wherever it is needed. In
the 2015 Edition of certification criteria for health information
technology (80 FR 16842) the Office of the National Coordinator for
Health Information Technology (ONC) has proposed the adoption of a new
criterion to ensure health IT can capture, display, and exchange a
robust care plan document in accordance with new standards released in
the Consolidated Clinical Document Architecture Release 2. While
further measure development is needed, we are seeking comment on the
appropriateness of a future quality measure which would assess the use
of shared care plans in the care of beneficiaries participating in the
CCJR model.
d. Future Measures for Use of Health IT and Health Information Exchange
We believe the use of health IT tools is a critical component of
effective coordination across settings of care. Under bundled payment
models, in which providers across the continuum of care share
accountability for the clinical management and total cost of an episode
of care, the capacity to share information electronically across
disparate provider systems is essential for delivering efficient, safe,
high quality care. As discussed in the August 2013 Statement
``Principles and Strategies for Accelerating Health Information
Exchange'' (available at https://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf), we believe that all
individuals, their families, their healthcare and social service
providers, and payers should have consistent and timely access to
health information in a standardized format that can be securely
exchanged between the patient, providers, and others involved in the
individual's care. ONC has released a draft document entitled
``Connecting Health and Care for the Nation: A Shared Nationwide
Interoperability Roadmap'' (available at https://www.healthit.gov/sites/default/files/nationwide-interoperability-roadmap-draft-version-1.0.pdf), which describes barriers to interoperability across the
current health IT landscape, the desired future state that will be
necessary according to the industry to enable a learning health system,
and a suggested path for moving forward. ONC will focus on actions that
will enable a majority of individuals and providers across the care
continuum to send, receive, find and use a common set of electronic
clinical information at the nationwide level by the end of 2017. Under
section 1833(z)(3)(D)(i)(I) of the Act, as amended by section 101(e) of
the Medicare Access and CHIP Reauthorization Act, providers
participating in qualifying alternative payment models under Medicare
will be required to use certified EHR technology beginning in 2019. As
this date approaches, we believe it will be important for providers
working in these models to demonstrate adoption of health information
technology.
We believe that use of certified health IT tools and the
interoperable exchange of health information is a critical capability
for CCJR model participants to be able to deliver the high-quality care
and effective coordination across settings that will be required to
demonstrate success under the model. Moreover, we believe that it will
be important to incentivize adoption and use of these enabling
technologies among model participants including post-acute care
providers, by linking these activities to participant eligibility to
receive reconciliation payments.
While we are not proposing to add a measure for certified health IT
use for the program's initial performance year, we are seeking comment
on how we might incorporate such a measure beginning in the 2017
performance year. We invite stakeholder comment on the following
questions:
Is successful attestation as part of the EHR Incentive
Program for Medicare hospitals tin he applicable reporting year the
most appropriate quality measure for assessing hospital performance on
the use of health IT and interoperable health information in the CCJR
model?
Should the model include a performance measure that would
be specific to the ability of hospitals to conduct electronic care
coordination using certified health IT, for instance, the measure of
transitions of care which hospitals currently report on as part of the
EHR Incentives Program for Medicare Hospitals?
What other measures could be used to assess hospital
performance on the use of health IT and interoperable health
information while minimizing program and provider collection and
reporting burden?
We seek public comments on how we might incorporate an electronic
measure beginning in the 2017 performance year,

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and public comments on the questions posed previously in this rule.
We also seek public comment on the appropriateness of quality
measures for post-acute care patients, physicians and facilities that
care for THA/TKA surgical procedure patients.
4. Form, Manner and Timing of Quality Measure Data Submission
We believe it is important to be transparent and to outline the
form, manner and timing of quality measure data submission so that
accurate measure results are provided to hospitals, and that timely and
accurate calculation of measure results are consistently produced to
determine annual reconciliation payment.
We propose that data submission for Hospital-Level Risk-
Standardized Complication Rate (RSCR) Following Elective Primary Total
Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550)
and Hospital-Level Risk-Standardized Readmission Rate (RSRR) Following
Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee
Arthroplasty (TKA) (NQF #1551) (or both) be accomplished through the
existing HIQR program processes. Since these measures are
administrative claims based measures, hospitals will not need to submit
data. We propose that the same mechanisms used in the HIQR program to
collect HCAHPS survey measure data also be used in the CCJR model (79
FR 50259). For the hospitals that voluntarily submit data for the THA/
TKA patient-reported outcome-based performance measure we anticipate,
if it is technically feasible, for data submission processes to be
broadly similar to those summarized for the HIQR program for chart
abstracted and administrative claims based measures. We would create a
template for hospitals to complete with the THA/TKA voluntary data,
provide a secure portal for data submission, and provide education and
outreach on how to use these mechanisms for data collection and where
to submit the THA/TKA voluntary data. We describe potential processes
for voluntary data collection in section III.D.3.a.(2) of this proposed
rule, Data Sources. These processes are broadly similar to those used
by the HIQR program.
We invite public comment on the proposal to collect quality measure
data through mechanisms similar to those used in the Hospital IQR
program.
5. Proposed Display of Quality Measures and Availability of Information
for the Public From the CCJR Model
We believe display of quality data is an important way to educate
the public on hospital performance. We have used several methods to
report quality data to the public, including posting data on the
Hospital Compare Web site and data.medicare.gov. Data has been
available for viewing on these Web sites and in downloadable databases
since 2005, and are well-known mechanisms for providing information to
the public. We are proposing to post data for measures included in the
CCJR model for each participant hospital on the Hospital Compare Web
site in an easily understood format. The applicable time periods for
the measures during the CCJR model initiative are summarized in Table
17.

Table 17--Summary of Quality Measure Performance Periods by Year of the CCJR Model
--------------------------------------------------------------------------------------------------------------------------------------------------------
CCJR model year
Measure title --------------------------------------------------------------------------------------------------------------------
1st 2nd 3rd 4th 5th
--------------------------------------------------------------------------------------------------------------------------------------------------------
THA/TKA Complication *............. April 1, 2013-March April 1, 2014-March April 1, 2015-March April 1, 2016-March April 1, 2017-March
31, 2016. 31, 2017. 31, 2018. 31, 2019. 31, 2020.
THA/TKA ** Readmission............. July 1, 2013-June 30, July 1, 2014-June 30, July 1, 2015-June 30, July 1, 2016-June 30, July 1, 2017-June 30,
2016. 2017. 2018. 2020. 2016.
HCAHPS ***......................... July 1, 2015-June 30, July 1, 2016-June 30, July 1, 2017-June 30, July 1, 2018-June 30, July 1, 2019-June 30,
2016. 2017. 2018. 2019. 2020.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA)
(NQF #1550).
** Hospital-Level Risk-Standardized Readmission Rate (RSRR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA)
(NQF #1551).
*** HCAHPS (NQF #0166) Survey.

The proposed time periods for the THA/TKA Complications measure
(NQF #1550), and the THA/TKA Readmission measure (NQF #1551) are
consistent with HIQR program performance periods for July 2017 public
reporting. The HCAHPS quality information will be the measure results.
We believe the public is familiar with the proposed measures, which
have been publicly reported in past releases of Hospital Compare as
part of the Hospital IQR Program. In order to minimize confusion and
facilitate access to the data on the measures included in the CCJR
model, we propose to post the data on each participant hospital's
performance on each of the 3 proposed quality measures in a
downloadable format in a section of the Web site specific to the CCJR
model, similar to what is done for HRRP and the Hospital-Acquired
Conditions Reduction Program. We also propose to post data on whether
or not each participant hospital met the proposed threshold (section
III.C.5.b. of this proposed rule) for receiving a reconciliation
payment in the same downloadable database.
In addition, we believe information about functional status both
pre- and post-operatively is important for hip and knee replacements.
We are developing a functional status measure that we believe will
provide this needed information. The measure, Hospital-Level
Performance Measure(s) of Patient-Reported Outcomes Following Elective
Primary Total Hip and/or Total Knee Arthroplasty (see section III.D.3
of this proposed rule for a detailed description), requires
comprehensive testing before it can be used in a CMS program. As part
of the effort to collect data on functional status voluntarily from
hospitals, we are proposing that hospitals that voluntarily submit data
for this measure be acknowledged through the use of a symbol on
Hospital Compare. The data submitted voluntarily for the functional
status measure would not be publicly reported along with the other
measures in the program.
We invite public comments on these proposals to post data for
mandatorily required measures on the Hospital Compare Web site and to
acknowledge hospitals that voluntarily submit data for the functional
status measure with an icon on the Hospital Compare Web site.
Finally, in accordance with section 1115A of the Act, we are
proposing section III.D. in the new proposed part 510 of the Code of
Federal Regulations.

[[Page 41291]]

E. Data Sharing

1. Overview
In this section, we propose to provide data to the hospital
participants of the CCJR model. CMS has experience with a range of
efforts designed to improve care coordination for Medicare
beneficiaries, including the Medicare Shared Savings Program (MSSP),
Pioneer Accountable Care Organization (ACO) Model, and BPCI, all of
which make certain data available to participants. The CCJR model
proposes in section III.C.2. of this proposed rule to financially
incentivize hospitals, through retrospective bundled payments, to
engage in care redesign efforts to improve quality of care and reduce
spending for the aggregate Part A and B FFS (FFS) spending for
beneficiaries included in the model during the inpatient
hospitalization and 90 days post-discharge. Given this, we believe it
is necessary to provide historical and ongoing claims data representing
care furnished during episodes of care for LEJRs to hospitals so that
they can, among other things, adequately structure their care pathways,
coordinate care for beneficiaries, and estimate acute inpatient and
post-acute spending within LEJR episodes.
As noted previously, this would not be the first instance in which
we have provided claims data to entities participating in a CMS model
or program. For example, participants in MSSP initially receive
historical aggregate information on their financial performance as well
as updated financial data throughout their tenure in the program. In
addition, MSSP participants receive certain beneficiary-identifiable
claims information in accordance with our regulations (see Medicare
Program; Medicare Shared Savings Program: Accountable Care
Organizations, 76 FR 67844 through 67849, November 2, 2011). The MSSP
regulation noted that while an ACO may have complete information for
the services it provides or coordinates on behalf of its FFS
beneficiary population, it may not have complete information on a FFS
beneficiary who chose to receive services, medications or supplies from
non-ACO providers and suppliers. Thus, we decided to provide ACOs
participating in the MSSP with an opportunity to request CMS claims
data on the premise that more complete beneficiary-identifiable
information would enable practitioners in an ACO to better coordinate
and target care strategies. Recently, we noted that the ACOs
participating in the MSSP have reported how important access to real
time data is for providers to improve care coordination across all
sites of care, including outpatient, acute, and post-acute sites of
care. Furthermore, we noted our view that providers across the
continuum of care are essential partners to physicians in the
management of care. (See Medicare Program: Medicare Shared Savings
Program: Accountable Care Organizations: Proposed Rule, 79 FR 72779).
Similarly, participants in the Pioneer ACO model can request
historical claims data of beneficiaries aligned with the particular
Pioneer ACO entity, and the entities continue to receive certain
ongoing data regarding the services furnished to those beneficiaries.
(See https://innovation.cms.gov/Files/fact-sheet/Pioneer-ACO-Model-Beneficiaries-Rights-Fact-Sheet.pdf). In addition, we provide BPCI
participants with the opportunity to request beneficiary-level claims
data regarding their own patients, both for the historical period of
2009-2012 that was used to set baseline prices for entities
participating in BPCI, as well as ongoing monthly claims feeds
containing Medicare FFS claims for beneficiaries that could have
initiated an episode of care for that particular BPCI participant.
These monthly claims feeds provide BPCI participants with data for both
acute and post-acute care spending for beneficiaries that could have
initiated an episode of care at that BPCI participant.
Based on our experience with these efforts, we believe that
providing a similar opportunity for hospitals participating in the CCJR
model to request data is necessary for participant hospitals to have
the relevant information to allow for practice changes supported by
CCJR and to identify services furnished to beneficiaries receiving
LEJRs under the model. Specifically, providing participant hospitals
with certain claims and summary information on beneficiaries in
accordance with established privacy and security protections would
improve their understanding of the totality of care provided during an
episode of care. With this greater understanding, we anticipate that
hospitals would be better equipped to evaluate their practice patterns
and actively manage care delivery so that care for beneficiaries is
better coordinated, quality and efficiency are improved, and payments
aligned more appropriately to the medically necessary services
beneficiaries have a right to receive. We also expect that providing
this data to CCJR participants will benefit beneficiaries by allowing
providers to use the data to improve care coordination activities in
areas that may be currently lacking. However, we also expect that CCJR
hospitals are able to, or will work toward, independently identifying
and producing their own data, through electronic health records, health
information exchanges, or other means that they believe are necessary
to best evaluate the health needs of their patients, improve health
outcomes, and produce efficiencies in the provision and use of
services.
Accordingly, we believe that making certain data available to CCJR
hospitals, as we do with ACOs participating in the MSSP and Pioneer
model, would help them to monitor trends and make needed adjustments in
their practice patterns. In order for CCJR participants to understand
and track their care patterns, we propose to provide the participants
with beneficiary-level claims data for the historical period used to
calculate a CCJR hospital's target price as well as ongoing quarterly
beneficiary-identifiable claims data in response to their request for
such data in accordance with our regulations. Given that the CCJR model
also proposes to incorporate regional pricing in the calculation of
target prices, we also propose to provide participants with aggregate
regional data.
2. Beneficiary Claims Data
Based on our experience with BPCI participants, we recognize that
hospitals vary with respect to the kinds of beneficiary claims
information that would be most helpful. While many hospitals located in
MSAs that are selected for participation in CCJR model may have the
ability to analyze raw claims data, other hospitals may find it more
useful to have a summary of these data. Given this, we are proposing to
make beneficiary claims information available through two formats.
First, for participant hospitals that lack the capacity to analyze
raw claims data, we propose to provide summary beneficiary claims data
reports on beneficiaries' use of health care services during the
baseline and performance periods. These reports would allow participant
hospitals to assess summary data on their relevant beneficiary
population without requiring sophisticated analysis of raw claims data.
Such summary reports will provide tools to monitor, understand, and
manage utilization and expenditure patterns as well as to develop,
target, and implement quality improvement programs and initiatives. For
example, if the data provided by CMS to a particular hospital
participant reflects that a certain post-acute care (PAC) provider
admits beneficiaries who then

[[Page 41292]]

have significantly higher rates of inpatient readmissions than the
rates experienced by other beneficiaries with similar care needs at
similarly situated PAC providers, that may be evidence that the
hospital could consider, among other things, the appropriateness of
discharges to that provider, whether other alternatives might be more
appropriate, and whether there exist certain care interventions that
could be incorporated post-discharge to lower readmission rates.
Therefore, for both the baseline period and on a quarterly basis
during a participant hospital's performance period, we are proposing to
provide participant hospitals with an opportunity to request summary
claims data that would encompass the total expenditures and claims for
an LEJR episode, including the procedure, inpatient stay, and all
related care covered under Medicare Parts A and B within the 90 days
after discharge, including hospital care, post-acute care, and
physician services for the hospital's beneficiaries whose anchor
diagnosis at discharge was either MS DRG 469 or 470. We propose that
these summary claims aggregate data reports would also contain payment
information, utilizing the categories listed for each episode triggered
by a beneficiary as follows:
Inpatient Hospital.
Outpatient Hospital.
Physician.
Long-Term Care Hospitals (LTCH).
Inpatient Rehabilitation Facilities (IRF).
Skilled Nursing Facilities (SNF).
Home Health Agencies (HHA).
Hospice.
Ambulatory Surgical Center.
Part-B Drugs.
Durable Medical Equipment (DME).
Clinical Laboratories.
Ambulance.
These reports would likely include the following:
Information such as admission and discharge date from the
anchor hospitalization.
The physician for the primary procedure, Medicare payments
during the anchor hospitalization.
Medicare payments during the post-acute care phase.
Medicare payments for physician services would likely be
included in these reports.

These summary claims data would reflect all Medicare Part A and Part B
expenditures during the 90-day episodes, except for those claim types
noted later in this section, as well as excluding expenditures related
to those MS-DRGs that we are proposing to be specifically excluded from
the episode of care, as set forth in section III.B.2. of this proposed
rule.
Alternatively, for hospitals with a capacity to analyze raw claims
data, we would make- more detailed beneficiary-level information
available in accordance with established privacy and security
protections. These data would enable hospitals to better coordinate and
target care strategies for beneficiaries included in CCJR episodes. For
example, in the BPCI initiative, we provide participants with
beneficiary-level claims data for all Part A and Part B services
furnished to a beneficiary treated by that BPCI participant for all MS-
DRGs included in an episode that the participant has selected for
participation (See ``Bundled Payments for Care Improvement Initiative
(BPCI): Background on Model 2 for Prospective Participants, page 3 at
https://innovation.cms.gov/Files/x/BPCI_Model2Background.pdf.)
These data include services furnished by the participant, as well
as services furnished by other entities during the 30, 60, or 90-day
episode. For example, where the entity participating in BPCI is an
acute care hospital, we provide beneficiary-level claims data for all
Medicare Part A and B services and supplies furnished by the hospital
during the inpatient admission, as well as all post-acute services
furnished to the beneficiary by the hospital or any other providers or
suppliers.
The response from entities participating in BPCI has indicated that
the availability of these data is necessary to monitor trends and
pinpoint areas where care practice changes are appropriate, as well as
assess the cost drivers during the acute and post-acute periods of the
episode. Thus, for the baseline period and on a quarterly basis during
a hospital's performance period, we propose to provide participant
hospitals with an opportunity to request line-level claims data for
each episode that is included in the relevant performance year, as
described in section III.C. of this proposed rule.
For both the proposed summary claims data and the more detailed
claims data formats, we propose that the sets of these files would be
packaged and sent to a portal in a ``flat'' or binary format for the
individual participant hospitals to retrieve. Furthermore, the files
would contain information on all claims triggered by a beneficiary in a
participating CCJR hospital. Finally, we note that beneficiary
information that is subject to the regulations governing the
confidentiality of alcohol and drug abuse patient records (42 CFR part
2) would not be included in any beneficiary identifiable claims data
shared with a hospital under our proposal.
We request comments on these proposals as well as the kinds of data
and frequency of reports that would be most helpful to the hospitals'
efforts in coordinating care, improving health, and producing
efficiencies.
3. Aggregate Regional Data
Additionally, because we are proposing to incorporate regional
pricing data in the creation of prices for CCJR, as set forth in
section III.C.4 of this proposed rule, we believe it will also be
necessary to provide comparable aggregate expenditure data available
for all claims associated with MS-DRGs 469 and 470 for the census
region in which the participant hospital is located. As noted in
section III.C, we are proposing that a hospital's target price will be
determined based on a blend of its own historical expenditures as well
regional pricing data of all other hospitals in its region. Thus, we
are also proposing to provide CCJR hospitals with aggregate data on the
total expenditures during an acute inpatient stay and 90-day post-
discharge period for all Medicare FFS beneficiaries whose anchor
diagnosis at discharge was either MS-DRG 469 or 470 (and would have
initiated a CCJR episode if discharged from a CCJR hospital) in their
census region. These data would not include beneficiary-identifiable
claims data, but would provide high-level information on the average
episode spending for MS-DRGs 469 and 470 in the region in which the
participant hospital is located. We request comments on these proposals
as well as the kinds of aggregate data and frequency of data reports
that would be most helpful to the hospitals' efforts in coordinating
care, improving health, and producing efficiencies.
4. Timing and Period of Baseline Data
We considered various options for the timing of providing baseline
data, as described previously, to CCJR participant hospitals. We
considered provision of data prior to the effective date of the model,
January 1, 2016, as well as providing data to participants at the point
of the first payment reconciliation (described in section III.C.6. of
this proposed rule). We propose to make baseline data available to
hospitals participating in CCJR no sooner than 60 days after January 1,
2016, the effective date of the model. We recognize that these data are
important to the abilities of CCJR participant hospitals to estimate
costs,

