CJR Target Pricing and Quality Measures & Their Impact on Payment

Last week, I wrote an article providing a general overview of the Comprehensive Care for Joint Replacement (CJR) model that the Centers for Medicare and Medicaid Services (CMS) implemented on April 1, 2016 in 67 geographic areas impacting approximately 800 hospitals that are paid under the Inpatient Prospective Payment System (IPPS). This week, I want to discuss more in-depth target pricing, reconciliation payments, repayments to the Medicare program and how quality scores can impact the target price.

Target pricing, quality scores, collaborators that provide physical therapy services and the payment for physical therapy services can all have an impact on the success, or lack of success, of the hospital that is participating in the CJR model. If you are a home health agency, skilled nursing facility, rehab agency, or a physical therapist in private practice and receive referrals from physicians and/or hospitals who are participating in the CJR model, this article is a must read.

Target Pricing

Every year during the approximate five performance years of this model, CJR hospitals will receive separate episode target prices for MS-DRGs 469 and 470. CMS will also use a simple risk stratification methodology to set different target prices for patients with hip fractures within each MS-DRG. CMS determines the target price based on the hospital’s historical performance (DRG + 90 days post-discharge spend for a rolling three year period) AND the expenditures of other hospitals in the region.

The rolling three year period for calendar years (CY) 2016 -2020 is as follows: