Centers for Medicare & Medicaid Services (CMS) Comprehensive Care for Joint Replacement Model


What is the impact on physical therapists in private practice?

By Alpha Lillstrom
March 3, 2016

Hip and knee replacements are the most common inpatient surgery for Medicare beneficiaries and can require lengthy recovery and rehabilitation periods. In 2014, there were more than 400,000 inpatient primary procedures costing more than $7 billion for hospitalization alone, yet the quality and cost of care for these hip and knee replacement surgeries still varies greatly.1

In November 2015, the Centers for Medicare & Medicaid Services (CMS) finalized an initiative through which they seek to achieve better and more efficient care for beneficiaries undergoing hip and knee replacements (also called lower extremity joint replacements, or LEJR). This model, referred to as the Comprehensive Care for Joint Replacement (CCJR) model, will go into effect on April 1, 2016. The initiative will test a new bundled payment and quality measurement design for these episodes of care.

An episode of care will include all related care following the joint replacement procedure.2 Despite the fact that a significant number of Medicare patients receive their rehabilitation treatment outside the hospital including at independent physical therapy practices, the model designates approximately 800 inpatient prospective payment system (IPPS) hospitals in the selected metropolitan statistical areas (MSAs) as the entities financially responsible for the CCJR-related episode of care.3

The model includes five performance years. Recognizing the preparation necessary to implement this new initiative, the first model performance period has been abbreviated and will be in effect from April 1, 2016, to December 31, 2016. Each of the four remaining model performance periods align with a calendar year, beginning January 1, 2017.4

CMS expects the CCJR episode payment model to incentivize participant hospitals to work with physicians and other post-acute care (PAC) providers and suppliers to improve quality and coordination of care for Medicare beneficiaries undergoing CCJR procedures and postoperative recovery, while simultaneously enhancing the efficiency of the care provided. CMS expects this CCJR model to result in $343 million in savings over the five designated performance years.5


Mechanics of the Model

All CCJR episodes of care will begin with an admission to an anchor IPPS hospital, last 90 days postdischarge, and consist of all related items and services paid under Medicare Part A or Part B, including independent outpatient physical therapy services.6 Throughout the year, all providers and suppliers will continue to be paid under the usual payment system rules and procedures of the Medicare program for services related to the episode. However, prior to the start of each performance year, episode target prices will be established using historical data of Medicare spending for related items and services as well as the calculation of actual episode spending.7 These data will be compared to the target prices in order to assess the performance of participant hospitals.8 CMS estimates that the IPPS payment for the anchor hospitalization will make up approximately 50 percent of the episode target price and has low expectations that the anchor hospitalization phase will offer many opportunities to reduce Medicare expenditures through increased care efficiency. In contrast, CMS expects significant episode efficiencies could be achieved and thus savings be generated by nonhospital services, including utilization of outpatient therapy.

After the completion of a performance year, the Medicare claims payments for all inpatient and outpatient services furnished to the beneficiary during the episode will be combined to calculate an actual episode payment.9 This actual episode payment will then be reconciled against the established CCJR target price. IPPS hospitals located in any of the 67 selected geographic areas will be eligible for an additional “reconciliation payment” from CMS if they achieve actual episode spending below a target price for a given performance period.10 However, if the CCJR target price is exceeded, after the first year of the model, Medicare will require the participant hospital to repay the difference between the actual episode payments and the target price.11 Participant hospitals are permitted (but not required) to share financial accountability for increased episode spending with collaborating providers and suppliers.12


Hospital Collaboration with Providers and Suppliers

The initiative does require that all acute care hospitals in the specified MSAs participate in the model.13 CMS expects participant hospitals to establish close partnerships with key providers and suppliers for CCJR beneficiaries in their communities. These hospitals would work with providers and suppliers to assist the hospital in redesigning care for CCJR episodes in order to improve quality and efficiency, coordinate and manage care for beneficiaries, and monitor episode performance. The Agency anticipates “that the CCJR Collaborators (physicians, physician group practices, skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, long term care hospitals, outpatient therapy providers, and others) would also directly furnish related items or services to a CCJR beneficiary during the episode and/or specifically participate in episode of care redesign activities, such as attending CCJR meetings and learning activities; drafting CCJR episode care pathways; reviewing CCJR beneficiaries’ clinical courses; developing episode analytics; or preparing reports of episode performance, under the direction of the participant hospital.”14

Participant hospitals may also enter into financial arrangements with Medicare-enrolled providers and suppliers of all sizes who are caring for beneficiaries in CCJR episodes. The sharing arrangements must be solely related to CCJR Collaborator contributions that achieve quality and efficiency improvements for CCJR beneficiaries under this model—not based on volume or value of referrals.15 Once a sharing agreement is in place, gainsharing payments from a participant hospital to a CCJR Collaborator will consist of reconciliation payments and/or, internal cost savings and may only be distributed once a year.16 In order to receive a gainsharing payment, Collaborators must also directly furnish billable services to CCJR beneficiaries in the calendar year in which the savings or loss was created.17 Moreover, the payments must be actually and proportionally related to the care beneficiaries received in a CCJR episode, and the Collaborator must be contributing to the care redesign strategies of the participant hospital.18 The contract between the hospital and the Collaborator provider or supplier could also share liability for downside risk. All financial transactions, whether they are gains or losses, between participant hospitals and CCJR Collaborators resulting from these arrangements must be auditable by the Department of Health and Human Resources (HHS) to ensure their financial and programmatic integrity.19


