[Federal Register Volume 82, Number 230 (Friday, December 1, 2017)]
[Rules and Regulations]
[Pages 57066-57104]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25979]



[[Page 57065]]

Vol. 82

Friday,

No. 230

December 1, 2017

Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 510 and 512





Medicare Program; Cancellation of Advancing Care Coordination Through 
Episode Payment and Cardiac Rehabilitation Incentive Payment Models; 
Changes to Comprehensive Care for Joint Replacement Payment Model: 
Extreme and Uncontrollable Circumstances Policy for the Comprehensive 
Care for Joint Replacement Payment Model; Final Rule

  Federal Register / Vol. 82 , No. 230 / Friday, December 1, 2017 / 
Rules and Regulations  

[[Page 57066]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 510 and 512

[CMS-5524-F and IFC]
RIN 0938-AT16


Medicare Program; Cancellation of Advancing Care Coordination 
Through Episode Payment and Cardiac Rehabilitation Incentive Payment 
Models; Changes to Comprehensive Care for Joint Replacement Payment 
Model: Extreme and Uncontrollable Circumstances Policy for the 
Comprehensive Care for Joint Replacement Payment Model

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule; interim final rule with comment period.

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SUMMARY: This final rule cancels the Episode Payment Models (EPMs) and 
Cardiac Rehabilitation (CR) Incentive Payment Model and rescinds the 
regulations governing these models. It also implements certain 
revisions to the Comprehensive Care for Joint Replacement (CJR) model, 
including: Giving certain hospitals selected for participation in the 
CJR model a one-time option to choose whether to continue their 
participation in the model; technical refinements and clarifications 
for certain payment, reconciliation and quality provisions; and a 
change to increase the pool of eligible clinicians that qualify as 
affiliated practitioners under the Advanced Alternative Payment Model 
(Advanced APM) track. An interim final rule with comment period is 
being issued in conjunction with this final rule in order to address 
the need for a policy to provide some flexibility in the determination 
of episode costs for providers located in areas impacted by extreme and 
uncontrollable circumstances.

DATES: Effective Date: These final and interim final regulations are 
effective on January 1, 2018.
    Comment Period: To be assured consideration, comments on the 
interim final rule with comment period presented in section III. of 
this document must be received at one of the addresses provided in the 
ADDRESSES section no later than 5 p.m. EST on January 30, 2018.

FOR FURTHER INFORMATION CONTACT: Nora Fleming, (410) 786-6908.
    For questions related to the CJR model: [email protected].
    For questions related to the EPMs: [email protected].

SUPPLEMENTARY INFORMATION:

I. Executive Summary and Background

A. Executive Summary

1. Purpose
    The purpose of this final rule is to finalize our proposal to 
cancel the Episode Payment Models (EPMs) and the Cardiac Rehabilitation 
(CR) Incentive Payment Model, established by the Center for Medicare 
and Medicaid Innovation (Innovation Center) under the authority of 
section 1115A of the Social Security Act (the Act) and to rescind the 
regulations at 42 CFR part 512. Additionally, this final rule finalizes 
our proposal to make participation voluntary for all hospitals in 
approximately half of the geographic areas selected for participation 
in the Comprehensive Care for Joint Replacement (CJR) model (33 of 67 
Metropolitan Statistical Areas [MSAs] selected; see 80 FR 73299 Table 
4) and for low-volume and rural hospitals in all of the geographic 
areas selected for participation in the CJR model, beginning in 
performance year 3. It also implements several technical refinements 
and clarifications for certain CJR model payment, reconciliation, and 
quality provisions, and finalizes our proposed change to the criteria 
for the Affiliated Practitioner List to broaden the CJR Advanced 
Alternative Payment Model (Advanced APM) track.
    As stated in the proposed rule, we note that reevaluation of 
policies and programs, as well as revised rulemaking, are within an 
agency's discretion, especially after a change in Administration. The 
EPMs and the CR Incentive Payment Model were designed and implemented 
as mandatory payment models via notice-and-comment rulemaking to test 
the effects of bundling cardiac and orthopedic care. The CJR model was 
also established as a mandatory payment model via notice-and-comment 
rulemaking to test the effects of bundling orthopedic episodes 
involving lower extremity joint replacements. The CJR model began on 
April 1, 2016 and is currently in its second performance year.
    While we continue to believe that cardiac and orthopedic episode 
models offer opportunities to redesign care processes and improve 
quality and care coordination while lowering spending, we determined 
after careful review that it was necessary to propose to rescind the 
regulations at 42 CFR part 512, which relate to the EPMs and CR 
Incentive Payment Model, and reduce the scope of the CJR model for the 
following reasons. As stated in the proposed rule, we believe that 
requiring hospitals to participate in additional episode payment models 
at this time is not in the best interest of the Agency or the affected 
providers. Many providers are currently engaged in voluntary CMS 
initiatives, and we expect to continue offering initiatives, including 
episode-based payment models. Similarly, we also believe that reducing 
the number of providers required to participate in the CJR model will 
allow us to continue to evaluate its effects while limiting the 
geographic reach of our current mandatory models. As we mentioned in 
the proposed rule, we considered altering the design of the EPMs and 
the CR Incentive Payment Model to allow for voluntary participation and 
to take into account other feedback on the models. However, we noted 
that this would potentially involve restructuring the model design, 
payment methodologies, financial arrangement provisions, and/or quality 
measures, and we did not believe that such alterations would offer 
providers enough time to prepare, given the planned January 1, 2018 
start date. In addition, if at a later date we test these or similar 
models, we would not expect to implement them through rulemaking if 
made voluntary but would employ the methods used to implement other 
voluntary models.
    Finally, as stated in the proposed rule, we believe that cancelling 
the EPMs and CR Incentive Payment Model, as well as altering the scope 
of the CJR model, offers CMS flexibility to design and test other 
episode-based payment models while evaluating the ongoing CJR model. 
The CJR model has been operational for over a year and a half, and we 
have begun to provide participant hospitals initial financial and 
quality results from the first performance year. In many cases, CJR 
participant hospitals have invested in care redesign, and we want to 
recognize such commitments to improvement while reducing the number of 
hospitals that are required to participate.
    We sought public comment on the proposals contained in the August 
17, 2017 proposed rule (82 FR 39310 through 39333), and also on any 
alternatives considered.
2. Summary of Costs and Benefits
    In the proposed rule, we stated that we did not anticipate that the 
cancellation of the EPMs and CR Incentive Payment Model prior to the 
start of those models would have any

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costs to providers. As discussed in section II.A. of this final rule 
and interim final rule with comment period, some commenters noted that 
providers who assumed that the EPMs would begin on January 1, 2018, had 
incurred preparatory costs in terms of care pathway redesign and the 
creation of care coordinator positions. However, as the commenters did 
not specifically quantify these costs, we are unable to estimate them 
here. As shown in our impact analysis in section V. of this final rule 
and interim final rule with comment period, we estimate that the CJR 
model changes will reduce the previously projected CJR model savings 
(82 FR 603) by a total of approximately $108 million. Of the total 
projected reduction in savings, $106 million is attributable to CJR 
model changes over the final three performance years while 
approximately $2 million is attributable to the extreme and 
uncontrollable circumstance policy. Accordingly, we estimate that the 
total CJR model impact after the changes in this final rule will be 
$189 million, instead of $294 million ($106 million less in savings), 
over the remaining 3-year performance period (2018 through 2020) of the 
CJR model. Additionally, we estimate that the financial impacts 
resulting from the interim final rule with comment period will be a 
further reduction in savings of approximately $2 million during 2017, 
noting that we are implementing the extreme and uncontrollable 
circumstances policy (via an interim final rule with comment) in this 
rule for the 2017 reconciliation that will occur beginning in March of 
2018. Our impact analysis has some degree of uncertainty and makes 
assumptions as discussed in section V. of this final rule and interim 
final rule with comment period. In addition to these estimated impacts, 
as with many of the Innovation Center models, the goals that 
participants are attempting to achieve include improving overall 
quality of care, enhancing participating provider infrastructure to 
support better care management, and reducing costs. We anticipate there 
will continue to be a broader focus on care coordination and quality 
improvement through the CJR model among hospitals and other providers 
and suppliers within the Medicare program that may lead to better care 
management and improved quality of care for beneficiaries.
3. Interim Final Rule Regarding Significant Hardship Due to Extreme and 
Uncontrollable Circumstances in the CJR Model
    We are issuing this interim final rule with comment period in 
conjunction with this final rule in order to address the need for a 
policy to provide some flexibility in the determination of episode 
costs for CJR hospitals located in areas impacted by extreme and 
uncontrollable circumstances. Specifically, this policy would apply to 
CJR hospitals located in a county, parish, U.S. territory, or tribal 
government designated in a major disaster declaration under the 
Stafford Act, if as a result of the same major disaster the Secretary 
of Health and Human Services (the Secretary) authorized waivers under 
section 1135 of the Act.

B. Background

    Under the authority of section 1115A of the Act, through notice-
and-comment rulemaking, CMS' Center for Medicare and Medicaid 
Innovation (Innovation Center) established the CJR model in a final 
rule titled ``Medicare Program; Comprehensive Care for Joint 
Replacement Payment Model for Acute Care Hospitals Furnishing Lower 
Extremity Joint Replacement Services'' published in the November 24, 
2015 Federal Register (80 FR 73274 through 73554) (referred to in this 
final rule as the ``CJR model final rule''). We established three new 
models for acute myocardial infarction, coronary artery bypass graft, 
and surgical hip/femur fracture treatment episodes of care, which are 
collectively called the Episode Payment Models (EPMs), created a 
Cardiac Rehabilitation Incentive Payment Model (CR Incentive Payment 
Model), and revised several existing provisions for the CJR model, in a 
final rule titled ``Advancing Care Coordination Through Episode Payment 
Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and 
Changes to the Comprehensive Care for Joint Replacement Model'' 
published in the January 3, 2017 Federal Register (82 FR 180) (referred 
to in this final rule as the ``EPM final rule'').
    The effective date for most of the provisions of the EPM final rule 
was February 18, 2017, and in the EPM final rule we specified an 
effective date of July 1, 2017 for certain CJR model regulatory changes 
intended to align with a July 1, 2017 applicability, or start, date for 
the EPMs and CR Incentive Payment Model. On January 20, 2017, the 
Assistant to the President and Chief of Staff issued a memorandum 
titled ``Regulatory Freeze Pending Review'' that instructed Federal 
agencies to temporarily postpone the effective date for 60 days from 
the date of the memorandum for regulations that had been published in 
the Federal Register but had not taken effect, for purposes of 
reviewing the rules and considering potentially proposing further 
notice-and-comment rulemaking. Accordingly, on February 17, 2017, we 
issued a final rule in the Federal Register (82 FR 10961) to delay 
until March 21, 2017 the effective date of any provisions of the EPM 
final rule that were to become effective on February 18, 2017. We 
subsequently issued an interim final rule with comment (IFC) period in 
the Federal Register on March 21, 2017 (referred to in this final rule 
as the ``March 21, 2017 IFC'') (82 FR 14464). The March 21, 2017 IFC 
further delayed the effective date of the provisions that were to take 
effect March 21, 2017 until May 20, 2017, further delayed the 
applicability date of the EPMs and CR Incentive Payment Model 
provisions until October 1, 2017, and further delayed the effective 
date of the conforming CJR model changes until October 1, 2017. In the 
March 21, 2017 IFC, we also solicited public comment on further 
delaying the applicability date for the EPMs and CR Incentive Payment 
Model provisions, as well as the effective date for the conforming 
changes to the CJR model from October 1, 2017 until January 1, 2018 to 
allow for additional notice-and-comment rulemaking. Based on the public 
comments we received in response to the March 21, 2017 IFC, we 
published a final rule (referred to in this final rule as the ``May 19, 
2017 final delay rule'') on May 19, 2017 (82 FR 22895) to finalize a 
January 1, 2018 applicability date for the EPMs and CR Incentive 
Payment Model provisions, as well as to finalize a January 1, 2018 
effective date for the conforming changes to the CJR model 
(specifically amending Sec.  510.2; adding Sec.  510.110; amending 
Sec.  510.120; amending Sec.  510.405; amending Sec.  510.410; revising 
Sec.  510.500; revising Sec.  510.505; adding Sec.  510.506; and 
amending Sec.  510.515). Additional changes to the CJR model, in 
accordance with the March 21, 2017 IFC, took effect May 20, 2017.
    As we stated in the May 19, 2017 final delay rule (82 FR 22897), we 
received a number of comments on the models that did not relate to the 
start date change. These additional comments suggested that we 
reconsider or revise various model aspects, policies and design 
components; in particular, many of these comments suggested that we 
should make participation in the models voluntary instead of mandatory. 
We did not respond to these comments in the May 19, 2017 final delay 
rule, as the comments were out of scope of that rulemaking, but we 
stated that we might

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take them into consideration in future rulemaking.
    In the August 17, 2017 Federal Register (82 FR 39310 through 
39333), we published a proposed rule that proposed to cancel the EPMs 
and CR Incentive Payment Model, and to rescind the regulations 
governing these models, as well as implement certain revisions to the 
CJR model.
    We received approximately 85 timely pieces of correspondence 
containing multiple comments in response to the August 17, 2017 
proposed rule. In the following sections of this final rule and interim 
final rule with comment period, we discuss our specific proposals, 
public comment, and our responses to those comments.

II. Provisions of the Proposed Regulations and Analysis of and Response 
to Public Comments

A. Cancellation of EPMs and Cardiac Rehabilitation Incentive Payment 
Model

    In the January 3, 2017 EPM final rule, we established three bundled 
payment models for acute myocardial infarction (AMI), coronary artery 
bypass graft (CABG), and surgical hip/femur fracture treatment (SHFFT) 
episodes, and a Cardiac Rehabilitation (CR) Incentive Payment Model. 
These models were similar to other Innovation Center models and focused 
on complex cases where we believe improvements in care coordination and 
other care redesign efforts offer the potential for improved patient 
outcomes and more efficient resource use. Many stakeholders, including 
commenters responding to the March 21, 2017 IFC, expressed concerns 
about provider burden and challenges these new models would present. We 
noted in the May 19, 2017 final delay rule (82 FR 22896), which 
finalized a January 1, 2018 start date for the EPMs and the CR 
Incentive Payment Model, that we would engage in notice-and-comment 
rulemaking on these models if warranted. We also noted that we received 
47 submissions in response to the March 21, 2017 IFC. These responses 
contained a mix of in- and out-of-scope comments (82 FR 22899). In the 
May 19, 2017 final delay rule (82 FR 22897), we noted that in addition 
to commenting on the change to the effective date for the EPMs and CR 
Incentive Payment Model and certain provisions of the CJR model, 
commenters highlighted concerns with the models' design, including but 
not limited to: Participation requirements, data, pricing, quality 
measures, episode length, CR and skilled nursing facility (SNF) 
waivers, beneficiary exclusions and notification requirements, 
repayment, coding, and model overlap issues. Specifically, many 
commenters were opposed to the mandatory participation requirements, 
arguing that these models would force many providers who lack 
familiarity, experience, or proper infrastructure to quickly support 
care redesign efforts for a new bundled payment system. Many commenters 
were concerned that these mandatory models might harm patients and 
providers before CMS knows how these models might affect access to 
care, quality, or outcomes. Additionally, commenters were concerned 
that unrelated services would be incorporated into episode prices under 
the finalized price-setting methodology, in which we base prices on MS-
DRGs and use clinical review to identify excluded, unrelated services 
rather than identifying included, related services. Commenters also 
expressed concern that this pricing approach would result in diagnosis 
codes classifying certain services as included, when in fact these 
services have no clinical relevance to the episode(s). Commenters were 
further concerned with the fact that CMS would progressively 
incorporate regional data into EPM target prices, where 100 percent of 
the EPM target price would be based on regional data by performance 
year 4. Commenters also took issue with the quality measures 
established for the SHFFT model, stating that these measures are not 
clinically related to the target population and are inappropriate for 
use in assessing the care provided to beneficiaries in the SHFFT model. 
In addition, commenters requested revisions to the CABG EPM to allow 
participants the option to use a CABG composite score developed by the 
Society of Thoracic Surgeons (STS) rather than the all-cause mortality 
measure.
    Commenters also expressed concerns about the design of the CR 
Incentive Payment Model waivers. Commenters stated that current direct 
supervision requirements would continue to contribute to a lack of 
access to cardiac rehabilitation services and would inhibit providers' 
ability to redesign care for the CR Incentive Payment Model. Commenters 
suggested broadening the CR physician supervision waiver because the 
current waivers would not cover non-model beneficiaries who might be 
obtaining services concurrently with model participants and are 
therefore not sufficient. Other commenters were concerned with the 
precedence rules for model overlap with Models 2, 3 and 4 of the 
Innovation Center's Bundled Payments for Care Improvement (BPCI) 
initiative.
    In the May 19, 2017 final delay rule (82 FR 22895), we stated that 
we might consider these public comments in future rulemaking. Based on 
our additional review and consideration of this stakeholder feedback, 
we concluded that certain aspects of the design of the EPMs and the CR 
Incentive Payment Model should be improved and more fully developed 
prior to the start of the models, and that moving forward with the 
implementation of the EPMs and CR Incentive Payment Model as put forth 
in the January 3, 2017 EPM final rule would not be in the best interest 
of beneficiaries or providers at this time. Based on our acknowledgment 
of the many concerns about the design of these models articulated by 
stakeholders, we proposed to cancel the EPMs and CR Incentive Payment 
Model before they began. Accordingly, we proposed to rescind 42 CFR 
part 512 in its entirety. We sought public comment on our proposal to 
cancel the EPMs and CR Incentive Payment Model.
    We noted that, if the proposal to cancel the EPMs and CR Incentive 
Payment Model was finalized, providers interested in participating in 
bundled payment models would still have an opportunity to do so during 
calendar year (CY) 2018 via new bundled payment models. The Innovation 
Center expects to develop new bundled payment model(s) during CY 2018 
that would be designed to meet the criteria to be an Advanced APM. We 
also noted the strong evidence base and other positive stakeholder 
feedback that we have received regarding the CR Incentive Payment 
Model. As we further develop the Innovation Center's portfolio of 
models, we may revisit this model and if we do, we will consider 
stakeholder feedback.
    Comment: The majority of commenters supported cancellation of the 
EPMs, although many of these commenters noted that they support the 
general shift toward value-based payment models. Many of these 
commenters noted they supported deregulation in general and supported 
CMS' efforts to ease the administrative burden of mandatory models, 
voicing concern that mandatory models unduly burden hospitals who may 
be unprepared for model participation and compromise patient access and 
quality of care delivery. Other commenters stated that mandatory models 
disadvantage inexperienced or under-resourced providers, and are too 
complex. Commenters argued these providers, many of whom are smaller 
hospitals or systems, face logistical and

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practical challenges that would be exacerbated by comparing all 
providers, and their varying levels of resources, to one another 
through a mandatory initiative. Commenters also argued that providers 
need models with greater flexibility, support, and incentives.
    Several commenters supporting the cancellation of the EPMs stated 
that mandatory models fail to solicit and incorporate stakeholder 
feedback, and that CMS moved too quickly in finalizing the EPMs. 
Commenters stated that the models should be improved and more fully 
developed prior to the start of the models. Commenters highlighted 
concerns with many aspects of the models' design, including: 
Participation requirements; episode selection; data; pricing, 
especially the movement to regional pricing under the models; quality 
measures used in the models, especially for the CABG and SHFFT models; 
episode length; clinical homogeneity (or lack thereof) of the included 
patient population; episode inclusions and exclusions; CR and skilled 
nursing facility (SNF) waivers; beneficiary exclusions and notification 
requirements; reconciliation and repayment policies; and model overlap 
issues that impact providers already participating in APMs or other 
programs. Commenters also stated that there is insufficient evidence 
and evaluation of the efficacy of mandatory bundled payment models. 
They stated that the EPMs were not built upon the success of existing 
cardiac models, and that CMS should use this opportunity to gather 
broad stakeholder feedback.
    Response: We thank commenters for their support for our proposal to 
cancel the EPMs. We agree with commenters' assertions that we should 
reduce provider burden when warranted, while maintaining the ability 
for providers to participate in future opportunities that shift towards 
value-based payment models. We continue to believe it is important to 
test and evaluate the effects of episode payment approaches on a broad 
range of Medicare providers. However, we agree with commenters that the 
design of the specific EPMs we are cancelling in this final rule and 
interim final rule with comment period should be further studied and 
refined, and we also agree with commenters that seeking additional 
stakeholder input in future model design is important. We note that in 
the recent Request for Information (posted on the CMS Web site at 
https://innovation.cms.gov/Files/x/newdirection-rfi.pdf), CMS solicited 
comments through November 20, 2017 on suggestions for a new direction 
for the Innovation Center. CMS will carefully evaluate any input 
received regarding future models and the design of these models.
    Comment: Several commenters contended that CMS lacks the authority 
to mandate participation in Innovation Center models. Commenters stated 
they do not believe that section 1115A of the Act provides CMS with the 
authority to mandate provider and supplier participation in Innovation 
Center models. These commenters stated that mandatory provider and 
supplier participation in models runs counter to both the letter and 
spirit of the law that established the Innovation Center, including the 
scope of its authority to test models under section 1115A of the Act 
and the directive to make recommendations to Congress set forth in 
section 1115A(g) of the Act. A commenter argued that the EPMs are a 
prohibited expansion in scope of the CJR model.
    Response: We disagree that the Innovation Center lacks the 
authority to test mandatory models under section 1115A of the Act. 
Section 1115A of the Act authorizes the Secretary to test innovative 
payment and service delivery models to reduce program expenditures 
while preserving or enhancing the quality of care furnished to 
Medicare, Medicaid, and Children's Health Insurance Program (CHIP) 
beneficiaries. Section 1115A of the Act does not specify that 
participation in models must be voluntary. Moreover, the Secretary has 
authority to establish regulations to carry out the administration of 
Medicare. Specifically, the Secretary has authority under both sections 
1102 and 1871 of the Act to implement regulations as necessary to 
administer Medicare, including testing these Medicare payment and 
service delivery models. However, as we discuss later in this section, 
the Innovation Center will approach new model design with a focus on 
reducing provider burden. Finally, we disagree that the EPMs were an 
expansion of CJR. The SHFFT Model was designed as a separate and 
distinct model from the CJR model, utilizing different MS-DRGs.
    Comment: Some commenters noted that the movement away from 
mandatory models represents a change in priorities from the previous 
administration. They acknowledged this change in preference from 
mandatory to voluntary model design but questioned that CMS continue to 
work toward achieving the goals of bundled payment models. They stated 
their desire to see CMS strike the best balance possible between 
reducing provider burden and incentivizing health system change that 
will allow for broad opportunities for Advanced APM participation 
beginning in CY 2018. A commenter noted that easing the regulatory 
burden on health systems and continuing the transition into value-based 
care need not be mutually exclusive goals.
    Response: We agree with the commenter that easing regulatory burden 
on health systems and continuing the transition into value-based care 
are not mutually exclusive goals. As we noted in section I. of this 
final rule and interim final rule with comment period, review and 
reevaluation of policies and programs, as well as revised rulemaking, 
are within an agency's discretion, and that discretion is often 
exercised after a change in administration occurs. CMS is setting a new 
direction for the Innovation Center to promote patient-centered care 
and test market-driven reforms that empower beneficiaries as consumers, 
provide price transparency, increase choices and competition to drive 
quality, reduce costs, and improve outcomes. We note that in the recent 
Request for Information (posted on the CMS Web site at https://innovation.cms.gov/Files/x/newdirection-rfi.pdf), CMS solicited 
comments through November 20, 2017 on suggestions for a new direction 
for the Innovation Center. As stated in the RFI, CMS believes that 
while existing partnerships with healthcare providers, clinicians, 
states, payers and stakeholders have generated important value and 
lessons, CMS is setting a new direction for the Innovation Center. New 
models will be designed to reduce burdensome requirements and 
unnecessary regulations to the extent possible to allow physicians and 
other providers to focus on providing high-quality healthcare to their 
patients. We appreciate the commenters' understanding of this change in 
priorities, and we reiterate CMS's commitment to developing models that 
reward value-based care and allow opportunities for Advanced APM 
participation for 2018 and future years.
    Comment: Multiple commenters expressed concern that the 
cancellation of the EPMs will signal to the innovation community (that 
is, those who invest valuable resources into the development of new 
technologies and systems with the goal of transforming healthcare 
delivery) that healthcare payment policy is subject to the uncertainty 
of ad hoc reversal of transformative initiatives, thus stifling further 
innovation efforts. A commenter stated that cancellation of the EPMs 
will send signals that will slow the transformation of healthcare and 
confuse providers regarding the urgency