[[Page 41293]]

coordinate care, and identify areas for practice transformation, and
that early release of this data can facilitate their efforts to do so.
We also anticipate that hospitals will view the CCJR effort as one
involving continuous improvement. As a result, changes initially
contemplated by a hospital could be subsequently revised based on
updated information and experiences. While we would like to be able to
make data available as soon as possible once the program begins, we do
not believe that these baseline data must be immediately available upon
its effective date as hospitals can begin considering improvements that
would enhance their ability to better coordinate care and increase
efficiencies in the absence of these data. Therefore, we propose to
begin making baseline data available to CCJR hospitals within 60 days
of CMS' receipt of the request by the participant hospital for such
data, in a form, time, and manner of such requests to be determined by
CMS and announced at a later date. Requests would not be accepted until
the model has begun. We seek comments on this proposal.
We have also considered which period of baseline data should be
shared with hospitals, for example, whether the data should represent a
single year, or some longer period such as a 3-year period or more. To
be most useful, we believe the baseline information should be recent
enough to reflect current practices yet of a sufficient duration to
reflect trends in those recent practices. For example, 1 year of data
would likely reflect a hospital's most current practices, but would not
be helpful for purposes of identifying trends. In contrast, 3 years of
data could both reflect a hospital's most recent performance and recent
performance trends. Moreover, making data available for a 3-year period
aligns with our proposal to set a target price based on a 3-year period
of baseline data, which is a factor in assessing CCJR hospitals'
performance (see section III.C). If a hospital has access to baseline
data for the 3-year period used to set its target price, then it would
be able to assess its practice patterns, identify cost drivers, and
ultimately redesign its care practices to improve efficiency and
quality.
We alternatively considered making data available for an even
longer historical period--for example, 4 or 5 years. However, we
question the usefulness of information that is older than 3 years for
purposes of changes contemplated for current operations. Accordingly,
we are proposing to make available baseline data for up to a 3-year
period. We will limit the content of this data set to the minimum data
necessary for the participant hospital to conduct quality assessment
and improvement activities and effectively coordinate care of its
patient population. This period would encompass up to the 3 most recent
years for which claims data are available for the hospital and would
align with the baseline period we propose to utilize to establish
target prices, as noted previously. We seek comments on our proposal
and invite comments on alternative time periods that could better help
hospitals evaluate their practice patterns and actively manage care
delivery so that care is better coordinated, quality and efficiency are
improved, and costs are better controlled.
5. Frequency and Period of Claims Data Updates for Sharing Beneficiary-
Identifiable Claims Data During the Performance Period
The availability of periodically updated beneficiary-identifiable
claims data would assist hospitals participating in CCJR to identify
areas where they might wish to change their care practice patterns, as
well as monitor the effects of any such changes. With respect to these
purposes, we have considered what would be the most appropriate period
for making updated claims information available to hospitals, while
complying with the HIPAA Privacy Rule's ``minimum necessary''
provisions standard. We believe that quarterly claims data updates
align with a 90-day episode window. Moreover, as a larger episode
window would be included, the claims data would be more representative
of total costs and hence more useful to hospitals as they consider
long-term practice changes. Accordingly, we are proposing to make
updated claims data available to hospitals upon receipt of a request
for such information that meets CMS's requirements to ensure the
applicable HIPAA conditions for disclosure have been met, as frequently
as on a quarterly basis. We seek comments on this proposal.
Related to this is the period of claims that would be represented
in each update. For example, we considered limiting this period to 3
months of data, which aligns with the frequency with which we would
make updated claims data available. However, other than this alignment,
we do not see additional reasons for artificially limiting the period
to this extent. Alternatively, we considered providing an updated
dataset as frequently as each quarter that would include data from up
to the previous 6 quarters. We believe that this level of cumulative
data would offer more complete information and allow better trend
comparisons.
Accordingly, we propose to make beneficiary-identifiable and
aggregate claims data available that would represent up to 6 quarters
of information upon receipt of a request for such information that
meets the requirements of the HIPAA Privacy Rule. We would note that we
intend for the data for this model to be consistent with the
performance year (January 1 through December 31). To accomplish this
for the first year of CCJR (2016), we would provide, upon request and
in accordance with the HIPAA Privacy Rule, claims data from January 1,
2016 to June 30, 2017 on as frequently as a running quarterly basis, as
claims are available. For each quarter and extending through June 30,
2017, participants would receive data for up to the current quarter and
all of the previous quarters going back to January 1, 2016. These
datasets would contain all claims for all potential episodes that were
initiated in 2016 and capture a sufficient amount of time for relevant
claims to have been processed. We will limit the content of this data
set to the minimum data necessary for the participating hospital to
conduct quality assessment and improvement activities and effectively
coordinate care of its patient population. We seek comment on our
proposal.
6. Legal Permission To Share Beneficiary-Identifiable Data
We recognize that there are a number of issues and sensitivities
surrounding the disclosure of beneficiary-identifiable health
information, and note that a number of laws place constraints on
sharing individually identifiable health information. For example,
section 1106 of the Act bars the disclosure of information collected
under the Act without consent unless a law (statute or regulation)
permits for the disclosure. In this instance, the HIPAA Privacy Rule
permits this proposed disclosure of individually identifiable health
information by us.
In this proposed rule, we are proposing to make participant
hospitals financially responsible for services that may have occurred
outside of the hospital during the 90-day post-discharge period.
Although we expect hospitals to be actively engaged in post-discharge
planning and other care during the 90-day post-discharge period for
beneficiaries receiving LEJRs, as discussed in section III.A. of this
proposed rule, we believe it is necessary for the purposes of the
CCJR--JR model to provide participant hospitals with beneficiary-level
claims data, either in

[[Page 41294]]

summary or line-level claim formats for a 3-year historical period as
well as on a quarterly basis during the performance period. We believe
that these data constitute the minimum information necessary to enable
the participant hospital to understand spending patterns during the
episode, appropriately coordinate care, and target care strategies
toward individual beneficiaries furnished care by the participant
hospital and other providers and suppliers.
Under the HIPAA Privacy Rule, covered entities (defined as health
care plans, providers that conduct covered transactions, including
hospitals, and health care clearinghouses) are barred from using or
disclosing individually identifiable health information (called
``protected health information'' or PHI) in a manner that is not
explicitly permitted or required under the HIPAA Privacy Rule.
The Medicare FFS program, a ``health plan'' function of the
Department, is subject to the HIPAA Privacy Rule limitations on the
disclosure of PHI. The hospitals and other Medicare providers and
suppliers are also covered entities, provided they are health care
providers as defined by 45 CFR 160.103 and they conduct (or someone on
their behalf conducts) one or more HIPAA standard transactions
electronically, such as for claims transactions. In light of these
relationships, we believe that the proposed disclosure of the
beneficiary claims data for an acute inpatient stay plus 90-day post-
discharge episode where the anchor diagnosis at discharge was MS-DRG
469 or 470 would be permitted by the HIPAA Privacy Rule under the
provisions that permit disclosures of PHI for ``health care
operations'' purposes. Under those provisions, a covered entity is
permitted to disclose PHI to another covered entity for the recipient's
health care operations purposes if both covered entities have or had a
relationship with the subject of the PHI to be disclosed, the PHI
pertains to that relationship, and the recipient will use the PHI for a
``health care operations'' function that falls within the first two
paragraphs of the definition of ``health care operations'' in the HIPAA
Privacy Rule (45 CFR 164.506(c)(4)).
The first paragraph of the definition of health care operations
includes ``conducting quality assessment and improvement activities,
including outcomes evaluation and development of clinical guidelines,''
and ``population-based activities relating to improving health or
reducing health costs, protocol development, case management and care
coordination'' (45 CFR 164.501). Under our proposal, hospitals would be
using the data on their patients to evaluate the performance of the
hospital and other providers and suppliers that furnished services to
the patient, conduct quality assessment and improvement activities, and
conduct population-based activities relating to improved health for
their patients. When done by or on behalf of a covered entity, these
are covered functions and activities that would qualify as ``health
care operations'' under the first and second paragraphs of the
definition of health care operations at 45 CFR 164.501. Hence, as
previously discussed, we believe that this provision is extensive
enough to cover the uses we would expect a participant hospital to make
of the beneficiary-identifiable data and would be permissible under the
HIPAA Privacy Rule. Moreover, our proposed disclosures would be made
only to HIPAA covered entities that have (or had) a relationship with
the subject of the information, the information we would disclose would
pertain to such relationship, and those disclosures would be for
purposes listed in the first two paragraphs of the definition of
``health care operations.''
When using or disclosing PHI, or when requesting this information
from another covered entity, covered entities must make ``reasonable
efforts to limit'' the information that is used, disclosed or requested
the ``minimum necessary'' to accomplish the intended purpose of the
use, disclosure or request (45 CFR 164.502(b)). We believe that the
provision of the proposed data elements listed previously would
constitute the minimum data necessary to accomplish the CCJR model
goals of the participant hospital.
The Privacy Act of 1974 also places limits on agency data
disclosures. The Privacy Act applies when the federal government
maintains a system of records by which information about individuals is
retrieved by use of the individual's personal identifiers (names,
Social Security numbers, or any other codes or identifiers that are
assigned to the individual). The Privacy Act prohibits disclosure of
information from a system of records to any third party without the
prior written consent of the individual to whom the records apply (5
U.S.C. 552a(b)).
``Routine uses'' are an exception to this general principle. A
routine use is a disclosure outside of the agency that is compatible
with the purpose for which the data was collected. Routine uses are
established by means of a publication in the Federal Register about the
applicable system of records describing to whom the disclosure will be
made and the purpose for the disclosure. We believe that the proposed
data disclosures are consistent with the purpose for which the data
discussed in this proposed rule was collected and may be disclosed in
accordance with the routine uses applicable to those records.
Notwithstanding these exceptions, we believe it would be
appropriate to provide some form of notice to Medicare beneficiaries
about sharing these data. Based on our experiences with data sharing in
other CMS programs and models, we propose a strategy for notifying
beneficiaries of claims data sharing in this proposed rule, and in
order to provide meaningful beneficiary choice over claims data sharing
with the participant hospitals in CCJR. We considered both ``opt-in''
and ``opt-out'' options for beneficiaries with respect to data sharing
in CCJR. An opt-in method has some advantages, particularly with regard
to the fact that consumers have consistently expressed a desire that
their consent should be sought before their health information may be
shared (Schneider, S. et al. ``Consumer Engagement in Developing
Electronic Health Information System.'' Prepared for: Agency for
Healthcare Research and Quality, July 2009, at 16. Available at: https://healthit.ahrq.gov/ahrq-funded-projects/consumer-engagement-developing-electronic-health-information-systems).
An opt-out method is used successfully in most systems of
electronic exchange of information because it is significantly less
burdensome on patients and providers while still providing an
opportunity for patients to exercise control over their data. Thus, we
propose to use an ``opt-out'' approach to provide beneficiaries with
the opportunity to decline claims data sharing directly through 1-800-
Medicare, rather than through the participant hospital. We also propose
to provide advance notification to all Medicare beneficiaries about the
opportunity to decline claims data sharing with entities participating
in CMS programs and models through CMS materials such as the Medicare &
You Handbook. The Handbook would include information about the purpose
of the model, describe the opportunity for participants to request
beneficiary identifiable claims data for health care operations
purposes, and provide instructions on how beneficiaries may decline
claims data sharing by contacting CMS directly through 1-800-Medicare.
The Handbook would also contain instructions on how a beneficiary may
reverse his or her preference to decline claims data sharing by
contacting 1-800-Medicare.

[[Page 41295]]

There are several advantages to these strategies. First, we note
that 1-800-Medicare is a communication method to which beneficiaries
have familiarity and broad exposure. It also has the capability for
beneficiaries to use accessible alternative or appropriate assistive
technology, if needed. While many procedures in MS-DRGs 469 and 470 are
planned in advance, some are emergent or unplanned procedures. Thus,
asking the participant hospital to provide advance notification to the
beneficiary, prior to the provision of services, may be inappropriate
or impossible in certain circumstances. We would continue to maintain a
list of beneficiaries who have declined data sharing and ensure that
their claims information is not included in the claims files shared
with participants. Hospitals with patient portals or Blue
Button[supreg] may have capability to garner patient input prior to
discharge through a hospital intervention specific to patient and care-
giver education, while also aiding the hospital to meet reporting
requirements for other CMS programs, such as Meaningful Use under the
EHR Incentive Program for Medicare Hospitals.
Finally, participant hospitals in CCJR will only be allowed to
request beneficiary-identifiable claims data for beneficiaries who: (1)
Have been furnished a billable service by the participant hospital
corresponding to the episode definitions for CCJR; and (2) have not
chosen to opt-out of claims data sharing. A beneficiary that chooses to
opt-out of claims data sharing is only opting out of the data sharing
portion of the model. The decision to opt-out does not otherwise limit
CMS' use of the beneficiaries' data, whether the beneficiary can
initiate an episode, inclusion in quality measures, or inclusion in
reconciliation calculations. Where a beneficiary chooses to opt-out of
claims data sharing, our data contractor would maintain a list of all
HICNs that choose to opt-out of data sharing. We would monitor whether
participant hospitals continue to request data on beneficiaries who
have opted out of having their data shared and do not intend to make
such data available in response to a CCJR such hospitals' requests.
We request comments on our proposals related to the provision of
both aggregate and beneficiary-identifiable data to participant
hospitals in CCJR. We are particularly interested in comments on the
kinds and frequency of data that would be useful to hospitals,
potential privacy and security issues, the implications for sharing
protected health information with hospitals, and the use of a
beneficiary opt-out, as opposed to an opt-in, to obtain beneficiary
consent to the sharing of their information. We also request comment on
whether it would be helpful to provide any such system of notices,
since Medicare claims information and other electronic information is
already routinely shared for many other purposes among health care
providers and insurers, and generally is subject to HIPAA protections.
We also propose where available, the exchange of CMS beneficiary data
with the local electronic health information exchange, a system that
allows doctors, nurses, pharmacists, other health care providers and
patients to appropriately access and securely share a patient's vital
medical information electronically in order to facilitate the hospitals
ability to share timely patient data supporting improved patient
referral, access, and care coordination across varied service settings.

F. Monitoring and Beneficiary Protection

1. Introduction and Summary
We are proposing the CCJR model as we believe it is an opportunity
to improve the quality of care and that the policies of the model
support making care more easily accessible to consumers when and where
they need it, increasing consumer engagement and thereby informing
consumer choices. For example, under this model we are proposing
certain waivers which would offer participant hospitals additional
flexibilities with respect to furnishing telehealth services, post-
discharge home visits, and care in skilled nursing facilities, as
discussed in section III.C.11 of this proposed rule. We believe that
this model will improve beneficiary access and outcomes. Conversely, we
do note that these same opportunities could be used to try to steer
beneficiaries into lower cost services without an appropriate emphasis
on maintaining or increasing quality. We direct readers to sections
III.C.5 and III.D. of this proposed rule for discussion of the
methodology for incorporating quality into the payment structure and
the measures utilized for this model.
We believe that existing Medicare provisions can be effective in
protecting beneficiary freedom of choice and access to appropriate care
under the CCJR model. However, because the CCJR model is designed to
promote efficiencies in the delivery of all care associated with lower
extremity joint replacement procedures, providers may seek greater
control over the continuum of care and, in some cases, could attempt to
direct beneficiaries into care pathways that save money at the expense
of beneficiary choice or even beneficiary outcomes. As such, we
acknowledge that some additional safeguards may be necessary under the
CCJR model as providers are simultaneously seeking opportunities to
decrease costs and utilization. We believe that it is important to
consider any possibility of adverse consequences to patients and to
ensure that sufficient controls are in place to protect Medicare
beneficiaries receiving lower extremity joint replacement related
services under the CCJR model.
2. Beneficiary Choice and Beneficiary Notification
Because we have proposed that hospitals in selected geographic
areas will be required to participate in the model, individual
beneficiaries will not be able to opt out of the CCJR model when they
receive care from a participant hospital in the model. We do not
believe that it is appropriate or consistent with other Medicare
programs to allow patients to opt out of a payment system that is
unique to a particular geographic area. For example, the state of
Maryland has a unique payment system under Medicare, but that payment
system does not create an alternative care delivery system, nor does it
in any way impact beneficiary decisions. Moreover, we do not believe
that an ability to opt out of a payment system is a factor in upholding
beneficiary choice or is otherwise advantageous to beneficiaries or
even germane to beneficiary decisions given that this model does not
increase beneficiary cost-sharing. We also believe that full
notification and disclosure of the payment model and its possible
implications is critical for beneficiary understanding and protection.
However, it is important to create safeguards for beneficiaries to
ensure that care recommendations are based on clinical needs and not
inappropriate cost savings. It is also important for beneficiaries to
know that they can raise any concerns with their physicians, with 1-
800-Medicare, or with their local Quality Improvement Organizations.
This proposed payment model does not limit the ability to choose
among Medicare providers or the range of services available to the
beneficiary. Beneficiaries may continue to choose any Medicare
participating provider, or any provider who has opted out of Medicare,
with the same costs, copayments and responsibilities as they

[[Page 41296]]

have with other Medicare services. Although the proposed model would
allow participant hospitals to enter into CCJR Sharing Arrangements
with certain providers and these preferred providers may be recommended
to beneficiaries as long as those recommendations are made within the
constraints of current law, hospitals may not restrict beneficiaries to
any list of preferred or recommended providers that surpass any
restrictions that already exist under current statutes and regulations.
Moreover, hospitals may not charge any CCJR collaborator a fee to be
included on any list of preferred providers or suppliers, nor may the
hospital accept such payments, which would be considered to be outside
the realm of risk-sharing agreements. Thus, this proposed payment model
does not create any restriction of beneficiary freedom to choose
providers, including surgeons, hospitals, post-acute care or any other
providers or suppliers.
Moreover, as participant hospitals redesign care pathways, it may
be difficult for providers to sort individuals based on health care
insurance and to treat them differently. We anticipate that care
pathway redesign occurring in response to the model will increase
coordination of care, improve the quality of care, and decrease cost
for all patients, not just for Medicare beneficiaries. This anticipated
change in the delivery of care to all patients may further promote
consistent treatment of all beneficiaries.
We believe that beneficiary notification and engagement is
essential because there will be a change in the way participating
hospitals are paid. We believe that appropriate beneficiary
notification should explain the model, advise patients of both their
clinical needs and their care delivery choices, and should clearly
specify that any non-hospital provider holding a risk-sharing agreement
with the hospital should be identified to the beneficiary as a
``financial partner of the hospital for the purposes of LEJR
services.'' These policies seek to enhance beneficiaries' understanding
of their care, improve their ability to share in the decision-making,
and ensure that they have the opportunity to consider competing
benefits even as they are presented with cost-saving recommendations.
We believe that appropriate beneficiary notification should do all of
the following:
Explain the model and how it will or will not impact their
care.
Inform patients that they retain freedom of choice to
choose providers and services.
Explain how patients can access care records and claims
data through an available patient portal and through sharing access to
care-givers to their Blue Button[supreg] electronic health information.
Advise patients that all standard Medicare beneficiary
protections remain in place.

These include the ability to report concerns of substandard care to
Quality Improvement Organizations (QIO) and 1-800-MEDICARE.
After carefully considering the appropriate timing and
circumstances for the necessary beneficiary notification, we are
proposing that participating hospitals must require all providers and
suppliers who execute a CCJR Sharing Arrangement with a participant
hospital to share certain notification materials, to be developed or
approved by CMS, that detail this proposed payment model before they
order an admission for joint replacement for a Medicare FFS patient who
would be included under the model. Participant hospitals must require
this notification as a condition of any CCJR Sharing Arrangement. Where
a participant hospital does not have CCJR Sharing Arrangements with
providers or suppliers that furnish services to beneficiaries during a
CCJR episode of care, or where the admission for joint replacement for
a Medicare FFS patient who would be included under the model was
ordered by a physician who does not have a CCJR Sharing Arrangement,
the beneficiary notification materials must be provided to the
beneficiary by the participant hospital. The purpose of this proposed
policy is to ensure that all beneficiaries that initiate a CCJR episode
receive the beneficiary notification materials, and that they receive
such materials as early as possible. We believe that this proposal
targets beneficiaries for whom information is relevant, and increases
the likelihood that patients will become engaged and seek to understand
the model and its potential impact on their care.
We note that beneficiaries are accustomed to receiving similar
notices of rights and obligations from healthcare providers prior to
the start of inpatient care. However, we also considered that this
information might be best provided by hospitals at the point of
admission for all beneficiaries, as hospitals provide other information
concerning patient rights and responsibilities at that time. We invite
comment on ways in which the timing and source of beneficiary
notification could best serve the needs of beneficiaries without
creating unnecessary administrative work for providers. We believe that
this notification is an important safeguard to help ensure that
beneficiaries in the model receive all medically necessary services,
but it is also an important clinical opportunity to better engage
beneficiaries in defining their goals and preferences as they share in
the planning of their care.
3. Monitoring for Access to Care
Given that participant hospitals would receive a reconciliation
payment when they are able to reduce average costs per case and meet
quality thresholds, they could have an incentive to avoid complex, high
cost cases by referring them to nearby facilities or specialty referral
centers. We intend to monitor the claims data from participant
hospitals--for example, to compare a hospital's case mix relative to a
pre-model historical baseline to determine whether complex patients are
being systematically excluded. We will publish these data as part of
the model evaluation to promote transparency and an understanding of
the model's effects. We also propose to continue to review and audit
hospitals if we have reason to believe that they are compromising
beneficiary access to care. For example, where claims analysis
indicates an unusual pattern of referral to regional hospitals located
outside of the model catchment area or a clinically unexplained
increase or decrease in joint replacement surgery rates.
4. Monitoring for Quality of Care
As we noted previously, in any payment system that promotes
efficiencies of care delivery, there may be opportunities to direct
patients away from more expensive services at the expense of outcomes
and quality. We believe that professionalism, the quality measures in
the model, and clinical standards can be effective in preventing
beneficiaries from being denied medically necessary care in the
inpatient setting and in post-acute care settings during the 90 days
post-discharge. Accordingly, the potential for the denial of medically
necessary care within the CCJR model will not be greater than that
which currently exists under IPPS. However, we also believe that we
have the authority and responsibility to audit the medical records and
claims of participating hospitals and their CCJR collaborators in order
to ensure that beneficiaries receive medically necessary services. We
may also monitor arrangements between participant hospitals and their
CCJR collaborators to ensure that such arrangements do not result in
the denial

[[Page 41297]]

of medically necessary care or other program or patient abuse. We
invite public comment on whether there are elements of the CCJR model
that would require additional beneficiary protection for the
appropriate delivery of inpatient care, and if so, what types of
monitoring or safeguards would be most appropriate.
With respect to post-acute care, we believe that requiring
participating hospitals to engage patients in shared decision making is
the most important safeguard to prevent inappropriate recommendations
of lower cost care, and that such a requirement can be best effected by
requiring hospitals to make this a condition of any CCJR Sharing
Arrangements with practitioners who perform these procedures.
Additional deterrents are created by the financial accountability of
the 90-day bundle, which is sufficiently long that it encourages the
provision of high-quality care to avoid the risk of complications and
readmissions, which would typically occur within that time period.
Physician patterns of practice are also constrained by clinical
standards of care, and we believe that the risk associated with
deviations from those standards provides further deterrence to
compromising care.
We believe that these safeguards are all enhanced by beneficiary
knowledge and engagement. Therefore, we are proposing to require that
participant hospitals must, as part of discharge planning, account for
potential financial bias by providing patients with a complete list of
all available post-acute care options in the service area consistent
with medical need, including beneficiary cost-sharing and quality
information (where available and when applicable). We expect that the
treating surgeons or other treating practitioners, such as
physiatrists, will continue to identify and discuss all medically
appropriate options with the beneficiary, and that hospitals will
discuss the various facilities and providers who are available to meet
the clinically identified needs. These proposed requirements for CCJR
participant hospitals would supplement the existing discharge planning
requirements under the hospital Conditions of Participation. We also
specifically note that neither the Conditions of Participation nor this
proposed transparency requirement preclude hospitals from recommending
preferred providers within the constraints created by current law, as
coordination of care and optimization of care are important factors for
successful participation in this model. We invite comment on this
proposal, including additional opportunities to ensure high quality
care.
5. Monitoring for Delayed Care
This model is based in part on an incentive for hospitals to create
efficiencies in the delivery of care within a 90-day episode following
the joint replacement surgery. Theoretically this basis could create
incentives for hospitals and other CCJR collaborators involved in any
CCJR Sharing Arrangements to delay services until after that window has
closed.
We believe that existing Medicare safeguards are sufficient to
protect beneficiaries. First, our experience with other bundled
payments such as the BPCI initiative has shown that providers focus on
appropriate care first and efficiencies only when those efficiencies
can be obtained in the setting of appropriate care. We believe that a
90-day post-discharge episode will sufficiently minimize the risk that
services furnished in relation to the beneficiary's lower extremity
joint replacement procedure will be necessary beyond the end of the
episode duration. To ensure that the length of the episode duration
sufficiently minimizes the risk that any lower extremity joint
replacement related care will not exceed the time established for the
episode, we proposed to establish a 90-day post-discharge duration. We
believe that participant hospitals would be unlikely to postpone
services beyond a 90-day period because the consequences of delaying
care beyond this long episode duration would be contrary to usual
standards of care.
However, we also note that additional monitoring would occur as a
function of the payment model. We have proposed as part of the payment
definition (see section III.C of this proposed rule) that certain post-
episode payments occurring in the 30-day window subsequent to the end
of the 90-day episode would be counted as an adjustment against
savings. We believe that the inclusion of this payment adjustment would
create an additional deterrent to delaying care beyond the episode
duration. In addition, the data collection and calculations used to
determine this adjustment provide a mechanism to check if providers are
inappropriately delaying care. Finally, we note that the proposed
quality measures create additional safeguards as they are used to
monitor and influence hospital clinical care at the institutional
level.
In accordance with section 1115A of the Act, we are proposing to
codify these proposals in regulation in the new proposed Part 510. We
invite public comment on our proposed requirements for notification of
beneficiaries and our proposed methods for monitoring participants'
actions and ensuring compliance as well as on other methods to ensure
that beneficiaries receive high quality, clinically appropriate care.

G. Coordination With Other Agencies

Impacts created by payment changes under this model are entirely
internal to HHS operations; coordination with other agencies is not
required outside of the usual coordination involved in the publication
of all HHS regulatory changes.

IV. Evaluation Approach

A. Background

The proposed CCJR model is intended to enable CMS to better
understand the effects of bundled payments models on a broader range of
Medicare providers than what is currently being tested under BPCI.
Obtaining information that is representative of a wide and diverse
group of hospitals will best inform us on how such a payment model
might function were it to be more fully integrated within the Medicare
program. All CMS models, which would include the proposed CCJR model,
are rigorously evaluated on their ability to improve quality and reduce
costs. In addition, we routinely monitor CMS models for potential
unintended consequences of the model that run counter to the stated
objective of lowering costs without adversely affecting quality of
care. Outlined in this proposed rule are the proposed design and
evaluation methods, the data collection methods, key evaluation
research questions, and the evaluation period and anticipated reports
for the proposed CCJR model.

B. Design and Evaluation Methods

Our evaluation approach for the CCJR model will have elements in
common with the standard Innovation Center evaluation approaches we
have taken in other projects such as the BPCI initiative, Acute Care
Episode (ACE) Demonstration, Pioneer ACO model, and other Innovation
Center models. Specifically, the evaluation design and methodology for
the proposed CCJR model would be designed to allow for a comparison of
historic patterns of care among the CCJR providers to any changes made
in these patterns in response to the CCJR model.
Our evaluation methodology for this model builds upon the fact that
MSAs will be selected for participation in the model by stratified
random assignment. Due to the random assignment, we can evaluate the
effects of the model on outcomes of interest by directly

[[Page 41298]]

comparing MSAs that are randomly selected to participate in the model
to a comparison group of MSAs that were not randomly selected for the
model (but could have been). Randomized evaluation designs of this kind
are widely considered the ``gold standard'' for social science and
medical research because they ensure that the systematic differences
are reduced between units that do and do not experience an
intervention, which ensures that (on average) differences in outcomes
between participating and non-participating units reflect the effect of
the intervention. In constructing the comparison group, we are
considering whether to use a simple comparison group that consists of
all non-selected MSAs or to instead select a comparison group from
among the non-selected providers based on how well they match the
providers along a variety of measurable dimensions, such as hospital
size, LEJR expenditures, provider characteristics and market
characteristics. The latter approach is sometimes referred to as
``post-stratification'' in the literature on the analysis of randomized
experiments.
We plan to use a range of analytic methods, including regression
and other multivariate methods appropriate to the analysis of
stratified randomized experiments to examine each of our measures of
interest. Measures of interest could include, for example, quality of
and access to care, utilization patterns, expenditures, and beneficiary
experience. The evaluation would also include rigorous qualitative
analyses in order to capture the evolving nature of the care model
interventions.
In our design, we plan to take into account the impact of the CCJR
model at the geographic unit level, the hospital level, and at the
patient level. We are also considering various statistical methods to
address factors that could confound or bias our results. For example,
we would use statistical techniques to account for clustering of
patients within hospitals and markets. Clustering allows our evaluation
to compensate for commonalities in beneficiary outcomes by hospitals
and by markets. Thus, in our analysis, if a large hospital consistently
has poor performance, clustering would allow us to still be able to
detect improved performance in the other, smaller hospitals in a market
rather than place too much weight on the results of one hospital and
potentially lead to biased estimates and mistaken inferences. Finally,
we plan to use various statistical techniques to examine the effects of
the CCJR model while also taking into account the effects of other
ongoing interventions such as BPCI, Pioneer ACOs, and Medicare Shared
Savings Program. For example, we are considering additional regression
techniques to help identify and evaluate the incremental effects of
adding the CCJR model in areas where patients and market areas are
already subject to these other interventions as well as potential
interactions among these efforts.

C. Data Collection Methods

We are considering multiple sources of data to evaluate the effects
of the CCJR model. We expect to base much of our analysis on secondary
data sources such as Medicare FFS claims and required patient
assessment instruments such as the Minimum Data Set (MDS) collected for
skilled nursing facility stays, the Patient Assessment Instrument for
Inpatient Rehabilitation Facility (IRF-PAI) collected for IRF stays and
the Outcome and Assessment Information Set (OASIS) collected for home
health episodes of care. The beneficiary claims data would provide
information such as expenditures in total and by type of provider and
service as well as whether or not there was an inpatient hospital
readmission. The assessment tools would provide information on a
beneficiary's functioning (for example, physical, psychological and
psychosocial functioning).
In conjunction with the previously stated secondary data sources,
we are considering a CMS-administered survey of beneficiaries who
received an LEJR during the performance period. This survey would be
administered to beneficiaries who either had received an LEJR under the
CCJR model or were selected as part of a control group. The primary
focus of this survey would be to obtain information on the
beneficiary's perception of their functional status before and after
the LEJR as well as information on their pain and LE joint symptoms,
and perceptions on access to care. The administration of this
beneficiary survey would be coordinated with administration of the
HCAHPS survey so as to not conflict with or compromise the HCAHPS
efforts. Likewise, we are considering a survey administered by CMS and
guided interviews conducted by CMS with providers including, but not
limited to, the orthopedic surgeons, initiating hospitals, and PAC
providers participating furnishing services to beneficiaries included
in the CCJR model. These surveys would provide insight on
beneficiaries' experience under the model and additional information on
the care redesign strategies undertaken by health care providers.
In addition, we are considering CMS evaluation contractor
administered site visits with selected hospitals and PAC providers as
well as focus groups with a range of populations such as PAC providers
and orthopedic surgeons. We believe that these qualitative methods
would provide contextual information that would help us better
understand the dynamics and interactions occurring among CCJR providers
furnishing services included within a CCJR episode. For example, these
data could help us better understand hospitals' intervention plans as
well as how they were implemented and what they achieved. Moreover, in
contrast to relying on quantitative methods alone, qualitative
approaches would enable us to view program nuances as well as identify
factors that are associated with successful interventions and
distinguish the effects of multiple interventions that may be occurring
within participating providers, such as simultaneous ACO and bundled
payment participation.

D. Key Evaluation Research Questions

Our evaluation would assess the impact of the CCJR model on the
aims of improved care quality and efficiency as well as reduced health
care costs. This would include assessments of patient experience of
care, utilization, outcomes, Medicare expenditures, provider costs,
quality, and access. Our key evaluation questions would include, but
are not limited to, the following:
PAYMENT. Is there a reduction in total Medicare
expenditures in absolute terms or for subcategories of providers (for
example, acute vs post-acute providers, providers in certain geographic
areas, providers within concentrated vs non-concentrated market areas
or in urban vs rural areas)? Do the participants reduce or eliminate
variations in utilization and expenditures or both that are not
attributable to differences in health status? If so, how have they
accomplished these changes?
UTILIZATION. Are there changes in Medicare utilization
patterns overall or for specific types of providers or services? How do
these patterns compare to historic patterns, regional variations, and
national patterns of care? How are these patterns of changing
utilization associated with Medicare payments, patient outcomes and
general clinical judgment of appropriate care?
OUTCOMES/QUALITY. Is there either a negative or positive
impact on quality of care and patient experiences of care or both? Did
the incidence of complications remain constant or

[[Page 41299]]

decrease? Was there a change in beneficiaries' level of pain reduction,
functional outcomes or return to independence under the model than
relative to appropriate comparison groups? If so, how and for which
beneficiaries?
REFERRAL PATTERNS AND MARKET IMPACT. How, if at all, has
the behavior in the selected geographic areas changed under the model?
How have the referral patterns changed and for which type(s) of
providers? Similarly, does the model have an impact on the number of
patients with LEJR procedures and what types of patients are undergoing
the procedure? To what extent, if any, is this related to gainsharing
activities?
UNINTENDED CONSEQUENCES. Did the CCJR model result in any
unintended consequences, including adverse selection of patients,
access problems, cost shifting beyond the agreed upon episode, evidence
of stinting on appropriate care, anti-competitive effects on local
health care markets, evidence of inappropriate referrals practices? Is
so, how, to what extent, and for which beneficiaries or providers?
POTENTIAL FOR EXTRAPOLATION OF RESULTS. What was the
typical patient case mix in the participating practices and how did
this compare to regional and national patient populations? What were
the characteristics of participating practices and to what extent were
they representative of practices treating Medicare FFS beneficiaries?
Was the model more successful in certain types of markets? To what
extent would the results be able to be extrapolated to similar markets
and nationally or both?
EXPLANATIONS FOR VARIATIONS IN IMPACT. What factors are
associated with the patterns of results? Specifically, are the results
related to the following?
++ Characteristics of the models including variations by year and
factors such as presence of downside risk?
++ The participating hospital's specific features and ability to
carry out their proposed intervention?
++ Characteristics and nature of interaction with partner providers
including orthopedic surgeons and PAC provider community?
++ Characteristics of the geographic area, such as market
concentration or size of city and availability of PAC providers?
++ Characteristics associated with the patient populations served?

E. Evaluation Period and Anticipated Reports

As discussed in section III.A. of this proposed rule, each of the
selected participants in the CCJR model would have a 5-year performance
period. The evaluation period would encompass this entire 5-year period
and up to two years after. We plan to evaluate the CCJR model on an
annual basis. We recognize, however, that interim results are subject
to issues such as sample size and random fluctuations in practice
patterns. Hence, while CMS intends to have internal periodic summaries
to offer useful insight during the course of the effort, a final
analysis after the end of the 5-year performance period will be
important for ultimately synthesizing and validating results.
We seek comments on our design, evaluation, data collection
methods, and research questions.

V. Collection of Information Requirements

As stated in section1115A(d)(3) of the Act, Chapter 35 of title 44,
United States Code, shall not apply to the the testing and evaluation
of models under section 1115A. As a result, the information collection
requirements contained in this proposed rule need not be reviewed by
the Office of Management and Budget.

VI. Response to Comments

Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this proposed
rule, and, when we proceed with a subsequent document(s), we will
respond to those comments in the preamble to that document.