A private practice physical therapist who desires to participate as a CCJR collaborator will face many challenges. This hospital-centric model provides significant guidance and support to the IPPS facility. However, while CMS anticipates hospitals will develop partnerships with community-based providers, it does not require the hospitals to look beyond their employees to complete an episode of care. Additionally, should an IPPS facility decide to include outpatient physical therapy providers as collaborators, CMS has provided minimal protocols for how to support CCJR collaborators in their efforts. The model requires that CCJR collaborators participate in drafting new CCJR episode of care pathways, episode analytics, and other necessary elements of care redesign, all of which will be time consuming. These vague parameters could functionally exclude many private practice physical therapists from the model for any number of reasons from local political challenges to time commitments, which would conflict with clinical schedules.

Beneficiary Choice

However, what CMS does make clear is that patient steering is not permissible; that is, beneficiaries included in a CCJR episode fully retain their right to choose their providers and suppliers. To this end, as a part of discharge planning and referrals, CMS requires hospitals to provide beneficiaries with a written list of all PAC providers and suppliers in the area as well as their rights under Medicare, including their right to use their choice of provider.”20

While hospitals may not restrict beneficiaries to any list of CCJR Collaborators, preferred, or recommended providers,21 CMS does permit them to identify “preferred providers,” meaning providers the hospital would prefer patients choose on the basis of their internal assessments of quality and cost.22 This represents yet another obstacle for private practice physical therapists. Despite serious concerns raised by private practice physical therapists and other stakeholders, CMS believes this guideline is sufficient to reduce the potential misuse of beneficiary incentives to steer a beneficiary toward a specific provider or supplier and has promised to produce a model notice that achieves this balance.



Through this hospital-based CCJR model, CMS hopes to achieve better care for patients through more coordinated, higher quality care during and after hip or knee replacement surgery. The Agency believes that it can implement smarter spending of health care dollars by holding hospitals accountable for total episode spending, not just inpatient costs. CMS touts that the model is designed to support healthier people and communities by improving coordination in health care and by connecting care across hospitals, physicians, and other health care providers;23 however, the hospital-centric model does not provide nonhospital providers and suppliers, particularly those in private practice, easy access to the program.

For Private Practice Section (PPS) members this means it will be necessary to: (1) decide if participation in the CCJR model is beneficial, essential, or desirable to their practice; and, if so, (2) identify and employ strategies to engage with the hospital in order to become a CCJR collaborator. If and when these two steps are accomplished, it will be essential that the physical therapist scrutinize the terms of the contract that creates the collaborative arrangement.


1. Federal Register, Vol. 80, No. 226, Tuesday November 24, 2015, Rules and Regulations, (CMS_FRDOC_0001-1830) www.gpo.gov/fdsys/pkg/FR-2015-11-24/pdf/2015-29438.pdf.

2. Ibid., 73324.

3. Ibid., 73538.

4. Ibid., 73326.

5. Ibid., 73326.

6. Ibid., 73315.

7. https://innovation.cms.gov/Files/fact-sheet/cjr-providerfs-finalrule.pdf, 4.

8. Federal Register, Vol. 80, No. 226, Tuesday November 24, 2015, Rules and Regulations, (CMS_FRDOC_0001-1830) www.gpo.gov/fdsys/pkg/FR-2015-11-24/pdf/2015-29438.pdf, 73315.

9. Ibid., 73280.

10. Ibid., 73258.

11. Ibid., 73280.

12. https://innovation.cms.gov/Files/x/cjr-faq.pdf, 6.

13. Participation is required by all IPPS hospitals in the 67 designated MSAs, except for those currently participating in Model 1 or Models 2 or 4 of the Bundled Payments for Care Improvement (BPCI) initiative for LEJR episodes, https://innovation.cms.gov/initiatives/bundled-payments/.

14. Federal Register, Vol. 80, No. 226, Tuesday November 24, 2015, Rules and Regulations, (CMS_FRDOC_0001-1830) https://www.gpo.gov/fdsys/pkg/FR-2015-11-24/pdf/2015-29438.pdf, 73412.

15. Ibid., 73415, 73431.

16. Ibid., 73428.

17. Ibid., 73417.

18. Ibid., 73412, 73413.

19. Ibid., 73412.

20. Ibid., 73538.

21. Ibid., 73538.

22. Ibid., 73519.

23. https://innovation.cms.gov/Files/slides/ccjr-overview.pdf.


Alpha Lillstrom is a registered federal lobbyist working with Connolly Strategies & Initiatives, which has been retained by PPS. An attorney by training, she provides guidance to companies, nonprofit organizations, and political campaigns. For six years, she served as Senior Policy Advisor and Counsel for Health, Judiciary, and Education issues for Senator Jon Tester (Montana), advising and contributing to the development of the Affordable Care Act, as well as working on issues of election law, privacy, government transparency, and accountability. Alpha has also directed Voter Protection efforts for Senators Bob Casey, Al Franken, Russ Feingold, and Mark Begich. She was Senator Franken’s Policy Director during his first campaign and was hand-picked to be the Recount Director for his eventual 312-vote win in 2009.