[[Page 57070]]

of system change from FFS to value-based payment. Another commenter 
stated that requiring providers to adapt to innovative, value-based 
payment models is preferable to reinforcing current, financially 
unsustainable payment models that incentivize the delivery of services 
without consideration for their cost, quality, and outcomes.
    Response: We acknowledge the commenters' concerns about the signals 
that cancellation of the EPMs could send regarding our commitment to 
moving away from FFS toward value-based payment. We reiterate that CMS 
continues to explore new models to incentivize innovation and value-
based payment and is committed to innovations that will foster an 
affordable, accessible healthcare system that puts patients first.
    Comment: Many commenters objected to the outright cancellation of 
EPMs and stated that the models should be offered on a voluntary basis. 
These commenters expressed concern about the precedent established by 
the cancellation of a planned model after health systems have expended 
significant time and resources to prepare for participation in the 
initiative, and asserted that, without offering the option of voluntary 
participation, we would disadvantage health systems that had already 
made substantial investments in care redesign in anticipation of 
participating in EPMs, as this would not provide opportunity for return 
on those investments. Specifically, several commenters noted that since 
the finalization of the EPMs, providers have invested considerable time 
and funding in developing the necessary programs, processes, 
infrastructure and financial relationships in preparation for these 
programs. Commenters stated that while there may be limited or minimal 
additional costs required going forward with the cancellation of these 
models, it is worth nothing that significant investment was made by 
various stakeholders in preparation for them, particularly as they had 
been finalized by CMS. Multiple commenters stated that, since the 
finalization of the rule implementing EPMs, their health systems have 
already made significant investments and expended resources on care 
redesign to meet the payment models' requirements. While these 
commenters did not quantify the cost of these investments they noted 
that the investments included hiring care coordinators, re-engineering 
the process for admission from the Emergency Department for hip and 
femur fractures, and improving communication between their health 
system's regional hospitals and its main hospital, such that 
innovations in efficient and effective care coordination are already 
emerging from this implementation process. One commenter further stated 
that preparation for implementing the models resulted in a culture 
shift within their organization, especially with respect to 
communication and coordination between providers. Another commenter 
stated the time clinicians spent preparing for these models is 
ultimately a loss for patient care.
    Response: We appreciate the commenters' support for voluntary 
versions of the EPMs. However, in reviewing the other comments received 
in support of the cancellation due to concerns with multiple aspects of 
the models, we continue to believe that there would not be enough time 
to sufficiently revise the models given the planned January 1, 2018 
start date and that implementing these models as originally designed 
would not be in the best interest of beneficiaries or providers. We 
thank the commenters for their submissions noting that providers have 
invested in infrastructure, increased staffing, and care redesign in 
response to the mandatory nature of the EPMs. We appreciate these 
initiatives taken by hospitals selected for the EPMs and thank them for 
bringing these actions to our attention. We note that commenters did 
not provide enough detail about the hiring status or educational and 
licensing requirements of any care coordinator positions they may have 
created and filled (that is, full or part-time, Registered Nurse or 
non-Registered Nurse, scope of work, etc.) for us to quantify an 
economic impact for these case coordination investments. Likewise 
investments in re-engineering of processes and communication systems 
were not quantified and thus preclude us from attempting to estimate a 
dollar value impact. We believe that these investments and preparations 
will position providers for successful participation in future 
initiatives that may provide opportunities for return on these 
investments. Further we believe hospitals that made preparations, 
especially those that have created new care coordinator positions that 
they intend to keep staffed and those that have implemented process 
improvements that they intend to keep in place, are likely to provide 
enhanced patient care by improving the efficiency and quality of care 
for Medicare beneficiaries and improving the coordination of care from 
the initial hospitalization through recovery, rather than reverting to 
previous practices that may not have placed as much emphasis on 
efficiency, quality, and care coordination. As we remain committed to 
moving toward value-based payment, we believe that investments in care 
coordination and quality improvement will ultimately benefit both 
providers and patients.
    Comment: Some commenters stated their opposition to the 
cancellation of EPM models and stated that they should be implemented 
as mandatory models. A commenter stated the belief that providers would 
have adapted to the models and beneficiaries' access to care would not 
have been affected, and suggested that, rather than cancelling the 
models, CMS should further delay the start date to allow providers more 
time to prepare for implementation of the models. Other commenters 
noted that mandatory models, compared to voluntary models, create a 
more reliable experiment with the ability to generate evidence of 
bundled payments' effectiveness, and they increase the chances of 
bringing bundled payments to scale nationally. Another commenter stated 
that they support mandatory models because they are necessary to 
eliminate the ``pilot program'' mentality of providers. A commenter 
noted that voluntary models provide opportunities for gaming. Another 
commenter asserted that the rationale used by CMS to rescind the EPMs 
is flawed and contradicts statements outlined in the EPM final rule. 
This commenter further stated that, while there will always be 
innovators who will participate in voluntary models and guide their 
peers in systematic improvements leading to changes in overall 
healthcare delivery, non-participant providers have been reluctant to 
accept a change in their clinical practice and as a result have not 
demonstrated the clinical improvement that others have seen, due to the 
lack of a mandate for change. This commenter expressed concern that 
without mandatory models, improvement will not remain consistent and 
there will likely be a reversion to ``the norm.'' Another commenter 
stated their opposition to the cancellation of EPMs and their belief 
that mandatory models should be implemented more broadly. This 
commenter further stated their belief that the cancellation of EPMs 
represents an attempt to delay the move to value-based reimbursement 
and maintain the FFS reimbursement model, which will benefit the 
financial interests of healthcare companies at the expense of the well-
being and economic interests of the healthcare consumer and American 
taxpayer. Another commenter similarly stated their opposition to the

[[Page 57071]]

cancellation of EPMs based on their concern about the long term fiscal 
solvency of Medicare.
    Response: We appreciate the commenters pointing out some of the 
specific benefits of mandatory, as opposed to voluntary, models. We 
agree generally that mandatory models have certain advantages over 
voluntary models, and we have had to weigh those advantages against our 
goals of minimizing provider burden at this time and against the 
design-related concerns raised by stakeholders for these specific EPM 
and CR Incentive Payment Models. Furthermore, although we monitor 
provider behavior to be sure that hospitals' implementation strategies 
are in compliance with the CJR model and other Medicare requirements, 
and to identify individual providers that merit additional 
investigation, educational outreach, or referral to program integrity 
contractors, cancelling the EPMs will provide more time to fully 
evaluate the impact of CJR.
    However, we take seriously the commenters' concerns about the 
urgency of continuing our movement toward value-based care in order to 
accommodate an aging population with increasing levels of chronic 
conditions, while also acting as responsible stewards of the Medicare 
Trust Funds. We continue to believe that value-based payment 
methodologies will play an essential role in lowering costs and 
improving quality of care, which will be necessary in order to maintain 
Medicare's fiscal solvency. At this time, we believe that focusing on 
the development of different bundled payment models and engaging more 
providers in these models is the best way to drive health system change 
while minimizing provider burden and maintaining patient access to 
care.
    Comment: We received many comments in support of our proposal to 
cancel the CR Incentive Payment model. Commenters supporting our 
proposal to cancel the CR Incentive Payment Model lauded the 
decelerated implementation of mandatory models and noted that the 
mandatory CR Incentive Payment Model would have created additional 
undue administrative burden for providers. Many of these commenters 
suggested that the CR Incentive Payment Model would strain hospitals' 
limited resources, leading to decreased access to care or quality of 
care.
    Response: We appreciate some commenters' support of our proposal to 
cancel the mandatory CR Incentive Payment Model. We agree with the 
commenters that it is important to lessen provider burden where we can.
    Comment: Several commenters opposed CMS' proposal to cancel the CR 
Incentive Payment Model. These commenters stated that they saw the CR 
Incentive Payment Model as an important step toward value-based 
payments and that cancelling the CR Incentive Payment Model would 
result in a missed opportunity to collect evidence. Commenters opposing 
the cancellations also cited the financial investments providers made 
in preparation for the model. Some of these commenters felt that a 
mandatory cardiac model would force otherwise-hesitant providers to 
focus on enhanced care management, improved infrastructure, and cost 
reduction. Several commenters cited evidence of the effectiveness of 
cardiac rehabilitation and its relatively low utilization levels as 
support for continuing the model, stating that it would be an effective 
test with or without concurrent EPM implementation. A commenter stated 
that implementing the CR Incentive Payment Model alone would provide 
independent testing of its effects, and some commenters requested that 
the model continue as a limited pilot.
    Response: We thank commenters for their input and note that we 
agree with the premise cited by commenters that the CR Incentive 
Payment Model could provide an opportunity to collect evidence and may 
support provision of an under-utilized yet effective intervention. 
However, we believe that the nature of the CR Incentive Payment Model 
does not permit sufficient provider choice and our intention in 
removing this mandatory model at this time is to enhance providers' 
ability to determine the models and initiatives that suit their 
organizations while increasing quality and value-based payments. 
Additionally, we note the obstacles presented by the cancellation of 
the cardiac EPMs and conforming regulations with which this model is 
aligned. Due to the manner in which the regulations guiding the cardiac 
EPMs were interwoven with those of the CR Incentive Payment Model, we 
do not believe it would be feasible to continue the mandatory CR 
Incentive Payment Model alone at this time since we are cancelling the 
EPMs and rescinding all of the associated regulations. However, as we 
stated in the proposed rule, as we further develop the Innovation 
Center's portfolio of models, we may revisit the concept of a model 
with a focus on cardiac rehabilitation and, if we do, will consider 
stakeholder feedback.
    Comment: Many commenters stated that the CR Incentive Payment Model 
required improvements prior to implementation, including many who 
requested that it continue as a voluntary model. A few requested that 
we solicit more stakeholder feedback throughout model development, 
while others requested altered or new model waivers. Many commenters 
supporting cancellation of the CR Incentive Payment Model recommended 
that any potential future iterations of the model should be separate 
from other APMs. A commenter asserted that the CR Incentive Payment 
Model could be effective without incentivizing such a high number of CR 
or intensive cardiac rehabilitation (ICR) services. Another commenter 
recommended allowing shared financial arrangements among CR programs.
    Response: We thank commenters for suggested improvements to the CR 
Incentive Payment Model, and would consider this input for any future 
cardiac rehabilitation models.
    Comment: Many commenters encouraged CMS to expedite the 
introduction of the new voluntary bundled payment models that would 
meet the criteria to be Advanced APMs. Commenters noted making new 
voluntary models available as soon as possible will allow hospitals to 
capitalize on the preparations they made in anticipation of the EPMs 
and will also allow them to partner with clinicians to provide better 
quality, more efficient care. Commenters are concerned that the 
ambiguity surrounding the future of EPMs has posed challenges for 
hospitals attempting to determine where and how to invest in 
implementation. Commenters supported the development of new models that 
meet the Advanced APM definition under the Quality Payment Program and 
urged CMS to build upon the lessons learned in the Bundled Payments for 
Care Improvement (BPCI) initiative. A commenter urged CMS to align 
advancements included in the CJR and EPM models into a new bundled 
payment model. A commenter recommended that CMS ensure that a voluntary 
model is available when the current BPCI initiative expires. Several 
commenters urged CMS to implement new voluntary models before the 
proposed voluntary election period for CJR (January 1-January 31, 2018) 
to give these providers as well as BPCI participants adequate time to 
prepare for future models. Commenters suggested that in the 
alternative, CMS should implement new voluntary models prior to BPCI's 
conclusion in September 2018. A commenter urged CMS to limit the size 
and scope of future models and ensure open and

[[Page 57072]]

transparent communication with stakeholders during model development. 
Commenters suggested that CMS should release data on baselines and 
targets in advance of a model's application deadline to allow entities 
to prepare for the most appropriate models. Commenters encouraged CMS 
to initiate collaborative process between CMS, providers and other 
stakeholders as they stated this would result in more robust and 
effective models.
    Response: We note providers' interest in future bundled payment 
models that meet the criteria to be an Advanced APM and are considering 
options for developing such models.
    Comment: Numerous commenters suggested changes to the overall 
design of the EPMs, CR Incentive Payment Model, BPCI initiative, and 
CJR model that were outside of the scope of the August 17, 2017 
proposed rule. These comments touched on model participation 
requirements, data, pricing, choice of quality measures used, episode 
length, CR and SNF waivers, beneficiary exclusions and notification 
requirements, repayment, coding, model overlap issues, and the 
inclusion of depression screening in models. Additionally we received 
public comments suggesting alternative model proposals that include 
physician-based, outcome-based, procedure-based, specialty-based, and 
Medicare Advantage APMs. Commenters recommended that the CJR model and 
future models provide more collaboration opportunities and offer 
broader waivers of fraud and abuse laws, such as the physician self-
referral law commonly known as the ``Stark Law,'' and the Anti-Kickback 
statute. Several commenters stated that the ``Stark Law,'' which they 
contend has not been updated statutorily for over 2 decades, is 
challenging to work through when developing financial arrangements, as 
small, unintentional technical errors on the part of physicians or 
staff could lead to heavy penalties under this strict liability 
statute, and that the cost of compliance and disclosure can be 
prohibitive to small and medium practices who would otherwise want to 
participate in new models. Commenters encouraged data transparency and 
access to substance abuse claims, an APM Ombudsman, differing episode 
durations, a uniform model overlap policy, use of care coordinators, 
pricing and reconciliation modifications, different quality measures, 
and clarification of certified electronic health record technology 
(CEHRT) requirements.
    Response: We consider these public comments to be outside of the 
scope of the August 17, 2017 proposed rule; and therefore, we are not 
addressing them in this final rule and interim final rule with comment 
period. We may consider these public comments in future rulemaking.
    Summary of Final Decisions: We are finalizing our proposal to 
cancel the Episode Payment Models (EPMs) and Cardiac Rehabilitation 
(CR) Incentive Payment Model and to rescind the regulations at 42 CFR 
part 512.

B. Changes to the CJR Model Participation Requirements

1. Voluntary Participation Election (Opt-In) for Certain MSAs and Low-
Volume and Rural Hospitals
    The CJR model began on April 1, 2016. The model is currently 
nearing completion of the second performance year, which includes 
episodes ending on or after January 1, 2017 and on or before December 
31, 2017. The third performance year, which includes all CJR episodes 
ending on or after January 1, 2018 and on or before December 31, 2018, 
would necessarily incorporate episodes beginning before January 2018. 
The fifth performance year will end on December 31, 2020. Currently, 
with limited exceptions, hospitals located in the 67 geographic areas 
selected for participation in the CJR model must participate in the 
model through December 31, 2020; that is, their participation in the 
CJR model is mandatory unless the hospital is an episode initiator for 
a lower-extremity joint replacement (LEJR) episode in the risk-bearing 
period of Models 2 or 4 of the BPCI initiative. Hospitals with a CCN 
primary address in one of the 67 selected geographic areas selected for 
CJR that participated in Model 1 of the BPCI initiative, which ended on 
December 31, 2016, began participating in the CJR model when their 
participation in the BPCI initiative ended.
    Based on smaller, voluntary tests of episode-based payment models 
and demonstrations, such as the Acute Care Episode (ACE) demonstration 
and the BPCI initiative, that have indicated a potential to improve 
beneficiaries' care while reducing costs (see ACE evaluation at: 
https://downloads.cms.gov/files/cmmi/ace-evaluationreport-final-5-2-14.pdf and BPCI evaluation at: https://innovation.cms.gov/Files/reports/BPCI-EvalRpt1.pdf), we finalized the CJR model with mandatory 
participation in the 67 selected geographic areas so that we could 
further test delivery of better care at a lower cost across a wide 
range of hospitals, including some hospitals that might not otherwise 
participate, in many locations across the country. In the CJR model 
final rule (80 FR 73276), we stated that we believed that by requiring 
the participation of a large number of hospitals with diverse 
characteristics, the CJR model would result in a robust data set for 
evaluation of this bundled payment approach, and would stimulate the 
rapid development of new evidence-based knowledge. Testing the model in 
this manner would also allow us to learn more about patterns of 
inefficient utilization of healthcare services and how to incentivize 
the improvement of quality for common LEJR procedure episodes.
    After further consideration of stakeholder feedback, including 
responses we received on the March 21, 2017 IFC, we proposed certain 
revisions to the mandatory participation requirements for the CJR model 
to allow us to continue to evaluate the effects of the model while 
limiting the geographic reach of our current mandatory models. 
Specifically, we proposed that the CJR model would continue on a 
mandatory basis in approximately half of the selected geographic areas 
(that is, 34 of the 67 selected geographic areas), with an exception 
for low-volume and rural hospitals, and continue on a voluntary basis 
in the other areas (that is, 33 of the 67 selected geographic areas).
    The geographic areas for the CJR model are certain Metropolitan 
Statistical Areas (MSAs) that were selected following the requirements 
in Sec.  510.105 as discussed in the CJR model final rule (80 FR 73297 
through 73299). In Sec.  510.2, an MSA is defined as a core-based 
statistical area associated with at least one urbanized area that has a 
population of at least 50,000. In selecting the 67 MSAs for inclusion 
in the CJR model, the 196 eligible MSAs were stratified into 8 groups 
based on MSA average wage adjusted historic LEJR episode payments and 
MSA population size (80 FR 41207). Specifically, we classified MSAs 
according to their average LEJR episode payment into four categories 
based on the 25th, 50th and 75th percentiles of the distribution of the 
196 potentially selectable MSAs as determined in the exclusion rules as 
applied in the CJR model proposed rule (80 FR 41198). This approach 
ranked the MSAs relative to one another and created four equally sized 
groups of 49. The population distribution was divided at the median 
point for the MSAs eligible for potential selection, creating 8 groups. 
Of the 196 eligible MSAs, we chose 67 MSAs via a stratified random 
selection process as

[[Page 57073]]

discussed in the CJR model final rule (80 FR 73291).
    In reviewing our discussion of the MSA selection and the MSA volume 
needed to provide adequate statistical power to evaluate the impact of 
the model in the CJR model final rule (80 FR 73297), we determined that 
reducing the mandatory MSA volume in half by selecting the 34 MSAs with 
the highest average wage-adjusted historic LEJR episode payments for 
continued mandatory participation could allow us to evaluate the 
effects of the CJR model across a wide range of providers, including 
some that might not otherwise participate in the model. Higher payment 
areas are most likely to have significant room for improvement in 
creating efficiencies and greater variations in practice patterns. 
Thus, the selection of more expensive MSAs was the most appropriate 
approach to fulfilling the overall priorities of the CJR model to 
increase efficiencies and savings for LEJR episodes while maintaining 
or improving the overall quality of care.
    The original determination of the sample size need in the CJR model 
final rule was constructed to be able to observe a 2-percent reduction 
in wage-adjusted episode spending after 1 year. This amount was chosen 
based on the anticipated amount of the discount applied in the target 
price. In considering the degree of certainty that would be needed to 
generate reliable statistical estimates, we assumed a 20-percent chance 
of false positive and a 30-percent chance of a false negative. Using 
these parameters, we determined that the number of MSAs needed ranged 
from 50 to 150. In order to allow for some degree of flexibility, we 
selected 75 MSAs, which were narrowed to 67 due to final exclusion 
criteria.
    As we reviewed the CJR model for the August 17, 2017 proposed rule, 
we noted that, excluding quarterly reconciliation amounts, evaluation 
results from BPCI Model 2 indicated possible reductions in fee-for-
service spending of approximately 3 percent on orthopedic surgery 
episodes for hospitals participating in the LEJR episode bundle 
(https://innovation.cms.gov/Files/reports/bpci-models2-4-yr2evalrpt.pdf). We examined the sample size needed to detect a 3-
percent reduction in CJR model episode spending after 1 year using the 
same methodology as described in the CJR model final rule. We 
determined that we would be able to meet this standard with 34 MSAs 
from the higher cost groups. We noted that we expect that hospitals in 
the higher cost MSAs will be able to achieve similar 3-percent savings 
given their MSA's relatively high historic episode spending and thus 
greater opportunities for improvements, and their experience over the 
first 2 performance years of the CJR model. We noted that the proposed 
changes to the model, including the focus on higher cost MSAs and the 
reduced number of mandatory MSAs, would cause changes to the nature of 
the evaluation.
    To select the 34 MSAs that would continue to have mandatory 
participation (except for low-volume and rural hospitals), we took the 
distribution of average wage-adjusted historic LEJR episode payments 
for the 67 MSAs using the definition described in the CJR model final 
rule, ordered them sequentially by average wage-adjusted historic LEJR 
episode payments, and then selected the 34 MSAs with the highest 
average payments. We noted that under the proposal to reduce the number 
of MSAs with mandatory participation, the remaining 33 MSAs would no 
longer be subject to the CJR model's mandatory participation 
requirements; that is, hospital participation would be voluntary in 
these 33 MSAs.
    After dividing the 67 MSAs into 34 mandatory and 33 voluntary MSAs 
as described previously, we examined selected MSA characteristics. In 
order to determine whether a good balance was maintained across MSA 
population size, we examined the number of MSAs below and above the 
median population point of the 196 MSAs eligible for potential 
selection. We observed that a good balance of MSA population size was 
maintained (17 out of 34 mandatory and 17 out of 33 voluntary MSAs had 
a population above the median population). While the 34 MSAs that would 
continue to have mandatory participation have higher spending on 
average, these MSAs all include providers with average cost episodes in 
addition to providers with high cost episodes. In general, we noted 
that hospitals located in higher cost areas have a greater potential to 
demonstrate significant decreases in episode spending. However, within 
the higher cost MSAs, there was still significant variation in 
characteristics and experiences of the included hospitals. We 
anticipated that the evaluation would be able to assess the 
generalizability of the findings of the CJR model by examining 
variations of performance within the participating hospitals that 
represent a wide range of hospital and market characteristics. 
Therefore, we proposed that the CJR model would have 34 mandatory 
participation MSAs (identified in Table 1) and 33 voluntary 
participation MSAs (identified in Table 2) for performance years 3, 4, 
and 5.
    Specifically, we proposed that, unless an exclusion in Sec.  
510.100(b) applies (that is, for certain hospitals that participate in 
the BPCI initiative), participant hospitals in the proposed 34 
mandatory participation MSAs that are not low-volume or rural (as 
defined in Sec.  510.2 and discussed in the following paragraphs) would 
continue to be required to participate in the CJR model. We also 
proposed that hospitals in the proposed 33 voluntary participation MSAs 
and hospitals that are low-volume or rural (as defined in Sec.  510.2 
and discussed in the following paragraphs) would have a one-time 
opportunity to notify CMS, in the form and manner specified by CMS, of 
their election to continue their participation in the CJR model on a 
voluntary basis (opt-in) for performance years 3, 4, and 5. We noted 
that hospitals that choose to participate in the CJR model and make a 
participation election that complies with proposed Sec.  510.115 would 
be subject to all model requirements. Hospitals in the proposed 33 
voluntary participation MSAs and low-volume and rural hospitals (as 
defined in Sec.  510.2 and discussed in the following paragraphs) that 
do not make a participation election would be withdrawn from the CJR 
model as described later in this section of this final rule and interim 
final rule with comment period.
    We proposed to exclude and automatically withdraw low-volume 
hospitals in the proposed 34 mandatory participation MSAs, as 
identified by CMS (see Table 3), from participation in the CJR model 
effective February 1, 2018. Since some low-volume hospitals may want to 
continue their participation in the CJR model, we proposed to allow 
low-volume hospitals to make a one-time, voluntary participation 
election that complies with the proposed Sec.  510.115 in order for the 
low-volume hospital to continue its participation in the CJR model. We 
proposed to define a low-volume hospital in Sec.  510.2 as a hospital 
identified by CMS as having fewer than 20 LEJR episodes in total across 
the 3 historical years of data used to calculate the performance year 1 
CJR episode target prices. Note that under this definition, all 
hospitals listed in Table 3 would meet the definition of a low-volume 
hospital, but this list would not be inclusive of all hospitals that 
could be identified by CMS as a low-volume hospital. For example, a new 
hospital (with a new CCN) that opens in a mandatory MSA during the 
remaining years of the CJR model would not have

[[Page 57074]]

any LEJR episodes during the historical years of data used to calculate 
the performance year 1 CJR episode target prices. Under our proposal, 
we intended that any hospital with a new CCN that came into existence 
after the proposed voluntary participation election period would not be 
required or eligible to join the CJR model. We noted that our proposed 
policy for new hospitals would not be applicable in the case of a 
reorganization event where the remaining entity is a hospital with a 
CCN that was participating in the CJR model prior to the reorganization 
event; consistent with our current policy, such hospital would continue 
participation in the CJR model regardless of whether all predecessor 
hospitals were participant hospitals prior to the reorganization event.
    We also proposed to exclude and automatically withdraw rural 
hospitals from participation in the CJR model effective February 1, 
2018. Since some rural hospitals may want to continue their 
participation in the CJR model, we proposed to allow rural hospitals to 
make a one-time, voluntary participation election that complies with 
the proposed Sec.  510.115 in order for the rural hospital to continue 
its participation in the CJR model. Specifically, we proposed that 
rural hospitals (as defined in Sec.  510.2) with a CCN primary address 
in the 34 mandatory participation MSAs would have a one-time 
opportunity to opt-in to continue participation in the CJR model during 
the proposed voluntary participation election period. We proposed that 
a hospital's change in rural status after the end of the voluntary 
participation election period would not change the hospital's CJR model 
participation requirements. Specifically, we proposed that hospitals in 
the proposed 34 mandatory participation MSAs that are neither low-
volume or rural hospitals during the proposed voluntary participation 
election period would be required to participate in the CJR model for 
performance years 3, 4, and 5, and that these hospitals would continue 
to be required to participate in the CJR model even if they 
subsequently become a rural hospital. Similarly, we proposed that a 
rural hospital that makes a voluntary participation election during the 
one-time opportunity would be required to continue participating in the 
CJR model if that hospital no longer meets the definition of rural 
hospital in Sec.  510.2. We proposed this approach so that CMS could 
identify the hospitals, by CCN, that would participate in the model for 
the remainder of performance year 3 and performance years 4 and 5 at 
the conclusion of the proposed voluntary participation election period 
and so that there would be less confusion about which hospitals are CJR 
model participants.
    We also stated that we believe that our proposed approach to make 
the CJR model primarily concentrated in the higher cost MSAs where the 
opportunity for further efficiencies and care redesign may be more 
likely and to allow voluntary participation in the lower cost MSAs and 
for low-volume and rural hospitals allows the Innovation Center to 
focus on areas where the opportunity for further efficiencies and care 
redesign may be more likely, while still allowing hospitals in the 
voluntary MSAs the opportunity to participate in the model. In 
developing the proposed rule, we considered that hospitals in the CJR 
model had been participating for over a year and a half as of the 
timing of the proposed rule, and noted that we had begun to give 
hospitals in the model initial financial and quality results from the 
first performance year. In many cases, participant hospitals had made 
investments in care redesign, and we wanted to recognize such 
investments and commitments to improvement while reducing the overall 
number of hospitals that are required to participate. We also 
considered stakeholder feedback that suggested we make participation in 
the CJR model voluntary, and the model size necessary to detect at 
least a 3-percent reduction in LEJR episode spending. Taking these 
considerations into account, we considered whether revising the model 
to allow for voluntary participation in all, some, or none of the 67 
selected MSAs would be feasible.
    As discussed in section V. of this final rule and interim final 
rule with comment period (see 82 FR 39327 through 39331 for proposed 
rule impact estimates), the estimated impact of the changes to the CJR 
model we are finalizing in this final rule and interim final rule with 
comment period are estimated to reduce the overall estimated savings 
for performance years 3, 4, and 5 by $106 million. An additional 
estimated $2 million in reduced savings is estimated for the 
performance year 2 reconciliation that will occur in March of 2018 and 
will incorporate the extreme and uncontrollable circumstances policy we 
are putting into place in with the interim final rule with comment in 
this rule for a total reduction in the originally projected CJR model 
savings of $108 million. If voluntary participation was allowed in all 
of the 67 selected MSAs, the overall estimated model impact would no 
longer show savings, and would likely result in additional costs to the 
Medicare program. If participation was limited to the proposed 34 
mandatory participation MSAs and voluntary participation was not 
allowed in any MSA, the impact to the overall estimated model savings 
over the last 3 years of the model (excluding the impact of the extreme 
and uncontrollable circumstances policy in the interim final rule with 
comment period portion of this rule) would be closer to a reduction of 
$45 million than the reduction of $106 million estimate presented in 
section V. of this final rule, because our modeling, which does not 
include assumptions about behavioral changes that might lower fee-for-
service spending, estimates that 60 to 80 hospitals will choose 
voluntary participation. Since we estimated that these potential 
voluntary participants would be expected to earn only positive 
reconciliation payments under the model, these positive reconciliation 
payments would offset some of the savings garnered from mandatory 
participants. However, as many current hospital participants in all of 
the 67 MSAs are actively invested in the CJR model, we proposed to 
allow voluntary participation in the 33 MSAs that were not selected for 
mandatory participation and for low-volume and rural hospitals.
    We sought comment on this proposal.
    Comment: Several commenters disagreed with our proposal to make CJR 
voluntary in certain MSAs. Commenters noted that in some cases, they 
believe their hospitals have reduced spending and improved quality of 
care as well as patient satisfaction as a result of mandated 
participation in CJR. A commenter stated that due to mandated 
participation in CJR, it is now more likely they will elect to 
participate in other voluntary initiatives in the future. Other 
commenters stated that the current model of mandatory participation in 
all 67 MSAs allows for more generalizable evaluation results, and that 
allowing for voluntary participation in half of the current MSAs will 
negatively impact the evaluation. Some believe the proposal to offer 
hospitals in approximately half of the geographic areas the option to 
opt-in to the model on a voluntary basis will incentivize patient 
selection (that is, select only healthier patients for LEJR procedures) 
and limit CMS' ability to improve beneficiary health and the financial 
viability of the Medicare program. Several commenters stated that the 
proposal would stifle innovation, resulting in providers