VII. Regulatory Impact Analysis

We have examined the impact of this rule as required by Executive
Order 12866 and other laws and Executive Orders requiring economic
analysis of the effects of proposed rules.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any 1
year). We estimate that this rulemaking is ``economically significant''
as measured by the $100 million threshold, and hence also a major rule
under the Congressional Review Act. Accordingly, we have prepared a RIA
that, to the best of our ability, presents the costs and benefits of
the rulemaking.

A. Statement of Need

This proposed rule is necessary in order to create and test a new
payment model under the authority of section 1115A of the Act that
allows the Innovation Center to test innovative payment and service
delivery models in order to ``reduce program expenditures while
preserving or enhancing the quality of care furnished to individuals.''
The underlying issue addressed by the proposed model is that under FFS,
Medicare makes separate payments to providers and suppliers for items
and services furnished to a beneficiary over the course of a treatment
(an episode of care). Because the amount of payment is dependent on the
volume of services delivered, this creates incentives for care that are
fragmented, unnecessary or duplicative, while impeding the investment
in quality improvement or care coordination that would maximize patient
benefit. We anticipate the proposed model may reduce costs while
maintaining or improving quality where the provision of ``bundled
services'' in which all the services needed for a given episode of care
are included in a single payment arrangement that provides incentives
to promote high quality and efficient care.
This proposed rule would create and test the first bundled care
model under the Innovation Center authority in which providers would be
required to participate, building on the experience of the current
voluntary BPCI and ACE efforts. Testing the model in this manner would
also allow us to learn more about patterns of inefficient utilization
of health care services and how to incentivize the improvement quality
for common LEJR procedure episodes. This learning could inform future
Medicare payment policy.
Under the proposed CCJR model, acute care hospitals in certain
selected counties will receive retrospective bundled payments for
episodes of care for lower extremity joint replacement or reattachment
of a lower extremity. This proposed rule was developed based on the
experiences we gained from the implementation of the Bundled Payments
and Care Improvement Initiative and the Medicare Acute Care Episode
(ACE) Demonstration to test bundled payments. We believe the model may
benefit Medicare beneficiaries through improving the coordination and
transition of care, improving the coordination of items and services
paid for through Medicare FFS payments, encouraging provider investment
in infrastructure and redesigned care processes for high

[[Page 41300]]

quality and efficient service delivery, and incentivizing higher value
care across the inpatient and post-acute care spectrum spanning the
episode of care. It will also provide an opportunity to evaluate the
nature and extent of reductions in the cost of treatment by providing
financial incentives for providers to coordinate their efforts to
provide services to meet patient needs and prevent future costs.
As detailed in Table 18, we estimate a total aggregate impact of
$153 million in net Medicare savings over the proposed duration of the
model, CYs 2016 through 2020, from the proposed implementation of the
CCJR model. These estimated impacts represent the net effect of federal
transfers that reward or penalize hospitals for improving care while
making it more efficient. Furthermore, the proposed CCJR model may
benefit beneficiaries since the model requires participant hospitals to
be accountable for 90-day episodes of care for Medicare beneficiaries
with a lower extremity joint replacement, improve the coordination of
FFS items and services, and encourage investment in infrastructure and
redesigned care processes for high quality and efficient service
delivery that demonstrate a dedication and focus toward patient-
centered care.
Our analysis of the model's effects shows that this proposed rule
would trigger the threshold of ``an annual effect on the economy of
$100 million or more'' or any of the other criteria for significant
economic effects under E.O. 12866. Accordingly it would also be a major
rule under the Congressional Review Act, and we are required to prepare
an analysis that presents the costs and benefits of this proposed rule.
We have prepared an analysis that address benefits and costs that
applies to ``economically significant'' or ``major'' rules. We solicit
comment on the assumptions and analysis presented throughout this
regulatory impact section.

B. Overall Impact

We have examined the impacts of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social
Security Act, section 202 of the Unfunded Mandates Reform Act of 1995
(March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism
(August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order. As previously stated,
this proposed rule triggers these criteria.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on state
and local governments, pre-empts state law, or otherwise has federalism
implications. We do not believe that there is anything in this proposed
rule that either explicitly or implicitly pre-empts any state law, and
furthermore we do not believe that this proposed rule will have a
substantial direct effect on state or local governments, preempt states
law, or otherwise have a federalism implication.

C. Anticipated Effects

1. Overall Magnitude of the Model and Its Effects on the Market
According to Medicare FFS claims data in FY 2014 (October 1, 2013
through September 30, 2014), there were approximately 21,000 discharges
for MS-DRG 469 and 406,000 discharges for MS-DRG 470 (these DRG's cover
knee and hip replacements, respectively with and without complications)
nationally. Based on the same data, we estimate that the participant
hospitals cover approximately 111,000 LEJR episodes in this model or
about 25 percent of LEJR discharges nationally. The number of such
procedures has grown in recent years, due both to the aging of the
American population and to advances in medical technology and care that
have made these operations less physically burdensome on patients and
led to faster recovery times.
More uncertain are the total costs of these procedures. The mean
estimated 90-day episode payment for lower extremity joint replacement
procedures (defined as discharges for MS-DRG 469 and MS-DRG 470) is
about $26,000 based on Medicare claims data for FY 2014 where
approximately 55 percent of the spending is attributed to hospital
inpatient services, 25 percent of spending is attributed to post-acute
services such as physical therapy (either ambulatory and in a facility)
and 20 percent to physician, outpatient hospital and other spending.
We have proposed to apply the model in 75 MSAs out of 196 MSAs
eligible for selection, as described previously in this proposed rule.
Based on this proposed selection methodology, we estimate that the
model will cover about 25 percent of all lower extremity joint
replacement procedures nationally. We estimate the model will cover
about $2.261 billion in episode spending in 2016 and $2.713 billion in
episode spending in 2020 as displayed in Table 18 later in this
section. As discussed subsequently in this analysis, this is likely to
generate approximately a net amount of $153 million in savings to
Medicare over the entire duration of the model. Annual reconciliation
payments for each performance year may be greater than or less than the
net change as detailed in Table 18 later in this section. In years 2019
and 2020 of the proposed model, we estimate a net change that is less
than $100 million, but with repayments that may be greater than $100
million, which exceed the $100 million dollar threshold for economic
significance.
There may also be spillover effects in the non-Medicare market, or
even in the Medicare market in other areas as a result of this model.
We believe these are likely to be small, but cannot be certain. These
issues are discussed later in the analysis. We welcome comments on our
assumptions and calculations.
2. Effects on the Medicare Program
The proposed CCJR model is a model involving an innovative mix of
financial incentives for quality of care and efficiency gains within
FFS Medicare for lower extremity joint replacement episodes. This model
represents a new approach for the Medicare FFS program because it
applies bundled payments to hospitals that might not otherwise

[[Page 41301]]

participate in Innovation Center models or Medicare demonstrations and
tests bundled payment models for episodes of care for LEJR procedures
in multiple geographic areas. As such, we are interested in testing and
evaluating the impact of a bundled payment approach for LEJR procedures
in a variety of circumstances, especially among those providers that
may not have decided to engage in programs or models in which Medicare
makes payments differently than Medicare FFS.
As described earlier in this proposed rule, episodes would begin
with admission to an acute care hospital for an LEJR procedure that is
paid under the IPPS through MS-DRG 469 or 470 and extend 90 days
following discharge from the acute care hospital. The episode would
include the LEJR procedure, inpatient stay, and all related care
covered under Medicare Parts A and B within the 90 days after
discharge, including hospital care, post-acute care, and physician
services. Furthermore, we have proposed to designate participant
hospitals as the episode initiators and to be financially responsible
for episode cost under the proposed CCJR model. We propose to require
all hospitals paid under the IPPS and physically located in selected
geographic areas to participate in the CCJR model, with limited
exceptions. Eligible beneficiaries who receive care at these hospitals
will automatically be included in the model. Geographic areas, based on
MSAs, are proposed to be selected through a stratified random sampling
methodology based on the following criteria: Historical episode wage-
adjusted payment quartiles and population size halves. We anticipate
the proposed model may have financial and quality of care effects on
non-hospital providers that are involved in the care of Medicare
beneficiaries with an LEJR episode, improving the coordination of items
and services paid for through Medicare FFS, encouraging more provider
investment in infrastructure and redesigned care processes for higher
quality and more efficient service delivery, and incentivizing higher
value care across the inpatient and post-acute care spectrum spanning
the episode of care. However, the proposed model attributes episode
spending and makes the retrospective reconciliation payment to or
repayment from the participant hospital. Accordingly, our analysis
examines the proposed effects on participant hospitals, as they are the
providers accountable for the episode payment under this model.
Additionally, we have proposed to test CCJR for a 5-year period,
beginning January 1, 2016, and ending December 31, 2020 and our
estimates cover the 5 years of the model.
As described earlier in this proposed rule, we propose to continue
paying hospitals and other providers according to the usual Medicare
FFS payment systems during all performance years. After the completion
of a performance year, the Medicare claims payments for services
furnished to the beneficiary during the episode, based on claims data,
would be combined to calculate an actual episode payment. The actual
episode payment is the sum of Medicare claims payments furnished to a
beneficiary during a CCJR episode. The actual episode payment would
then be reconciled against an established CCJR target price, with
consideration of additional payment adjustments based on quality
performance and post episode spending. The amount of this calculation,
if positive, would be paid to the participant hospital if the hospital
has met the quality thresholds proposed in this rule. This payment is
the reconciliation payment. If negative, the participant hospital would
be required to make repayment to Medicare. We also proposed to phase in
the requirement that hospitals whose actual episode payments exceed
their CCJR target price to pay the difference back to Medicare
beginning in performance year 2. Under this proposal, Medicare will not
require repayment from hospitals for CCJR episode cost performance
above their target price in performance year 1. Lastly, we propose to
limit how much a hospital can gain or lose based on its reconciliation
calculation with additional policies to further limit the risk of high
payment cases for all participant hospitals and for special categories
of hospitals.
Based on the mix of financial and quality incentives, the proposed
CCJR model could result in a range of possible outcomes for participant
hospitals. The effects on hospitals of potential savings and
liabilities will have varying degrees.
Table 18 summarizes the estimated impact for the CCJR model. Our
model estimates that the Medicare program will save $153 million
dollars over the 5 performance years (2016 through 2020). Savings to
the Medicare program may be greater if providers are able to improve
the coordination of care, invest in infrastructure, and redesign care
processes to promote high quality and efficient service delivery. Costs
to the Medicare program may increase if providers are able to use
waivers provided under the model to increase episode volume among
beneficiaries that are expected to be less costly than the hospitals
target price without the need for improving the coordination of care.
Our analysis to the best of our ability presents the cost and transfer
payment effects of this proposed rule. We solicit comment on the
assumptions and analysis presented.
a. Assumptions and Uncertainties
We used final action Medicare claims data from January 1, 2012
through December 31, 2014 to simulate the impact that this model would
have on Medicare spending for joint replacement episodes. This time
period is consistent with the historical period that are proposing to
use to calculate target prices for performance years 1 and 2 of the
model as described in section III.C of this proposed rule (we note that
for performance year 3 through 5, target prices would be calculated
based on episodes that start between in the proposed period of January
1, 2014 to December 31, 2016). Specifically we applied the methodology
provided in this proposed rule for calculating target prices for all
hospitals that would be required to participate in the model, as
discussed in section III.A. of this proposed rule, based on their
performance from calendar years 2012 through 2014. Specifically, all
IPPS hospitals in the selected MSAs not currently participating in
Model 1 or Phase II of BPCI Models 2 or 4 for the LEJR clinical episode
were included in this analysis. We identified the anchor
hospitalizations based on claims with MS-DRG 469 and MS-DRG 470 and
included the related spending that occurred 90 days after discharge. We
removed payments excluded from the episode as not being associated with
joint replacement care, as well as removing the IPPS add-on payments
including disproportionate share hospital and indirect medical
educational payments, and new technology payments associated with the
anchor hospitalization. We note that we have proposed other payment
exclusions in the calculation of the episode target price, in comparing
actual episode payments with target prices, and in determining whether
a reconciliation payment should be made to the hospital or repayment
from the hospital should be made as described in section III.C of this
proposed rule. For the purpose of this impact analysis, we have only
limited our calculations to remove the IPPS add-on payments for
disproportionate share hospital and indirect medical educational
payments, and new technology payments in calculating estimated target
prices and in comparing the target price to actual episode payments. We
then excluded

[[Page 41302]]

episodes where the anchor hospitalization occurred in hospitals that
are not paid under the IPPS. With the remaining episodes, we
standardized episode payments to remove the variation in spending due
to differences in the hospital's wage index. We trended utilization and
prices in 2012 and 2013 to match 2014 national performance, and we
incorporated the proposed outlier policy to cap spending for high cost
outlier episodes such that payments are capped at the MS-DRG anchor
value that is two standard deviations above the mean as described in
section III.C of this proposed rule. After we pooled episodes for MS-
DRGs 469 and 470, we calculated average episode prices for each
hospital and census region, as well as a hospital-specific weight
representing a case mix value for each hospital that is dependent only
on episode volume for MS-DRGs 469 and 470, and the national anchor
factor. We then calculated blended prices for each hospital, with
prices set at two-thirds of the hospital's experience and one-third of
the region's average experience for performance years 1 and 2 of the
model, as one-third of the hospital's experience and two-thirds of the
region's experience as used for performance year 3 of the model, and as
the region's average experience for performance years 4 and 5 of the
model. We made an exception for hospitals with low historical CCJR
episode volume defined in this proposed rule as those with fewer than
20 CCJR episodes in total across the 3 historical years, by setting
their target price as the region's experience. These average prices
were then disaggregated based on the national anchor factor of average
episode spending for MS-DRG 470 relative to MS-DRG 469, the computed
hospital-specific weight, the hospital's wage index was then applied
back to the price, and a 2 percent discount was applied.
After calculating target prices for MS-DRG 469 and 470 for each
hospital appropriate for each performance year, we compared these
target prices against actual performance in the 2014 calendar year. We
capped actual spending for individual episodes based on the methodology
in this proposed rule for high cost outlier spending episodes. After
incorporating the proposed outlier policy, total Medicare FFS spending
in the 2014 calendar year for each hospital was reconciled against the
target price and total number of episodes for the hospital. The
aggregate impacts were then determined by multiplying by the total
episodes for each MS-DRG.
We have proposed that the difference between each CCJR episode's
actual payment and the relevant target price (calculated as target
price subtracted by CCJR episode actual episode payment) would be
aggregated for all episodes for a participant hospital within the
performance year, creating the NPRA. Any positive NPRA amount greater
than the proposed stop-gain limit would be capped at the stop-gain
limit of 20 percent for each performance year of the model, and any
negative NPRA amount exceeding the proposed stop-loss limit would be
capped at the stop-loss limit as described in section III.C.8.b of this
proposed rule. To limit a hospital's overall repayment responsibility
under this model, we have proposed a 10 percent repayment limit in
performance year 2 and a 20 percent repayment limit in performance year
3 and subsequent years. For rural hospitals, MDHS, SCHs and RRCs, we
have proposed a 3 percent repayment limit in performance year 2 and a 5
percent repayment limit in performance year 3 and subsequent years.
Furthermore, as described earlier in this proposed rule, in order for a
participant hospital to qualify for a reconciliation payment, a
hospital must meet or exceed the 30th percentile benchmark for each of
the three proposed quality measures in performance years 1 through 3:
Hospital-level risk-standardized complication rate
following elective primary total hip arthroplasty (THA) and/or total
knee arthroplasty (TKA) (NQF #1550)
Hospital-level 30-day, all-cause risk-standardized
readmission rate following elective primary total hip arthroplasty
(THA) and/or total knee arthroplasty (TKA) (NQF #1551)
HCAHPS Survey (NQF #0166).
In performance years 4 through 5, a hospital must meet or exceed
the 40th percentile benchmark for those proposed quality measures.
To simulate the impact for performance year 1 or 2016, we
calculated the NPRA assuming no downside risk to hospitals as proposed,
and using the target price calculated for performance year 1, that is
two-thirds hospital experience and one-third region experience. If the
estimated NPRA is negative (that is, in the aggregate, the actual
episode payments for all episodes is greater than the target price
multiplied by the number of episodes) for performance year 1, Medicare
would not require repayment of the NRPA from the hospital because we
have proposed no hospital responsibility for repayment for the first
performance year. Additionally, as part of this estimate, we accounted
for whether a hospital met the quality benchmarks to be eligible for a
reconciliation payment. Lastly, we have applied the proposed 20 percent
stop-gain limit on the estimated reconciliation payments made to
participant hospitals total reconciliation payments reflect what we
would expect Medicare to pay hospitals due to normal claims variation,
and due to a blended target price which rewards hospitals that already
perform better than their regional average.
To simulate the impact in performance year 2, we calculated the
NPRA assuming full risk as proposed for this model, rewarding hospitals
that perform better than their 2 percent discount that met the 30th
percentile threshold for the complications, readmissions and HCAHPs
quality metrics, but only requiring repayments from hospitals for total
spending that is above a 1 percent discount. For the simulation in
performance year 2, we used the target price calculated for performance
year 2 that is two-thirds hospital experience and one-third regional
experience. A 10 percent stop-loss limit was applied to repayments, and
3 percent stop-loss limit was applied for rural hospitals, sole
community hospitals, Medicare dependent hospitals, and rural referral
centers, as proposed, and a 20 percent stop-gain limit was applied.
To simulate the impact in performance year 3, we calculated the
NPRA assuming full risk as proposed in the model and rewarding
hospitals that perform better than their 2 percent discount and met the
30th percentile thresholds for all three of the quality metrics, and
requiring repayments from hospitals for total spending that is above
the 2 percent discount. For the simulation in year 3, we used the
target price calculated as one-third of the hospital's experience and
two-thirds of the regional experience. We included a 20 percent stop-
gain limit for all hospitals, a 20 percent stop-loss limit on
repayments from acute care hospitals included in this analysis, but
used a 5 percent stop-loss limit on reconciliation repayments from
rural hospitals, sole community hospitals, Medicare dependent
hospitals, and rural referral centers, as proposed.
For performance years 4 and 5, the impact estimates were calculated
in the same way except that the episode target prices are based on 100
percent of the regional experience, as proposed. Additionally, the
impact estimates accounted for the proposal that a hospital must meet
or exceed the 40th percentile benchmark for those proposed quality
measures in order to be eligible for a reconciliation payment.

