CJR Target Prices

The Comprehensive Care for Joint Replacement (CJR) Model has been underway since April 1, 2016. This model aims to support better and more efficient care for beneficiaries undergoing hip and knee replacements (also called lower extremity joint replacements or LEJR). This is the first CMS mandatory bundled payment model. CMS has indicated by making it mandatory it will allow for testing of how a variety of hospitals will fare in the “Episode Payment” approach.

Episodes of Care

Episodes of care are triggered by code assignment to MS-DRG 469 (Major joint replacement or reattachment of lower extremity with major complications or comorbidities) or MS-DRG 470 (Major joint replacement or reattachment of lower extremity without major complications or comorbidities). An episode of care ends 90 days post discharge from the acute care hospital.

Episode Target Price

An Episode Target Price represents the expected spending for all related Medicare Part A and Part B spending for an episode of care, with a discount applied. CMS believes that discounting the Episode Target Price allows Medicare to partake in some of the savings from the CJR model, while leaving considerable opportunity for hospitals to receive reconciliation payments. Before moving on, it is worth mentioning that in this model to Medicare a discount is the money they will keep off the top before a hospital receives any reconciliation payment.

The Episode Target Price blends hospital-specific and regional episode data over the five year course of the model as detailed in the following table:

Table 1: Hospital Specific & Regional Hospitals Episode Target Pricing Blend

CMS has noted that “as we transition to regional pricing over the course of the model, participant hospitals will no longer compete against their historical selves but rather strive to outperform their regional peers.”

The “regions” have been defined as each of the 9 U.S Census Divisions. CMS noted in the CJR Final Rule that they “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. The U.S. Census Divisions are depicted in the following map:

Link to map: https://www.eia.gov/consumption/commercial/maps.php

Annually, an Episode Target Price will be set for each participating hospital. Each hospital will receive the following four separate prices:

• MS-DRG 469 with hip fracture principal diagnosis,
• MS-DRG 469 without hip fracture,
• MS-DRG 470 with hip fracture principal diagnosis; and
• MS-DRG 470 without hip fracture.

CMS separated out hip fractures as principal diagnosis as historically, claims with a hip fracture have approximately 70% higher expenditures.

Hospitals, physicians, and post-acute care providers are paid their “regular” Medicare rates based on the applicable fee schedules during the year. At the end of a model performance year, actual spending for the episode (total expenditures for related services under Medicare Part A and B) is compared to the Medicare Episode Target Price for the responsible hospital. Depending on a participating hospital’s quality and episode spending performance, the hospital may receive additional payment or be required to repay Medicare for a portion of the episode spending.

Regional Pricing

On March 28, 2017, CMS posted a new Regional Target Pricing Document on the CJR Model webpage. There are three separate tables in the download representing the regional historic payment amounts used to calculate target prices for episodes initiated between April 1, 2016 to September 30, 2016, October 1, 2016 to December 31, 2016 and finally from January 1, 2017 to September 30, 2017.

Table 2: Episodes initiating between 1/1/2017 and 9/30/2017

CMS notes that these amounts are in standardized dollars. Hospital-specific target prices take into account historical payments and volume at the hospital, wage factors, and case mix.

Hospital Specific Prospective Quality Adjusted Target Prices

CMS has posted an FAQ document in the download section of the CJR webpage. This document has been updated to reflect several policy changes to the CJR model that were finalized in the Medicare Program; Advancing Care Coordination Through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the CJR Model Final Rule published January 3, 2017.

This document indicates that participant hospitals can now access their specific Target Prices for January – September 2017 in the CJR Data Portal. If your hospital needs access to the CJR Data Portal, email This email address is being protected from spambots. You need JavaScript enabled to view it..

Knowing your U.S Census Region, Reginal Pricing amounts and hospital specific prospective quality adjusted target prices are essential pieces of the puzzle that is the CJR Model.

Article by Beth Cobb

Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Services at Medical Management Plus, Inc. Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. In her current position, Beth monitors, interprets and communicates current and upcoming Case Management / Clinical Documentation issues as they relate to specific entities concerning Medicare. You may contact Beth at This email address is being protected from spambots. You need JavaScript enabled to view it..

This material was compiled to share information. MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.