[[Page 57075]]

hesitating before engaging in further innovative payment efforts and 
incentivizing only high-performing hospitals to continue participation 
in the voluntary MSAs. A commenter wrote that they believe it is too 
early to limit the scope of the CJR model and that doing so will halt 
our ability to produce data on the impact of the model on quality and 
cost.
    Response: We thank commenters for their responses. We continue to 
believe that by limiting the geographic areas in which CJR is mandatory 
at this time, we are encouraging innovation by reducing burden on 
providers to participate in models. We also believe that our proposal 
will not incentivize patient selection, as we will continue to monitor 
hospitals in CJR for changes in patient case-mix, and we are only 
allowing for a one-time opt-in for eligible hospitals. Hospitals that 
opt-in to the model, as discussed later in this section, will remain in 
CJR for the remaining 3 performance years and will not have the 
opportunity to later opt-out. In addition, all other current 
requirements of participation, such as notifying beneficiaries about 
the model, remain in place. We also note that we expect the CJR model 
to produce savings for the Medicare program, as detailed in section V. 
of this final rule, and to improve the quality of care provided to 
beneficiaries undergoing LEJR procedures. Providers in voluntary MSAs 
who have made investments and want to continue participating in CJR may 
do so by opting into the model. We also reiterate that we are 
considering options for a new bundled payment initiative, as discussed 
previously in section II.A. of this final rule, which could provide 
additional participation opportunities for providers currently in CJR, 
including low volume and rural providers, as well as hospitals located 
in voluntary MSAs, that choose not to opt-in to CJR. Finally, we 
believe that we will still be able to evaluate the CJR model, given 
these policy changes. After examining the remaining 34 mandatory MSAs, 
we observed that there remains significant variation in the types of 
markets and hospitals who will continue participation in the model 
across a broad representation of geographic regions. This wide 
variation in hospital and market characteristics will allow us to 
evaluate variations in impact and assess the generalizability of the 
findings of the CJR model. Additionally, the anticipated inclusion of 
hospitals in the voluntary MSAs who opt-in has a high likelihood of 
resulting in a robust data set for the evaluation of generalizability 
of findings in mandatory areas that moved to voluntary participation.
    Comment: Many commenters supported our proposal to make CJR 
voluntary in 33 MSAs and voluntary for all rural and low volume 
providers in CJR. However, several commenters requested we make CJR 
voluntary in all 67 MSAs, effectively removing any mandatory 
participation. Commenters opposed mandatory participation in payment 
models due to providers' differing levels of experience with risk and 
infrastructure capabilities and because some providers may not be well-
positioned to take on financial risk for a specific patient population. 
Several commenters cited concerns with beneficiary access and the 
quality of patient care under mandatory initiatives. A commenter stated 
that mandatory models penalize providers that have not already 
participated in other voluntary initiatives like BPCI. Other commenters 
opposed mandatory models due to a belief that quality of care is more 
likely to improve when health providers actively choose to participate 
in payment models. Several commenters stated that under our proposal, 
physicians and other teams of providers in voluntary MSAs could still 
utilize the flexibility and resources under CJR to improve patient care 
and would be incentivized to do so.
    Other commenters requested that CMS make the model voluntary in all 
MSAs across the country, not just those 67 currently participating in 
CJR, in order to increase participation opportunities in Advanced APMs 
and to treat hospitals in all 67 current CJR MSAs fairly by not 
mandating participation in some areas and not others. Several 
commenters noted support for our proposal to make CJR voluntary in 
certain areas, but requested that CMS clarify that our priorities still 
include delivery system reform given that our proposal would limit the 
reach of an existing model.
    Response: We thank those commenters that supported the proposal. We 
note that although we are reducing the number of MSAs where 
participation in the CJR model is mandatory, we continue to believe 
that the CJR model offers opportunities for providers to improve the 
quality of care while reducing spending. We expect many providers in 
the voluntary MSAs to elect to continue participation in the CJR model, 
and look forward to continuing to work with all CJR participant 
hospitals to improve quality of care under the model. Delivery system 
reform and movement toward value-based payment remain CMS priorities; 
we believe offering more opportunities for providers to engage in such 
activities on a voluntary basis will allow us to continue to pursue our 
goals.
    We continue to believe that offering voluntary participation in 33 
MSAs while maintaining mandatory participation in the remaining 34 MSAs 
is the correct path forward at this time. As discussed previously, we 
will continue to require hospitals in the 34 highest-cost MSAs to 
participate in CJR because we believe that those geographic areas have 
significant opportunity for reducing episode spending while improving 
quality of care under the model. Similarly, we believe that at this 
point in the CJR model (the end of the second performance year), it is 
most prudent for us to continue the model in the geographic areas where 
providers have already implemented infrastructure changes as well as 
received initial financial and quality results for the first 
performance year. In addition, as discussed previously, participation 
will remain mandatory in the 34 higher-cost MSAs where we believe there 
exists significant opportunity to reduce episode spending. In lieu of 
increasing the number of MSAs participating in CJR at this time, we are 
focusing our efforts on development of other new models that will 
further address our goals of improving quality of care and reducing 
spending.
    Comment: Several commenters supported our proposal to make 
participation in CJR voluntary in some of the current MSAs but objected 
to our use of the high-cost criterion to determine which MSAs should 
remain mandatory. These commenters requested that we randomly select 
which MSAs would remain mandatory or include a mixture of high- and 
low-cost MSAs in the remaining mandatory areas.
    Response: We thank the commenters for their suggestions but 
continue to believe that choosing the higher-cost MSAs for mandatory 
participation is appropriate, especially given the transition to fully 
regional pricing in performance years 4 and 5 of the CJR model. The 
higher-cost MSAs may offer more opportunity for hospitals in CJR to 
reduce episode spending and improve quality, especially as target 
prices move to fully regional prices in year 4 of the model.
    Comment: A number of commenters supported our proposal to allow low 
volume hospitals in all 67 MSAs to participate in the model on a 
voluntary basis, but requested that we revise the low volume threshold 
to offer voluntary participation to a larger number of

[[Page 57076]]

hospitals. Commenters specifically requested we revise the threshold to 
100 episodes across the 3-year historical baseline (episodes that began 
in 2012-2014), noting their belief that hospitals with fewer episodes 
have experienced more pricing volatility and have a more difficult time 
managing care redesign and episode spending under bundled payment 
models.
    Response: We proposed to define low volume hospitals as those 
hospitals with fewer than 20 episodes in the 3-year historical baseline 
period (episodes in 2012 through 2014) used to create PY1 episode 
target prices. We note that this definition is consistent with our 
treatment of low volume hospitals currently participating in CJR; since 
the model's inception, under Sec.  510.300(b)(3), such hospitals 
receive a 100 percent regional target price in all years of the model. 
This threshold represents approximately the 10th percentile of episode 
volume across hospitals, which we believed was a reasonable threshold. 
In addition, such hospitals are defined as low volume for purposes of 
the CJR model based only on their historical LEJR episode volume among 
Medicare FFS beneficiaries; while these hospitals may furnish few LEJR 
procedures to Medicare FFS beneficiaries, they are not necessarily 
rural or low volume in terms of bed count or the volume of other 
services provided. In response to commenters' suggestion to revise the 
threshold, we reexamined our data on episode volume across the 
historical baseline, as well as the initial performance year 1 
reconciliation results.
    We are finalizing our proposal to define low volume hospitals as 
those with fewer than 20 episodes in the historical baseline period for 
the following reasons. First, we note that a number of low volume 
hospitals earned initial reconciliation payments for performance year 
1, indicating that having a low volume of episodes among Medicare FFS 
beneficiaries does not preclude a hospital from achieving care redesign 
and financial success under the model. Second, we are attempting to 
balance competing considerations, including not wanting to overburden 
smaller providers, while still learning how these types of providers 
perform in an episode model like CJR. We will continue to operate CJR 
as a mandatory model in 34 MSAs so that we may better understand how 
providers who typically do not participate in voluntary models respond 
to an episode payment structure. In addition, small hospitals are 
currently underrepresented in voluntary Innovation Center models. Thus, 
we are particularly interested in learning about their experiences as 
participants so that, when we examine whether the statutory 
requirements for expansion are met for CJR, we can consider these 
experiences rather than assuming that the experience of larger 
hospitals can be simply applied to them. We believe that the current 
manner of defining low volume hospitals as those having fewer than 20 
episodes strikes an appropriate balance between wanting to understand 
the experience of hospitals with different care patterns and 
populations while limiting unnecessary burden.
    Comment: Commenters supported our proposal to make participation 
voluntary for rural hospitals in all 67 CJR MSAs. Commenters noted that 
our proposal to allow for voluntary participation in CJR for all rural 
hospitals recognizes the unique challenges that rural hospitals face, 
including more limited access to infrastructure.
    Response: We thank the commenters for their support. We agree that 
rural hospitals face unique challenges related to caring for their 
patient populations and are finalizing our policy to allow rural 
hospitals in all 67 CJR MSAs to opt-in to continue participation in the 
model.
    Comment: Several commenters requested that CMS clarify how the CJR 
regional target prices will change if the proposal is finalized.
    Response: We are clarifying that regional targets will not change 
because they incorporate all lower-extremity joint replacement episodes 
in a U.S. Census Division, regardless of MSA and CJR participation.
    Comment: A commenter requested clarification on the proposed CJR 
participation requirements for hospitals currently participating in 
BPCI for LEJR episodes. The commenter noted that under our proposed 
policy, it was unclear whether a hospital participating in BPCI for 
LEJR episodes would enter CJR upon terminating participation on BPCI, 
or when the current BPCI initiative ends in September 2018. The 
commenter believes that requiring hospitals to enter CJR starting in 
the fourth performance year could expose them to undue financial risk, 
given that CJR will transition to fully regional pricing for 
performance years 4 and 5 of the model.
    Response: We note that we did not propose any changes to the CJR 
participation requirements with relation to BPCI precedence. Hospitals 
that are participating in the BPCI initiative for LEJR episodes are not 
required to participate in CJR. We did not propose a special election 
period for BPCI hospitals that terminate from BPCI (or stop 
participating in LEJR episodes under that initiative). In other words, 
a hospital that terminates from BPCI after January 1, 2018 and that is 
located in a voluntary area or that qualified as a rural or low volume 
provider under the CJR definitions as of January 31, 2018 would not be 
required or able to participate in CJR. When BPCI concludes its final 
performance period, we will not offer a special election period. At 
that time, hospitals in mandatory CJR MSAs who do not qualify as rural 
or low volume under the CJR definitions must participate in CJR, as 
specified in Sec.  510.100(b). Our expectation is that hospitals that 
have been participating in BPCI will have a smooth transition into CJR 
based on their experience in managing episodes under the BPCI model. 
Hospitals not in mandatory areas or hospitals that have rural or low 
volume status under the CJR definitions interested in participating in 
voluntary bundled payment models would have other opportunities to 
apply to do so, as discussed in section II.A. of this final rule and 
interim final rule with comment period.

                Table 1--CJR Mandatory Participation MSAs
------------------------------------------------------------------------
                                                         Wage-adjusted
           MSA                      MSA name            episode payments
                                                             (in $)
------------------------------------------------------------------------
10420....................  Akron, OH.................            $28,081
11700....................  Asheville, NC.............             27,617
12420....................  Austin-Round Rock, TX.....             28,960
13140....................  Beaumont-Port Arthur, TX..             32,544
17140....................  Cincinnati, OH-KY-IN......             28,074
18580....................  Corpus Christi, TX........             30,700

[[Page 57077]]

 
20020....................  Dothan, AL................             30,710
22500....................  Florence, SC..............             27,901
23540....................  Gainesville, FL...........             29,370
24780....................  Greenville, NC............             27,446
25420....................  Harrisburg-Carlisle, PA...             28,360
26300....................  Hot Springs, AR...........             29,621
28660....................  Killeen-Temple, TX........             27,355
31080....................  Los Angeles-Long Beach-                28,219
                            Anaheim, CA.
31180....................  Lubbock, TX...............             29,524
32820....................  Memphis, TN-MS-AR.........             28,916
33100....................  Miami-Fort Lauderdale-West             33,072
                            Palm Beach, FL.
33740....................  Monroe, LA................             30,431
33860....................  Montgomery, AL............             30,817
35300....................  New Haven-Milford, CT.....             27,529
35380....................  New Orleans-Metairie, LA..             29,562
35620....................  New York-Newark-Jersey                 31,076
                            City, NY-NJ-PA.
36420....................  Oklahoma City, OK.........             27,267
36740....................  Orlando-Kissimmee-Sanford,             29,259
                            FL.
37860....................  Pensacola-Ferry Pass-                  29,485
                            Brent, FL.
38300....................  Pittsburgh, PA............             30,886
38940....................  Port St. Lucie, FL........             30,423
39340....................  Provo-Orem, UT............             28,852
39740....................  Reading, PA...............             28,679
42680....................  Sebastian-Vero Beach, FL..             28,015
45300....................  Tampa-St. Petersburg-                  32,424
                            Clearwater, FL.
45780....................  Toledo, OH................             28,658
46220....................  Tuscaloosa, AL............             31,789
46340....................  Tyler, TX.................             30,955
------------------------------------------------------------------------


                Table 2--CJR Voluntary Participation MSAs
------------------------------------------------------------------------
                                                         Wage-adjusted
           MSA                      MSA name            episode payments
                                                             (in $)
------------------------------------------------------------------------
10740....................  Albuquerque, NM...........            $25,892
12020....................  Athens-Clarke County, GA..             25,394
13900....................  Bismarck, ND..............             22,479
14500....................  Boulder, CO...............             24,115
15380....................  Buffalo-Cheektowaga-                   26,037
                            Niagara Falls, NY.
16020....................  Cape Girardeau, MO-IL.....             24,564
16180....................  Carson City, NV...........             26,128
16740....................  Charlotte-Concord-                     26,736
                            Gastonia, NC-SC.
17860....................  Columbia, MO..............             25,558
19500....................  Decatur, IL...............             24,846
19740....................  Denver-Aurora-Lakewood, CO             26,119
20500....................  Durham-Chapel Hill, NC....             25,151
22420....................  Flint, MI.................             24,807
23580....................  Gainesville, GA...........             23,009
26900....................  Indianapolis-Carmel-                   25,841
                            Anderson, IN.
28140....................  Kansas City, MO-KS........             27,261
30700....................  Lincoln, NE...............             27,173
31540....................  Madison, WI...............             24,442
33340....................  Milwaukee-Waukesha-West                25,698
                            Allis, WI.
33700....................  Modesto, CA...............             24,819
34940....................  Naples-Immokalee-Marco                 27,120
                            Island, FL.
34980....................  Nashville-Davidson--                   26,880
                            Murfreesboro--Franklin,
                            TN.
35980....................  Norwich-New London, CT....             25,780
36260....................  Ogden-Clearfield, UT......             25,472
38900....................  Portland-Vancouver-                    22,604
                            Hillsboro, OR-WA.
40980....................  Saginaw, MI...............             25,488
41180....................  St. Louis, MO-IL..........             26,425
41860....................  San Francisco-Oakland-                 23,716
                            Hayward, CA.
42660....................  Seattle-Tacoma-Bellevue,               23,669
                            WA.
43780....................  South Bend-Mishawaka, IN-              23,143
                            MI.
44420....................  Staunton-Waynesboro, VA...             25,539
45820....................  Topeka, KS................             24,273
48620....................  Wichita, KS...............             25,945
------------------------------------------------------------------------


[[Page 57078]]


 Table 3--Low-Volume Hospitals Located in the Mandatory MSAs Eligible To
                 Opt-In During Voluntary Election Period
------------------------------------------------------------------------
         CCN            Hospital name         MSA           MSA title
------------------------------------------------------------------------
010034..............  Community                  33860  Montgomery, AL.
                       Hospital, Inc.
010062..............  Wiregrass                  20020  Dothan, AL.
                       Medical Center.
010095..............  Hale County                46220  Tuscaloosa, AL.
                       Hospital.
010097..............  Elmore Community           33860  Montgomery, AL.
                       Hospital.
010108..............  Prattville                 33860  Montgomery, AL.
                       Baptist
                       Hospital.
010109..............  Pickens County             46220  Tuscaloosa, AL.
                       Medical Center.
010149..............  Baptist Medical            33860  Montgomery, AL.
                       Center East.
040132..............  Leo N. Levi                26300  Hot Springs, AR.
                       National
                       Arthritis
                       Hospital.
050040..............  LAC-Olive View-            31080  Los Angeles-Long
                       UCLA Medical                      Beach-Anaheim,
                       Center.                           CA.
050091..............  Community                  31080  Los Angeles-Long
                       Hospital of                       Beach-Anaheim,
                       Huntington Park.                  CA.
050137..............  Kaiser                     31080  Los Angeles-Long
                       Foundation                        Beach-Anaheim,
                       Hospital-                         CA.
                       Panorama City.
050138..............  Kaiser                     31080  Los Angeles-Long
                       Foundation                        Beach-Anaheim,
                       Hospital-Los                      CA.
                       Angeles.
050139..............  Kaiser                     31080  Los Angeles-Long
                       Foundation                        Beach-Anaheim,
                       Hospital-Downey.                  CA.
050158..............  Encino Hospital            31080  Los Angeles-Long
                       Medical Center.                   Beach-Anaheim,
                                                         CA.
050205..............  Glendora                   31080  Los Angeles-Long
                       Community                         Beach-Anaheim,
                       Hospital.                         CA.
050373..............  LAC + USC                  31080  Los Angeles-Long
                       Medical Center.                   Beach-Anaheim,
                                                         CA.
050378..............  Pacifica                   31080  Los Angeles-Long
                       Hospital of the                   Beach-Anaheim,
                       Valley.                           CA.
050411..............  Kaiser                     31080  Los Angeles-Long
                       Foundation                        Beach-Anaheim,
                       Hospital-South                    CA.
                       Bay.
050468..............  Memorial                   31080  Los Angeles-Long
                       Hospital of                       Beach-Anaheim,
                       Gardena.                          CA.
050543..............  College Hospital           31080  Los Angeles-Long
                       Costa Mesa.                       Beach-Anaheim,
                                                         CA.
050548..............  Fairview                   31080  Los Angeles-Long
                       Developmental                     Beach-Anaheim,
                       Center.                           CA.
050552..............  Motion Picture &           31080  Los Angeles-Long
                       Television                        Beach-Anaheim,
                       Hospital.                         CA.
050561..............  Kaiser                     31080  Los Angeles-Long
                       Foundation                        Beach-Anaheim,
                       Hospital-West                     CA.
                       Los Angeles.
050609..............  Kaiser                     31080  Los Angeles-Long
                       Foundation                        Beach-Anaheim,
                       Hospital-Orange                   CA.
                       County-Anaheim.
050641..............  East Los Angeles           31080  Los Angeles-Long
                       Doctors                           Beach-Anaheim,
                       Hospital.                         CA.
050677..............  Kaiser                     31080  Los Angeles-Long
                       Foundation                        Beach-Anaheim,
                       Hospital-                         CA.
                       Woodland Hills.
050723..............  Kaiser                     31080  Los Angeles-Long
                       Foundation                        Beach-Anaheim,
                       Hospital-                         CA.
                       Baldwin Park.
050738..............  Greater El Monte           31080  Los Angeles-Long
                       Community                         Beach-Anaheim,
                       Hospital.                         CA.
050744..............  Anaheim Global             31080  Los Angeles-Long
                       Medical Center.                   Beach-Anaheim,
                                                         CA.
050747..............  South Coast                31080  Los Angeles-Long
                       Global Medical                    Beach-Anaheim,
                       Center.                           CA.
050751..............  Miracle Mile               31080  Los Angeles-Long
                       Medical Center.                   Beach-Anaheim,
                                                         CA.
050771..............  Coast Plaza                31080  Los Angeles-Long
                       Hospital.                         Beach-Anaheim,
                                                         CA.
050776..............  College Medical            31080  Los Angeles-Long
                       Center.                           Beach-Anaheim,
                                                         CA.
050779..............  Martin Luther              31080  Los Angeles-Long
                       King Jr.                          Beach-Anaheim,
                       Community                         CA.
                       Hospital.
050780..............  Foothill Medical           31080  Los Angeles-Long
                       Center.                           Beach-Anaheim,
                                                         CA.
050782..............  Casa Colina                31080  Los Angeles-Long
                       Hospital.                         Beach-Anaheim,
                                                         CA.
070038..............  Connecticut                35300  New Haven-
                       Hospice Inc.                      Milford, CT.
070039..............  Masonic Home and           35300  New Haven-
                       Hospital.                         Milford, CT.
100048..............  Jay Hospital....           37860  Pensacola-Ferry
                                                         Pass-Brent, FL.
100130..............  Lakeside Medical           33100  Miami-Fort
                       Center.                           Lauderdale-West
                                                         Palm Beach, FL.
100240..............  Anne Bates Leach           33100  Miami-Fort
                       Eye Hospital.                     Lauderdale-West
                                                         Palm Beach, FL.
100277..............  Douglas Gardens            33100  Miami-Fort
                       Hospital.                         Lauderdale-West
                                                         Palm Beach, FL.
100320..............  Poinciana                  36740  Orlando-
                       Medical Center.                   Kissimmee-
                                                         Sanford, FL.
100326..............  Promise Hospital           33100  Miami-Fort
                       of Miami.                         Lauderdale-West
                                                         Palm Beach, FL.
190005..............  University                 35380  New Orleans-
                       Medical Center                    Metairie, LA.
                       New Orleans.
190011..............  University                 33740  Monroe, LA.
                       Health Conway.
190079..............  St. Charles                35380  New Orleans-
                       Parish Hospital.                  Metairie, LA.
190245..............  Monroe Surgical            33740  Monroe, LA.
                       Hospital.
190300..............  St. Charles                35380  New Orleans-
                       Surgical                          Metairie, LA.
                       Hospital LLC.
190302..............  Omega Hospital             35380  New Orleans-
                       LLC.                              Metairie, LA.
190308..............  St. Bernard                35380  New Orleans-
                       Parish Hospital.                  Metairie, LA.
190313..............  New Orleans East           35380  New Orleans-
                       Hospital.                         Metairie, LA.
250012..............  Alliance                   32820  Memphis, TN-MS-
                       Healthcare                        AR.
                       System.
250126..............  North Oak                  32820  Memphis, TN-MS-
                       Regional                          AR.
                       Medical Center.
250167..............  Methodist Olive            32820  Memphis, TN-MS-
                       Branch Hospital.                  AR.
310058..............  Bergen Regional            35620  New York-Newark-
                       Medical Center.                   Jersey City, NY-
                                                         NJ-PA.
330080..............  Lincoln Medical            35620  New York-Newark-
                       & Mental Health                   Jersey City, NY-
                       Center.                           NJ-PA.
330086..............  Montefiore Mount           35620  New York-Newark-
                       Vernon Hospital.                  Jersey City, NY-
                                                         NJ-PA.
330100..............  New York Eye and           35620  New York-Newark-
                       Ear Infirmary.                    Jersey City, NY-
                                                         NJ-PA.
330199..............  Metropolitan               35620  New York-Newark-
                       Hospital Center.                  Jersey City, NY-
                                                         NJ-PA.
330231..............  Queens Hospital            35620  New York-Newark-
                       Center.                           Jersey City, NY-
                                                         NJ-PA.
330233..............  Brookdale                  35620  New York-Newark-
                       Hospital                          Jersey City, NY-
                       Medical Center.                   NJ-PA.
330240..............  Harlem Hospital            35620  New York-Newark-
                       Center.                           Jersey City, NY-
                                                         NJ-PA.
330385..............  North Central              35620  New York-Newark-
                       Bronx Hospital.                   Jersey City, NY-
                                                         NJ-PA.
330396..............  Woodhull Medical           35620  New York-Newark-
                       and Mental                        Jersey City, NY-
                       Health Center.                    NJ-PA.
330397..............  Interfaith                 35620  New York-Newark-
                       Medical Center.                   Jersey City, NY-
                                                         NJ-PA.
330399..............  St. Barnabas               35620  New York-Newark-
                       Hospital.                         Jersey City, NY-
                                                         NJ-PA.
330405..............  Helen Hayes                35620  New York-Newark-
                       Hospital.                         Jersey City, NY-
                                                         NJ-PA.
360241..............  Edwin Shaw Rehab           10420  Akron, OH.
                       Institute.
370011..............  Mercy Hospital             36420  Oklahoma City,
                       El Reno Inc.                      OK
370158..............  Purcell                    36420  Oklahoma City,
                       Municipal                         OK.
                       Hospital.