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In this proposed model, we are selecting a total of 75 MSAs from 8
MSA groupings. IPPS hospitals located within the selected MSAs will be
required to participate in this model unless they participate in BPCI
as discussed earlier in this proposed rule in section III.A.
Additionally, as described earlier in this proposed rule in section
III.C.5, hospitals can qualify for a lower discount applied to their
target episode price if they voluntarily submit patient-reported
outcome measures data. More specifically, for hospitals that
successfully submit patient-reported outcome measures data for episodes
beginning in performance year 2, the discount percentage is reduced
from 2 percent to 1.7 percent for purposes of determining the
hospital's opportunity to receive reconciliation payment for actual
episode spending below the target price, and reduce the discount
percentage from 1 percent to 0.7 percent for purposes of determining
the amount Medicare would require the hospital to repay. We modeled the
effects of this proposal by re-running the simulation using a 1.7
percent discount for all hospitals in performance years 2 through 5,
and in performance year 2 only requiring repayments that are beyond a
0.7 percent discount. We combined the simulations with a 2 percent
discount and 1.7 percent discount by assuming that 33 percent of
hospitals would submit the patient-reported outcome measures data.
Additionally, we note for these estimates, we did not make
assumptions for changes in efficiency or utilization over the course of
the model. Over the 5 years of the model, we estimate $153 million
dollars in savings to the Medicare program, out of $12.321 billion in
total episode spending.

Table 18: Proposed Estimates of Reconciliation Payments *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year of proposed model Across all 5
-------------------------------------------------------------------------------- years of the
2016 2017 2018 2019 2020 proposed model
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total episode spending.................................. $2,261 $2,332 $2,447 $2,568 $2,713 $12,321
Net reconciliation payments**........................... 23 (29) (43) (50) (53) (153)
Reconciliation amounts.................................. 23 24 47 63 66 223
Repayment amounts....................................... 0 (53) (90) (113) (120) (376)
Net reconciliation as a percentage of total episode 1.0% (1.3%) (1.7%) (2.0%) (2.0%) (1.2%)
spend..................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Impact for 75 selected MSAs. All numbers rounded to closest million.
** Sum of reconciliation amount and repayment amount may not add to net reconciliation payment due to rounding.

These estimates contain a significant amount of uncertainty. As a
result, this proposed model could produce more significant Medicare
savings or could result in additional costs to the Medicare program.
The primary source of uncertainty stems from the normal variation in
claim cost trends each year coupled with the proposed cap on the
repayment made at reconciliation. In addition, this analysis assumes no
change in utilization both for the use of services within the bundled
episode, as well as no change in total episodes among hospitals. The
prospective prices for the proposed CCJR model incorporate price
updates from the FFS payment systems, but assume no change in
utilization for the performance years. If there is a national increase
in utilization within each bundle that is independent of this model,
then savings to the Medicare program may increase due to greater
repayments paid back to Medicare. If there is a national decrease in
utilization within each bundle that is independent of this model then
costs to the Medicare program may increase due to greater
reconciliation payments paid by Medicare to hospitals. The results will
also depend on the cumulative effects over time and across providers on
whether and how to change either actual medical procedures or the
allocations of payments among service providers. We would expect
significant variation among hospitals and among metropolitan areas, but
are unable to predict these.
Additionally, although we project savings to Medicare under this
proposed model, as stated earlier, we note that under section
1115A(b)(3)(B) of the Act, the Secretary is required to terminate or
modify a model unless certain findings can be made with respect to
savings and quality after the model has begun. If during the course of
testing the model it is determined that termination or modification is
necessary, such actions would be undertaken through rulemaking.
b. Analyses
The first performance year of the model is expected to cost the
Medicare program $23 million in reconciliation payments made by CMS to
hospitals. We have proposed that no repayments from hospitals will be
assessed because hospitals are not subject to downside risk in
performance year 1. Hospitals that would receive reconciliation
payments are the hospitals that provide lower cost care relative to
their regional average.
In the second performance year of the model, participant hospitals
on net are expected to pay $29 million to CMS. We have proposed a 10
percent stop-loss limit for acute care hospitals, with exception for
rural hospitals, sole community hospitals, Medicare dependent
hospitals, and rural referral center hospitals which would be subject
to a 3 percent stop-loss limit. These limits would cap the total amount
of repayments paid by hospitals to CMS.
In the third performance year of the model, net reconciliation
payments are expected to be $43 million in savings to the Medicare
program. The additional savings in performance year 3 compared to
performance year 2 can be attributed to receiving repayments from
hospitals for total spending that is above a 1 percent discount in
performance year 2, while in performance year 3, we would require
repayments from hospitals for total spending that is above a 2 percent
discount.
For performance years 4 and 5 of the model, the proposed episode
target price will be based on full regional pricing. This creates great
variation between the target price and hospital's own experience.
Therefore, the stop-gain and stop-loss limits on reconciliation
payments are estimated to have a larger impact. As a result, net
payments are expected to be $50 million dollars from hospitals to the
Medicare program in the fourth year and $53 million in the fifth year.
Savings to the Medicare program increases as a higher proportion of
hospitals that provide care more efficiently than their regional
average will forego reconciliation

[[Page 41304]]

payments due to failure to meet the proposed thresholds on all three of
the quality of care measures. These estimated savings in years 4 and 5
represent 2.0 percent of total episode spending in those years. The
proposed total savings to the Medicare program after 5 years of the
model are expected to be $153 million dollars out of $12.321 billion
dollars or 1.2 percent in total episode spending. Due to the
uncertainty of estimating this model, actual results could be
significantly higher or lower than this estimate.
c. Further Consideration
We can use our experience in previous implementation of bundled
payment models to help inform our impact analyses. We have previously
used our statutory authority to create payment models such as the BPCI
initiative and the ACE Demonstration to test bundled payments. Under
the authority of section 1866C of the Act, CMS funded a 3-year
demonstration, the ACE Demonstration. The demonstration used a
prospective global payment for a single episode of care as an
alternative approach to payment for service delivery under traditional
Medicare FFS. The episode of care was defined as a combination of Parts
A and B services furnished to Medicare FFS beneficiaries during an
inpatient hospital stay for any one of a specified set of cardiac and
orthopedic MS DRGs. The MS DRGs tested included 469 and 470, those
proposed for inclusion in the CCJR model. The discounted bundled
payments generated an average gross savings to Medicare of $585 per
episode for a total of $7.3 million across all episodes (12,501
episodes) or 3.1 percent of the total expected costs for these
episodes. After netting out the savings produced by the Medicare Parts
A and B discounted payments and some increased post-acute care costs
that were observed at two sites, Medicare saved approximately $4
million, or 1.72 percent of the total expected Medicare spending.
Additionally, we are currently testing the BPCI initiative. Under the
initiative, entities enter into payment arrangements with CMS that
include financial and performance accountability for episodes of care.
Episodes of care under the BPCI initiative begin with either an--(1)
inpatient hospital stay; or (2) post-acute care services following a
qualifying inpatient hospital stay and include tests of LEJR episodes.
The BPCI initiative is evaluating the effects of episode based payment
approaches on patient experience of care, outcomes, and cost of care
for Medicare FFS beneficiaries. Although there is limited evidence from
BPCI and ACE suggesting that providers may improve their performance,
both of these demonstrations were voluntary, and the participants that
volunteered for these demonstrations may be in a better position to
reduce episode spending relative to the average provider. We believe
that our experiences with BPCI support the proposed design of the CCJR
Model.
3. Effects on Beneficiaries
In 2014, approximately 430,000 Medicare beneficiaries had
discharges for lower extremity joint replacements (MS-DRG 469 and MS-
DRG 470) nationally. We anticipate that the CCJR model may benefit
beneficiaries receiving lower extremity joint replacements because the
intent of the model is to test whether providers under this bundled
payment system are able to improve the coordination and transition of
care, invest in infrastructure and redesigned care processes for high
quality and efficient service delivery, and incentivize higher value
care across the inpatient and post-acute care spectrum spanning the
episode of care. We believe the model has a patient-centered focus such
that healthcare delivery and communication on the patient and those who
are close to the patient and bases the care and communication delivered
around the needs of the beneficiary, thus benefitting the beneficiary
community.
We have proposed several quality of care and patient experience
measures to evaluate participant hospitals in the CCJR model with the
intent that it will encourage the provider community to focus on and
deliver improved quality care for the Medicare beneficiary. We are
proposing to adopt and publicly report three hospital level quality of
care measures for the CCJR model. Those measures include a complication
measure, readmission measure, and a patient experience survey measure.
In addition, we are proposing to voluntarily collect data to develop a
hospital-level measure of patient reported outcomes following an
elective primary total hip or total knee arthroplasty. We propose to
use these measures to test the success of the model and to monitor for
beneficiary safety. Additionally, participant hospitals must meet the
proposed quality performance standards in order to qualify to receive a
reconciliation payment. The accountability of participant hospitals for
both quality and cost of care provided for Medicare beneficiaries with
an LEJR episode provides the hospitals with new incentives to improve
the health and well-being of the Medicare beneficiaries they treat.
Additionally, the model does not affect the beneficiary's freedom
of choice to obtain health services from any individual or organization
qualified to participate in the Medicare program guaranteed under
section 1802 of the Act. Under the CCJR model, eligible beneficiaries
who choose to receive services from a participant hospital would not
have the option to opt out of inclusion in the model. Although the
proposed model allows hospitals to enter into risk-sharing arrangements
with certain other providers and these hospitals may recommended those
providers to the beneficiary, hospitals may not prevent or restrict
beneficiaries to any list of preferred or recommended providers.
Many controls exist under Medicare to ensure beneficiary access and
quality and we have proposed to use our existing authority, if
necessary, to audit participant hospitals if claims analysis indicates
an inappropriate change in delivered services. As described earlier in
this proposed rule, given that participant hospitals would receive a
reconciliation payment when they are able to reduce average costs per
case and meet quality thresholds, they could have an incentive to avoid
complex, high cost cases by referring them to nearby facilities or
specialty referral centers. We intend to monitor the claims data from
participant hospitals--for example, to compare a hospital's case mix
relative to a pre-model historical baseline to determine whether
complex patients are being systematically excluded. Furthermore, we
also proposed to require providers to supply beneficiaries with written
information regarding the design and implications of this model as well
as their rights under Medicare, including their right to use their
provider of choice.
We have proposed to implement several safeguards to ensure that
Medicare beneficiaries do not experience a delay in services. We
believe that the longer the episode duration, the lower the risk of
delaying care beyond the episode duration, and we believe that a 90 day
episode is sufficiently long to minimize the risk that any lower
extremity joint replacement related care will be delayed beyond the end
of the episode. Moreover, we have proposed as part of the payment
definition (see section III.C of this proposed rule) that certain
outlier costs post-episode payments occurring in the 30 day window
subsequent to the end of the 90-day episode will be counted as an

[[Page 41305]]

adjustment against savings. Importantly, approaches to saving costs
will include taking steps that facilitate patient recovery, that
shorten recovery duration, and that minimize post-operative problems
that might lead to readmissions. Thus, the model itself rewards better
patient care.
Lastly, we note that Medicare payments for services will continue
to be made for each Medicare FFS payment system under this model, and
will include normal beneficiary copayments, deductibles, and
coinsurance. We expect and assume that beneficiary payments will not be
affected, as only the hospital will be subject to the reconciliation
process. Beneficiaries may benefit if providers are able to
systematically improve the quality of care while reducing costs. We
welcome public comments on our estimates of the impact of our proposals
on Medicare beneficiaries.
4. Effects on Small Entities
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. We estimate that most hospitals and most
other providers and suppliers are small entities, either by virtue of
their nonprofit status or by qualifying as small businesses under the
Small Business Administration's size standards (revenues of less than
$7.5 to $38.5 million in any 1 year; NAIC Sector-62 series). States and
individuals are not included in the definition of a small entity. For
details, see the Small Business Administration's Web site at https://www.sba.gov/content/small-business-size-standards.
For purposes of the RFA, we generally consider all hospitals and
other providers and suppliers to be small entities. We believe that the
provisions of this proposed rule relating to acute care hospitals would
have some effects on a substantial number of other providers involved
in these episodes of care including surgeons and other physicians,
skilled nursing facilities, physical therapists, and other providers.
Although we acknowledge that many of the affected entities are
small entities, and the analysis discussed throughout this proposed
rule discusses aspects of the model that may or will affect them, we
have no reason to assume that these effects will reach the threshold
level of 5 percent of revenues used by HHS to identify what are likely
to be ``significant'' impacts. Although lower extremity joint
replacement procedures (MS-DRGs 469 and 470) are among the most common
surgical procedures undergone by Medicare beneficiaries, they are only
about 5 percent of all acute hospital discharges.\81\ We assume that
all or almost all of these entities will continue to serve these
patients, and to receive payments commensurate with their cost of care.
Such changes occur frequently already (for example, as both hospital
affiliations and preferred provider networks change), and we have no
reason to assume that this will change significantly under the model.
---------------------------------------------------------------------------

\81\ Medicare Inpatient Claims data from January-December 2014,
Chronic Conditions Warehouse.
---------------------------------------------------------------------------

Accordingly, we have determined that this proposed rule will not
have a significant impact on a substantial number of small entities. We
solicit public comments on our estimates and analysis of the impact of
our proposals on those small entities.
5. Effects on Small Rural Hospitals
Section 1102(b) of the Social Security Act requires us to prepare a
regulatory impact analysis if a proposed rule or final rule may have a
significant impact on the operations of a substantial number of small
rural hospitals. This analysis must conform to the provisions of
section 603 of the RFA. For purposes of section 1102(b) of the Act, a
small rural hospital is defined as a hospital that is located outside
of an MSA and has fewer than 100 beds. We note that, according to this
definition, the CCJR model would not include any rural hospitals given
that the CCJR model would only include hospitals located in MSAs, as
proposed in section III.A. However, we also note that as discussed in
section III.C.8., for purposes of our proposal to include a more
protective stop-loss policy for certain hospitals, we are proposing to
define a rural hospital as an IPPS hospital that is either located in a
rural area in accordance with Sec. 412.64(b) or in a rural census
tract within an MSA defined at Sec. 412.103(a)(1) or has reclassified
to rural in accordance with Sec. 412.103. Thus, the proposed model
will affect some rural hospitals, as discussed previously in section
III.C.8 of this proposed rule.
Because of our concerns that rural hospitals may have lower risk
tolerance and less infrastructure and support to achieve efficiencies
for high payment episodes, we have proposed additional financial
protections for certain categories of hospitals, including rural
hospitals. In performance year 2, a hospital could owe Medicare no more
than 10 percent of the target price multiplied by the number of the
hospital's LEJR episodes in CCJR as we phase in repayment
responsibility under the model. In performance year 3 and beyond when
full repayment responsibility is in place, no more than 20 percent of
the target price multiplied by the number of the hospital's LEJR
episodes in CCJR could be owed by a hospital to Medicare. However, for
rural hospitals, Medicare Dependent Hospitals, Rural Referral Centers
and Sole Community, we proposed a stop loss limit policy of 3 percent
of episode payments for these categories of hospitals. More
specifically, in performance year 2, a hospital could owe Medicare no
more than 3 percent of the target price multiplied by the number of the
hospital's episodes in CCJR. In performance years 3 through 5, a
hospital could owe Medicare no more than 5 percent of the target price
multiplied by the number of the hospital's episodes. Although we
propose these additional protections, we believe that few rural
hospitals will be included in the model, and therefore that few will
need those protections.
Because lower extremity joint replacement procedures (MS-DRGs 469
and 470) account for only about 5 percent of all discharges, because
relatively few of these procedures are performed at small rural
hospitals, and because our model is designed to minimize adverse
effects on rural hospitals, we do not believe that rural hospitals will
experience significant adverse economic impacts. Accordingly, we
conclude that this proposed rule would not have a significant impact on
the operations of a substantial number of small rural hospitals.
We are soliciting public comments on our estimates and analysis of
the impact of our proposals on those small rural hospitals.
6. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2015, that
is approximately $144 million. This proposed rule does not include any
mandate that would result in spending by state, local or tribal
governments, in the aggregate, or by the private sector in the amount
of $144 million in any 1 year.

[[Page 41306]]

D. Alternatives

Throughout this proposed rule, we have identified our proposed
policies and alternatives that we have considered, and provided
information as to the effects of these alternatives and the rationale
for each of the proposed policies. We solicit and welcome comments on
our proposals, on the alternatives we have identified, and on other
alternatives that we should consider, as well as on the costs,
benefits, or other effects of these. We note that our estimates are
limited to the IPPS hospitals that would be selected to participate in
this proposed model. This proposed rule will not impinge directly on
hospitals that are not participating in the model. However, it may
encourage innovations in health care delivery in other areas or in care
reimbursed through other payers. For example, a hospital and affiliated
providers may choose to extend their arrangements to all joint
replacement procedures they provide, not just those reimbursed by
Medicare. Alternatively, a hospital and affiliated providers in one
city may decide to hold themselves forth as ``centers of excellence''
for patients from other cities, both those included and not included in
the model. We welcome comments that address these or other
possibilities.

E. Accounting Statement

As required by OMB Circular A-4 under Executive Order 12866
(available at https://www.whitehouse.gov/omb/circulars_a004_a-4) in
Table 19, we have prepared an accounting statement showing the
classification of transfers, benefits, and costs associated with the
provisions in this proposed rule. The accounting statement is based on
estimates provided in this regulatory impact analysis. Because of the
uncertainties identified in establishing the economic impact estimates,
we intend to update the estimates in the final rule. As described in
Table 18, we estimate this proposed model will result in savings to the
federal government of $153 million over the 5years of the model from
2016 to 2020. The following Table 19 shows the annualized change in (A)
net federal monetary transfers, and (B) potential reconciliation
payments to participating hospitals net of repayments from participant
hospitals that is associated with the provisions of this proposed rule
as compared to baseline. In Table 19, the annualized change in payments
based on a 7 percent and 3 percent discount rate, results in net
federal monetary transfer from the participant IPPS hospitals to the
federal government of $28 million and $30 million respectively.

Table 19--Accounting Statement Estimated Impacts
------------------------------------------------------------------------
Source citation
Category Primary estimate (RIA, preamble,
etc.)
------------------------------------------------------------------------
BENEFITS:
Annualized monetized $28 million....... Change from
transfers: Discount rate: baseline to
7%. proposed changes
(Table 18).
Annualized monetized $30 million.......
transfers: Discount rate:
3%.
---------------------------------------
From whom to whom?.......... From Participant IPPS Hospitals to
Federal Government.
------------------------------------------------------------------------

F. Conclusion

The preceding analysis, together with the remainder of this
preamble, provides the Regulatory Impact Analysis of a rule with a
significant economic effect. As a result of this proposed rule, we
estimate of the financial impact of the CCJR model for CYs 2016 through
2020 would be net federal savings of $153 million over a 5 year period.
The annualized change in payments based on a 7 percent and 3 percent
discount rate, results in net federal monetary transfer from the
participant IPPS hospitals to the federal government of $28 million and
$30 million respectively.
In accordance with the provisions of Executive Order 12866, this
rule was reviewed by the Office of Management and Budget.

