In this episode, Barbara Ihrig, a consultant in the Reimbursement Services team at BESLER Consulting reviews how financial agreements can be structured between providers to share risk in Comprehensive Care for Joint Replacement (CJR) bundled payment program.
Mike Passanante: Hi and welcome to the Hospital Finance Podcast. This is Mike Passanante. Glad you could be with us. Today, I’m joined by Barbara Ihrig who is a consultant in our reimbursement services team here at Besler. Welcome, Barbara.
Barbara Ihrig: Thank you for having me.
Mike: So today, Barbara is going to talk to us about financial agreements between providers within the CJR program.
And if you’ve listened to one of our previous prodcasts by Maria Miranda, she talks about reconciliation payments and how they’re calculated under the CJR program. And if you heard that podcast or you’re familiar with the program, you’ll know that there are some upside and perhaps some downside risks associated with the CJR program in terms of the reconciliation payments.
One of the interesting components of the CJR program is they allow hospitals who are primarily responsible for repayments—or perhaps some gain sharing—to take on financial agreements with associated providers to help share that risk. And Barbara’s going to talk to us more about that today.
So, Barbara, let me jump right back into the podcast here. Can you give us some background on the purpose of the agreements between providers in the CJR program?
Barbara: Sure! Well, the purpose of the agreements between the CJR providers is for the hospitals to have the opportunity—like you said—either gain-sharing and risk-sharing relationships with the other providers involved in the post-discharge treatment of CJR patients.
The CMS’ goal is to make patient care more efficient. So to achieve this, they’re encouraging hospitals and post-discharge providers to work together to improve the quality and the coordination of care, which is critical for the successful lower extremity joint replacement outcomes.
The post-acute services account for a very large portion of the overall episode expense. So if you’re reducing expenses and increasing the quality of hospital setting during the surgical admission, on its own, it’s just not enough. But they’re interrelated.
So if the hospital reduces their complications during the stay, there should be a reduction in the amount of post-acute recovery time. And likewise, if the surgeon screens all his potential LEJR surgery patients and only proceeds with the cases that are a good fit for surgery, then the incidents of complications during the surgery may also be reduced.
Mike: So, which types of providers can enter into collaboration agreements with hospitals?
Barbara: Well, there are a number of providers. You’ve got the skilled nursing facilities, the home health agencies, the long-term care hospitals, the in-patient rehabilitation facilities.
You’ve got the physicians, the non-physician practitioners, the PGPs (otherwise known as the Physician Practice Groups), the providers and the suppliers of out-patient therapy services.
And basically, the services must be related to Part A and Part B care for the 90 days after discharge, unless of course they’re on the CMS exclusion list.
Now, CJR patients are rarely discharged directly home. So one patient might go to a skilled nursing facility followed by rehab, and then they go home and receive home health care. They might have gone home with a walker or other therapy supplies.
Another patient might go directly from the hospital to rehab or directly from the hospital to home health. And in extreme cases, a patient might go directly to long-term health care facility.
But no matter what scenario throughout the 90 days, the physicians, the PGPs, the hospital, the suppliers, they’re all still involved in the care of the patient.
Mike: So, we talked at the beginning of the podcast about repayments that a hospital might need to make to CMS depending on how their reconciliation works out. Is the hospital responsible for repayments to CMS regardless of any sharing arrangements that might be in place?
Barbara: Yes. The hospitals are always ultimately responsible for any repayments to CMS. The sharing in agreements can incorporate risk-sharing payments from the CJR collaborators to the hospital. And these are called “alignment payments.” Their sole purpose is to share the hospital’s responsibility for repayment.
However, there are some stipulations. The hospital must retain at least 50% of its repayment responsibility. A single collaborator cannot take on more than 25 percent of the hospital’s risks.
These payments must also be made by EFT—also known as electronic fund transfers—and they can be made any time agreed upon by the parties.
Now, CMS believes that it’s appropriate for a hospital to retain at least 50% of its repayment responsibility even after the final reconciliation in order to ensure that all services are delivered appropriately.
And as I said, the hospital would be solely liable for repayment of any negative repayments back to CMS. But if the hospital fails to repay, CMS would invoke all legal means to collect that debt, including referral to the remaining debt to the United States Department of Treasury.
Mike: So, we talked about the risk-sharing here. Can providers share in any upside payments that hospitals might receive once payments are reconciled with CMS?
Barbara: Yes. Besides the sharing of the risk, they also share the reconciliation payments. And these are in the form of gain-sharing payments.
The gain-sharing payments are the payments made from the hospital to the collaborator, but they can only occur once per year. And these gain-sharing payments can only be either reconciliation payment or an internal cost savings attributable to the care design or combination of the two.
Now, CMS does not specify how these agreements must calculate the gain-sharing payments, however there is a cap on the payments to individual physicians, to the PGPs and to the non-physician practitioners which is 50% of the total Medicare physician fee schedule for services furnished to the patients by that provider.
And CJR hospitals have the flexibility at entering into different agreements with similar types of providers but within the boundaries of the program.
Mike: Barbara, do all of the collaborators have to be Medicare providers?
Barbara: Yes, they do. Since this is a CMS initiative, all the collaborators are required to be Medicare-certified.
Additionally, CMS has emphasized that CJR collaborators that receive a gain-sharing payment or make an alignment payment must have furnished services included in the episode to the CJR beneficiary.
The payment arrangements for gain-sharing payments or for alignment payments contained in the agreement must be actually and proportionately related to the care of beneficiaries in the CJR episode.
And the collaborator also must contribute to the care redesign strategies for the participant hospital.
Mike: And Barbara, does Medicare set any conditions on the financial agreements made between hospitals and other providers?
Barbara: Yes, they do. The hospitals that enter into sharing agreements, they must update their compliance programs and have written policies for selecting their CJR collaborators.
The documentation of the agreement must be established at the same time as the collaborators agreement. And it should be done prior to the patient care and include a description, the date, the purpose, the scope and the financial terms.
Also, hospitals must publish a list of their CJR collaborators on their website and update it at least quarterly. However, beneficiaries retain the ability to use any provider that they choose.
And as I stated earlier, payment arrangements must be proportional to the care provided and collaborators must contribute to the care redesign strategies of the CJR hospital.
Mike: Barbara, one final question for you. Could you just dig into how physician groups are affected by gain-sharing payments?
Barbara: Sure! The PGPs have the option of retaining some or all of their gain-sharing payments they receive from CJR hospitals. The gain-shairng payments may only be shared with the individual physician or the non-physician practitioner who billed for an item or service for the patient in that performance year.
So like arrangements between the hospital and the non-PGP providers, the agreements between the PGP and the individual members also must be in writing;
They must be voluntary for the individual;
They must require compliance with the CJR final rule;
The payments must not be contingent or based on volume, but rather on quality of care;
And the payments must be made by EFT.
Also, the payment to the individual must not exceed the total gain-sharing payment received by the PGP.
The practitioners must also retain the ability to make clinical decisions in the best interest of the patient. And individual practitioners cannot have separate agreements with the CJR hospital.
And I don’t think I mentioned this earlier, but all gain-sharing payments made by the participant hospital to the collaborators or the alignment payments made by the collaborators to the participant hospital must be auditable by HHS.
Mike: Barbara, thanks for stopping by and helping us understand more about financial agreements between hospitals and providers under the CJR program.
Barbara: And thank you for having me.