[[Page 57079]]

 
370199..............  Lakeside Women's           36420  Oklahoma City,
                       Hospital A                        OK.
                       Member of
                       INTEGRIS Health.
370206..............  Oklahoma Spine             36420  Oklahoma City,
                       Hospital.                         OK.
370215..............  Oklahoma Heart             36420  Oklahoma City,
                       Hospital.                         OK.
370234..............  Oklahoma Heart             36420  Oklahoma City,
                       Hospital South.                   OK.
390184..............  Highlands                  38300  Pittsburgh, PA.
                       Hospital.
390217..............  Excela Health              38300  Pittsburgh, PA.
                       Frick Hospital.
420057..............  McLeod Medical             22500  Florence, SC.
                       Center-
                       Darlington.
420066..............  Lake City                  22500  Florence, SC.
                       Community
                       Hospital.
440131..............  Baptist Memorial           32820  Memphis, TN-MS-
                       Hospital Tipton.                  AR.
450143..............  Seton Smithville           12420  Austin-Round
                       Regional                          Rock, TX.
                       Hospital.
450605..............  Care Regional              18580  Corpus Christi,
                       Medical Center.                   TX.
450690..............  University of              46340  Tyler, TX.
                       Texas Health
                       Science Center
                       at Tyler.
450865..............  Seton Southwest            12420  Austin-Round
                       Hospital.                         Rock, TX.
460043..............  Orem Community             39340  Provo-Orem, UT.
                       Hospital.
670087..............  Baylor Scott &             12420  Austin-Round
                       White Emergency                   Rock, TX.
                       Medical Center-
                       Cedar Park.
------------------------------------------------------------------------

    As stated previously in this section, we proposed a one-time 
participation election period for all hospitals with a CCN primary 
address located in the voluntary participation MSAs listed in Table 2, 
low-volume hospitals specified in Table 3, and rural hospitals. Based 
on the anticipated timing for when this final rule implementing this 
proposal would be published, we proposed that the voluntary 
participation election period would begin January 1, 2018, and would 
end January 31, 2018. We noted that we must receive the participation 
election letter no later than January 31, 2018. We proposed that the 
hospital's participation election letter would serve as the model 
participant agreement. Voluntary participation would begin February 1, 
2018, and continue through the end of the CJR model, unless sooner 
terminated. Thus, participant hospitals located in the voluntary 
participation MSAs listed in Table 2, the low-volume hospitals 
specified in Table 3, and the rural hospitals that elect voluntary 
participation would continue in the CJR model without any disruption to 
episodes attributed to performance year 3, which begins January 1, 
2018. Participant hospitals located in the voluntary participation MSAs 
listed in Table 2, the low-volume hospitals specified in Table 3, and 
the rural hospitals that do not elect voluntary participation would be 
withdrawn from the model effective February 1, 2018, and all of their 
performance year 3 episodes up to and including that date would be 
canceled, so that these hospitals would not be subject to a 
reconciliation payment or repayment amount for performance year 3. We 
proposed to implement our proposed opt-in approach in this manner as a 
way to balance several goals, including establishing a uniform time 
period for hospitals to make a voluntary participation election, 
avoiding disruption of episodes for hospitals that elect to continue 
their participation in the CJR model, and preventing confusion about 
whether a hospital is participating in performance year 3 of the model. 
Specifically, we considered whether adopting a voluntary election 
period that ended prior to the start of performance year 3 would be 
less confusing and less administratively burdensome in terms of whether 
a hospital is participating in performance year 3. To implement this 
approach, the voluntary participation election period would have to 
close by December 31, 2017, such that each hospital would have made its 
determination regarding participation in performance year 3 before the 
start of performance year 3 (note that episodes attributed to 
performance year 3 would still be canceled under this alternative 
approach for eligible hospitals that do not make a participation 
election). We noted that because the voluntary election period under 
this approach would conclude in advance of the relevant CJR model 
performance year, this approach could simplify our administration of 
performance year 3 by establishing in advance of performance year 3 
whether a hospital would be a participant hospital for the totality of 
performance year 3. However, given the timing of the proposed 
rulemaking, we were not confident that hospitals would have sufficient 
time to make a voluntary participation election by December 31, 2017. 
Thus, we proposed that the voluntary participation election period 
would occur during the first month of performance year 3 (that is, 
throughout January 2018) and would apply prospectively beginning on 
February 1, 2018. We believed this approach would best ensure adequate 
time for hospitals to make a participation election while minimizing 
the time period during which participation in performance year 3 
remains mandatory for all eligible hospitals in the 67 selected MSAs. 
We noted that based on timing considerations, including potential 
changes to the anticipated date of publication of the final rule and 
interim final rule with comment period, we may modify the dates of the 
voluntary participation election period and make conforming changes to 
the dates for voluntary participation in performance year 3. We sought 
comment on the proposed voluntary participation election period, 
including whether we should instead require the participation election 
to be made by December 31, 2017 (that is, prior to the start of 
performance year 3) or if a different or later voluntary election 
period may be preferable.
    Comment: Some commenters requested that we establish multiple opt-
in periods. Several commenters requested an additional opt-in period 
after we announce new voluntary bundled payment initiatives, while 
others requested an annual opt-in process. Commenters also noted that 
they believe hospitals in the voluntary MSAs, as well as low volume and 
rural hospitals, do not have enough information to make an informed 
decision about participation in CJR at this time due to the following 
reasons: (1) We have not yet released details of the next voluntary 
bundled payment initiative; (2) January 1 through 31, 2018 is too soon 
for hospitals to make an educated decision; (3) it is unclear what, if 
any, revisions will be made to the CJR

[[Page 57080]]

pricing methodology if we finalize the proposed OPPS policy to remove 
total knee arthroplasty (TKA) from the inpatient-only (IPO) list; and 
(4) commenters believe that offering multiple opt-in periods will 
result in a great number of hospitals electing to remain in CJR.
    Response: We appreciate commenters' concern that it may be more 
difficult for hospitals to make a participation decision during January 
2018 given the uncertain factors that commenters provided. We 
understand that hospitals facing uncertainty for these reasons or 
others may choose not to opt-in based on that uncertainty. However, we 
believe that offering an opt-in period in January of 2018 is a 
reasonable timeframe, given the following reasons. First, hospitals 
opting-in to the model will have already been participants in CJR for 
nearly 2 years at that time. Participant hospitals have been receiving 
episode data and have received initial reconciliation results, and in 
many cases an initial reconciliation payment, for the first performance 
year of CJR. Second, as discussed in section II.I. of this final rule 
and interim final rule with comment period, we plan to address 
commenters' concerns about the potential impact of the removal of TKA 
from the IPO list in future rulemaking, as appropriate. Finally, we 
believe that a one-time opt-in process minimizes potential patient 
selection and gaming issues, as an annual opt-in process may result in 
hospitals only opting-in to the model if they are earning 
reconciliation payments. We also believe that a one-time opt-in process 
reduces confusion for hospitals regarding participation in the CJR 
model. We will publish a list on the CMS Web site of all hospitals 
participating in the CJR model for performance years 3 through 5 as of 
February 1, 2018. Therefore, we are finalizing our proposal to offer a 
one-time opt-in period for all participant hospitals in the 33 
voluntary MSAs and rural and low volume hospitals in all 67 MSAs. In 
conjunction with the publication of this final rule and interim final 
rule with comment period, we will post on our Web site the list of 
rural hospitals we have identified as rural that will be automatically 
excluded from the CJR model if they do not submit an opt-in election as 
specified in this final rule and interim final rule with comment 
period. CJR hospitals not shown on this list who believe they should be 
considered rural should contact the CJR model at [email protected].
    Comment: A commenter was concerned about how the opt-in process 
would affect hospitals that have submitted a rural reclassification 
request prior to January 31, 2018 that has not yet been approved by 
CMS. The commenter requested that CMS notify all current CJR hospitals 
about the opt-in process, use the date the reclassification request was 
submitted to CMS to determine whether a hospital is rural, and offer a 
30-day appeals process for hospitals with pending rural 
reclassification requests.
    Response: We appreciate the commenter's recognition of the 
operational challenges involved in identifying which hospitals are 
rural hospitals for purposes of the model. For this reason, we proposed 
that we would consider a hospital's rural status as of January 31, 2018 
for purposes of determining which hospitals are required to participate 
in CJR or are eligible for voluntary participation. We proposed, and 
are now notifying all CJR hospitals (and the public in general) about, 
the opt-in process. We also have included information about the 
proposed process, which we are now finalizing, in communications with 
current CJR participant hospitals. We do not believe it is appropriate, 
or in the best interest of rural hospitals, to offer an appeals process 
or additional opt-in periods for hospitals that reclassify to rural 
status, for the following reasons. First, we seek to minimize confusion 
as to which hospitals are in CJR and to avoid creating further 
incentives for hospitals to reclassify for reasons solely related to 
the CJR model. Second, any participant hospitals that are not 
reclassified as rural as of January 31, 2018 will have been 
participating in the CJR model since April 1, 2016 without rural 
status. Finally, participant hospitals have already had an incentive 
under the model to reclassify to rural, given that the CJR model has 
offered more limited financial risk for rural hospitals through lower 
stop-loss limits since downside risk began in year 2. We note that any 
participant hospital that reclassifies to rural after the opt-in period 
would have lower stop-loss limits for the remainder of the model. Thus, 
to more effectively operate the model, and to make it clear which 
hospitals will remain in CJR for performance years 3 through 5, we are 
finalizing our proposal to define rural hospitals for purposes of the 
model as those hospitals that have rural status as of the final day of 
the voluntary participation election period (January 31, 2018).
    To specify their participation election, we proposed that hospitals 
would submit a written participation election letter to CMS in a form 
and manner specified by CMS. We noted that we intend to provide 
templates that can easily be completed and submitted in order to limit 
the burden on hospitals seeking to opt-in. If a hospital with a CCN 
primary address located in the voluntary participation MSAs or a low-
volume or rural hospital in the mandatory participation MSAs does not 
submit a written participation election letter by January 31, 2018, the 
hospital's participation in performance year 3 would end, all of its 
performance year 3 episodes would be canceled, and it would not be 
included in the CJR model for performance years 4 and 5.
    We proposed a number of requirements for the participation election 
letter and that the hospital's participation election letter would 
serve as the model participant agreement. First, we proposed that the 
participation election letter must include all of the following:
     Hospital Name.
     Hospital Address.
     Hospital CCN.
     Hospital contact name, telephone number, and email 
address.
     If selecting the Advanced APM track, attestation of CEHRT 
use as defined in Sec.  414.1305.
    Second, we proposed that the participation election letter must 
include a certification in a form and manner specific by CMS that--
     The hospital will comply with all requirements of the CJR 
model (that is, 42 CFR part 510) and all other laws and regulations 
that are applicable to its participation in the CJR model; and
     Any data or information submitted to CMS will be accurate, 
complete and truthful, including, but not limited to, the participation 
election letter and any quality data or other information that CMS uses 
in reconciliation processes or payment calculations or both.
    We solicited feedback on this proposed certification requirement, 
including whether the certification should include different or 
additional attestations.
    Finally, we proposed that the participation election letter be 
signed by the hospital administrator, chief financial officer (CFO) or 
chief executive officer (CEO).
    We proposed that, if the hospital's participation election letter 
meets these criteria, we would accept the hospital's participation 
election. Once a participation election for the CJR model is made and 
is effective, the participant hospital would be required to participate 
in all activities related to the CJR model for the remainder of the CJR 
model unless the hospital's participation is terminated sooner.

[[Page 57081]]

    Comment: Several commenters requested that we make the opt-in 
template available as soon as possible, and that the template be clear 
and concise, minimizing the administrative burden on hospitals and 
limiting confusion.
    Response: We are finalizing the proposed elements of the 
participation election letter with one modification. We will not 
require hospitals to attest to CEHRT use in the opt-in template, as we 
currently request that information from hospitals on an annual basis, 
along with their clinician financial arrangements list, when they elect 
a track in CJR for purposes of Advanced APM status consistent with 
Sec.  510.120. In order to minimize burden and limit confusion for 
hospitals as to whether attesting to CEHRT use in the opt-in template 
would supersede other information provided to use regarding CEHRT use, 
we are removing that item from the opt-in template. We note that the 
opt-in template for hospitals eligible for voluntary participation in 
CJR has been posted on the CMS public Web site at https://innovation.cms.gov/initiatives/cjr in conjunction with this final rule 
and interim final rule with comment period.
    We noted that episodes end 90 days after discharge for the CJR 
model and episodes that do not start and end in the same calendar year 
will be attributed to the following performance year. For example, 
episodes that start in October 2017 and do not end on or before 
December 31, 2017 are attributed to performance year 3. Our methodology 
for attributing these episodes to the subsequent performance year would 
be problematic in cases where a hospital with a CCN primary address 
located in a voluntary participation MSA or a rural hospital or a low-
volume hospital, as specified by CMS, has not elected to voluntarily 
continue participating in the model. Therefore, for a hospital with a 
CCN primary address located in a voluntary participation MSA, or a 
rural hospital or a low-volume hospital, as specified by CMS, that does 
not elect voluntary participation during the one-time voluntary 
participation election period, we proposed that all episodes attributed 
to performance year 3 for that hospital would be canceled and would not 
be included in payment reconciliation. Such hospitals would have their 
participation in the CJR model withdrawn effective February 1, 2018. We 
noted that this proposal is consistent with our policy for treatment of 
episodes that have not ended by or on the last day of performance year 
5 and cannot be included in performance year 5 reconciliation due to 
the end of the model (see Table 8 of the CJR model final rule (80 FR 
73326)).
    We stated that we believe our proposed opt-in approach to allow for 
voluntary participation in the CJR model by certain hospitals would be 
less burdensome on such hospitals than a potential alternative approach 
of requiring hospitals to opt-out of the model. In developing the 
proposal to allow eligible hospitals located in the proposed 33 
voluntary participation MSAs and low-volume and rural hospitals located 
in the 34 mandatory participation MSAs to elect voluntary 
participation, we considered whether to propose that hospitals would 
have to make an affirmative voluntary participation election (that is, 
an opt-in approach) or to propose that these hospitals would continue 
to be required to participate in the CJR model unless written 
notification was given to CMS to withdraw the hospital from the CJR 
model (that is, an opt-out approach). We stated that we believe an opt-
in approach would be less burdensome on hospitals, because it would not 
require participation in the CJR model for hospitals located in the 
proposed 33 voluntary participation MSAs and for low-volume and rural 
hospitals located in the 34 mandatory participation MSAs unless the 
hospital affirmatively chose it. Further, we stated that we believe 
requiring an affirmative opt-in election would result in less ambiguity 
about a hospital's participation intentions as compared to an opt-out 
approach. Specifically, with an opt-in approach, a hospital's 
participation election would document each hospital's choice, whereas 
under an opt-out approach there could be instances where hospitals fail 
to timely notify CMS of their desire to withdraw from participation and 
are thus included in the model and subject to potential repayment 
amounts. For these reasons, we proposed an opt-in approach. We sought 
comment on this proposal and the alternative considered.
    Comment: A commenter requested that CMS clarify whether hospitals 
are allowed to terminate participation in CJR. The commenter noted that 
although our proposal for the opt-in process is clear, the language in 
the proposed rule does not clearly state whether a hospital could opt-
in to CJR and later opt-out of the model after January 2018. Another 
commenter requested clarification as to whether a hospital that opts-in 
to CJR may later withdraw from the model through participation in a new 
voluntary bundled payment initiative.
    Response: Under our proposed policy, all hospitals that opt-in to 
the model as of January 31, 2018 would be required to participate 
through the end of performance year 5 (episodes that end by December 
31, 2020), unless such participation were terminated in accordance with 
Sec.  510.410 or Sec.  510.900, regardless of the hospital's 
participation in a new voluntary bundled payment initiative.
    A summary of the finalized changes to the CJR model participation 
requirements is shown in Table 4.
    Summary of Final Decisions: We are finalizing our proposals to 
reduce the number of MSAs where all IPPS hospitals are required to 
participate in CJR from 67 to 34, and to allow for voluntary 
participation for all IPPS participant hospitals in the remaining 33 
MSAs. We are also finalizing our proposal that rural hospitals (as 
defined at Sec.  510.2 as of January 31, 2018) and low volume 
hospitals, defined as hospitals with fewer than 20 episodes in the 
historical baseline period used to create the PY1 target prices, in the 
34 mandatory participation MSAs are not required to participate in the 
model but may opt-in to the model. We are finalizing our proposal to 
offer a single opt-in period from January 1, 2018 through January 31, 
2018. Table 4 provides a summary of our final participation 
requirements.
    These policies are codified at Sec. Sec.  510.2, 510.105, and 
510.115.

                                           Table 4--Participation Requirements for Hospitals in the CJR Model
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Required to participate as of                                             Participation        Election
                                                     February 1, 2018            May elect voluntary participation     election period    effective date
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Mandatory Participation MSAs
--------------------------------------------------------------------------------------------------------------------------------------------------------
All IPPS participant hospitals, except     Yes................................  No................................                   n/a             n/a
 rural and low-volume *.
Rural hospitals *........................  No.................................  Yes...............................    1/1/2018-1/31/2018        2/1/2018

[[Page 57082]]

 
Low-volume hospitals (see Table 3).......  No.................................  Yes...............................    1/1/2018-1/31/2018        2/1/2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Voluntary Participation MSAs
--------------------------------------------------------------------------------------------------------------------------------------------------------
All IPPS participant hospitals...........  No.................................  Yes...............................    1/1/2018-1/31/2018        2/1/2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Note: Participation requirements are based on the CCN status of the hospital as of January 31, 2018. A change in rural status after the voluntary
  election period does not affect the participation requirements.

2. Proposed Codification of CJR Model-Related Evaluation Participation 
Requirements
    We note that for the CJR model evaluation, the data collection 
methods and key evaluation research questions under the proposed 
reformulated approach (that is, the proposal for voluntary opt-in 
elections discussed in section III.B.1. of the proposed rule (82 FR 
39313)) would remain similar to the approach presented in the CJR model 
final rule. The evaluation methodology for the CJR model would be 
consistent with the standard Innovation Center approaches we have taken 
in other voluntary models such as the Pioneer Accountable Care 
Organization (ACO) Model. Cooperation and participation in model-
related activities by all hospitals that participate in the CJR model 
would continue to be extremely important to the evaluation. Therefore, 
with respect to model-related evaluation activities, we proposed to add 
provisions in Sec.  510.410(b)(1)(i)(G) to specify that CMS may take 
remedial action if a participant hospital, or one of its collaborators, 
collaboration agents, or downstream collaboration agents fails to 
participate in model-related evaluation activities conducted by CMS 
and/or its contractors for any performance year in which the hospital 
participates. We noted that we believe the addition of this provision 
would make participation and collaboration requirements for the CJR 
model evaluation clear to all participant hospitals and in particular 
to hospitals that are eligible to elect voluntary participation. We 
sought comment on our proposed regulatory change.
    Comment: A commenter requested clarification on our proposal, 
including how CMS will monitor hospitals for compliance, what the 
remedial actions will be, and if the evaluation requirements apply to 
collaborators as well.
    Response: In order to monitor whether hospitals comply with the 
model's evaluation requirements, we may do so through our existing 
monitoring activities, which include data analysis and other methods 
such as site visits and interviews, or through other methods. Under the 
existing CJR model regulations, we have numerous remedial actions 
available to us, should a hospital fail to comply with any of the model 
requirements. We believe that our ability to evaluate the CJR model is 
a crucial aspect of the model test, and therefore we are finalizing our 
proposal to add provisions to Sec.  510.410(b)(1)(i)(G) to specify that 
we may take remedial action if a CJR participant hospital, 
collaborator, collaboration agent, or downstream collaboration agent 
fails to comply with model-related evaluation activities. We refer 
readers to section Sec.  510.410(b)(2) of the CJR regulations for a 
list of potential remedial actions. Finally, we note that our 
regulations at Sec.  510.410 state that model requirements such as the 
addition of evaluation requirements apply to CJR collaborators as well 
as participant hospitals.
3. Comment Solicitation: Incentivizing Participation in the CJR Model
    In the August 17, 2017 proposed rule (82 FR 39310 through 39333), 
we proposed to make participation in the CJR model voluntary in 33 MSAs 
and for low-volume and rural hospitals in the remaining 34 MSAs via the 
proposed opt-in election policy discussed in section III.B.1 of the 
proposed rule (82 FR 39313). In order to keep hospitals in all MSAs 
selected for participation in the CJR model actively participating in 
the model, we solicited comment on ways to further incentivize eligible 
hospitals to elect to continue participating in the CJR model for the 
remaining years of the model and to further incentivize all participant 
hospitals to advance care improvements, innovation, and quality for 
beneficiaries throughout LEJR episodes.
    Comment: Commenters suggested a variety of ways that CMS could 
incentivize participation in the CJR model, and in bundled payment 
models in general, including: Allowing convener organizations, 
including medical device manufacturers, to participate in CJR; limiting 
model participation to entities that provide direct patient care; 
reducing the regional component of CJR target prices in performance 
years 3 through 5 of the model; setting target prices at the higher of 
the hospital-specific or regional amount; using MSAs instead of U.S. 
Census Divisions to establish regional pricing; avoiding rebasing 
prices near the beginning of the model; limiting the use of a national 
trend factor to avoid penalizing hospitals that have reduced episode 
spending under models like BPCI; including reconciliation and repayment 
amounts in target prices; including risk adjustment in the pricing 
methodology, including adjustment for socioeconomic factors; allowing 
gainsharing on a more frequent basis; excluding further procedures and 
diagnoses, such as cancer, from CJR model episodes; altering the 
pricing structure to ensure that high-performing hospitals are 
incentivized to remain in the model as it moves to regional pricing and 
baseline years are updated to include later years; allow hospitals to 
choose when they enter downside risk; annually evaluating whether 
models should include outpatient procedures; changing precedence rules 
to level the playing field for hospitals; broadening CJR to allow other 
entities such as physicians and non-IPPS providers such as inpatient 
rehabilitation facilities to initiate episodes and bear direct 
financial risk for episode spending; offering waivers of certain IRF 
payment policies to allow for additional flexibilities for post-acute 
care providers; and releasing baseline data and target prices in 
advance of model start dates.
    Response: We thank the commenters for their suggestions to 
incentivize participation in CJR and in bundled payment models in 
general. We note that we have considered and discussed some of these 
suggestions and issues in prior rulemaking that established the CJR 
model regulations (see 80 FR 73273). We will continue to consider

[[Page 57083]]

these options raised by commenters as we move forward with CJR and 
other models.
    Additionally, we noted in the August 17, 2017 proposed rule that, 
under the CJR refinements established in the January 3, 2017 EPM final 
rule, the total amount of gainsharing payments for a performance year 
paid to physicians, non-physician practitioners, physician group 
practices (PGPs), and non-physician practitioner group practices 
(NPPGPs) must not exceed 50 percent of the total Medicare approved 
amounts under the Physician Fee Schedule for items and services that 
are furnished to beneficiaries during episodes that occurred during the 
same performance year for which the CJR participant hospital accrued 
the internal cost savings or earned the reconciliation payment that 
comprises the gainsharing payment being made (Sec.  510.500(c)(4)). 
Distribution payments to these individuals and entities are similarly 
limited as specified in Sec.  510.505(b)(8), and downstream 
distribution payments are similarly limited as specified in Sec.  
510.506(b)(8). These program integrity safeguards, which are consistent 
with the gainsharing caps in other Innovation Center models, were 
included to avoid setting an inappropriate financial incentive that may 
result in stinting, steering or denial of medically necessary care (80 
FR 73415 and 73416). While we did not propose in the August 17, 2017 
proposed rule any changes to the gainsharing caps for these models, we 
noted that we had heard various opinions from stakeholders, including 
the Medicare Payment Advisory Commission (MedPAC), on the relative 
benefit of such limitations on gainsharing and in the proposed rule we 
solicited comment on this requirement and any alternative gainsharing 
caps that may be appropriate to apply to physicians, non-physician 
practitioners, PGPs, and NPPGPs.
    Comment: Several commenters supported the current 50 percent 
gainsharing cap. Other commenters offered a variety of recommendations 
for changing the gainsharing limitations, including: Increasing the 
frequency of gainsharing payments from hospitals to collaborators; 
increasing the gainsharing cap on physicians, non-physician 
practitioners, PGPs, and NPPGPs to 70 percent; granting hospitals 
increased flexibility in designing their respective gainsharing 
programs and determining the amount of savings to share with their 
collaborators; removing all gainsharing limits, noting that when 
surgeons coordinate with the hospital to provide efficient, high-
quality care that decreases cost, they should be able to fully share in 
the resulting cost reductions; providing more clarity on the 
applicability of the gainsharing policy; and coordinating unified 
guidance from CMS and the HHS Office of the Inspector General (OIG) 
relating to gainsharing and the model's fraud and abuse waivers, as 
well as providing a mechanism for hospitals to ask questions about the 
model's waivers.
    Response: We thank the commenters for their suggestions regarding 
gainsharing limitations and alternative gainsharing caps. We will 
continue to consider these issues raised by commenters as we move 
forward with CJR and other models.
    Comments on the waivers of fraud and abuse laws for the CJR model 
are beyond the scope of this rulemaking. Fraud and abuse waivers issued 
in connection with the CJR model are available at https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Fraud-and-Abuse-Waivers.html and on the OIG's Web site. No waivers of any fraud and 
abuse authorities are being issued in this final rule.