List of Subjects for 42 CFR Part 510

Administrative practice and procedure, Health facilities, Medicare,
Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, under the authority at
section 1115A of the Social Security Act, the Centers for Medicare &
Medicaid Services proposes to amend 42 CFR Chapter IV as follows:

0
1. Revise the heading of Subchapter H to read as follows:

SUBCHAPTER H--HEALTH CARE INFRASTRUCTURE AND MODEL PROGRAMS

0
2. Part 510 is added to Subchapter H to read as follows:

PART 510--COMPREHENSIVE CARE FOR JOINT REPLACEMENT MODEL

Secs.
Subpart A--General Provisions
510.1 Basis and scope.
510.2 Definitions.
Subpart B--Comprehensive Care for Joint Replacement Model Participants
510.100 Episodes being tested.
510.105 Geographic areas.
Subpart C--Scope of Episodes
510.200 Time periods, included services, and attribution.
510.205 Beneficiary inclusion criteria.
510.210 Determination of the episode.
Subpart D--Pricing and Payment
510.300 Determination of episode target prices.
510.305 Determination of the NPRA and reconciliation process.
510.310 Appeals process.
510.315 Quality thresholds for reconciliation payment eligibility.
510.320 Treatment of incentive programs or add-on payments under
existing Medicare payment systems.
510.325 Allocation of payments for services that straddle the
episode.
Subpart E--Quality Measures, Beneficiary Protections, and Compliance
Enforcement
510.400 Quality measures and reporting.
510.405 Beneficiary choice and beneficiary notification.
510.410 Compliance enforcement.
Subpart F--Financial Arrangements and Beneficiary Incentives
510.500 Financial arrangements under the CCJR model.
510.505 Beneficiary incentives under the CCJR model.
Subpart G--Waivers
510.600 Waiver of direct supervision requirement for certain post-
discharge home visits.
510.605 Waiver of certain telehealth requirements.
510.610 Waiver of SNF 3-day rule.
510.615 Waiver of certain post-operative billing restrictions.

[[Page 41307]]

Authority: Secs. 1102, 1115A, and 1871 of the Social Security
Act (42 U.S.C. 1302, 1315(a), and 1395hh).

Subpart A--General Provisions

Sec. 510.1 Basis and scope.

(a) Basis. This part implements the test of the Comprehensive Care
for Joint Replacement model under section 1115A of the Act. Except as
specifically noted in this part, the regulations under this part must
not be construed to affect the payment, coverage, program integrity,
and other requirements (such as those in parts 412 and 482 of this
chapter) that apply to providers and suppliers under this chapter.
(b) Scope. This part sets forth the following:
(1) The participants in the Comprehensive Care for Joint
Replacement model.
(2) The episodes being tested in the model.
(3) The methodology for pricing and payment under the model.
(4) Quality performance standards and quality reporting
requirements.
(5) Safeguards to ensure preservation of beneficiary choice and
beneficiary notification.

Sec. 510.2 Definitions.

For the purposes of this part, the following definitions are
applicable:
ACO stands for Accountable Care Organization.
Actual episode payment means the sum of Medicare claims payments
for items and services that are included in the episode in accordance
with Sec. 510.200(b), excluding the items and services described in
Sec. 510.200(d) and the incentive programs and add-on payments
specified in Sec. 510.320, and subject to the cap described in Sec.
510.300(b)(4).
Alignment payment means a payment from a Comprehensive Care for
Joint Replacement collaborator to a participant hospital under a
Comprehensive Care for Joint Replacement sharing arrangement.
Anchor hospitalization means the initial hospital stay upon
admission for a lower extremity joint replacement.
BPCI stands for the Bundled Payments for Care Improvement
initiative.
CCJR stands for Comprehensive Care for Joint Replacement.
CCJR collaborator means one of the following persons or entities
that enter into a CCJR sharing arrangement:
(1) Skilled nursing facility.
(2) Home health agency.
(3) Long-term care hospital.
(4) Inpatient rehabilitation facility.
(5) Physician.
(6) Nonphysician practitioner.
(7) Outpatient therapy provider.
(8) Physician group practice.
CCJR-eligible hospital means a hospital that is paid under IPPS and
not a participant in BPCI Model 1 or in the risk-bearing period of
Models 2 or 4 for LEJR episodes, regardless of whether or not the
metropolitan statistical area in which the hospital is located is
selected for inclusion in the CCJR model.
CCJR reconciliation report means the report prepared after each
reconciliation that CMS provides to each participant hospital notifying
the participant hospital of the outcome of the reconciliation.
CCJR sharing arrangement means a financial arrangement between a
participant hospital and a CCJR collaborator for the sole purpose of
sharing the following:
(1) CCJR reconciliation payments.
(2) The participant hospital's internal cost savings.
(3) The participant hospital's responsibility for repayment to
Medicare.
Core-based statistical area (CBSA) means a statistical geographic
entity consisting of the county or counties associated with at least
one core (urbanized area or urban cluster) of at least 10,000
population, plus adjacent counties having a high degree of social and
economic integration with the core as measured through commuting ties
with the counties containing the core.
Critical access hospital (CAH) means a hospital designated under
subpart F of part 485 of this chapter.
Episode of care (Episode) means all Medicare Part A and B items and
services described in Sec. 510.200(b) (and excluding the items and
services described in Sec. 510.200(d)) that are furnished to a
beneficiary described in Sec. 510.205 during the time period that
begins with such beneficiary's admission to an anchor hospitalization
and ends 90 days after discharge from the anchor hospitalization.
Episode target price means the amount determined in accordance with
Sec. 510.300 and applied to an episode in determining a net payment
reconciliation amount.
Gainsharing payment means a payment from a participant hospital to
a CCJR collaborator, under a CCJR sharing arrangement, composed of only
reconciliation payments or internal cost savings or both.
Historical episode payment means the most recent 3 years of
expenditures for an episode in a given participant hospital.
Hospital means a hospital subject to the prospective payment system
specified in Sec. 412.1(a)(1) of this chapter.
ICD-CM stands for International Classification of Diseases,
Clinical Modification.
Inpatient prospective payment systems (IPPS) means the payment
systems for subsection (d) hospitals as defined in section
1886(d)(1)(B) of the Act.
Internal cost savings means the measurable, actual, and verifiable
cost savings realized by the participant hospital resulting from care
redesign undertaken by the participant hospital in connection with
providing items and services to beneficiaries within specific CCJR
episodes of care. Internal cost savings does not include savings
realized by any individual or entity that is not the participant
hospital.
Lower-extremity joint replacement (LEJR) means any procedure that
is within MS-DRG 469 or 470, including lower-extremity joint
replacement procedures or reattachment of a lower extremity.
Medicare severity diagnosis-related group (MS-DRG) means a patient
classification system for inpatient discharges and adjusting payments
under the IPPS.
Medicare-dependent, small rural hospital (MDH) means a specific
type of hospital that meets the classification criteria specified under
Sec. 412.108 of this chapter.
Metropolitan Statistical Area (MSA) means a core-based statistical
area associated with at least one urbanized area that has a population
of at least 50,000.
Net payment reconciliation amount (NPRA) means the amount
determined in accordance with Sec. 510.305(e).
NPI stands for National Provider Identifier.
OIG stands for the Department of Health and Human Services', Office
of the Inspector General.
Participant hospital means an IPPS hospital (other than those
hospitals specifically excepted under Sec. 510.100(b)) that is
physically located in one of the geographic areas selected for
participation in the CCJR model in accordance with Sec. 510.105, as of
the date of selection or any time thereafter during any performance
period.
Participation agreement means a written, signed agreement between a
CCJR collaborator and a participant hospital that meets the
requirements of Sec. 510.500(c).
PBPM stands for per-beneficiary-per-month.

[[Page 41308]]

Performance year means one of the calendar years in which the CCJR
model will be tested.
Post-episode spending amount means the sum of Medicare Parts A and
B payments for items and services that are furnished within 30 days
after the end of the episode.
Reconciliation payment means a payment of the NPRA made to a CCJR
participant hospital.
Region means one of the nine U.S. census divisions, as defined by
the U.S. Census Bureau.
Rural hospital means a hospital that meets one of the following
definitions:
(1) Is located in a rural area as defined under Sec. 412.64 of
this chapter.
(2) Is located in a rural census tract defined under Sec.
412.103(1) of this chapter.
(3) Has reclassified as a rural hospital under Sec. 412.103 of
this chapter.
Rural referral center (RRC) has the same meaning given this term
under Sec. 412.96 of this chapter.
Sole community hospital (SCH) means a certain type of hospital that
meets the classification criteria specified in Sec. 412.92 of this
chapter.
TIN stands for Taxpayer Identification Number.
Total episode payments means the total Medicare FFS Parts A and B
claims for an episode.

Subpart B--Comprehensive Care for Joint Replacement Program
Participants

Sec. 510.100 Episodes being tested.

(a) Initiation of an episode. An episode is initiated when a
participant hospital admits a Medicare beneficiary described in Sec.
510.205 for an anchor hospitalization.
(b) Exclusions. A hospital is excluded from being a participant
hospital if any of the following conditions apply on or after July 1,
2015:
(1) The hospital is an episode initiator for an LEJR episode in the
risk-bearing period of Models 2 or 4 of the BPCI. This exclusion ceases
to apply to the hospital upon any termination of its participation as
an episode initiator for a lower-extremity joint replacement episode.
(2) The hospital is participating in Model 1 of the BPCI. This
exclusion ceases to apply to the hospital upon any termination of its
participation in BPCI in Model 1.

Sec. 510.105 Geographic areas.

(a) General. The geographic areas for inclusion in the CCJR model
are obtained using a stratified random sampling of certain MSAs in the
United States. All counties within each of the selected MSAs are
selected for inclusion in the CCJR model.
(b) Stratification criteria. Geographic areas in the United States
are stratified according to the characteristics that CMS determines are
necessary to ensure that the model is tested on a broad range of
different types of hospitals that may face different obstacles and
incentives for improving quality and controlling costs.
(c) Exclusions. CMS excludes from the selection of geographic areas
MSAs that met the following criteria between July 1, 2013 and June 30,
2014:
(1) Had fewer than 400 episodes;
(2) Had fewer than 400 non-BPCI episodes;
(3) Had at least 400 non-BPCI episodes, but--
(i) Had more than 50 percent of otherwise qualifying (BPCI or non
BPCI) episodes in Phase 2 of BPCI Model 2 or 4 with hospital episode
initiators; or
(ii) Had more than 50 percent of otherwise qualifying (BPCI or non-
BPCI) episodes treated in a SNF or HHA that were treated in a BPCI
Model 3 initiating provider;
(4) Had more than 50 percent of episodes that were paid under the
Maryland State Waiver System, if any part of the MSA was located in
Maryland.

Subpart C--Scope of Episodes

Sec. 510.200 Time periods, included services, and attribution.

(a) Time periods. All episodes being tested in the CCJR model begin
on or after January 1, 2016 and end on or before December 31, 2020.
(b) Included services. All Medicare Parts A and B items and
services are included in the episode, except as specified in paragraph
(d) of this section. These services include, but are not limited to,
the following:
(1) Physicians' services.
(2) Inpatient hospital services (including hospital readmissions).
(3) Inpatient hospital readmission services.
(4) Inpatient psychiatric facility (IPF) services.
(5) Long-term hospital care (LTCH) services.
(6) Inpatient rehabilitation facility (IRF) services.
(7) Skilled nursing facility (SNF) services.
(8) Home health agency (HHA) services.
(9) Hospital outpatient services.
(10) Independent outpatient therapy services.
(11) Clinical laboratory services.
(12) Durable medical equipment (DME).
(13) Part B drugs and biologicals.
(14) Hospice services.
(15) PBPM payments under models tested under section 1115A of the
Act.
(c) Episode attribution. All items and services included in the
episode (as described in paragraph (b) of this section) are attributed
to the participant hospital at which the anchor hospitalization occurs.
(d) Excluded services. The following items, services, and payments
are excluded from the episode:
(1) Hemophilia clotting factors provided in accordance with Sec.
412.115 of this chapter.
(2) New technology add-on payments, as defined in part 412, subpart
F of this chapter.
(3) Items and services unrelated to the anchor hospitalization, as
determined by CMS. Such excluded services include, but are not limited
to, the following:
(i) Inpatient hospital admissions for MS-DRGs that group to the
following categories of diagnoses:
(A) Oncology.
(B) Trauma medical.
(C) Chronic disease surgical, such as prostatectomy.
(D) Acute disease surgical, such as appendectomy.
(ii) Medicare Part B services as identified by the principal ICD-CM
diagnosis code, based on the ICD-CM version in use during the
performance year, on the claim that group to the following categories
of diagnoses:
(A) Acute disease diagnoses, such as severe head injury.
(B) Certain chronic disease diagnoses, as specified by CMS on a
diagnosis-by-diagnosis--basis depending on whether the condition was
likely to have been affected by the lower-extremity joint replacement
procedure and recovery period or whether substantial services were
likely to be provided for the chronic condition during the episode.
Such chronic disease diagnoses are posted on the CMS Web site and may
be revised in accordance with paragraph (e) of this section.
(C) Certain PBPM payments under models tested under section 1115A
of the Act. PBPM model payments are excluded if they are determined to
be primarily used for care coordination or care management services for
clinical conditions in excluded categories of diagnoses, as described
in this paragraph. The list of excluded PBPM payments is posted on the
CMS Web site and is updated consistent with the following.
Notwithstanding the foregoing, all PBPM model payments

[[Page 41309]]

funded from CMMI's appropriation are excluded from the episode.
(1) The list of excluded PBPM payments will be posted on the CMS
Web site.
(2) On an annual basis, or more frequently as needed, CMS updates
the list of excluded PBPM payments.
(3) Criteria for exclusion of PBPM payments under certain models
tested under section 1115A of the Act. Model PBPM payments are excluded
from episode target price and actual episode payments if determined to
be primarily used for care coordination or care management services for
clinical conditions in excluded categories of diagnoses, as described
in paragraph (d) of this section.
(4) Updating the list of excluded PBPM payments to account for new
models.
CMS posts potential new exclusions of PBPM payments to the CMS Web
site to allow for public comment and finalize and post to the CMS Web
site the updated exclusions list after consideration of public input.
(D) Previous years' reconciliation or repayment amounts are not
included in the episode for purposes of calculating episode target
prices (Sec. 510.300) or total episode payments during a performance
period.
(e) Updating the lists of excluded services. (1) The list of
excluded MS-DRGs and ICD-CM diagnosis codes are posted on the CMS Web
site.
(2) On an annual basis, or more frequently as needed, CMS updates
the list of excluded services to reflect annual coding changes or other
issues brought to CMS's attention.
(3) CMS applies the following standards when revising the list of
excluded services for reasons other than to reflect annual coding
changes:
(i) Items or services that are directly related to the LEJR
procedure or the quality or safety of LEJR care would be included in
the episode.
(ii) Items or services for chronic conditions that may be affected
by the LEJR procedure or post-surgical care would be related and
included in the episode.
(iii) Items and services for chronic conditions that are generally
not affected by the LEJR procedure or post-surgical care would be
excluded from the episode.
(iv) Items and services for acute clinical conditions not arising
from existing, episode-related chronic clinical conditions or
complications of LEJR surgery would be excluded from the episode.
(4) CMS posts the following to the CMS Web site:
(i) Potential revisions to the exclusion to allow for public
comment; and
(ii) An updated exclusions list after consideration of public
comment.

Sec. 510.205 Beneficiary inclusion criteria.

(a) Episodes tested in the CCJR model include only those in which
care is furnished to beneficiaries who meet all of the following
criteria upon admission to the anchor hospitalization:
(1) The beneficiary is enrolled in Medicare Parts A and Part B.
(2) The beneficiary's eligibility for Medicare is not on the basis
of end stage renal disease, as described in Sec. 406.13 of this
chapter.
(3) The beneficiary is not enrolled in any managed care plan (for
example, Medicare Advantage, health care prepayment plans, or cost-
based health maintenance organizations).
(4) The beneficiary is not covered under a United Mine Workers of
America health care plan.
(5) Medicare is the primary payer.
(b) If at any time during the episode the beneficiary no longer
meets all of the criteria in this section, the episode is canceled in
accordance with Sec. 510.210(b).

Sec. 510.210 Determination of the episode.

(a) General. The episode begins with the admission of a Medicare
beneficiary described in Sec. 510.205 to a participant hospital for an
anchor hospitalization and ends 90 calendar days after discharge from
the anchor hospitalization.
(b) Cancellation of an episode. The episode is cancelled and is not
included in the determination of NPRA as specified in Sec. 510.305 if
the beneficiary does any of the following:
(1) Ceases to meet any criterion listed in Sec. 510.205 at any
time during the episode.
(2) Is readmitted to any participant hospital during the episode
for another anchor hospitalization;
(3) Initiates an LEJR episode under BPCI
(4) Dies during the anchor hospitalization.

Subpart D--Pricing and Payment

Sec. 510.300 Determination of episode target prices.

