CJR Model's $180M savings pave way for nationwide expansion

What the CJR final evaluation found

Over three-quarters of the net savings from the CJR Model during the extension period stemmed from reductions in episode spending, according to the final evaluation report.

That means shifting care delivery patterns and other cost-saving strategies used by participating providers saved Medicare money, with the remaining savings attributable to repayments from hospitals that exceeded their target prices. In fact, the report showed a $1,226 decrease in spending per elective episode, which accounted for the majority of the model's episodes during the period.

For elective episodes, hospitals and patients have advanced notice to prepare for optimal surgical and recovery outcomes. Still, hospitals cut costs slightly by about $110 in total for fracture episodes, which are unexpected encounters.

The savings across episodes primarily stemmed from reductions in institutional post-acute care spending, the report found. Inpatient rehabilitation facility payments saw the largest savings at $556 for all episodes, followed by a $126 reduction in hospital readmission costs.

Skilled nursing facility payments also slightly decreased by just under $100, while home health payments increased by $166 for all episodes.

While the model has led to lower costs, most hospitals are getting better at joint replacements.

Researchers noted that participating hospitals were only likely to have reduced total episode payments compared to a control group of hospitals in similar high-cost areas. Their estimated impact did not meet the statistical significance of a 10% difference, they explained.

They also noted that IRF utilization decreased among nonparticipants during the period, although likely higher among participants.

Additionally, the report found no link between the CJR Model and changes to four claims-based quality outcomes, including ED use, mortality rate, readmission rate and complication rate.

What’s next for CJR

The success of the CJR Model has already directly influenced the design of TEAM, which includes joint replacement episodes, as well as four other high-cost surgical episodes. However, the CJR Model is perhaps more notably the foundation for CJR-X.

Under CJR-X, the CMS will make the model mandatory again after it booted voluntary participants during the extension period. It will also affect hospitals nationwide, versus just 67 areas, which the CMS later reduced to 37.

The CJR-X also builds on its predecessor's risk adjustment strategy, adding dozens more risk adjusters to prevent hospitals from being penalized for complex patients, and addresses the general shift of care to outpatient facilities.

The successor model is gunning for permanent placement on Medicare's alternative payment model roster, which includes the Medicare Shared Savings Program. However, hospital lobbying groups have strongly opposed the CJR-X, primarily because of its mandatory nature.

Lobbying efforts have already pushed back the launch date for CJR-X from October 2027 to January 2028, but hospital groups still want more concessions, particularly for smaller safety-net facilities that may have a hard time managing episodes. Although they argue that participation will be a strain on nearly all hospitals, which are already under financial pressure.

But researchers from the Lewin Group said in the report that their findings "show how a mature, mandatory episode-based payment model could reduce spending and maintain quality after multiple design refinements and amid ongoing changes in care delivery and the Medicare population."

Jacqueline LaPointe is an Executive Editor at Xtelligent Healthcare Media, covering revenue cycle management, healthcare payers, health policy, and health IT since 2016.