C. Maintaining ICD-CM Codes for Quality Measures

    In the CJR model final rule (80 FR 73474), we discussed how 
specific International Classification of Diseases (ICD)--Clinical 
Modifications (CM) procedure codes define group of procedures included 
in the Hospital-level risk-standardized complication rate (RSCR) 
following elective primary total hip arthroplasty (THA) and/or total 
knee arthroplasty (TKA) (NQF #1550) (Hip/Knee Complications) measure. 
In discussing quality measures in general, the ICD-CM codes relative to 
defining a measure cohort are updated annually and are subject to 
change. For example, in the EPM final rule (82 FR 389), we itemized 
specific ICD-9-CM and ICD-10-CM codes for Hip/Knee Complications 
measure. As quality measures are refined and maintained, the ICD-CM 
code values used to identify the relevant diagnosis and/or procedures 
included in quality measures can be updated. For example, CMS' Center 
for Clinical Standards and Quality (CCSQ) has recently updated the list 
of ICD-10 codes used to identify procedures included in the Hip/Knee 
Complications measure. We did not intend for our preamble discussions 
of certain ICD-CM codes used, for example, to identify procedures 
included in the Hip/Knee Complications measures, and therefore the PRO 
cohorts for the CJR model, to set a policy that would define the 
relevant cohorts for the entirety of the CJR model. We should have also 
directed readers to look for the most current codes on the CMS quality 
Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. 
To ensure that model participants are aware of periodic ICD-CM code 
updates to the Hip/Knee Complications measure, we proposed to clarify 
that participants must use the applicable ICD-CM code set that is 
updated and released to the public each calendar year in April by CCSQ 
and posted on the Hospital Quality Initiative Measure Methodology Web 
site (https://www.cms.gov/medicare/Quality-Initiatives-Patient-
Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html) 
for purposes of reporting each of those measures.
    CMS relies on the National Quality Forum (NQF) measure maintenance 
update and review processes to update substantive aspects of measures 
every 3 years. Through NQF's measure maintenance process, NQF endorsed 
measures are sometimes updated to incorporate changes that we believe 
do not substantially change the nature of the measures. Examples of 
such changes include updated diagnosis or procedures codes, changes to 
patient population, definitions, or extension of the measure 
endorsement to apply to other settings. We believe these types of 
maintenance changes are distinct from more substantive changes and do 
not require the use of the agency's regulatory process used to update 
more detailed aspects of quality measures.
    Final Decision: We did not receive any comments regarding this 
section. Therefore, we are finalizing the proposal without 
modification.

D. Clarification of CJR Reconciliation Following Hospital 
Reorganization Event

    In the CJR model final rule (80 FR 73348) rule, we discussed our 
method of setting target prices using all historical episodes that 
would represent our best estimate of historical volume and payments for 
participant hospitals when an acquisition, merger, divestiture, or 
other reorganization results in a hospital with a new CCN. When a 
reorganization event occurs during a performance year, CMS updates the 
quality-adjusted episode target prices for the new or surviving 
participant hospital (Sec.  510.300(b)(4)). Following the end of a 
performance year, CMS performs annual reconciliation calculations in 
accordance with the provisions established in Sec.  510.305. The annual 
reconciliation calculations are specific

[[Page 57084]]

to the episodes attributable to each participant hospital entity for 
that performance year. The applicable quality-adjusted episode target 
price for such episodes is the quality-adjusted episode target price 
that applies to the episode type as of the anchor hospitalization 
admission date (Sec.  510.300(a)(3)). For example, if during a 
performance year, two participant hospitals (Hospital A and Hospital B) 
merge under the CCN of one of those two participant hospital's CCN 
(Hospital B's CCN), (assuming no other considerations apply) three 
initial (and three subsequent) annual reconciliation calculations for 
that performance year are performed: An initial (and subsequent) 
reconciliation for Hospital A for the episodes where the anchor 
hospitalization admission occurred prior to the merger (as determined 
by the CCN on the IPPS claim), using Hospital A's episode target price 
for that time period; an initial (and subsequent) reconciliation for 
Hospital B for the episodes where anchor hospitalization admission 
occurred before the merger (as determined by the CCN on the IPPS 
claim), using Hospital B's episode target price for that time period; 
and an initial (and subsequent) reconciliation for the post-merger 
entity (merged Hospitals A and B) for the episodes where anchor 
hospitalization admission occurred on or after the merger's effective 
date, using the episode target price for that time period. 
Reorganization events that involve a CJR participant hospital and a 
hospital that is not participating in the CJR model and result in the 
new organization operating under the CJR participant hospital's CCN, 
would not affect the reconciliation for the CJR participant hospital 
for episodes that initiate before the effective date of the 
reorganization event. Episodes that initiate after such reorganization 
event would be subject to an updated quality-adjusted episode target 
price that is based on historical episodes for the CJR participant 
hospital which would include historical episode expenditures for all 
hospitals that are integrated under the surviving CCN. These policies 
have been in effect since the start of the CJR model on April 1, 2016. 
To further clarify this policy for the CJR model, we proposed to add a 
provision specifying that separate reconciliation calculations are 
performed for episodes that occur before and after a reorganization 
that results in a hospital with a new CCN at Sec.  510.305(d)(1). We 
noted that we believe this clarification would increase transparency 
and understanding of the payment reconciliation processes for the CJR 
model. We sought comment on this proposal.
    Comment: We received no comments on our proposal.
    Response: We will finalize this proposal without modification. We 
will continue to perform two reconciliation calculations for hospitals 
that undergo a merger, consistent with our existing regulations.

E. Proposed Adjustment to the Pricing Calculation for the CJR 
Telehealth HCPCS Codes To Include the Facility PE Values

    In the CJR model final rule (80 FR 73450), we established 9 HCPCS 
G-codes to report home telehealth evaluation and management (E/M) 
visits furnished under the CJR telehealth waiver as displayed in Table 
5. These codes have been payable for CJR model beneficiaries since the 
CJR model began on April 1, 2016. Pricing for these 9 codes is updated 
each calendar year to reflect the work and malpractice (MP) relative 
value units (RVUs) for the comparable office and other outpatient E/M 
visit codes on the Medicare Physician Fee Schedule (MPFS). As we stated 
in the CJR model final rule (80 FR 73450), in finalizing this pricing 
method for these codes, we did not include the practice expense (PE) 
RVUs of the comparable office and other outpatient E/M visit codes in 
the payment rate for these unique CJR model services, based on the 
belief that practice expenses incurred to furnish these services are 
marginal or are paid for through other MPFS services. However, since 
the publication of the CJR model final rule, stakeholders have 
expressed concern that the zero value assigned to the PE RVUs for these 
codes results in inaccurate pricing. Stakeholders assert that there are 
additional costs related to the delivery of telehealth services under 
the CJR model such as maintaining the telecommunications equipment, 
software and security and that, while these practice expense costs are 
not equivalent to in-person service delivery costs, they are greater 
than zero. In considering the pricing concerns voiced by stakeholders, 
we recognized that there are resource costs in practice expense for 
telehealth services furnished remotely. However, we did not believe the 
current PE methodology and data accurately accounted for these costs 
relative to the PE resource costs for other services. This belief 
previously led us to assign zero PE RVUs in valuing these services, but 
because we recognized that there are some costs that were not being 
accounted for by the current pricing for these CJR model codes, we 
believed an alternative to assigning zero PE RVUs would be to use the 
facility PE RVUs for the analogous in-person services. While we 
acknowledged that assigning the facility PE RVUs would not provide a 
perfect reflection of practice resource costs for remote telehealth 
services under the CJR model, in the absence of more specific 
information, we believed it was likely a better proxy for such PE costs 
than zero. Therefore, we proposed to use the facility PE RVUs for the 
analogous services in pricing the 9 CJR HCPCS G codes shown in Table 5. 
Additionally, we proposed to revise Sec.  510.605(c)(2) to reflect the 
addition of the RVUs for comparable codes for the facility PE to the 
work and MP RVUs we are currently using for the basis for payment of 
the CJR telehealth waiver G codes.
    Comment: Commenters supported CMS' proposal to assign facility PE 
RVUs to the telehealth codes utilized under the CJR model, stating that 
our proposal acknowledges the additional infrastructure and care 
coordination costs associated with providing telehealth services and 
supports increasing the use of telemedicine for Medicare beneficiaries. 
A commenter requested that CMS allow physical therapists to furnish 
telehealth services under CJR. Another commenter requested that CMS 
develop a demonstration to test whether capitated payments may increase 
the utilization of telehealth services.
    Response: We thank the commenters for their support of our proposed 
policy. We note that we did not propose to make any changes to the 
regulations regarding providers and suppliers that may furnish 
telehealth services under CJR. We agree that, while the PE values are 
not a perfect representation of the overhead costs associated with 
furnishing telehealth services, they are a reasonable approximation of 
the care coordination and infrastructure costs. We are finalizing our 
proposed policy to use the facility PE RVUs for analogous services when 
pricing the 9 HCPCS G-codes used for telehealth services under the CJR 
model. We also thank commenters for their suggestions around 
incentivizing the use of telehealth more generally.
    This policy is codified in the regulations at Sec.  510.605 (which 
we inadvertently referred to as Sec.  510.65 in the proposed rule).

[[Page 57085]]



      Table 5--HCPCS Codes for Telehealth Visits for CJR Model Beneficiaries in Home or Place of Residence
----------------------------------------------------------------------------------------------------------------
                                                                                      Work and MP RVUs equal to
                                                                                     those of the corresponding
                                                                                     office/outpatient E/M visit
   HCPCS Code No.       Long descriptor                Short descriptor              CPT code for same calendar
                                                                                     year under the PFS; PE RVUs
                                                                                    equal to the facility values
                                                                                              for each
----------------------------------------------------------------------------------------------------------------
G9481..............  Remote in-home visit   Remote E/M new pt 10 mins.............                         99201
                      for the evaluation
                      and management of a
                      new patient for use
                      only in the Medicare-
                      approved
                      Comprehensive Care
                      for Joint
                      Replacement model,
                      which requires these
                      3 key components:
                      A problem
                      focused history.
                      A problem
                      focused examination..
                     
                      Straightforward
                      medical decision
                      making, furnished in
                      real time using
                      interactive audio
                      and video
                      technology..
                     Counseling and
                      coordination of care
                      with other
                      physicians, other
                      qualified health-
                      care professionals
                      or agencies are
                      provided consistent
                      with the nature of
                      the problem(s) and
                      the needs of the
                      patient or the
                      family or both.
                      Usually, the
                      presenting
                      problem(s) are self-
                      limited or minor.
                      Typically, 10
                      minutes are spent
                      with the patient or
                      family or both via
                      real time, audio and
                      video
                      intercommunications
                      technology.
G9482..............  Remote in-home visit   Remote E/M new pt 20 mins.............                         99202
                      for the evaluation
                      and management of a
                      new patient for use
                      only in the Medicare-
                      approved
                      Comprehensive Care
                      for Joint
                      Replacement model,
                      which requires these
                      3 key components:
                      An expanded
                      problem focused
                      history.
                      An expanded
                      problem focused
                      examination..
                     
                      Straightforward
                      medical decision-
                      making, furnished in
                      real time using
                      interactive audio
                      and video
                      technology.
                      Counseling and
                      coordination of care
                      with other
                      physicians, other
                      qualified healthcare
                      professionals or
                      agencies are
                      provided consistent
                      with the nature of
                      the problem(s) and
                      the needs of the
                      patient or the
                      family or both.
                      Usually, the
                      presenting
                      problem(s) are of
                      low to moderate
                      severity. Typically,
                      20 minutes are spent
                      with the patient or
                      family or both via
                      real time, audio and
                      video
                      intercommunications
                      technology..
G9483..............  Remote in-home visit   Remote E/M new pt 30 mins.............                         99203
                      for the evaluation
                      and management of a
                      new patient for use
                      only in the Medicare-
                      approved
                      Comprehensive Care
                      for Joint
                      Replacement model,
                      which requires these
                      3 key components:
                      A detailed
                      history.
                      A detailed
                      examination..
                      Medical
                      decision making of
                      low complexity,
                      furnished in real
                      time using
                      interactive audio
                      and video
                      technology.
                      Counseling and
                      coordination of care
                      with other
                      physicians, other
                      qualified healthcare
                      professionals or
                      agencies are
                      provided consistent
                      with the nature of
                      the problem(s) and
                      the needs of the
                      patient or the
                      family or both.
                      Usually, the
                      presenting
                      problem(s) are of
                      moderate severity.
                      Typically, 30
                      minutes are spent
                      with the patient or
                      family or both via
                      real time, audio and
                      video
                      intercommunications
                      technology..
G9484..............  Remote in-home visit   Remote E/M new pt 45 mins.............                         99204
                      for the evaluation
                      and management of a
                      new patient for use
                      only in the Medicare-
                      approved
                      Comprehensive Care
                      for Joint
                      Replacement model,
                      which requires these
                      3 key components:

[[Page 57086]]

 
                      A
                      comprehensive
                      history.
                      A
                      comprehensive
                      examination..
                      Medical
                      decision making of
                      moderate complexity,
                      furnished in real
                      time using
                      interactive audio
                      and video
                      technology.
                      Counseling and
                      coordination of care
                      with other
                      physicians, other
                      qualified healthcare
                      professionals or
                      agencies are
                      provided consistent
                      with the nature of
                      the problem(s) and
                      the needs of the
                      patient or the
                      family or both.
                      Usually, the
                      presenting
                      problem(s) are of
                      moderate to high
                      severity. Typically,
                      45 minutes are spent
                      with the patient or
                      family or both via
                      real time, audio and
                      video
                      intercommunications
                      technology..
G9485..............  Remote in-home visit   Remote E/M new pt 60 mins.............                         99205
                      for the evaluation
                      and management of a
                      new patient for use
                      only in the Medicare-
                      approved
                      Comprehensive Care
                      for Joint
                      Replacement model,
                      which requires these
                      3 key components:
                      A
                      comprehensive
                      history.
                      A
                      comprehensive
                      examination..
                      Medical
                      decision making of
                      high complexity,
                      furnished in real
                      time using
                      interactive audio
                      and video
                      technology.
                      Counseling and
                      coordination of care
                      with other
                      physicians, other
                      qualified healthcare
                      professionals or
                      agencies are
                      provided consistent
                      with the nature of
                      the problem(s) and
                      the needs of the
                      patient or the
                      family or both.
                      Usually, the
                      presenting
                      problem(s) are of
                      moderate to high
                      severity. Typically,
                      60 minutes are spent
                      with the patient or
                      family or both via
                      real time, audio and
                      video
                      intercommunications
                      technology..
G9486..............  Remote in-home visit   Remote E/M est. pt 10 mins............                         99212
                      for the evaluation
                      and management of an
                      established patient
                      for use only in the
                      Medicare-approved
                      Comprehensive Care
                      for Joint
                      Replacement model,
                      which requires at
                      least 2 of the
                      following 3 key
                      components:
                      A problem
                      focused history.
                      A problem
                      focused examination..
                     
                      Straightforward
                      medical decision
                      making, furnished in
                      real time using
                      interactive audio
                      and video
                      technology.
                      Counseling and
                      coordination of care
                      with other
                      physicians, other
                      qualified healthcare
                      professionals or
                      agencies are
                      provided consistent
                      with the nature of
                      the problem(s) and
                      the needs of the
                      patient or the
                      family or both.
                      Usually, the
                      presenting
                      problem(s) are self
                      limited or minor.
                      Typically, 10
                      minutes are spent
                      with the patient or
                      family or both via
                      real time, audio and
                      video
                      intercommunications
                      technology..
G9487..............  Remote in-home visit   Remote E/M est. pt 15 mins............                         99213
                      for the evaluation
                      and management of an
                      established patient
                      for use only in the
                      Medicare-approved
                      Comprehensive Care
                      for Joint
                      Replacement model,
                      which requires at
                      least 2 of the
                      following 3 key
                      components:

[[Page 57087]]

 
                      An expanded
                      problem focused
                      history.
                      An expanded
                      problem focused
                      examination..
                      Medical
                      decision making of
                      low complexity,
                      furnished in real
                      time using
                      interactive audio
                      and video
                      technology.
                      Counseling and
                      coordination of care
                      with other
                      physicians, other
                      qualified healthcare
                      professionals or
                      agencies are
                      provided consistent
                      with the nature of
                      the problem(s) and
                      the needs of the
                      patient or the
                      family or both.
                      Usually, the
                      presenting
                      problem(s) are of
                      low to moderate
                      severity. Typically,
                      15 minutes are spent
                      with the patient or
                      family or both via
                      real time, audio and
                      video
                      intercommunications
                      technology..
G9488..............  Remote in-home visit   Remote E/M est. pt 25 mins............                         99214
                      for the evaluation
                      and management of an
                      established patient
                      for use only in the
                      Medicare-approved
                      Comprehensive Care
                      for Joint
                      Replacement model,
                      which requires at
                      least 2 of the
                      following 3 key
                      components:
                      A detailed
                      history.
                      A detailed
                      examination..
                      Medical
                      decision making of
                      moderate complexity,
                      furnished in real
                      time using
                      interactive audio
                      and video
                      technology.
                      Counseling and
                      coordination of care
                      with other
                      physicians, other
                      qualified healthcare
                      professionals or
                      agencies are
                      provided consistent
                      with the nature of
                      the problem(s) and
                      the needs of the
                      patient or the
                      family or both.
                      Usually, the
                      presenting
                      problem(s) are of
                      moderate to high
                      severity. Typically,
                      25 minutes are spent
                      with the patient or
                      family or both via
                      real time, audio and
                      video
                      intercommunications
                      technology..
G9489..............  Remote in-home visit   Remote E/M est. pt 40 mins............                         99215
                      for the evaluation
                      and management of an
                      established patient
                      for use only in the
                      Medicare-approved
                      Comprehensive Care
                      for Joint
                      Replacement model,
                      which requires at
                      least 2 of the
                      following 3 key
                      components:
                      A
                      comprehensive
                      history.
                      A
                      comprehensive
                      examination..
                      Medical
                      decision making of
                      high complexity,
                      furnished in real
                      time using
                      interactive audio
                      and video
                      technology.
                      Counseling and
                      coordination of care
                      with other
                      physicians, other
                      qualified healthcare
                      professionals or
                      agencies are
                      provided consistent
                      with the nature of
                      the problem(s) and
                      the needs of the
                      patient or the
                      family or both.
                      Usually, the
                      presenting
                      problem(s) are of
                      moderate to high
                      severity. Typically,
                      40 minutes are spent
                      with the patient or
                      family or both via
                      real time, audio and
                      video
                      intercommunications
                      technology..
----------------------------------------------------------------------------------------------------------------

F. Clinician Engagement Lists

1. Background for Submission of Clinician Engagement Lists
    Under the Quality Payment Program, the Advanced APM track of the 
CJR model does not include eligible clinicians on a Participation List; 
rather the CJR Advanced APM track currently includes eligible 
clinicians on an Affiliated Practitioner List as defined under Sec.  
414.1305 and described under Sec.  414.1425(a)(2) of the agency's 
Quality Payment Program regulations. As such, the Affiliated 
Practitioner List for the CJR model is the ``CMS-maintained list'' of 
eligible clinicians that have ``a contractual relationship with the 
Advanced APM Entity [for CJR, the participant hospital] for the 
purposes of supporting the Advanced APM Entity's quality or cost goals 
under the Advanced APM.'' As specified in our regulations at Sec.  
414.1425(a)(2), CMS will use this list to identify the eligible 
clinicians who will be assessed as Qualifying APM Participants (QPs) 
for the year. CMS will make QP determinations individually for these 
eligible clinicians as specified in Sec. Sec.  414.1425(b)(2), (c)(4), 
and 414.1435.
    In the EPM final rule, we stated that a list of physicians, 
nonphysician practitioners, or therapists in a sharing arrangement, 
distribution arrangement, or downstream distribution

[[Page 57088]]

arrangement, as applicable, would be considered an Affiliated 
Practitioner List of eligible clinicians who are affiliated with and 
support the Advanced APM Entity in its participation in the Advanced 
APM for purposes of the Quality Payment Program. An in-depth discussion 
of how the clinician financial arrangement list is considered an 
Affiliated Practitioner List can be found in section V.O. of the EPM 
final rule (82 FR 558 through 563). The clinician financial 
arrangements list (Sec.  510.120(b)) will be used by CMS to identify 
eligible clinicians for whom we would make a QP determination based on 
services furnished through the Advanced APM track of the CJR model.
2. Proposed Clinician Engagement List Requirements
    To increase opportunities for eligible clinicians supporting CJR 
model participant hospitals by performing CJR model activities and who 
are affiliated with participant hospitals to be considered QPs, we 
proposed that each physician, nonphysician practitioner, or therapist 
who is not a CJR collaborator during the period of the CJR model 
performance year specified by CMS, but who does have a contractual 
relationship with the participant hospital based at least in part on 
supporting the participant hospital's quality or cost goals under the 
CJR model during the period of the performance year specified by CMS, 
would be added to a clinician engagement list.
    In addition to the clinician financial arrangement list that is 
considered an Affiliated Practitioner List for purposes of the Quality 
Payment Program, we proposed the clinician engagement list would also 
be considered an Affiliated Practitioner List. The clinician engagement 
list and the clinician financial arrangement list would be considered 
together an Affiliated Practitioner List and would be used by CMS to 
identify eligible clinicians for whom we would make a QP determination 
based on services furnished through the Advanced APM track of the CJR 
model. As specified in Sec.  414.1425, as of our regulations, adopted 
in the Calendar Year (CY) 2017 Quality Payment Program final rule (81 
FR 77551), those physicians, nonphysician practitioners, or therapists 
who are included on the CJR model Affiliated Practitioner List as of 
March 31, June 30, or August 31 of a QP performance period would be 
assessed to determine their QP status for the year. As discussed in the 
2017 Quality Payment Program final rule (81 FR 77439 and 77440), for 
clinicians on an Affiliated Practitioner List, we determined whether 
clinicians meet the payment amount or patient count thresholds to be 
considered QPs (or Partial QPs) for a year by evaluating whether 
individual clinicians on an Affiliated Practitioner List have 
sufficient payments or patients flowing through the Advanced APM; we do 
not make any determination at the APM Entity level for Advanced APMs in 
which eligible clinicians are not identified on a Participation List, 
but are identified on an Affiliated Practitioner List. CMS makes the QP 
determination based on Part B claims data, so clinicians need not track 
or report payment amount or patient count information to CMS.
    We noted that the proposal to establish a clinician engagement list 
would broaden the scope of eligible clinicians that are considered 
Affiliated Practitioners under the CJR model to include those without a 
financial arrangement under the CJR model but who are either directly 
employed by or contractually engaged with a participant hospital to 
perform clinical work for the participant hospital when that clinical 
work, at least in part, supports the cost and quality goals of the CJR 
model. We proposed that the cost and quality goals of the additional 
affiliated practitioners who are identified on a clinician engagement 
list because they are contracted with a participant hospital must 
include activities related to CJR model activities. CJR model 
activities are activities related to promoting accountability for the 
quality, cost, and overall care for beneficiaries during LEJR episodes 
included in the CJR model, including managing and coordinating care; 
encouraging investment in infrastructure, enabling technologies, and 
redesigned care processes for high quality and efficient service 
delivery; the provision of items and services during a CJR episode in a 
manner that reduces costs and improves quality; or carrying out any 
other obligation or duty under the CJR model.
    Like the requirements of the clinician financial arrangement lists 
specified at Sec.  510.120(b), for CMS to make QP determinations for 
eligible clinicians based on services furnished through the CJR 
Advanced APM track, we would require that accurate information about 
each physician, non-physician practitioner, or therapist who is not a 
CJR collaborator during the period of the CJR model performance year 
specified by CMS, but who is included on a clinician engagement list, 
be provided to CMS in a form and manner specified by CMS on a no more 
than quarterly basis. Thus, we proposed that each participant hospital 
in the Advanced APM track of the CJR model submit to CMS a clinician 
engagement list in a form and manner specified by CMS on a no more than 
quarterly basis. We proposed this list must include the following 
information on eligible clinicians for the period of the CJR model 
performance year specified by CMS:
     For each physician, non-physician practitioner, or 
therapist who is not a CJR collaborator during the period of the CJR 
model performance year specified by CMS but who does have a contractual 
relationship with a participant hospital based at least in part on 
supporting the participant hospital's quality or cost goals under the 
CJR model during the period of the CJR model performance year specified 
by CMS:
    ++ The name, TIN, and NPI of the individual.
    ++ The start date and, if applicable, the end date for the 
contractual relationship between the individual and participant 
hospital.
    Further, we proposed that if there are no individuals that meet the 
requirements to be reported, as specified in any of Sec.  510.120 
(b)(1) through (3) of the EPM final rule or Sec.  510.120(c) of the 
August 17, 2017 proposed rule (82 FR 39310 through 39333), the 
participant hospital must attest in a form and manner required by CMS 
that there are no individuals to report.
    Given that the proposal would require submission of a clinician 
engagement list, or an attestation that there are no eligible 
clinicians to be included on such a list, to reduce burden on 
participant hospitals, we would collect information for the clinician 
engagement list and clinician financial arrangement list at the same 
time.
    We sought comments on the proposal for submission of this 
information. We noted that we were especially interested in comments 
about approaches to information submission, including the periodicity 
and method of submission to CMS that would minimize the reporting 
burden on participant hospitals while providing CMS with sufficient 
information about eligible clinicians to facilitate QP determinations.
    For each participant hospital in the CJR Advanced APM track, we 
proposed that the participant hospital must maintain copies of its 
clinician engagement lists and supporting documentation (that is, 
copies of employment letters or contracts) of its clinical engagement 
lists submitted to CMS. Because we would use these lists to develop 
Affiliated Practitioner Lists used for purposes of making QP