(a) General. CMS establishes episode target prices for participant
hospitals for each performance year the model as specified in this
section. Episode target prices are established according to the
following:
(1) MS-DRG assigned at discharge for anchor hospitalization--
(i) MS-DRG 469; or
(ii) MS-DRG 470.
(2) Applicable time period for performance period episode target
prices. Episode target prices are be updated to account for midyear
payment updates no less than twice per year, for updated episode target
prices effective October 1 and January 1, and at other intervals if
necessary.
(3) Episodes that straddle performance years or midyear payment
updates. Episode target prices apply for the time period in which the
date of the anchor hospitalization admission occurs.
(4) Adjustments for quality reporting, as discussed in Sec.
510.305(g).
(b) Episode target price. (1) CMS calculates episode target prices
based on a blend of each participant hospital's most recent 3 years of
expenditures for an episode and the most recent 3 years of expenditures
for an episode in the region in which the participant hospital is
physically located. Specifically, the blend consists of the following:
(i) Two-thirds of the participant hospital's own historical episode
payments and one-third of the regional historical episode payments for
performance years 1 and 2.
(ii) One-third of the hospital's own historical episode payments
and two-thirds of the regional historical episode payments for
performance year 3.
(iii) Regional historical episode payments for performance years 4
and 5.
(2) Exception for low-volume hospitals. Episode target prices for
participant hospitals with fewer than 20 CCJR episodes in total across
the 3 historical years of data used to calculate the episode target
price are based on 100 percent regional historical episode payments.
(3) Exception for recently merged or split or altogether new
hospitals. (i) Hospital-specific historical payments for recently
merged or split hospitals would incorporate the historical episodes
attributed to their previous entities.
(ii) New hospitals (with new CMS provider agreements) would receive
target prices using the same blended approach and low-volume policy for
existing hospitals as described in in this section.
(4) Exception for high episode spending in baseline period.
Historical episode payments are capped at 2 standard deviations above
the mean episode payment for purposes of calculating the episode target
prices.
(5) Exclusion of incentive programs and add-on payments under
existing Medicare payment systems. Certain incentive programs and add-
on payments are excluded, as applicable, from target price and total
episode payment calculations by using the CMS

[[Page 41310]]

Price Standardization methodology used for the Medicare spending per
beneficiary measure in the Hospital Value-Based Purchasing Program.
(6) Communication of episode target prices. CMS communicates
episode target prices to participant hospitals before the performance
period in which they apply for performance years 2 through 5, and
before or shortly after the start of performance year 1.
(c) Discount factor. A participant hospital's episode target prices
incorporate applicable discount factors to reflect Medicare's portion
of reduced expenditures from the CCJR model as described in this
section.
(1) Except as provided in paragraph (c)(2) of this section, the
applicable discount factor is for a participant hospital that--
(i) Does not successfully submit voluntary patient-reported outcome
data for that performance year as provided in Sec. 510.400(b) is 2.0
percent.
(ii) Successfully submits voluntary patient-reported outcome data
for that performance year as provided in Sec. 510.400(b) is 1.7
percent.
(2) For performance year 2 only, if the participant hospital's NPRA
(defined in section Sec. 510.305(e)) would be negative using the
applicable discount factor under paragraph (c)(1) of this section, then
for purposes of determining the participant hospital's NPRA, the
discount factor is applied in lieu of the applicable discount factor
under paragraph (c)(1) of this section for a participant hospital
that--
(i) Successfully submits the voluntary patient-reported outcomes
data for performance year 2 as provided in Sec. 510.400(b) is 0.7
percent.
(ii) Does not successfully submit the voluntary patient-reported
outcomes data for performance year 2 as provided in Sec. 510.400(b),
is 1 percent.
(d) Data sharing. (1) CMS makes available to participant hospitals,
through the most appropriate means, data that CMS determines may be
useful to participant hospitals to do the following:
(i) Determine appropriate ways to increase the coordination of
care.
(ii) Improve quality.
(iii) Enhance efficiencies in the delivery of care.
(iv) Otherwise achieve the goals of the CCJR model described in
this section.
(2) Beneficiary-identifiable data. (i) CMS makes beneficiary-
identifiable data available to a participant hospital in accordance
with applicable privacy laws and only in response to the hospital's
request for such data for a beneficiary who has been furnished a
billable service by the participant hospital corresponding to the
episode definitions for CCJR and has not chosen to opt out of claims
data sharing.
(ii) The minimum data necessary to achieve the goals of the CCJR
model, as determined by CMS, may be provided under this section for a
participant hospital's baseline period and as frequently as on a
quarterly basis throughout the hospital's participation in the CCJR
model.

Sec. 510.305 Determination of the NPRA and reconciliation process.

(a) General. Providers and suppliers furnishing items and services
included in the episode bill for such items and services in accordance
with existing rules and as if this part were not in effect.
(b) Reconciliation. Medicare uses a series of reconciliation
processes, which CMS performs as described in paragraphs (d) and (f) of
this section after the end of each performance year, to establish final
payment amounts to participant hospitals for CCJR episodes for a given
performance year. Following the end of each performance year, CMS
determines actual episode payments for each episode for the performance
year (other than episodes that have been canceled in accordance with
Sec. 510.210(b)) and determines the amount of a reconciliation or
repayment amount.
(c) Data used. CMS uses the most recent claims data available to
perform each reconciliation calculation.
(d) Annual reconciliation. (1) Two months after the end of each
performance year, CMS performs a reconciliation calculation to
establish an NPRA for each participant hospital.
(2) CMS--
(i) Calculates the NPRA for each participant hospital in accordance
with Sec. 510.305(e) including the adjustments provided for in Sec.
510.305(e)(5); and
(ii) Assesses whether hospitals meet specified quality requirements
under Sec. 510.315.
(e) Calculation of the NPRA. By comparing the episode target prices
described in Sec. 510.300 and the participant hospital's actual
episode spending for the performance year and applying the adjustments
in paragraph (e)(1)(v) of this section, CMS establishes an NPRA for
each participant hospital for each performance year.
(1) Initial calculation. In calculating the NPRA for each
participant hospital for each performance year, CMS does the following:
(i) Determines actual episode payments for each episode included in
the performance year (other than episodes that have been cancelled in
accordance with Sec. 510.210(b)) using claims data that is available 2
months after the end of the performance year, in accordance with the
adjustments in Sec. 510.300(b)(5).
(ii) Multiplies the participant hospital's applicable episode
target price, including necessary adjustments for voluntary reporting
of outcome data (Sec. 510.400(b)) for each type of episode being
tested and time period (as determined in accordance with Sec. 510.300)
by the number of episodes being tested in the performance year to which
that episode target price applies.
(iii) Aggregates the amounts computed in paragraph (e)(1) of this
section across all episodes being tested for that participant hospital
in that performance year.
(iv) Subtracts the aggregate actual episode payments for all of the
participant hospital's episodes being tested in that performance year
from the calculated amount from paragraph (e)(2) of this section.
(v) Makes the following adjustments:
(A) Increases in post-episode spending. If the average post-episode
spending for a participant hospital in any given performance year is
greater than 3 standard deviations above the regional average post-
episode spending for the same performance year, then this amount would
be applied to the NPRA.
(B) Limit on financial responsibility for high episode payment
cases. Actual episode payments for an episode are capped at 2 standard
deviations above the mean episode payment for purposes of calculating
the episode target prices (Sec. 510.300) and for purposes of comparing
the actual episode payments with the applicable episode target price to
calculate the NPRA.
(C) Limitation on loss. The total amount any participant hospital
is responsible for repaying to Medicare for a performance year cannot
exceed the following:
(1) For performance year 2 only, 10 percent of the amount
calculated in paragraph (e)(1)(ii) of this section for the performance
year.
(2) For performance years 3, 4, and 5, 20 percent of the amount
calculated in paragraph (e)(1)(ii) of this section for the performance
year.
(D) Limitation on gain. The total amount of any reconciliation
payment Medicare would make to a participant hospital for a performance
year cannot exceed 20 percent of the amount calculated in paragraph
(e)(1)(ii) of this section for the performance year.
(E) Financial loss limits for SCHs, MDHs, and RRCs. If a
participant hospital is an SCH, an MDH or RRC, then for--

[[Page 41311]]

(1) Performance year 2, the total repayment amount for which the
participant hospital is responsible cannot exceed 3 percent of amount
calculated in paragraph (e)(1)(ii) of this section; and
(2) Performance years 3 through 5, the total repayment amount
cannot exceed 5 percent of the amount calculated in paragraph
(e)(1)(ii) of this section.
(f) Determination of reconciliation or repayment amount--(1)
Determination of the reconciliation or repayment amount. (i) For
performance year 1, the reconciliation or repayment amount is equal to
the NPRA.
(ii) For performance years 2 through 5, results from the subsequent
reconciliation calculation for a prior year's reconciliation, as
described in paragraph (i)(3) of this section, are applied to the
current year's NPRA in order to determine the reconciliation or
repayment amount.
(2) Reconciliation payment. If the amount from paragraph (f)(1) of
this section is positive and the participant hospital meets or exceeds
all of the quality thresholds described in Sec. 510.400, Medicare pays
the participant hospital a reconciliation payment an amount equal to
the calculation described in paragraph (f)(1) of this section.
(3) Repayment amount. If the amount from paragraph (f)(1) of this
section is negative, the participant hospital pays to Medicare an
amount equal to the calculation described in paragraph (f)(1) of this
section. CMS waives this requirement for performance year 1.
(g) Determination of eligibility for reconciliation based on
quality. (1) CMS assesses each participant hospital's performance on
quality metrics, as described in Sec. 510.400, to determine whether
the participant hospital is eligible to receive a reconciliation
payment for a performance year.
(2) If the hospital meets the quality thresholds as specified in
Sec. 510.400, and is determined to have positive NPRA under paragraph
(e) of this section, the hospital is eligible for a reconciliation
payment.
(3) If the hospital does not meet the thresholds as specified in
Sec. 510.400 for a performance year, the hospital is not eligible for
a reconciliation payment.
(h) Reconciliation report. CMS issues each participant hospital a
CCJR reconciliation report for the performance year. Each CCJR
reconciliation report contains the following:
(1) Information on whether the participant hospital met or exceeded
the quality thresholds specified in Sec. 510.400.
(2) The total actual episode payments for the participant hospital.
(3) The NPRA.
(4) Whether the participant hospital is eligible for a
reconciliation payment or must make a repayment to Medicare.
(5) The NPRA and subsequent reconciliation calculation amount for
the previous performance year, as applicable.
(6) The reconciliation payment or repayment amount.
(i) Subsequent reconciliation calculation. (1) Fourteen months
after the end of each performance year, CMS performs an additional
calculation, using claims data available at that time, to account for
final claims run-out and any additional overlap between the CCJR model
and other CMS models and programs as described in paragraph (i)(2) of
this section.
(2) The subsequent reconciliation calculation accounts for CCJR
episodes that overlap with the following shared savings programs and
models in cases where the participant hospital is a participant in the
ACO and the beneficiary in the episode is assigned to the ACO:
(i) The Pioneer ACO model.
(ii) The Medicare Shared Savings Program.
(iii) The Next Generation ACO model.
(iv) The Comprehensive ESRD Care Initiative (CEC).
(3) The additional calculation occurs concurrently with the
reconciliation process for the most recent performance year. If the
result of the subsequent calculation is different than zero, CMS
applies the stop-loss and stop-gain limits in paragraph (e) of this
section to the calculations in aggregate for that performance year (the
initial reconciliation and the subsequent calculation) to ensure the
amount does not exceed the stop-loss or stop-gain limits. CMS then
applies this amount to the NPRA for the most recent performance year in
order to determine the reconciliation amount or repayment amount for
the most recent performance year. For the performance year 2
reconciliation report only, the subsequent calculation amount (for
performance year 1) is applied to the performance year 1 NPRA to ensure
that the combined amount is not less than 0. If the combined amount is
less than zero, the subsequent calculation amount would be capped at
the amount that would result in a net amount of zero for the
combination of the performance year 1 NPRA and subsequent calculation
amount.

Sec. 510.310 Appeals process.

(a) General. If a participant hospital believes that there is an
error in a calculation that involves a matter in any way related to
payment, reconciliation amounts, repayment amounts, or determinations
associated with quality measures impacting payment, the hospital is
required to provide written notice of the error, in a form and manner
specified by CMS.
(1) Unless the participant hospital provides such notice, the CCJR
reconciliation report is deemed final 30 calendar days after it is
issued.
(2) If CMS receives a timely notice of a calculation error as
provided in paragraph (d) of this section, CMS responds in writing
within 30 calendar days to either confirm or refute the calculation
error, although CMS reserves the right to an extension upon written
notice to the participant hospital.
(3) If a participant hospital does not submit timely notice of a
calculation error in accordance with the timelines and processes
specified by CMS, then CMS deems final the CCJR reconciliation report
and proceeds with the payment or repayment processes, as applicable, as
determined by the NPRA reflected in the CCJR reconciliation report.
(b) Participant hospitals may appeal the NPRA or any calculations
impacting NPRA, reconciliation amounts or repayment amounts on the
grounds that CMS or its representative made an error in calculating
such amounts using the dispute resolution process defined in paragraph
(e) of this section.
(c) Only participant hospitals may utilize the dispute resolution
process.
(d) To begin the dispute resolution process, a participant hospital
must submit a notice of calculation error in a timely manner, as
specified by CMS.
(e) Dispute resolution process. (1) If the participant hospital is
dissatisfied with CMS's response to the notice of a calculation error,
the participant hospital may request a reconsideration review in a form
and manner as specified by CMS.
(i) The reconsideration review request must provide a detailed
explanation of the basis for the dispute and include supporting
documentation for the participant hospital's assertion that CMS or its
representatives did not accurately calculate the NPRA in accordance
with Sec. 510.305.
(ii) If CMS does not receive a request for reconsideration from the
participant hospital within 10 calendar days of the issue date of CMS's
response to the participant hospital's notice of calculation error,
then CMS's response

[[Page 41312]]

to the calculation error is deemed final and CMS proceeds with
reconciliation payment or repayment processes, as applicable, as
described in Sec. 510.305.
(iii) Where the participant hospital contests a matter that does
not involve an issue contained in, or a calculation which contributes
to, a CCJR reconciliation report, a calculation error form is not
required. An example of such a matter is termination of the participant
hospital from the model. In those instances, if CMS does not receive a
request for reconsideration from the participant hospital within 10
calendar days of the notice of the initial determination, the initial
determination is deemed final and CMS proceeds with action indicated in
the initial determination.
(2)(i) A CMS reconsideration official notifies the participant
hospital in writing within 15 calendar days of receiving the
participant hospital's review request of the following:
(A) The date, time, and location of the review.
(B) The issues in dispute.
(C) The review procedures.
(D) The procedures (including format and deadlines) for submission
of evidence.
(ii) The CMS reconsideration official takes all reasonable efforts
to schedule the review to occur no later than 30 days after the date of
receipt of the notification.
(iii) The provisions at Sec. 425.804(b), (c), and (e) of this
chapter are applicable to reviews conducted in accordance with the
reconsideration review process for CCJR.
(iv) The CMS reconsideration official issues a written
determination within 30 days of the review. The determination is final
and binding.
(3) Limitations on review. In accordance with section 1115A(d)(2)
of the Act, there is no administrative or judicial review under
sections 1869 or 1878 of the Act or otherwise for the following:
(i) The selection of models for testing or expansion under section
1115A of the Act.
(ii) The selection of organizations, sites, or participants to test
those models selected.
(iii) The elements, parameters, scope, and duration of such models
for testing or dissemination.
(iv) Determinations regarding budget neutrality under section
1115A(b)(3) of Act.
(v) The termination or modification of the design and
implementation of a model under section 1115A(b)(3)(B) of Act.
(vi) Decisions about expansion of the duration and scope of a model
under section 1115A(c) of the Act, including the determination that a
model is not expected to meet criteria described in paragraph (e)(1) or
(2) of this section.

Sec. 510.315 Quality thresholds for reconciliation payment
eligibility.

(a) General. Participant hospitals are eligible for a
reconciliation payment for a performance year only if they meet or
exceed the minimum quality thresholds specified in paragraph (b) of
this section for the performance year.
(b) Quality measure thresholds. A participant hospital's measure
result must be at or above the thresholds in paragraphs (b)(1) and (2)
of this section for all three quality measures for each performance
year of this model to be eligible for additional payments under the
CCJR model.
(1) The 30th percentile of the national hospital measure results
calculated for all HIQR-participant hospitals for performance years 1,
2, and 3.
(2) The 40th percentile for performance years 4 and 5.
(c) Low-volume hospital exception. A participant hospital with an
insufficient volume of episodes on which to determine performance on an
individual measure, as determined by CMS, is considered to have met the
performance threshold for that quality measure.

Sec. 510.320 Treatment of incentive programs or add-on payments under
existing Medicare payment systems.

The CCJR model does not replace any existing Medicare incentive
programs or add-on payments. The target price and NPRA for a
participant hospital is independent of, and does not affect, any
incentive programs or add-on payments under existing Medicare payment
systems (as described in Sec. 510.300(b)(5)).

Sec. 510.325 Allocation of payments for services that straddle the
episode.

(a) General. Services included in the episode as provided in Sec.
510.200(b) that straddle the episode are prorated so that only the
portion attributable to care furnished during the episode are
attributed to the calculation of actual episode payments.
(b) Proration of services. Payments for services that straddle the
episode are prorated using the following methodology:
(1) Non-IPPS inpatient services and other inpatient services. Non-
IPPS inpatient services, and services furnished by other inpatient
providers that extend beyond the end of the episode are prorated
according to the percentage of the actual length of stay (in days) that
falls within the episode window.
(2) Home health agency services. Home health services paid under
the prospective payment system in part 484, subpart E of this chapter
are prorated according to the percentage of days, starting with the
first billable service date (``start of care date'') and through and
including the last billable service date, that occur during the fixed
duration of the episode. This methodology is applied in the same way if
the home health services begin (the start of care date) prior to the
start of the episode.
(3) IPPS services. IPPS claim amounts that extend beyond the end of
the episode are prorated according to the geometric mean length of
stay, using the following methodology:
(i) The first day of the IPPS stay is counted as 2 days.
(ii) If the actual length of stay that occurred during the episode
is equal to or greater than the MS-DRG geometric mean, the normal MS-
DRG payment would be fully allocated to the episode.
(iii) If the actual length of stay that occurred during the episode
is less than the geometric mean, the normal MS-DRG payment amount would
be allocated to the episode based on the number of inpatient days that
fall within the episode.
(iv) If the full amount is not allocated to the episode, any
remainder amount is allocated to the post-episode spending calculation
(defined in Sec. 510.2).

Subpart E--Quality Measures, Beneficiary Protections, and
Compliance Enforcement

Sec. 510.400 Quality measures and reporting.

(a) Reporting of quality measures. The following quality measures
are used for public reporting and for determining whether a participant
hospital is eligible for additional payments under the CCJR model, as
described in Sec. 510.305:
(1) Hospital-level risk-standardized complication rate following
elective primary total hip arthroplasty and/or total knee arthroplasty.
(2) Hospital-level 30-day, all-cause risk-standardized readmission
rate following elective primary total hip arthroplasty and/or total
knee arthroplasty.
(3) Hospital Consumer Assessment of Healthcare Providers and
Systems Survey.
(b) Requirements for successful data submission of patient reported
outcomes. To be eligible for the discount factors that apply to
participant hospitals that successfully submit the voluntary patient
reported outcomes data described in Sec. 510.300(c), participant
hospitals must submit data

[[Page 41313]]

on the hospital-level performance measure(s) of patient-reported
outcomes following elective primary total hip and/or total knee
arthroplasty, including but not limited to the pre-operative and post-
operative data elements, for at least 80 percent of the eligible
elective primary total hip and/or total knee arthroplasty beneficiaries
within 60 days of the end of the most recent performance period.
(c) Public reporting. CMS--
(1) Makes the quality measurement results calculated for the
readmission, complication, and patient survey quality measures for each
participant hospital in each performance year publicly available on the
CMS Web site in a form and manner as determined by CMS.
(2) Shares each participant hospital's quality metrics with the
hospital prior to display on the Web site.
(3) Does not publicly report the voluntary patient reported outcome
data during this 5 year model.

Sec. 510.405 Beneficiary choice and beneficiary notification.