[[Page 57089]]

determinations, these documents would be necessary to assess the 
completeness and accuracy of materials submitted by a participant 
hospital and to facilitate monitoring and audits. For the same reason, 
we further proposed that the participant hospital must retain and 
provide access to the required documentation in accordance with Sec.  
510.110.
    Comment: Many commenters supported our proposal to broaden the 
scope of eligible clinicians that could be considered Affiliated 
Practitioners under the CJR model and therefore eligible for the 
incentives available under the Advanced APM track of the Quality 
Payment Program. Commenters urged CMS to finalize the policy as 
proposed, stressing the importance of providing further opportunities 
for clinician groups to engage in more comprehensive risk-based 
Advanced APMs as an alternative to MIPS reporting. Commenters also 
stated that a significant number of healthcare clinicians support 
participant hospitals but their efforts are not accounted for by CMS, 
despite the critical importance of the care they deliver to patients 
included within the CJR model. These commenters noted that expanding 
the number of Affiliated Practitioners will help to recognize the 
efforts of those clinicians while also enhancing access to care under 
the CJR model.
    Response: We appreciate the positive feedback on the proposed 
policy, and agree with commenters that increasing opportunities for 
clinicians in a contractual relationship with Advanced APM participant 
hospitals is valuable. We agree that the work these clinicians perform 
on CJR model activities is essential to the success of care under the 
CJR model and that we should be recognizing the efforts of these 
clinicians by providing them the opportunity to qualify as qualified 
practitioners under the Quality Payment Program.
    Comment: A commenter requested that CMS provide clarification on 
the definition of contractual agreements, and that CMS provide further 
guidance on how CJR-related activities will be monitored and whether 
there will be any thresholds that clinicians must meet to be considered 
engaged in the quality or costs goals of CJR.
    Response: To clarify, for each physician, non-physician 
practitioner, or therapist who is not a CJR collaborator during the 
period of the CJR model performance year specified by CMS, but who does 
have a contractual relationship with the participant hospital based at 
least in part on supporting the participant hospital's quality or cost 
goals under the CJR model during the period of the performance year as 
specified by CMS, can be included on the hospital's clinician 
engagement list. The term contractual relationship encompasses the wide 
range of relationships whereby a participant hospital engages a 
clinician to perform work that at least in part supports the cost and 
quality goals of the CJR model
    CMS will monitor compliance with the requirement that clinicians be 
engaged to support cost and quality goals via a range of methods, 
including but not limited to document reviews and site visits.
    CMS is not establishing a specific threshold a clinician must met 
to be considered engaged in supporting the cost and quality goals of 
the CJR model.
    Comment: Several commenters objected to the requirement that 
hospitals include a clinician's start and end date on the clinician 
engagement list, noting a start date is not feasible because the 
clinician's employment may have started before the start of the CJR 
model and may not have end-dates but rather automatically renew. 
Commenters also stated that maintaining and submitting a clinician 
engagement list is burdensome. The commenters suggested that hospitals 
should attest that the clinician was under contract during the model, 
and that CMS could conduct audits to verify this information.
    Response: We appreciate commenters' feedback on this requirement 
for submitting the clinician engagement list. The requirement that a 
hospital include the clinician's start date at a minimum will allow CMS 
to determine whether the clinician is an eligible clinician for Quality 
Payment Program purposes; a simple attestation will not suffice for the 
Quality Payment Program. We understand that clinicians may have begun 
the contractual relationship with the hospital prior to the start of 
the CJR model. However, the hospital will have to determine whether and 
when the contractual relationship with the clinician began supporting 
the participant hospital's quality or cost goals under the CJR model. 
The hospital would then report to CMS the date on which the 
relationship began supporting the cost and quality goals of the CJR 
model. For example, if a physician started working at the participant 
hospital on 1/1/2000 and started supporting the participant hospital's 
quality or cost goals under the CJR model on 7/15/2016, the hospital 
would report 7/15/2016. The end date of the contractual relationship 
need only be supplied if the clinician has one. Also, we understand 
that maintaining a list can be burdensome; however, we developed this 
requirement in response to feedback from stakeholders and hospitals who 
expressed a desire to enhance opportunities for those physicians, non-
physician practitioners, and therapists without a financial arrangement 
under the CJR model. Finally, in order to reduce burden, CMS will 
collect information for the clinician financial arrangement list and 
the clinician engagement list together. Hospitals will be able to 
complete all required attestations at one time.
    Summary of Final Decisions: We thank the commenters for their 
suggestions and feedback. We are finalizing our policy as proposed. 
This policy is codified at Sec.  510.120(c) through (e).

G. Clarification of Use of Amended Composite Quality Score Methodology 
During CJR Model Performance Year 1 Subsequent Reconciliation

    We conducted the initial reconciliation for performance year 1 of 
the CJR model in early 2017 and made reconciliation payments to CJR 
participant hospitals in fall 2017 to accommodate the performance year 
1 appeals process timelines. We will conduct the subsequent 
reconciliation calculation for performance year 1 of the CJR model 
beginning in the first quarter of 2018, which may result in additional 
amounts to be paid to participant hospitals or a reduction to the 
amount that was paid for performance year 1. However, the results of 
the performance year 1 subsequent reconciliation calculations will be 
combined with the performance year 2 initial reconciliation results 
before reconciliation payment or repayment amounts are processed for 
payment or collection. Changes to the CJR model established in the EPM 
final rule impact this process.
    The improvements to the CJR model quality measures and composite 
quality score methodology, which were finalized in the EPM final rule 
(82 FR 524 through 526), were intended to be effective before the CJR 
model's performance year 1 initial reconciliation. However, as noted in 
section II. of the proposed rule (82 FR 39311), the effective date for 
certain EPM final rule provisions, including those amending Sec. Sec.  
510.305 and 510.315 to improve the quality measures and composite 
quality score methodology, were delayed until May 20, 2017.
    As a result, the CJR reconciliation reports issued in April 2017 
were created in accordance with the provisions of Sec. Sec.  510.305 
and 510.315 in effect as of April 2017; that is, the

[[Page 57090]]

provisions finalized in the CJR model final rule. In early 2018, we 
would perform the performance year 1 subsequent reconciliation 
calculation in accordance with the provisions Sec. Sec.  510.305 and 
510.315 in effect as of early 2018, that is, established in the EPM 
final rule. Applying the provisions established in the EPM final rule 
to the performance year 1 subsequent reconciliation calculation may 
result in significant differences between the reconciliation payments 
calculated during the performance year 1 initial reconciliation and the 
performance year 1 subsequent reconciliation. We anticipate that these 
differences will be greater than those that would be expected as a 
result of using more complete claims and programmatic data that will be 
available for the subsequent reconciliation (due to the additional 12 
months of time that will occur between the initial and subsequent 
reconciliation calculations), more accurate identification of model 
overlap and exclusion of episodes, as well as factoring in adjustments 
to account for shared savings payments, and post-episode spending, as 
specified in Sec.  510.305(i).
    Specifically, the methodology used to determine the quality-
adjusted target price for the performance year 1 subsequent 
reconciliation calculation would differ from the methodology used to 
determine the quality-adjusted target price for the performance year 1 
initial reconciliation calculation as follows: The quality-adjusted 
target price would be recalculated to apply the amended reductions to 
the effective discount factors (Sec.  510.315(f)), which would be 
determined after recalculating the composite quality scores, including 
applying more generous criteria for earning quality improvement points 
(that is, a 2 decile improvement rather than 3 decile improvement as 
specified in amended Sec.  510.315(d)). Using the recalculated quality-
adjusted target price, the net payment reconciliation amount (NPRA) 
would be recalculated and include application of post-episode spending 
reductions (Sec.  510.305(j)), as necessary, after determining the 
limitations on loss or gain. Thus, calculating performance year 1 
reconciliation payments using these two different provisions may result 
in a range of upward or downward adjustments to participant hospitals' 
performance year 1 payment amounts. We note that a downward adjustment 
to the performance year 1 payment amounts would require payment 
recoupment, if offset against a performance year 2 initial 
reconciliation payment amount is not feasible, which may be burdensome 
for participant hospitals.
    In developing the August 17, 2017 proposed rule (82 FR 39310 
through 39333), we also considered whether there might be benefit in 
further delaying the amendments to Sec. Sec.  510.305 and 510.315 such 
that the same calculations would be used for both the performance year 
1 initial reconciliation and the subsequent performance year 1 
reconciliation, and the use of the amended calculations would begin 
with the performance year 2 initial reconciliation. We noted that we 
believe such an approach would impact future CJR model implementation 
and evaluation activities. Because determining the performance year 2 
composite quality score considers the hospital's quality score 
improvement from its performance year 1 score, using different 
methodologies across performance years would require a mechanism to 
account for differences in the quality score methodology, for example 
we would have to develop a reliable crosswalk approach. If we were to 
develop and use a crosswalk approach, participants and other 
stakeholders would need to be informed about the crosswalk methodology 
in order to validate data analyses across performance years and that 
usage of the crosswalk would be ongoing throughout the model's duration 
for consistency across performance years. This methodology could add 
substantial complexity to this time-limited model. We also considered 
that the composite quality score for some participant hospitals may be 
higher under the revised scoring methodology. Delaying use of the 
revised scoring methodology may disadvantage participants if their 
composite quality score would be higher and result in a more favorable 
discount percentage or allow the hospital to qualify for a 
reconciliation payment. Therefore, we believed the best approach was to 
apply the quality specifications as established in the EPM final rule 
(that is, the amendments to Sec. Sec.  510.305 and 510.315 that became 
effective May 20, 2017) to performance year 1 subsequent reconciliation 
calculations to ensure that reconciliation calculations for subsequent 
performance years will be calculated using the same methodology and to 
improve consistency across performance years for quality improvement 
measurement. Thus, for the reasons noted previously, we did not propose 
to change the amendments to Sec. Sec.  510.305 and 510.315 that became 
effective May 20, 2017. We sought comment on whether using an 
alternative approach, such as the composite quality score methodology 
from the CJR model final rule for the performance year 1 subsequent 
reconciliation, would ensure better consistency for analyses across CJR 
performance years.
    Comment: We received several comments supporting our proposal to 
apply the quality specifications as established in the EPM final rule 
(that is, the amendments to Sec. Sec.  510.305 and 510.315 that became 
effective May 20, 2017) to performance year 1 subsequent reconciliation 
calculations. Several commenters favored this approach because they 
believed it was unlikely for a hospital's quality category to decrease 
between the initial and subsequent reconciliation. A commenter favored 
applying the EPM final quality specifications to performance year 1 
subsequent reconciliation calculations because they believed applying 
more generous criteria for earning quality improvement points and using 
a more appropriate national peer group as the reference for determining 
performance would result in higher composite quality scores. The 
commenter stated that these higher composite quality scores would allow 
more CJR participant hospitals to be eligible for reconciliation 
payments or to owe smaller repayments and would preserve the ability 
for high-performing hospitals to earn reconciliation payments that more 
accurately reflect their performance and investments in the model. The 
commenter noted that transitioning to the revised composite quality 
score methodology between the performance year 1 initial and subsequent 
reconciliation calculations may increase the differences between the 
results of the two calculations than would otherwise have occurred 
during subsequent reconciliation due to the anticipated longer claims 
run out, accounting for model overlap, and post-episode spending 
adjustments. They stated that the difference would vary by hospital, 
and could be positive or negative. The commenter clarified that the 
impact of any larger downward adjustments, however, should occur in 
performance year 1, when hospitals are not responsible for repayments 
to CMS if their costs exceed their quality-adjusted target price. 
Finally, the commenter stated that delaying implementation of the EPM 
final quality specifications until performance year 2 initial 
reconciliation calculations would increase CJR operational complexity 
and complicate evaluation of CJR model results. The commenter urged CMS 
to

[[Page 57091]]

share results from the performance year 1 subsequent reconciliation 
with participant hospitals as early as feasible in 2018 to minimize 
uncertainty for hospitals, should a downward adjustment occur.
    Response: We appreciate the feedback we received from commenters on 
the benefits of applying the quality specifications as established in 
the EPM final rule to performance year 1 subsequent reconciliation 
calculations, and we thank the commenters for their support of our 
proposed policy. We agree there are benefits to applying the EPM final 
rule quality specifications to performance year 1 subsequent 
reconciliation calculations instead of delaying use of the amended 
specifications until initial reconciliation for performance year 2. 
These benefits include reducing the complexity of future evaluation of 
the model and preventing possibly disadvantaging participants whose 
composite quality scores would be higher as a result of applying the 
amended specifications.
    Comment: Several commenters opposed our proposal to apply the 
quality specifications established in the EPM final rule to performance 
year 1 subsequent reconciliation calculations. A commenter stated that 
a hospital's payment should not be adjusted for performance year 1 as a 
result of administrative issues, such as the delay of the effective 
date for the EPM final rule, which occurred between the initial 
reconciliation and the subsequent reconciliation for performance year 
1.
    Response: We appreciate the commenters' concerns regarding possible 
downward adjustments to the performance year 1 payment amounts that 
would require repayment recoupment. We intended for the refinements to 
the CJR model quality measures and composite quality score methodology 
finalized in the EPM final rule (82 FR 524 through 526) to be effective 
before the CJR model's performance year 1 initial reconciliation. We 
acknowledge that the delayed effective date for the EPM final rule has 
caused frustration, and we acknowledge that a downward adjustment 
requiring payment recoupment would be burdensome for participant 
hospitals.
    For these reasons, we sought comment on whether using an 
alternative approach, such as applying the quality composite score 
methodology from the CJR model final rule to the performance year 1 
subsequent reconciliation, would ensure better consistency for analyses 
across performance years. Commenters generally supported our proposal 
to apply the quality specifications as established in the EPM final 
rule. Furthermore, we believe that the benefits to hospitals of 
applying the quality specifications finalized in the EPM final rule to 
performance year 1 subsequent reconciliation justify finalizing our 
proposal. This approach ensures that reconciliation calculations for 
subsequent performance years will be calculated using the same 
methodology, eliminating the need for a the development of a crosswalk 
approach for reconciling differences in composite quality scores across 
performance years and reducing the impact on future model evaluation 
efforts.
    Comment: Several commenters provided out-of-scope public comments 
that suggested changes to the composite quality score methodology, the 
choice of quality measures in the EPM and CJR models, and the patient 
reported outcomes (PRO) data submission. Several commenters believed 
the revised composite quality score methodology was not in the best 
interest of model success, and CMS was inaccurate in stating that the 
changes to the composite quality score would result in a higher 
composite quality score for some participant hospitals. Several 
commenters suggested we include, replace, or drop some or all of the 
finalized quality measures. Finally, a commenter stated that CMS did 
not provide sufficient supporting rationale for determinations 
regarding patient-reported outcomes (PRO) data submission, nor did CMS 
provide clear information on which patients were eligible for PRO data 
collection. This commenter requested that CMS provide hospitals with 
lists of PRO-eligible patients on a regular basis.
    Response: We consider these public comments to be outside of the 
scope of the August 17, 2017 proposed rule. Therefore, we are not 
addressing them in this final rule and interim final rule with comment 
period. We may consider these public comments in future rulemaking. We 
do note that a number of resource guides on the PRO data collection 
process and eligible patients is available to CJR participant hospitals 
on the CJR Connect site.
    Summary of Final Decisions: We are finalizing our proposal to apply 
the quality specifications as established in the EPM final rule (that 
is, the amendments to Sec. Sec.  510.305 and Sec.  510.315 that became 
effective May 20, 2017) to performance year 1 subsequent reconciliation 
calculations.

H. Clarifying and Technical Changes Regarding the Use of the CMS Price 
(Payment) Standardization Detailed Methodology

    Based on questions we received from participant hospitals during 
the performance year 1 reconciliation process, we proposed to make two 
technical changes to the CJR model regulations to clarify the use of 
the CMS Price (Payment) Standardization Detailed Methodology, posted on 
the QualityNet Web site at http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228772057350, in the calculation of target prices and actual episode spending. 
This pricing standardization approach was the same as that used for the 
Hospital Value-Based Purchasing Program's (HVBP) Medicare spending per 
beneficiary metric. In section III.C.3.a. of the CJR model final rule 
(80 FR 73331 through 73333), we finalized how we would operationalize 
the exclusion of the various special payment provisions in calculating 
CJR model episode expenditures, both historical episode spending and 
performance year episode spending, by relying upon the CMS Price 
(Payment) Standardization Detailed Methodology with modifications. 
However, we did not clearly articulate the finalized policy in the 
regulations at 42 CFR part 510. Thus, we proposed the following 
technical changes to bring the regulatory text into conformity with our 
intended policy and to reduce potential stakeholder uncertainty about 
how the price (payment) standardization methodology is used. We 
proposed to insert ``standardized'' into the definition of actual 
episode payment in Sec.  510.2, and insert ``with certain 
modifications'' into Sec.  510.300(b)(6) to account for the 
modifications we must make to the standardization methodology to ensure 
all pricing calculations are consistent with our finalized policies.
    Comment: We received no comments on our proposal.
    Response: We are finalizing our proposal to insert ``standardized'' 
into the definition of actual episode payment in Sec.  510.2, and 
insert ``with certain modifications'' into Sec.  510.300(b)(6).

I. Public Comments on Removal of Total Knee Arthroplasty (TKA) From the 
Inpatient-Only (IPO) List and on the Need for a Disaster Policy for 
Affected CJR Episodes

1. Pricing Implications of the Removal of TKA From the IPO List
    In the CY 2017 Outpatient Prospective Payment System (OPPS) 
Proposed Rule

[[Page 57092]]

(81 FR 45679 through 45681) we sought comment on the potential removal 
of TKA from the IPO list from interested parties, although we did not 
make any proposals regarding the issue. We specifically requested input 
on potential changes to the BPCI initiative and CJR model if we should 
make such a policy change in the future. In the CY 2018 Outpatient 
Prospective Payment System (OPPS) Proposed Rule (82 FR 33558), we 
proposed to remove total knee arthroplasty from the IPO list. We refer 
readers to that proposed rule for more details regarding the proposal.
    Comment: Numerous commenters requested that, should we finalize the 
proposal to remove TKA from the IPO list, we also finalize a policy to 
modify the CJR pricing methodology. Commenters stated that if TKA is 
removed from the IPO list, the CJR target prices will no longer 
accurately reflect spending for the inpatient population, given that 
the historical time period used to set prices included all Medicare TKA 
cases under MS-DRGs 469 and 470, including those that could be 
performed on an outpatient basis (and are presumably less costly) if 
TKA is removed from the IPO list. Commenters were concerned that if 
Medicare begins to pay for TKA in outpatient settings and does not make 
adjustments to CJR prices, the case mix under the model (that is, 
beneficiaries in CJR episodes) will include only more costly and 
higher-acuity cases that are not appropriate for outpatient settings. 
Thus, LEJR procedures furnished in inpatient settings (and included in 
CJR episodes) will be more costly than those in outpatient settings, 
negatively affecting CJR hospitals' potential to financially succeed 
under the model. Commenters noted that without a pricing adjustment, 
CJR participant hospitals could have a hard time meeting spending 
targets if many lower-cost cases move to the outpatient setting. 
Commenters suggested a variety of solutions, including: Setting a 
separate target price for outpatient TKA cases and including them in 
CJR; various methodologies to estimate the removal of outpatient cases 
from the baseline period when setting target prices; and robust risk 
adjustment. A commenter suggested we test the removal of TKA from the 
IPO list as part of our bundled payment models before implementing a 
change on a national basis. Other commenters stated that hospitals 
eligible for a voluntary participation election in January 2018 cannot 
make a participation decision without knowing how CMS will modify the 
CJR pricing methodology to ensure participant hospitals are not 
negatively affected by the removal of TKA from the IPO list.
    Response: We thank the commenters for their feedback and thoughtful 
suggestions on ways we could refine the CJR pricing methodology to 
ensure our decision to remove TKA from the IPO list would not harm 
hospitals. We refer readers to the 2018 OPPS Final Rule (82 FR 52356) 
which discusses our finalized policy to remove TKA from the IPO list. 
Because we did not make a proposal regarding changes to the CJR payment 
methodology and because there is no clinical experience or claims data 
yet available for analysis on the potential impacts of this policy 
change on the CJR target pricing methodology, we will consider all 
comments and address this issue through future rulemaking, as 
appropriate.
2. Need for a Policy To Address the Recent Hurricanes and Other Natural 
Disasters
    In late August and September 2017 several hurricanes created 
significant damage to multiple states and in late September 2017, 
severe wildfires wreaked havoc on many counties in California.
    Comment: Several commenters requested that CMS recognize the unique 
challenges faced by CJR participant hospitals during the recent natural 
disasters that have occurred in or near several of the CJR MSAs. 
Commenters noted that beneficiaries in disaster areas may have required 
unplanned or extensive healthcare services as a result of evacuation or 
other emergency situations. Commenters were also concerned that 
hospitals in the disaster areas would not be able to complete their 
quality reporting requirements. Commenters stated that CJR participant 
hospitals should not be held financially accountable for such spending 
that is beyond their control. Commenters suggested that CMS offer a 
waiver of the participation requirement or another mechanism to ensure 
that hospitals are not held accountable for circumstances beyond their 
control due to natural disasters.
    Response: We thank the commenters for their suggestions. We 
understand that some participant hospitals in the CJR model have been 
impacted by recent natural disasters and that there is a clear need for 
a policy in CJR to address expenditures outside the control of 
hospitals located in areas experiencing extreme and uncontrollable 
circumstances.

III. Provisions of the Interim Final Rule With Comment Regarding 
Significant Hardship Due to Extreme and Uncontrollable Circumstances in 
the CJR Model

A. Overview and Background

    This interim final rule with comment period is being issued in 
conjunction with this final rule to address the need for a policy that 
would apply for performance year 2 (and, when finalized, that would 
also apply for the future performance years 3 through 5 of the CJR 
model) providing some flexibility in determining episode spending for 
CJR participant hospitals located in areas impacted by extreme and 
uncontrollable circumstances. This interim final rule with comment 
period most notably addresses Hurricane Harvey, Hurricane Irma, 
Hurricane Nate, and the California wildfires of August, September, and 
October 2017 but could also include other similar events that occur 
within a given performance year, including performance year 2, if those 
events meet the requirements we are setting forth in this policy in 
this interim final rule with comment. While Hurricane Maria, which also 
occurred in the same time frame, had and, as of the writing of this 
rule, continues to have a significant and crippling effect on Puerto 
Rico and the U.S. Virgin Islands, Hurricane Maria is not part of this 
particular interim final rule with comment as the CJR model is not in 
operation in the areas impacted by Hurricane Maria, and, therefore 
there are no CJR participant hospitals that have been impacted by 
Hurricane Maria. Hurricane Harvey, Hurricane Irma, Hurricane Nate, and 
the California wildfires affected large regions of the United States 
where the CJR model operates, leading to widespread destruction of 
infrastructure that impacted residents' ability to continue normal 
functions afterwards.
    At least 101 CJR participant hospitals are located in the areas 
affected by Hurricane Irma and Hurricane Harvey, at least 22 CJR 
participant hospitals are located in areas impacted by the California 
wildfires and approximately 12 are in the areas affected by Hurricane 
Nate. Based on a review of news articles focusing on the hurricanes, at 
least 35 hospitals evacuated for Hurricane Irma \1\ and several 
hospitals evacuated at least partially for Hurricane Harvey.\2\ In

[[Page 57093]]

Florida, at least two CJR participant hospitals in Miami, (Anne Bates 
Leach Eye Hospital and University of Miami Hospital) and one CJR 
participant hospital in Miami Beach--Mount Sinai Medical Center--had to 
close because of Hurricane Irma.\3\ Tampa General Hospital, a CJR 
participant hospital in Tampa, evacuated all patients except for those 
too ill to move.\4\ In response to Hurricane Irma, on September 9, 
2017, Tampa Community Hospital, CJR participant hospital, suspended all 
services and evacuated all patients to two other CJR participant 
hospitals, Brandon Regional Hospital and Medical Center of Trinity.\5\ 
In Texas, Baptist Beaumont Hospital, a CJR participant hospital in 
Beaumont, Texas, had to shut down and evacuate on August 31, 2017.\6\ 
On the same day, Christus Southeast Texas St. Elizabeth, another CJR 
participant hospital in Beaumont, Texas, left only the emergency and 
trauma center of the hospital open in order to ensure they had enough 
water for the patients still at the hospital.\6\ Patients seeking care 
at the Medical Center of Southeast Texas, a CJR participant hospital in 
Port Arthur, Texas, had to be taken by dump truck through the submerged 
hospital parking lot to the perimeter of the property, where a boat 
would take them to the hospital.\6\ An additional review of news 
related to California wildfires also shows that the fires caused 
various hospitals to evacuate patients.\7\ On November 16, 2017, five 
counties in Alabama were declared as major disaster areas due to the 
destruction of structures, piers, roads and bridges caused by Hurricane 
Nate.\3\ Although we do not yet have enough data to evaluate these 
events' specific effects on CJR episodes, we anticipate that at least 
some CJR participant hospitals may have experienced episode cost 
escalation as a result of hurricane or fire damage and subsequent 
emergency evacuations.
---------------------------------------------------------------------------

    \1\ Irma forces at least 35 hospitals to evacuate patients. 
Here's a rundown. September 9, 2017. https://www.statnews.com/2017/09/09/irma-hospital-evacuations-rundown/. Accessed November 21, 
2017.
    \2\ After Harvey Hit, a Texas Hospital Decided to Evacuate. 
Here's How Patients Got Out. September 6, 2017. https://www.nytimes.com/2017/09/06/us/texas-hospital-evacuation.html. 
Accessed November 21, 2017.
    \3\ Hurricane Irma causes 36 Florida hospitals to close. 
September 12, 2017. https://www.healthdatamanagement.com/news/hurricane-irma-causes-36-florida-hospitals-to-close. Accessed 
November 22, 2017.
    \4\ At Tampa Hospital in Evacuation Zone, 800 Patients and Staff 
Ride Out Hurricane Irma. September 10, 2017. https://weather.com/storms/hurricane/news/hurricane-irma-tampa-hospital-evacuation-zone. 
Accessed November 22, 2017.
    \5\ Tampa Community Hospital has suspended all services and has 
evacuated patients. September 9, 2017. https://tampacommunityhospital.com/about/newsroom/tampa-community-hospital-has-suspended-all-services-and-has-evacuated-patients. Accessed 
November 22, 2017.
    \3\ http://www.al.com/news/mobile/index.ssf/2017/11/trump_declares_major_disaster.html.
---------------------------------------------------------------------------

    Under Sec.  510.305(e), as of performance year 2, CJR participant 
hospitals who have episode costs as calculated under Sec.  
510.305(e)(1)(iii) (for example, episode costs that exceed the target 
price for the performance year) will owe CMS 5 percent of the loss. 
While the intent of this policy is to incentivize providers to control 
costs while managing and improving the quality of CJR patient care, we 
note that in extreme and uncontrollable circumstances, prudent patient 
care management may involve potentially expensive air ambulance 
transport or prolonged inpatient stays when other alternatives are not 
practical due, for example, to state and local mandatory evacuation 
orders or compromised infrastructure. In addition to the news reports 
of disaster conditions that impacted several CJR participant hospitals, 
a number of research studies on natural disasters and rushed 
evacuations for hospitals support our assumption that costs can rise 
during disaster situations.\4\
---------------------------------------------------------------------------

    \4\ Tia Powell, Dan Hanfling, Lawrence O. Gostin. Emergency 
Preparedness and Public Health: The Lessons of Hurricane Sandy. 
JAMA. 2012;308(24):2569-2570. doi:10.1001/jama.2012.108940; 
Christine S. Cocanour, Steven J. Allen, Janine Mazabob, John W. 
Sparks, Craig P. Fischer, Juanita Romans, Kevin P. Lally. Lessons 
Learned From the Evacuation of an Urban Teaching Hospital. Arch 
Surg.2002;137(10):1141-1145. doi:10.1001/archsurg.137.10.1141.
---------------------------------------------------------------------------

    Currently, CJR regulations at Sec.  510.210 do not allow 
cancellation of episodes for extreme and uncontrollable circumstances. 
The CJR regulations at Sec.  510.305 also do not permit an adjustment 
to account for episode spending that may have escalated significantly 
due to events driven by extreme and uncontrollable circumstances.

B. Identifying Participant Hospitals Affected by Extreme and 
Uncontrollable Circumstances

    For purposes of developing a policy to identify hospitals affected 
by extreme and uncontrollable circumstances, we consulted section 1135 
of the Social Security Act, where the Secretary may temporarily waive 
or modify certain Medicare requirements to ensure that sufficient 
health care items and services are available to meet the needs of 
individuals enrolled in Social Security Act programs in the emergency 
area and time periods and that providers who provide such services in 
good faith can be reimbursed and exempted from sanctions (absent any 
determination of fraud or abuse). The Secretary has invoked this 
authority in response to significant natural disasters such as 
Hurricane Katrina in 2005 and Superstorm Sandy in 2012. Though the 1135 
waiver authority enables us to take actions that give healthcare 
providers and suppliers greater flexibility, it does not allow for 
payment adjustment for participant hospitals in the CJR model. However, 
the extreme and uncontrollable circumstance policy should only apply 
when a disaster is widespread and extreme. A section 1135 waiver 
identifies the ``emergency area'' and ``emergency period,'' as defined 
in section 1135(g) of the Social Security Act, for which waivers are 
available. We believe it is appropriate to establish an extreme and 
uncontrollable circumstance policy that applies only when and where the 
magnitude of the event calls for the use of special waiver authority to 
help providers respond to the emergency and continue providing care.
    The extreme and uncontrollable circumstance policy also should be 
tailored to the specific areas experiencing the extreme and 
uncontrollable circumstance. Section 1135 waivers typically are 
authorized for a geographic area that may encompass a greater region 
than is directly and immediately affected by the relevant emergency. 
For purposes of this policy, a narrower geographic scope than the full 
emergency area (as that term is defined in section 1135(g) of the Act) 
\5\ would ensure that the payment policy adjustment is focused on the 
specific areas that experienced the greatest adverse effects from the 
extreme and uncontrollable circumstance and is not applied to areas 
sustaining little or no adverse effects.
---------------------------------------------------------------------------

    \5\ (g) DEFINITIONS.--For purposes of this section: (1) 
EMERGENCY AREA; EMERGENCY PERIOD.--An ``emergency area'' is a 
geographical area in which, and an ``emergency period'' is the 
period during which, there exists--(A) an emergency or disaster 
declared by the President pursuant to the National Emergencies 
Act[102] or the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act[103]; and (B) a public health emergency declared by 
the Secretary pursuant to section 319 of the Public Health Service 
Act.
---------------------------------------------------------------------------

    To narrow the scope of this policy to ensure it is applied to those 
providers most likely to have experienced the greatest adverse effects, 
we would therefore also require that the area be declared as a major 
disaster area under the Stafford Act, which serves as a condition 
precedent for the Secretary's exercise of the 1135 waiver authority. 
Once an area is declared as a major disaster area under the Stafford 
Act, the specific counties, municipalities, parishes, territories, and 
tribunals that are part of the major disaster area are identified and 
can be located on Federal Emergency Management Agency

[[Page 57094]]

(FEMA) Web site at www.FEMA.gov/disasters. For this policy, only major 
disaster declarations under the Stafford Act will be used to identify 
the specific counties, municipalities, parishes, territories, and 
tribunals where the extreme and uncontrollable circumstance took place. 
Using the major disaster declaration as a requirement for the extreme 
and uncontrollable event policy also ensures that the policy would 
apply only when the event is extreme, meriting the use of special 
authority, and targeting the specific area affected by the extreme and 
uncontrollable circumstance. To note, we are not including emergency 
declarations under the Stafford Act or national emergency declarations 
under the National Emergencies Act in this policy, even if such a 
declaration serves as a basis for the Secretary's invoking the 1135 
waiver authority. This is because we believe it is appropriate for our 
extreme and uncontrollable circumstance policy to apply only in the 
narrow circumstance where the circumstance constitutes a major 
disaster, which are more catastrophic in nature and tend to have 
significant impacts to infrastructure, rather than the broader grounds 
for which an emergency could be declared.
    In establishing a policy to define extreme and uncontrollable 
circumstances for the CJR model, we identify an area as having 
experienced `extreme and uncontrollable circumstances,' if it is within 
an ``emergency area'' and ``emergency period'' as defined in section 
1135(g) of the Act, and also is within a county, parish, U.S. territory 
or tribal government designated in a major disaster declaration under 
the Stafford Act that served as a condition precedent for the 
Secretary's exercise of the 1135 waiver authority.
    We believe Hurricanes Harvey, Irma, and Nate and the recent 
California wildfires trigger the automatic extreme and uncontrollable 
circumstance policy we are adopting in this interim final rule with 
comment period. For the performance year 2 reconciliation that will be 
conducted beginning in March of 2018, this extreme and uncontrollable 
circumstance policy will apply to those CJR participant hospitals whose 
CCN has a primary address located in a state, U.S. territory, or tribal 
government that is within an ``emergency area'' and ``emergency 
period,'' as those terms are defined in section 1135(g) of the Act, for 
which the Secretary has issued a waiver under section 1135 of the Act 
and that is designated in a major disaster declaration under the 
Stafford Act that served as a condition precedent for the Secretary's 
exercise of the 1135 waiver authority. The states and territories for 
which section 1135 waivers were issued in response to Hurricanes 
Harvey, Irma, Nate and the California wildfires are Alabama, 
California, Florida, Georgia, South Carolina, Texas, Louisiana, 
Mississippi. Section 1135 waivers also were issued for Puerto Rico and 
the Virgin Islands as a result of Hurricane Maria, but there are no CJR 
participant hospitals with CCNs with a primary address in either of 
these areas. To view the 1135 waiver documents and for additional 
information on section 1135 waivers see: https://www.cms.gov/About-CMS/Agency-Information/Emergency/. The major disaster declarations are 
located on FEMA Web site at https://www.fema.gov/disasters. When 
locating the counties, municipalities, parishes, tribunals, and 
territories for the major disaster declaration, FEMA designates these 
locations as `designated areas' for that specific state, or tribunal. 
All counties, municipalities, parishes, tribunals, and territories 
identified as designated areas on the disaster declaration are 
included.
    The counties, parishes, and tribal governments that have met the 
criteria for the CJR policy on extreme and uncontrollable events in 
performance year 2 are: \6\
---------------------------------------------------------------------------

    \6\ The Secretary issued Mississippi a waiver under Section 1135 
for Hurricane Nate, however the President did not issue a major 
disaster declaration (An emergency disaster declaration was 
issued.), so under this policy Mississippi is not included on this 
list.
---------------------------------------------------------------------------

     The following counties in Alabama: Autauga, Baldwin, 
Choctaw, Clarke, Dallas, Macon, Mobile, and Washington.\7\
---------------------------------------------------------------------------

    \7\ https://www.fema.gov/disaster/4349/designated-areas.
---------------------------------------------------------------------------

    The following counties in California: Butte; Lake; Mendocino; Napa; 
Nevada Orange; Sonoma; and Yuba.\8\
---------------------------------------------------------------------------

    \8\ https://www.fema.gov/disaster/4344/designated-areas.
---------------------------------------------------------------------------

     All 67 counties \9\ and Big Cypress Indian Reservation, 
Brighton Indian Reservation, Fort Pierce Indian Reservation, Hollywood 
Indian Reservation, Immokalee Indian Reservation, Tampa Reservation in 
Florida.\10\
---------------------------------------------------------------------------

    \9\ https://www.fema.gov/disaster/4337/designated-areas.
    \10\ https://www.fema.gov/disaster/4341/designated-areas.
---------------------------------------------------------------------------

     All 159 counties in Georgia.\11\
---------------------------------------------------------------------------

    \11\ https://www.fema.gov/disaster/4338/designated-areas.
---------------------------------------------------------------------------

     All 46 counties, and the Catawba Indian Reservation in 
South Carolina.\12\
---------------------------------------------------------------------------

    \12\ https://www.fema.gov/disaster/4346/designated-areas.
---------------------------------------------------------------------------

     The following counties in Texas: Aransas; Austin; Bastrop; 
Bee; Bexar; Brazoria; Calhoun; Chambers; Colorado; Dallas; Dewitt; 
Fayette; Fort Bend; Galveston; Goliad; Gonzales; Hardin; Harris; 
Jackson; Jasper; Jefferson; Karnes; Kleberg; Lavaca; Lee; Liberty; 
Matagorda; Montgomery; Newton; Nueces; Orange; Polk; Refugio; Sabine; 
San Jacinto; San Patricio; Tarrant; Travis; Tyler; Victoria; Walker; 
Waller; and Wharton.\13\
---------------------------------------------------------------------------

    \13\ https://www.fema.gov/disaster/4332/designated-areas.
---------------------------------------------------------------------------

     The following parishes in Louisiana: Acadia; Allen; 
Assumption; Beauregard; Calcasieu; Cameron; De Soto; Iberia; Jefferson 
Davis; Lafayette; Lafourche; Natchitoches; Plaquemines; Rapides; Red 
River; Sabine; St. Charles; St. Mary; Vermilion; and Vernon.\14\
---------------------------------------------------------------------------

    \14\ https://www.fema.gov/disaster/4345/designated-areas.
---------------------------------------------------------------------------

    Using these criteria, CMS was able to identify at least 101 CJR 
participant hospitals located in the areas affected by Hurricanes 
Harvey and Hurricane Irma, approximately 12 CJR participant hospitals 
in the areas affected by Hurricane Nate, and at least 22 CJR 
participant hospitals in areas impacted by the California wildfires. As 
there are no CJR model areas in Puerto Rico or the U.S. Virgin Islands, 
we note that no CJR participant hospitals were impacted by Hurricane 
Maria. CMS will notify providers for whom this extreme and 
uncontrollable circumstances policy will apply for performance year 2 
(and subsequent performance years if and when the policy is invoked) 
via the initial reconciliation reports CMS delivers to providers upon 
completion of the reconciliation calculations, which under Sec.  
510.305(d) are initiated beginning 2 months after the close of the 
performance year.
    Though the Hurricanes and California wildfires were the driving 
force for developing the extreme and uncontrollable circumstance 
policy, this policy is being implemented for the duration of the CJR 
model, and we are amending the CJR regulations accordingly, as further 
outlined later.

B. Provisions for Adjusting Episode Spending Due to Extreme and 
Uncontrollable Circumstances

    Without a policy to provide CJR participant hospitals some 
flexibility in extreme and uncontrollable circumstances, we might 
inadvertently create an incentive to place cost considerations above 
patient safety, especially in the later years of the CJR model when the 
downside risk percentage increases. In considering policy alternatives 
to help ensure beneficiary protections by mitigating

[[Page 57095]]

participant hospitals' financial liability for costs resulting from 
extreme and uncontrollable circumstances, we considered and rejected a 
blanket cancellation of all episodes occurring during the relevant 
period. We do not believe that a blanket cancellation would be in 
either beneficiaries' or CJR participant hospitals' best interests, as 
it is possible that hospitals can manage costs and earn a 
reconciliation payment despite these extreme and uncontrollable 
circumstances.
    Furthermore, we would not want CJR participant hospitals to limit 
case management services for beneficiaries in CJR episodes during 
extreme and uncontrollable circumstances, when prudent care management 
could potentially involve using significantly more expensive transport 
or care settings. Therefore, we determined that capping the actual 
episode spending at the target amounts for those episodes would be the 
best way to protect beneficiaries from potential care stinting and 
hospitals from escalating costs. This will also ensure that those 
hospitals are still able to earn reconciliation payments on those 
eligible episodes where the disaster did not have a noticeable impact 
on cost.
    In determining the start date of episodes to which this extreme and 
uncontrollable circumstances policy would apply, we determined that a 
window of 30 days prior to and including the date that the emergency 
period (as defined in section 1135(g)) begins should reasonably capture 
those beneficiaries whose high CJR episode costs could be attributed to 
extreme and uncontrollable circumstances. We believe this 30-day window 
is particularly appropriate due to the 90-day CJR model episode length. 
Including all episodes that begin within 30 days before the date the 
emergency period begins should enable us to include the majority of 
beneficiaries still in institutional settings and who are still within 
the first third of their episodes when the extreme and uncontrollable 
circumstance arises. We note that the average length of stay for DRG 
469 is between 5 and 6 days and the average length of stay for DRG 470 
is between 2 and 3 days (see https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/FY2018-CMS-1677-FR-Table-5.zip).
    Under Sec.  510.300(a)(1), we differentiated fracture and non-
fracture CJR episodes and pricing, noting that lower extremity joint 
replacement procedures performed as a result of a hip fracture are 
typically emergent procedures. Fracture episodes typically occur for 
beneficiaries with more complex health issues and can involve higher 
episode spending. We do not expect a high volume of CJR non-fracture 
episodes to be initiated once extreme and uncontrollable circumstances 
arise, given that it is not prudent to conduct non-fracture major joint 
replacement surgeries, which generally are elective and non-emergent, 
until conditions stabilize and infrastructure is reasonably restored. 
Therefore, for non-fracture episodes, this extreme and uncontrollable 
circumstances policy will apply only to dates of admission to anchor 
hospitalization that occur between 30 days before and up to the date on 
which the emergency period (as defined in section 1135(g)) begins. We 
believe this policy empowers hospitals to decide whether they can 
safely and appropriately perform non-fracture THA and TKA procedures 
after the commencement of the emergency period and whether or not 
performing these procedures will subject their organization to undue 
financial risk resulting from increased costs that are beyond the 
organization's control.
    However, for CJR fracture episodes, the extreme and uncontrollable 
circumstances policy will apply to dates of admission to the anchor 
hospitalization that occur within 30 days before, on, or up to 30 days 
after the date the emergency period (as defined in section 1135(g)) 
begins. We recognize that fracture cases in CJR are often emergent and 
unplanned, and it may not be prudent to postpone major joint surgical 
procedures in many of those CJR fracture cases. Therefore, fracture 
episodes with a date of admission to the anchor hospitalization that is 
on or within 30 days before or after the date that the emergency period 
(as defined in section 1135(g) of the Act) begins are subject to this 
extreme and uncontrollable circumstances policy. We believe that this 
60-day window should ensure that hospitals caring for CJR fracture 
patients during extreme and uncontrollable circumstances are adequately 
protected from episode costs beyond their control.
    For performance years 2 through 5, for participant hospitals that 
are located in an emergency area during an emergency period, as those 
terms are defined in section 1135(g) of the Act, for which the 
Secretary has issued a waiver under section 1135, and in a county, 
parish, U.S. territory or tribal government designated in a major 
disaster declaration under the Stafford Act, the following conditions 
apply. For a non-fracture episode with a date of admission to the 
anchor hospitalization that is on or within 30 days before the date 
that the emergency period (as defined in section 1135(g)) begins, 
actual episode payments are capped at the target price determined for 
that episode under Sec.  510.300. For a fracture episode with a date of 
admission to the anchor hospitalization that is on or within 30 days 
before or after the date that the emergency period (as defined in 
section 1135(g)) begins, actual episode payments are capped at the 
target price determined for that episode under Sec.  510.300.
    We are codifying this new extreme and uncontrollable circumstance 
policy at Sec.  510.305(k). We seek comment on potential modifications 
refinements we might make to this policy for future performance year 
reconciliations after performance year 2.

D. Waiver of Proposed Rulemaking for Provisions Related to Extreme and 
Uncontrollable Circumstances

    Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), 
the agency is required to publish a notice of the proposed rule in the 
Federal Register before the provisions of a rule take effect. 
Similarly, section 1871(b)(1) of the Act requires the Secretary to 
provide notice of the proposed rule in the Federal Register with no 
less than 60 days for public comment. Section 553(b)(B) of the APA and 
section 1871(b)(2)(C) of the Act authorize an agency to dispense with 
normal rulemaking requirements for good cause if the agency makes a 
finding that the notice-and-comment process is impracticable, 
unnecessary, or contrary to the public interest.
    We find that there is good cause to waive the notice-and-comment 
requirements under sections 553(b)(B) of the APA and section 
1871(b)(2)(C) due to the impact of Hurricanes Harvey, Irma, and Nate 
and the California wildfires as described in section A. of this interim 
final rule with comment period. Based on the size and scale of the 
destruction and displacement caused by these natural disasters in the 
regions identified, and the news reports regarding specific impacts to 
hospitals that are participating in the CJR model discussed in section 
A of this interim final rule with comment, we believe it is likely that 
some CJR episodes at participant hospitals have been significantly and 
adversely affected by these events. As discussed in detail in section A 
of this interim final rule with comment, due to extreme flooding or 
infrastructure destruction where many major and minor roads became 
impassable and homes and/or institutions were flooded and rendered

[[Page 57096]]

inhabitable, it is possible that some beneficiaries may have required 
air ambulance transport or extended institutional stays in inpatient or 
post-acute care settings; these necessary services may drive actual 
episode costs well beyond the target prices.
    Furthermore, we received several requests for CMS to provide 
concessions for the unique challenges faced by CJR hospitals during the 
recent natural disasters. Commenters on the proposed rule noted that 
beneficiaries in disaster areas may have required unplanned or 
extensive healthcare services as a result of evacuation or other 
emergency situations and stated that CJR participant hospitals should 
not be held financially accountable for such spending that is beyond 
their control. They suggested that CMS offer a waiver of the 
participation requirement or another mechanism to ensure that hospitals 
are not held accountable for circumstances beyond their control due to 
natural disasters.
    Because the recent disasters impacted CJR participant hospitals 
during performance year 2 and will therefore flow into the payment 
reconciliation calculations in March 2018, potentially having a 
negative impact on providers unless an extreme and uncontrollable 
events policy is established immediately, we believe it is in the 
public interest to adopt these final policies. These policies will 
provide relief to impacted CJR participant hospitals and ensure they do 
not incur financial liability for costs outside their control. Without 
the immediate establishment of a policy providing additional 
flexibilities to CJR participant hospitals in extreme and 
uncontrollable circumstances, we could inadvertently incentivize 
patient care stinting as CJR participant hospitals contend with 
evacuation costs or potential longer inpatient stays during disasters. 
In particular, CJR hospitals may experience unintentional negative 
incentives as compared to other, non-CJR hospitals because their actual 
spending is compared to target prices, and they have downside risk 
responsibility for excess spending beyond their target prices. Without 
flexibilities provided, CJR hospitals in disaster areas may experience 
financial strain which could incentivize behaviors that could 
compromise the quality of care provided. Providing CJR participant 
hospitals with additional concessions in extreme and uncontrollable 
circumstances will strengthen beneficiary protections, which are 
integral to the model's goal of improving care quality.
    For the reasons discussed previously, we believe that it would be 
contrary to the public interest to undergo notice-and-comment 
procedures before finalizing the policies described for CJR participant 
hospitals that have been affected by extreme and uncontrollable events 
during performance year 2 of the model. Performance year 2 began on 
January 1, 2017 and concludes on December 31, 2017. With this interim 
final rule with comment period, it is our intention to reduce burden on 
and protect CJR participant hospitals and beneficiaries impacted by 
extreme and uncontrollable events. This extreme and uncontrollable 
circumstances policy will take effective with the publication of this 
final rule and interim final rule with comment and will be used during 
the reconciliation process for performance year 2 episodes that will 
occur beginning in March of 2018. We believe that an interim final rule 
with comment period minimizes hospitals' financial burden and avoids 
patient harm due to extenuating circumstances, efforts which would 
otherwise be protracted and become effective after the conclusion of 
performance year 2 if done through the notice-and-comment rulemaking 
process. Therefore, we find good cause to waive the notice of proposed 
rulemaking as provided under section 1871(b)(2)(C) of the Act and 
section 553(b)(B) of the APA and to issue this interim final rule with 
an opportunity for public comment. We are providing a 60-day public 
comment period as specified in the DATES section of this document.

E. Collection of Information Requirements Related to Extreme and 
Uncontrollable Circumstances

    As stated in section 1115A(d)(3) of the Act, Chapter 35 of title 
44, United States Code, shall not apply to the testing and evaluation 
of models under section 1115A of the Act. As a result, the information 
collection requirements contained in this final rule and interim final 
rule with comment period need not be reviewed by the Office of 
Management and Budget. However, we have summarized the anticipated cost 
burden associated with the information collection requirements in the 
Regulatory Impact Analysis section of this final rule and interim final 
rule with comment period.

F. Impacts Related to Extreme and Uncontrollable Circumstances

    In order to estimate the impacts resulting from this interim final 
rule with comment period, we utilized 2016 CJR episode level data to 
approximate the impact to projected CJR model savings resulting from 
the extreme and uncontrollable circumstance policy we are implementing 
in this interim final rule with comment period. Specifically, we first 
identified the CJR participant hospitals located in Alabama, 
California, Florida, Georgia, South Carolina, Mississippi, Texas and 
Louisiana (those states for which 1135 waivers were issued) that were 
also located in the counties listed in section III.A. of this interim 
final rule with comment period and listed on www.FEMA.gov/disasters as 
having a major disaster declaration. To approximate the date of the 
emergency, we used the date of the disasters as listed on the FEMA Web 
site from 2017 (resetting the year to 2016 to align with the claim 
dates of service) and selected all CJR episodes for these providers 
that initiated in the month preceding (that is, 30 days prior) the date 
of the disaster. Date of disaster declaration dates were matched to the 
CJR participant hospitals based on the hospitals' state addresses.
    For non-fracture episodes, we capped the actual episode payment at 
the target price determined for that episode if the date of admission 
to the anchor hospitalization is on or within 30 days before the date 
that the emergency period (as defined in section 1135(g) of the Act) 
begins. For fracture episodes, we capped the actual episode payment at 
the target price determined for that episode if the date of admission 
to the anchor hospitalization that is on or within 30 days before or 
after the date that the emergency period (as defined in section 1135(g) 
of the Act) begins. Our analyses indicate that the impact of capping 
the actual episode payments at the episode target prices based on the 
2017 extreme and uncontrollable events policy could result in a 
decrease to the CJR model estimated savings ranging between $1.5 to 
$5.0 million for performance year 2. We note that the projected impact 
was mitigated by the 5 percent stop-loss/stop-gain levels applicable to 
performance year 2 and add that if these disasters had occurred in a 
future performance year with higher stop-loss/stop-gain levels then we 
would expect the projected impact to increase. These savings estimates 
do not assume any change in spending or volume due to these extreme and 
uncontrollable circumstances, neither before nor after the date of the 
disaster as listed on the FEMA Web site.
    We utilized 2016 CJR model episode data assuming that it presented 
the best available proxy for estimating impacts to projected CJR model 
savings resulting from 2017 disasters. We modeled impact to savings 
projections using 2016 data during the same months in which

[[Page 57097]]

the 2017 disasters occurred, for hospitals impacted by the disasters. 
We note that due to lack of available actual claims data due to timing, 
we could not utilize actual 2017 performance data to estimate impacts 
from this interim final rule with comment period.
    Our estimates resulted from modeling which utilized all CJR model 
episode data for impacted hospitals in Alabama, Georgia, South 
Carolina, Louisiana, and California for the month of October, 2016 and 
CJR model fracture episodes only for impacted hospitals in Alabama, 
Georgia, South Carolina, Louisiana, and California for the month of 
November, 2016. We also utilized all CJR episode data for impacted 
hospitals in Texas and Florida during the month of September, 2016 and 
CJR model fracture episodes only for impacted hospitals in Texas and 
Florida for the month of October 2016. To model estimated impacts to 
savings projections resulting from this interim final rule with comment 
period, we recalculated NPRA based on the aforementioned policies.
    While we acknowledge that our estimates related to impacts 
resulting from this interim final rule with comment period may under- 
or over-estimate actual impacts resulting from the policies, we believe 
our assumptions are well-aligned with our other impact projections in 
this final rule and appropriately reflect our estimates of the impacts 
resulting from these policies.

IV. Collection of Information Requirements

    As stated in section 1115A(d)(3) of the Act, Chapter 35 of title 
44, United States Code, shall not apply to the testing and evaluation 
of models under section 1115A of the Act. As a result, the information 
collection requirements contained in this final rule and interim final 
rule with comment period need not be reviewed by the Office of 
Management and Budget. However, we have summarized the anticipated cost 
burden associated with the information collection requirements in the 
Regulatory Impact Analysis section of this final rule and interim final 
rule with comment period.