(a) Beneficiary choice. The CCJR model does not restrict Medicare
beneficiaries' ability to choose any Medicare participating provider or
supplier, or any provider or supplier who has opted out of Medicare.
(b) Required beneficiary notification. (1) Each participant
hospital must provide written notice to any Medicare beneficiary that
meets the criteria in Sec. 510.205 of his or her inclusion in the CCJR
model. The beneficiary notification must contain all of the following:
(i) A detailed explanation of the model and how it might be
expected to affect the beneficiary's care.
(ii) Notification that the beneficiary retains freedom of choice to
choose providers and services.
(iii) Explanation of how patients can access care records and
claims data through an available patient portal, and how they can share
access to their Blue Button[supreg] electronic health information with
caregivers.
(iv) A statement that all existing Medicare beneficiary protections
continue to be available to the beneficiary. These include the ability
to report concerns of substandard care to Quality Improvement
Organizations (QIO) and 1-800-MEDICARE.
(2) A participant hospital must require any physician with whom it
has a CCJR sharing arrangement to provide written notice of the
existence of such an arrangement to any Medicare beneficiary that meets
the criteria for inclusion in the model specified in Sec. 510.205.
(c) Timing of the required beneficiary notification. The
participant hospital provides the written notice described in paragraph
(b) of this section upon the beneficiary's admission for an anchor
hospitalization.

Sec. 510.410 Compliance enforcement.

(a) General. Participant hospitals must comply with all of the
requirements outlined in this part.
(b) Failure to comply. CMS may do one or more of the following if a
participant hospital fails to comply with any of the requirements
outlined in this part:
(1) Issue a warning letter to the participant hospital.
(2) Require the participant hospital to develop a corrective action
plan.
(3) Reduce or eliminate a participant hospital's positive NPRA.
(4) Terminate the participant hospital's participation in the CCJR
model, if the participant hospital, or an individual or entity with
which the participant hospital has a participation agreement, does any
of the following:
(i) Takes any action that threatens the health or safety of
patients.
(ii) Avoids at-risk Medicare beneficiaries, as this term is defined
in Sec. 425.20 of this chapter.
(iii) Avoids patients on the basis of payer status.
(iv) Is subject to sanctions or final actions of an accrediting
organization or federal, state, or local government agency that could
lead to the inability to comply with the requirements and provisions of
this part.
(v) Takes or fails to take any action that CMS determines for
program integrity reasons is not in the best interests of the CCJR
model.
(vi) Is subject to action by the Secretary to redress an allegation
of fraud or significant misconduct, including intervening in a False
Claims Act qui tam matter, issuing a pre-demand or demand letter under
a civil sanction authority or similar actions.

Subpart F--Financial Arrangements and Beneficiary Incentives

Sec. 510.500 Financial arrangements under the CCJR model.

(a) General. To assist participant hospitals in aligning the
financial incentives of other providers and suppliers caring for
beneficiaries in CCJR episodes with the quality and efficiency goals of
the CCJR model, participant hospitals may, consistent with applicable
law, elect to enter into financial arrangements that contain CCJR
sharing arrangements with CCJR collaborators, as defined in this
section.
(1) All such financial arrangements must comply with all relevant
laws and regulations, including the fraud and abuse laws and all
applicable payment and coverage requirements.
(2) CMS reserves the right to review any CCJR sharing arrangement
to ensure that it does not pose a risk to beneficiary access,
beneficiary freedom of choice, or quality of care.
(b) Required records. When a participant hospital enters into a
CCJR sharing arrangement with a CCJR collaborator, the participant
hospital, and all of its CCJR collaborators must maintain copies of the
following records:
(1) All original copies of CCJR sharing arrangements that the
participant hospital signs with a CCJR collaborator in connection with
the hospital's participation in CCJR. Each CCJR sharing arrangement
must include, but is not limited to the following:
(i) A specific methodology and accounting formula for calculating
and verifying the internal cost savings generated by the participant
hospital entering into a CCJR sharing arrangement with a CCJR
collaborator based on the care redesign elements specifically
associated with the particular CCJR collaborator.
(ii) Specific methodologies for accruing and calculating internal
cost savings from the participant hospital, where the hospital intends
to share internal cost savings through a CCJR sharing arrangement with
a CCJR collaborator. The specific methodologies for accruing and
calculating internal cost savings must be transparent, measurable, and
verifiable in accordance with generally accepted accounting principles
and Government Auditing Standards (The Yellow Book). The methodology
must set out the specific care redesign elements to be undertaken by
the participant hospital or the CCJR collaborator or both.
(iii) A description of the methodology and accounting formula for
calculating the percentage or dollar amount of a reconciliation payment
that will be paid from the participant hospital to the CCJR
collaborator.
(iv) A description of the methodology, frequency of distribution,
and accounting formula for distributing and verifying any and all
gainsharing payments.
(v) A description of the arrangement between the participant
hospital and the CCJR collaborator regarding gainsharing payments and
alignment payments, including safeguards to ensure that such alignment
payments are made solely for purposes related to sharing responsibility
for funds need to repay

[[Page 41314]]

Medicare in the CCJR model. This description must include the
following:
(A) A methodology.
(B) Frequency of payment.
(C) Accounting formula for payment.
(D) Receipt of any and all alignment payments.
(E) Plans regarding care redesign.
(F) Changes in care coordination or delivery that is applied to the
participant hospital or CCJR collaborators or both.
(G) Any description of how success will be measured.
(vi) Management and staffing information, including type of
personnel or contractors that will be primarily responsible for
carrying out changes to care under the model.
(2) The participant hospital must keep records of the following:
(i) All CCJR collaborators.
(ii) Its process for determining and verifying the eligibility of
CCJR collaborators to participate in Medicare.
(iii) Information confirming the organizational readiness of the
participant hospital to measure and track internal cost savings.
(iv) Plan to track internal cost savings.
(v) Information on the accounting systems used to track internal
cost savings.
(vi) A description of current health information technology,
including systems to track reconciliation payments and internal cost
savings.
(c) Participant agreement. The participant agreement must obligate
the parties to comply, and must obligate the CCJR collaborator to
require any of its employees, contractors or designees to comply,
without limitation, to the following:
(1) An individual or entity's participation in the CCJR sharing
arrangement is voluntary, and there is no penalty for nonparticipation.
(2) Any gainsharing payments made under the CCJR sharing
arrangement may be made only from the participant hospital to the
entity or individual with whom the participant hospital has a signed
CCJR sharing arrangement.
(3) Any alignment payments made in accordance with a CCJR sharing
arrangement may be made only to the participant hospital from the
entity or individual with whom the participant hospital has signed a
participation agreement containing a CCJR sharing arrangement. A CCJR
collaborator entering into a CCJR sharing arrangement must be in
compliance with all Medicare provider enrollment requirements at Sec.
424.500 of this chapter, including having a valid and active TIN or
NPI.
(4) Any internal cost savings or reconciliation payments that the
participant hospital seeks to share through CCJR sharing arrangements
must meet the requirements set forth in this part and must be
administered by the participant hospital in accordance with generally
accepted accounting principles.
(i) The participant hospital may not distribute any amounts that
are not comprised of dollars that are either internal cost savings or a
reconciliation payment, as those terms are defined in this part.
(ii) All amounts deemed internal cost savings by the participant
hospital must reflect actual, internal cost savings achieved by the
participant hospital through implementation of care redesign elements
identified and documented by the participant hospital in the manner
described in this section.
(iii) Internal cost savings may not reflect ``paper'' savings from
accounting conventions or past investment in fixed costs.
(5) Any alignment payments that the participant hospital receives
through a CCJR sharing arrangement must meet the requirements set forth
in this section and be administered by the participant hospital in
accordance with generally accepted accounting principles. In no event
may the participant hospital receive any amounts from a CCJR
collaborator under a CCJR sharing arrangement that are not alignment
payments.
(6) Provisions that require CCJR collaborators to share all records
related to a CCJR Sharing Arrangement, including at a minimum the
following:
(i) Each participation agreement between the participant hospital
and a CCJR collaborator must obligate the CCJR collaborator to provide
the participant hospital and CMS with access to the CCJR collaborator's
records, information, and data for purposes of monitoring and reporting
and any other lawful purpose.
(ii) Records, information, and data demonstrating compliance with
the gainsharing payment must--
(A) Have sufficient detail to verify compliance with all material
terms of the CCJR sharing arrangement; and
(B) Be fully substantiated and documented, as to both statements
and numbers.
(7) Participation agreements must require all CCJR collaborators to
comply with any evaluation, monitoring, compliance, and enforcement
activities performed by CMS or its designees for the purposes of
operating the CCJR model.
(d) Gainsharing payment and alignment payment conditions and
restrictions. Participant hospitals must adhere to the following
conditions and restrictions concerning gainsharing payments and
alignment payments made under a CCJR sharing arrangement:
(1) No entity or individual, as a party to a participation
agreement or not, may condition the opportunity to receive gainsharing
payments in CCJR on the volume or value of past or anticipated
referrals or other business generated to, from, or among the
participant hospital and any CCJR collaborators.
(2) Participant hospitals are not required to share reconciliation
payments, internal cost savings, or responsibility for repayment to CMS
with other providers and suppliers.
(i) If a participant hospital elects to engage in those activities,
such activities are limited to the terms of this section.
(ii) Gainsharing payments, if distributed, must be distributed on
an annual basis.
(iii) Alignment payments from a CCJR collaborator to a participant
hospital may be made at any interval that is agreed upon by both
parties, and must--
(A) Be clearly identified;
(B) Comply with all provisions in this section;
(C) Comply with all applicable laws, statutes, and rules.
(3) No entity or individual, as a party to a participation
agreement or not, may condition the opportunity to send or receive
alignment payments in CCJR on the volume or value of past or
anticipated referrals or other business generated to, from, or among
the participant hospital and any CCJR collaborators.
(4) In a calendar year, the aggregate amount of the total
gainsharing payments distributed by a participant hospital that are
derived from a CCJR reconciliation payment may not exceed the amount of
the reconciliation payment the participant hospital receives from CMS.
(5) In a calendar year, the aggregate amount of the total alignment
payments received by the participant hospital may not exceed 50 percent
of the participant hospital's repayment amount due to CMS. If no
repayment amount is due, then no alignment payments may be received by
the participant hospital.
(6) The participant hospital must retain at least 50 percent of its
responsibility for repayment, pursuant to the repayment amount
reflected in a reconciliation report, under the CCJR model to CMS.
(7) A single CCJR collaborator may not make an alignment payment to
a participant hospital that represents an amount greater than 25
percent of the

[[Page 41315]]

repayment amount reflected on a reconciliation report.
(8) Gainsharing payments and alignment payments must not induce any
of the following parties to reduce or limit medically necessary
services to any Medicare beneficiary:
(i) The participant hospital.
(ii) CCJR collaborators.
(iii) Employees, contractors, or designees of the participant
hospital or CCJR collaborators.
(9) Individual physician and nonphysician practitioners must retain
their ability to make decisions in the best interests of the patient,
including the selection of devices, supplies, and treatments.
(10) Methodologies for calculating gainsharing payments and
alignment payments must not directly account for volume or value of
referrals, or business otherwise generated, between or among the
participant hospital and CCJR collaborators.
(11) Gainsharing payments must be derived solely from
reconciliation payments or internal cost savings or both.
(12) The total amount of gainsharing payments for a calendar year
paid to an individual physician or nonphysician practitioner who is a
CCJR collaborator must not exceed 50 percent of the total Medicare
approved amounts under the Physician Fee Schedule (PFS) for services
furnished to the participant hospital's CCJR beneficiaries during a
CCJR episode by that physician or nonphysician practitioner.
(e) Documentation and maintenance of records. All participant
hospitals and CCJR collaborators who enter into CCJR sharing
arrangements must:
(1) Provide to CMS, the OIG, and the Comptroller General or their
designee(s) scheduled and unscheduled access to all books, contracts,
records, documents, and other evidence (including data related to
utilization and payments, quality performance measures, billings, and
CCJR sharing arrangements related to CCJR) sufficient to enable the
audit, evaluation, inspection, or investigation of the participant
hospital's compliance, as well as the compliance of any CCJR
collaborator that has a CCJR sharing arrangement with the participant
hospital, with CCJR requirements, the participation agreement, the
quality of services furnished, the obligation to repay any
reconciliation payments owed to CMS, or the calculation or both,
distribution, receipt, or recoupment of gainsharing payments or
alignment payments.
(2) Maintain all such books, contracts, records, documents, and
other evidence for a period of 10 years from the last day of the
participant hospital's participation in the CCJR model or from the date
of completion of any audit, evaluation, inspection, or investigation,
whichever is later, unless--
(i) CMS determines that there is a special need to retain a
particular record or group of records for a longer period and notifies
the participant hospital at least 30 calendar days before the normal
disposition date; or
(ii) There has been a dispute or allegation of fraud or similar
fault against the participant hospital or any CCJR collaborator, in
which case the records must be maintained for an additional 6 years
from the date of any resulting final resolution of the dispute or
allegation of fraud or similar fault.
(f) Compliance responsibility. Notwithstanding any CCJR sharing
arrangements between the participant hospital and CCJR collaborators,
the participant hospital must have ultimate responsibility for adhering
to and otherwise fully complying with all provisions of the CCJR model.
(g) OIG authority. OIG authority is not limited or restricted by
the provisions of the CCJR model, including the authority to audit,
evaluate, investigate, or inspect the participant hospital, CCJR
collaborators, or any other person or entity or their records, data, or
information, without limitation.
(h) Other authorities. None of the provisions of the CCJR model
limits or restricts any other government authority permitted by law to
audit, evaluate, investigate, or inspect the participant hospital, CCJR
collaborators, or any other person or entity or their records, data, or
information, without limitation.

Sec. 510.505 Beneficiary incentives under the CCJR model.

(a) General. Participant hospitals may choose to provide in-kind
patient engagement incentives to beneficiaries in CCJR episodes for
free or below fair market value, subject to the following conditions:
(1) The incentive must be provided to the beneficiary during a CCJR
episode of care.
(2) The item or service provided must be reasonably connected to
the beneficiary's medical care, as well as be a preventive care item or
service or an item or service that advances a clinical goal, as listed
in paragraph (b) of this section, for a beneficiary in a CCJR episode
by engaging the beneficiary in better managing his or her own health.
(b) Goals of the CCJR model. The following are the particular
clinical goals of the CCJR model, which may be advanced through
beneficiary incentives:
(1) Beneficiary adherence to drug regimens.
(2) Beneficiary adherence to follow up care plan or care.
(3) Reduction of readmissions and complications resulting from
lower-extremity joint replacement procedures.
(4) Management of chronic diseases and conditions that may be
affected by the lower-extremity joint replacement procedure.
(c) Beneficiary incentives. Participant hospitals are required to
maintain a list of items and services furnished as beneficiary
incentives that exceed $10, including the following:
(1) The date the incentive is provided.
(2) The identity of the beneficiary to whom the item or service was
provided.
(d) Technology provided to a beneficiary. (1) Items or services
involving technology provided to a beneficiary may not exceed $1,000 in
value for any one beneficiary in any one CCJR episode.
(2) Items of technology exceeding $50 must--
(i) Remain the property of the participant hospital; and
(ii) Be retrieved from the beneficiary at the end of the CCJR
episode. The participant hospital must maintain documentation of the
date of retrieval.

Subpart G--Waivers

Sec. 510.600 Waiver of direct supervision requirement for certain
post-discharge home visits.

(a) General. CMS waives the requirement in Sec. 410.26(b)(5) of
this chapter that services and supplies furnished incident to a
physician's service must be furnished under the direct supervision of
the physician (or other practitioner) to permit home visits as
specified in this section. The services furnished under this waiver are
not be considered to be ``hospital services,'' even when furnished by
the clinical staff of the hospital.
(b) General supervision of qualified personnel. The waiver of the
direct supervision requirement in Sec. 410.26(b)(5) of this chapter
applies only in the following circumstances:
(1) The home visit is furnished during the episode to a beneficiary
who has been discharged from an anchor hospitalization.
(2) The home visit is furnished at the beneficiary's home or place
or residence.
(3) The beneficiary does not qualify for home health services under
sections 1835(a) and 1814(a) of the Act at the time of any such home
visit.
(4) The visit is furnished by a licensed clinician, either employed
by a hospital

[[Page 41316]]

or not, under the general supervision of a physician employee or a
contractor of the participant hospital.
(5) No more than 9 visits are furnished to the beneficiary during
the episode.
(c) Payment. Up to 9 post-discharge home visits per CCJR episode
may be billed under Part B by the physician or nonphysician
practitioner or by the participant hospital to which the supervising
physician has reassigned his or her billing rights.
(d) Other requirements. All other Medicare rules for coverage and
payment of services incident to a physician's service continue to
apply.

Sec. 510.605 Waiver of certain telehealth requirements.

(a) Waiver of the geographic site requirements. CMS waives the
geographic site requirements of section 1834(m)(4)(C)(i)(I) through
(III) of the Act for all episodes being tested in the CCJR model, but
only for services that--
(1) May be furnished via telehealth under existing requirements;
and
(2) Are included in the episode in accordance with Sec.
510.200(b).
(b) Waiver of the originating site requirements. CMS waives
originating site requirements under section 1834(m)(4)(C)(ii)(I)
through (VIII) of the Act for all episodes being tested in the CCJR
model to permit a telehealth visit to originate in the beneficiary's
home or place of residence, but only for services that--
(1) May be furnished via telehealth under existing requirements;
and
(2) Are included in the CCJR episode in accordance with Sec.
510.200(b). The facility fee normally paid by Medicare to an
originating site for a telehealth service is not paid if the service is
originated in the beneficiary's home.
(c) Other requirements. All other requirements for Medicare
coverage and payment of telehealth services continue to apply,
including the list of specific services approved to be furnished by
telehealth.

Sec. 510.610 Waiver of SNF 3-day rule.

(a) Waiver of the SNF 3-day rule. For all episodes being tested in
the CCJR model in performance years 2 through 5, CMS waives the SNF 3-
day rule for coverage of a SNF stay for a beneficiary following the
anchor hospitalization, but only if the SNF is rated an overall of 3
stars or better in the Five-Star Quality Rating System for SNFs on the
Nursing Home Compare Web site (www.medicare.gov/NursingHomeCompare/).
(b) Other requirements. All other Medicare rules for coverage and
payment of Part A-covered SNF services continue to apply.

Sec. 510.615 Waiver of certain post-operative billing restrictions.

(a) Waiver to permit certain services to be billed separately
during the 90-day post-operative global surgical period. CMS waives the
billing requirements for global surgeries to allow the separate billing
of certain post-discharge home visits, including those related to
recovery from the surgery, as described in paragraph (b) of this
section, for all episodes being tested in the CCJR model.
(b) Services to which the waiver applies. Up to 9 post-discharge
home visits, including those related to recovery from the surgery, per
CCJR episode may be billed separately under Part B by the physician or
nonphysician practitioner, or by the participant hospital to which the
physician or nonphysician practitioner has reassigned his or her
billing rights.
(c) Other requirements. All other Medicare rules for global surgery
billing during the 90-day post-operative period continue to apply.

Dated: July 1, 2015.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.

Dated: July 6, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2015-17190 Filed 7-9-15; 4:15 pm]
BILLING CODE 4120-01-P

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