V. Regulatory Impact Analysis

A. Introduction

    We have examined the impacts of this final rule and interim final 
rule with comment period as required by Executive Order 12866 on 
Regulatory Planning and Review (September 30, 1993), Executive Order 
13563 on Improving Regulation and Regulatory Review (January 18, 2011), 
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999) and the 
Congressional Review Act (5 U.S.C. 804(2)), and Executive Order 13771 
on Reducing Regulation and Controlling Regulatory Costs (January 30, 
2017).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
This final rule cancels the EPMs and the CR Incentive Payment Model in 
advance of their start date and revises the design of the CJR model; 
these provisions impact a subset of hospitals under the IPPS. 
Therefore, it would have a relatively small economic impact; as a 
result, this final rule does not reach the $100 million threshold and 
thus is neither an ``economically significant'' rule under E.O. 12866, 
nor a ``major rule'' under the Congressional Review Act.

B. Statement of Need

    As discussed previously, review and reevaluation of policies and 
programs, as well as revised rulemaking, are within an agency's 
discretion, especially after a change in administration occurs. After 
review and reevaluation of the CJR model final rule, the EPM final rule 
and the public comments we received in response to the March 21, 2017 
IFC, in addition to other considerations, we have determined that it is 
necessary to rescind the regulations at 42 CFR part 512 and to reduce 
the scope of the CJR model for the following reasons. We believe that 
reducing the number of hospitals required to participate in the CJR 
model will allow us to continue to evaluate the effects of such a model 
while limiting the geographic reach of our current mandatory models. 
Additionally, we believe that canceling the EPMs and CR Incentive 
Payment Model, as well as altering the scope of the CJR model, offers 
CMS maximum flexibility to design alternative episode-based models and 
make potential improvements to these models as suggested by 
stakeholders, while still allowing us to test and evaluate the impact 
of the CJR model on the quality of care and expenditures.
    This final rule and interim final rule with comment period is also 
necessary to improve the CJR model for performance years 3, 4, and 5. 
We are implementing a few technical refinements and clarifications for 
certain payment, reconciliation and quality provisions, and changing 
the criteria for the Affiliated Practitioner List to broaden the CJR 
Advanced APM track to additional eligible clinicians. We believe these 
refinements will address operational issues identified since the start 
of the CJR model.

C. Anticipated Effects

    In section III. of this final rule and interim final rule with 
comment period, we discuss the policies we are finalizing to amend the 
regulations governing the CJR model. We present the following estimated 
overall impact of the proposed changes to the CJR model. Table 6 
summarizes the estimated impact for the CJR model for the last 3 years 
of the model. The modeling methodology for provider performance and 
participation is consistent with the methodology used in modeling the 
CJR impacts in the EPM final rule (82 FR 596). However, we updated our 
analysis to include an opt-in option for hospitals in 33 of the 67 MSAs 
selected for participation in the CJR model (all but 4 of these MSAs 
are from the lower cost groups), while maintaining mandatory 
participation for the remaining 34 MSAs (all of which are from the 
higher cost groups), and allowing for the exclusion of low-volume and 
rural hospitals in these 34 MSAs from mandatory participation and 
allowing them to choose voluntary participation (opt-in).
    We note that we updated the list of excluded rural hospitals 
between the proposed and final rules as we did not have a complete set 
of rural hospitals; this final rule now includes in the analysis 
approximately 23 additional rural hospitals that we anticipate will not 
opt-in to the CJR model in this final rule. We expect the number of 
mandatory participating hospitals from year 3 forward to decrease from 
approximately 700, which is approximately the number of current CJR 
participant hospitals, to approximately 370. We assumed that if a 
hospital would exceed its target pricing such that it would incur an 
obligation of repayment to CMS of 3 percent or more in a given year, 
that hospital would not elect voluntary participation in the model for 
the final 3 performance years.
    We assumed no low-volume hospitals would participate, noting that 
including

[[Page 57098]]

them in impacts would not have any noticeable effects due to their low 
claims volume. For purposes of identifying CJR rural hospitals for this 
impact, we used the 2018 IPPS Sec.  412.103 rural reclassification list 
and checked the addresses of record for the CJR hospitals to identify 
any located within the rural RUCA census tracts. The likelihood of 
voluntary participation linearly increases based on an upper bound of 3 
percent bonus, but the modeling assumed that 25 percent of hospitals in 
the voluntary MSAs would not consider participation so that the 
likelihood of participation for each hospital was capped at 75 percent; 
we expected 60 to 80 hospitals to elect voluntary participation in the 
model. We sought comment on our assumptions about the number of 
hospitals that would elect voluntary participation in the CJR model.
    Due to a lack of available data, we did not account for participant 
investment in the impact analysis model we used for the proposed rule. 
However, we noted that we would expect that those who choose to 
voluntarily participate would have made investments in the CJR model 
that enable them to perform well and that they would anticipate earning 
positive reconciliation payments. For those hospitals choosing not to 
voluntarily participate, we would expect that the cost of any 
investments they may have made based on their participation in 
performance years 1 and 2 of the CJR model would be outweighed by the 
reconciliation payment obligations they would expect to incur if they 
continued to participate.
    The 60 to 80 participants we expect to continue participating in 
the model through the voluntary election process are not included in 
our previous estimate of 370 CJR participants in the mandatory MSAs. 
Thus, in total we expected approximately 430 to 450 participants in the 
CJR model for the final 3 performance years. The participation 
parameters were chosen to reflect both the anticipated risk aversion of 
hospitals, and an expectation that many participants do not remain in 
an optional model or demonstration when there is an expectation that 
the hospital would incur an obligation of repayment to CMS. These 
assumptions reflected the experience with other models and 
demonstrations. The value of 3 percent may be somewhat larger than the 
level of repayment at which hospitals would opt-in, but the value was 
chosen to allow for the uncertainty of expected claims. We noted that 
the possibility of shifting episodes from CJR model participant 
hospitals to low-volume or other non-participating hospitals exists and 
that we did not include any assumptions of this potential behavior in 
our financial impact modeling. We sought comment on our model 
assumptions that shifting of episodes will not occur.
    The calculations estimated that the CJR model would result in a net 
Medicare program savings of approximately $189 million over the 3 
remaining performance years (2018 through 2020). This represents a 
reduction in savings of approximately $106 million from the estimated 
net financial impacts of the CJR model in the EPM final rule (82 FR 
603).
    Our previous analyses of the CJR model did not explicitly model for 
utilization changes, such as improvements in the efficiency of service 
during episodes. However, these behavioral changes would have minimal 
effect on the Medicare financial impacts. If the actual costs for an 
episode are below the discounted bundled payment amount, then CMS 
distributes the difference between these two amounts to the participant 
hospital, up to a capped amount. Similarly, if actual costs for an 
episode are above the discounted bundled payment amount, then the 
participant hospital pays CMS the difference between these amounts, up 
to a capped amount. Due to the uncertainty of estimating the impacts of 
this model, actual results could be higher or lower than this estimate.

   Table 6--Comparison of Initial Estimate of the Impact on the Medicare Program of the CJR Model With Revised
                                                    Estimates
                         [Figures are in $ millions, negative values represent savings]
----------------------------------------------------------------------------------------------------------------
                      Year                             2018            2019            2020            Total
----------------------------------------------------------------------------------------------------------------
Initial CJR Estimate............................             -61            -109            -125            -294
Revised CJR Estimate............................             -35             -72             -82            -189
Change..........................................              26              37              43             106
----------------------------------------------------------------------------------------------------------------
Note: The initial estimate included the changes to the CJR model finalized in the EPM final rule (82 FR 603).
  The 2016 and 2017 initial estimate was not impacted by the proposed changes to the CJR model in the August 17,
  2017 proposed rule (82 FR 39310 through 39333). The total column reflects 2018 through 2020. Totals do not
  necessarily equal the sums of rounded components.

    The revised impact of EPM and the CR Incentive Payment as a result 
of ``Advancing Care Coordination Through Episode Payment Models (EPMs); 
Cardiac Rehabilitation Incentive Payment Model; and Changes to the 
Comprehensive Care for Joint Replacement Model'' published in the 
January 3, 2017 Federal Register (82 FR 597), estimated an annual cost 
of $32 million for 2018 and annual savings of $29 million, $36 million, 
$52 million, and $119 million for years 2019-2022, respectively. 
Additionally, assuming a zero percent growth in cardiac rehabilitation 
resulting from the CR Incentive Payment Model (see 82 FR 604 for a 
discussion of the original cardiac rehabilitation impact where we 
estimated an impact range between a cost of $29 million to a savings of 
$32 million over 2017 to 2024; we note we assumed a zero percent growth 
rate for purposes of the accounting statement in the January 3, 2017 
final rule and continue to do so here), we projected annual costs to 
the Medicare program of $4.8 million, $6.7 million, $7.2 million, $7.6 
million, $8.1 million for the years 2018 through 2022, respectively, 
and projected neither costs nor savings for the years 2023 and 2024. 
Table 7 summarizes the anticipate changes to the savings and cost 
estimates resulting from the cancellation of the EPMs and CR Incentive 
Payment model relative to the previously projected savings estimates. 
Overall, the change to projected savings and costs resulting from the 
cancellation of these models totals $170 million, reflecting a 
reduction in savings for years 2018 through 2022 resulting from 
cancelation of the EPMs and a reduction in costs for years 2018 through 
2022 resulting from the cancelation of the CR Incentive Payment Model.

[[Page 57099]]



    Table 7--Comparison of Iniitial Estimate of the Impact on the Medicare Program of the EPMS and CR Incentive Payment Model With Revised Estimates
                                             [Figures are in $ millions, negative values represent savings]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          Year                                 2018            2019            2020            2021            2022            Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Previous EPM Estimate...................................             $32           ($29)           ($36)           ($52)          ($119)          ($204)
Previous CR Incentive Payment Model Estimate............               5               7               7               8               8              34
Total Initial Estimate..................................              37            (22)            (29)            (45)           (111)           (170)
Revised Total Estimate..................................               0               0               0               0               0               0
Change..................................................            (37)              22              29              45             111             170
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Totals do not necessarily equal the sums of rounded components.

    Our analysis presented the cost and transfer payment effects of the 
proposed rule to the best of our ability.
    Comment: Several commenters questioned the validity of our proposed 
estimated reduction in savings of $90 million throughout the remainder 
of the model due to the proposed changes to the CJR model. The 
commenter stated that the projected $90 million in reduced savings is 
only part of the total savings that would result from continuing the 
CJR model in its original, entirely mandatory, form. This commenter 
stated that savings will increase due to the CJR model's increased 
regional pricing component beginning in performance year 4.
    Response: We thank the commenters for their input. We acknowledge 
that our total savings estimates (which we note shifted from $90 
million in the proposed rule to $108 million in this final rule and 
interim final rule with comment period, with $106 million due to final 
changes to the CJR model as (well as the exclusion of an additional 23 
rural hospitals we did not account for in the proposed rule) and an 
additional $2 million resulting from the impacts of this interim final 
rule with comment) may prove imperfect. As with all rule and regulation 
development, CMS utilized standard savings modeling methodology to 
determine estimates of the effects from this rule. Our current modeling 
reflects our proposal to alter the existing CJR model for the final 
three performance years of 2018 through 2020.
    Comment: A commenter asserted that the proposed voluntary model 
structure would allow for ``cherry picking'' of CJR patients by 
participating hospitals and create selection bias that may alter or 
interfere with evaluation efforts.
    Response: We appreciate the commenter's concern about the proposed 
voluntary format. We note that the final policy will allow for a one-
time opt in for certain hospitals and that these hospitals will be 
participants in the CJR model should they elect to proceed. Hospitals 
that elect to voluntarily participate in CJR will be held to the same 
standards, regulations and programmatic expectations as the hospitals 
within the mandatory MSAs. Thus, we would not anticipate hospitals 
electing voluntary participation in CJR to be any more or less likely 
than hospitals within the mandatory MSAs to engage in concerning 
behaviors such as care stinting or biased patient selection for 
surgery. We appreciate the commenter's concern that the proposed model 
design could impede evaluation efforts and refer readers to discussion 
of the impact on the evaluation in section II.A of this final rule and 
interim final rule with comment period.

D. Effects on Beneficiaries

    We believe that the cancellation of the EPMs and CR Incentive 
Payment Model will not affect beneficiaries' freedom of choice to 
obtain healthcare services from any individual or organization 
qualified to participate in the Medicare program, including hospitals 
that are making care improvements within their communities. Although 
these models seek to incentivize care redesign and collaboration 
throughout the inpatient and post-acute care spectrum, the models have 
not yet begun. As the current baseline assumes these models will become 
effective on January 1, 2018, and that these models will incentivize 
care improvements that will likely result in an increase in quality of 
care for beneficiaries, we note that it is possible that the 
cancellation of these models may cause hospitals that potentially made 
improvements in care in anticipation of the start of these models to 
delay or cease these investments, which may result in a reversal of any 
recent quality improvements. However, we believe the concerns raised by 
stakeholders and the lack of time to consider design improvements for 
these models prior to the January 1, 2018 start date outweigh potential 
reversal of any recent improvements in care potentially made by some 
hospitals and warrant cancellation of these models at this time while 
we engage with stakeholders to identify future tests for bundled 
payments and incentivizing high value care.
    We believe that the changes to the CJR model discussed in this 
final rule and interim final rule with comment period, specifically 
focusing the model on higher cost MSAs in which participation will 
continue to be mandatory and allowing low-volume and rural hospitals 
and all participant hospitals in lower cost MSAs to choose voluntary 
participation, will maintain the potential benefits of the CJR model 
for beneficiaries in many areas while providing a substantial number of 
hospitals with increased flexibility to better focus on priority needs 
of the beneficiaries they serve. Specifically, low-volume and rural 
hospitals as well as other hospitals in the 33 voluntary participation 
MSAs (which are relatively more efficient areas) may elect to 
participate in the CJR model if they believe that doing so best meets 
their organization's strategic priorities for serving the beneficiaries 
in their community. Alternatively, if these hospitals do not believe 
continued participation in the CJR model will benefit their 
organizational goals and local patient care priorities, they may elect 
not to opt-in for the remainder of the model. We believe that 
beneficiaries in the service areas of the hospitals that will be 
allowed to choose to participate in the CJR model may have an ongoing 
benefit from the care redesign investments these hospitals have already 
made during the first 2 years of the CJR model. Overall, we believe the 
refinements to the CJR model implemented by this final rule and interim 
final rule with comment period do not materially alter the potential 
effects of the model on beneficiaries. However, we acknowledge the 
possibility that the improved quality of care that was likely to have 
occurred during performance years 1 and 2 of the CJR model may be 
curtailed for beneficiaries that receive care at

[[Page 57100]]

hospitals that do not elect to continue participation in the CJR model.
    Comment: A commenter expressed concern for the unintended 
consequences on beneficiaries that result from implementation of 
mandatory models. The commenter stated that a mandatory approach to 
model implementation will force some hospitals to participate in a 
model for which they are ill-prepared, potentially limiting 
beneficiaries' access to care.
    Response: We appreciate the commenter's concern about unintended 
consequences resulting from the CJR model and as such, note that 
beneficiary protection remains a very high priority as originally 
specified in the CJR final rule. We will continue to diligently monitor 
CJR model participant behavior for the potential for any adverse 
outcomes resulting from model participation.

E. Effects on Small Rural Hospitals

    The changes to the CJR model implemented by this final rule and 
interim final rule with comment period do not substantially alter our 
previous impacts of the impact on small, geographically rural hospitals 
specified in either the EPM final rule (82 FR 606) or the CJR model 
final rule (80 FR 73538) because we continue to believe that few 
geographically rural hospitals will be included in the CJR model. In 
addition, allowing all rural hospitals (as defined in Sec.  510.2) that 
are not otherwise excluded the opportunity to elect to opt-in to the 
CJR model instead of having a mandatory participation requirement may 
further reduce the likelihood that rural hospitals will be included in 
the model. We solicited public comment on our estimates and analysis of 
the impact of our proposals on small rural hospitals.
    Comment: We received no comments regarding the effects of these 
policies on small rural hospitals.

F. Effects on Small Entities

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. We estimated that most hospitals and most 
other providers and suppliers are small entities, either by virtue of 
their nonprofit status or by qualifying as small businesses under the 
Small Business Administration's size standards (revenues of less than 
$7.5 to $38.5 million in any 1 year; NAIC Sector-62 series). States and 
individuals are not included in the definition of a small entity. For 
details, see the Small Business Administration's Web site at http://www.sba.gov/content/smallbusiness-size-standards.
    For purposes of the RFA, we generally consider all hospitals and 
other providers and suppliers to be small entities. We believe that the 
provisions of this final rule and interim final rule with comment 
period relating to acute care hospitals will have some effects on a 
substantial number of other providers involved in these episodes of 
care including surgeons and other physicians, skilled nursing 
facilities, physical therapists, and other providers. Although we 
acknowledge that many of the affected entities are small entities, and 
the analysis discussed throughout this final rule and interim final 
rule with comment period discusses aspects of episode payment models 
that may or would affect them, we have no reason to assume that these 
effects would reach the threshold level of 3 percent of revenues used 
by HHS to identify what are likely to be ``significant'' impacts. We 
assume that all or almost all of these entities will continue to serve 
these patients, and to receive payments commensurate with their cost of 
care. Hospitals currently experience frequent changes to payment (for 
example, as both hospital affiliations and preferred provider networks 
change) that may impact revenue, and we have no reason to assume that 
this will change significantly under the changes implemented by this 
final rule and interim final rule with comment period.
    Accordingly, we have determined that this final rule and interim 
final rule with comment period will not have a significant impact on a 
substantial number of small entities. We solicited public comments on 
our estimates and analysis of the impact of the proposed rule on those 
small entities.
    Comment: We did not receive comments regarding this section.

G. Effects of Information Collection

    The changes implemented by this final rule and interim final rule 
with comment period will have a minimal additional burden of 
information collection for CJR model participant hospitals. The two 
areas which this final rule and interim final rule with comment period 
may increase participant burden include providing clinician engagement 
lists and submitting opt-in documentation (for eligible hospitals who 
choose to opt-in to the CJR model).
    Clinician engagement list submission for the CJR model will require 
that participants submit on a no more than quarterly basis a list of 
physicians, non-physician practitioners, or therapists who are not a 
CJR model collaborator during the period of the CJR model performance 
year specified by CMS but who do have a contractual relationship with a 
CJR model participant hospital based at least in part on supporting the 
participant hospital's quality or cost goals under the CJR model during 
the period of the performance year specified by CMS.
    For hospitals eligible to opt-in to the CJR model that elect to 
participate in the model, CMS intends to provide a template that can be 
completed and submitted prior to the January 31, 2018 submission 
deadline. As stated previously, we estimate that the number of 
hospitals that will elect voluntary participation in CJR is 60 to 80. 
As stated previously, this template would be designed to minimize 
burden on participants, and the template will capture the information 
required to effectively opt-in to the model. Using wage information 
from the Bureau of Labor Statistics for medical and health service 
managers (Code 11-9111), we assumed a rate of $105.16 per hour, 
including overhead and fringe benefits (https://www.bls.gov/oes/current/oes_nat.htm) and estimated that the time to complete the opt-in 
template would be, on average, approximately 30 minutes per hospital. 
Thus, total costs associated with completing opt-in templates for all 
60 to 80 hospitals projected to elect voluntary participation is 
expected to range between $3,150 (60 hospitals) and $4,200 (80 
hospitals).
    We sought comment on our assumptions and information on any costs 
associated with this work.
    Comment: Several commenters stated that the administrative burden 
resulting from the clinician engagement list requirements, sharing 
arrangement reporting and beneficiary notification mandates of the CJR 
model is overwhelming. A commenter added that any reduction in burden 
that can be achieved would be helpful to hospitals and would enable 
patient-centered care. Another commenter stated that they have 
significant concerns about hospitals' ability to maintain accurate 
clinician engagement lists with start and end dates for each clinician. 
The commenter noted that this would be particularly challenging for 
hospitals in California, where they believe alignment with providers is 
particularly complicated, thus making a list of this type burdensome to 
maintain.
    Response: We appreciate the commenters' concerns over the 
administrative burden associated with the CJR model as well as the 
burden

[[Page 57101]]

resulting from clinician engagement lists and the concern that 
maintaining accurate lists will prove particularly difficult for some 
providers. We acknowledge that the requirement of submitting clinician 
engagement lists may be burdensome for providers. However, as discussed 
in section III.F. of the proposed rule, we developed this requirement 
in response to feedback from stakeholders who expressed a desire to 
enhance opportunities for those physicians, non-physician 
practitioners, and therapists without a financial arrangement under the 
CJR model, but who are affiliated with and support the Advanced APM 
Entity in its participation in the Advanced APM for purposes of the 
Quality Payment Program.

H. Regulatory Review Costs

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this final rule and 
interim final rule with comment period, we should estimate the cost 
associated with regulatory review. Due to the uncertainty involved with 
accurately quantifying the number of entities that will review the 
final rule and interim final rule with comment period, we assume that 
the total number of unique commenters on the July 25, 2016 proposed 
rule that proposed the EPMs and CR Incentive Payment Model will be the 
number of reviewers of this final rule and interim final rule with 
comment period. We received 85 unique comment submissions for this 
final rule but maintain that the 175 comments received for the July 25, 
2016 EPM and CR Incentive Payment Model proposed rule reflects a more 
conservative estimate of the number of organizations which invested 
resources in review of this final rule, regardless of whether or not 
the organization elected to formally submit comments. We acknowledge 
that this assumption may understate or overstate the costs of reviewing 
this final rule and interim final rule with comment period. It is 
possible that not all commenters reviewed the precedent rule in detail, 
and it is also possible that some reviewers chose not to comment on the 
proposed rule. For these reasons we believe that the number of past 
commenters on the EPM proposed rule would be a fair estimate of the 
number of reviewers of this rule.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of the proposed rule. 
However, for the purposes of our estimate we assume that each reviewer 
reads approximately 100 percent of the rule.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $105.16 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average 
reading speed, we estimate that it would take approximately 1.6 hours 
for the staff to review the proposed rule. For each entity that reviews 
the rule, the estimated cost is $168.26 (1.6 hours x $105.16). 
Therefore, we estimate that the total cost of reviewing this regulation 
is $29,445 ($105.16 x 175 reviewers).

I. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2017, that 
is approximately $148 million. This final rule and interim final rule 
with comment period does not include any mandate that would result in 
spending by state, U.S. territories, local or tribal governments, in 
the aggregate, or by the private sector in the amount of $148 million 
in any 1 year.

J. Federalism

    We do not believe that there is anything in this final rule and 
interim final rule with comment period that either explicitly or 
implicitly preempts any state law, and furthermore we do not believe 
that this final rule and interim final rule with comment period will 
have a substantial direct effect on state or local governments, preempt 
state law, or otherwise have a federalism implication.

K. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs (82 FR 9339), was issued on January 30, 2017. This 
final rule and interim final rule with comment period is not expected 
to be subject to the requirements of E.O. 13771 because it is estimated 
to result in no more than de minimis costs.

L. Alternatives Considered

    Throughout this final rule and interim final rule with comment 
period, we have identified our policies and alternatives that we have 
considered, and provided information as to the effects of these 
alternatives and the rationale for each of the policies. We considered 
but did not propose to allow voluntary participation in all of the 67 
selected MSAs in the CJR model because the overall estimated CJR model 
impact would no longer show savings, and would likely result in costs. 
An entirely voluntary CJR model would likely result in costs due to the 
assumption that, in aggregate, hospitals that expect to receive a 
positive reconciliation payment from Medicare would elect to opt-in to 
the model while hospitals that expect to owe Medicare a reconciliation 
amount would not likely elect to participate in the model. We also 
considered but did not propose limiting participation to the proposed 
34 mandatory participation MSAs and not allowing voluntary 
participation in any of the 67 selected MSAs. In the August 17, 2017 
proposed rule, we noted that if participation was limited to the 
proposed 34 mandatory participation MSAs and voluntary participation 
was not allowed in any MSA, the impact to the overall estimated model 
savings over the last 3 years of the model would be closer to $30 
million than the $90 million estimate presented in section V. of the 
proposed rule (82 FR 39327 through 39331), because our modeling did not 
include assumptions about behavioral changes that might lower fee-for-
service spending. Since our impact model estimated that 60 to 80 
hospitals would choose voluntary participation and that these potential 
voluntary participants would be expected to earn only positive 
reconciliation payments under the model, these positive payments to the 
voluntary participants would offset some of the savings garnered from 
mandatory participants. However, we did propose to allow voluntary 
participation in the proposed 33 voluntary participation MSAs and for 
low-volume and rural hospitals to permit hospitals that have made 
investments in care redesign and commitments to improvement to continue 
to participate in the model for the remaining 3 years. We stated that 
we believed our proposal would benefit a greater number of 
beneficiaries because a greater number of hospitals would be included 
in the CJR model.
    Instead of proposing to cancel the EPMs and CR Incentive Payment 
Model, we considered altering the design of these models to allow for 
voluntary participation but as this would potentially involve 
restructuring the model design, payment methodologies, financial 
arrangement provisions and/or quality measures, we did not believe that 
such alterations would offer providers enough time to prepare for such 
changes, given the planned

[[Page 57102]]

January 1, 2018 start date. In addition, if at a later date we decided 
to offer these models, or similar models we would not expect to 
implement them through rulemaking if done on a voluntary basis, but 
rather would establish them consistent with the manner in which we have 
implemented other voluntary models.
    We solicited and welcomed comments on our proposals, on the 
alternatives we identified, and on other alternatives that we should 
consider, as well as on the costs, benefits, or other effects of these.
    We did not receive any comments regarding this section.

M. Accounting Statement and Table

    As required by OMB Circular A-4 under Executive Order 12866 
(available at http://www.whitehouse.gov/omb/circulars_a004_a-4) in 
Table 8, we have prepared an accounting statement showing the 
classification of transfers associated with the provisions in this 
final rule and interim final rule with comment period. The accounting 
statement is based on estimates provided in this regulatory impact 
analysis. As described in Table 6, we estimate the changes to the CJR 
model will continue to result in savings to the federal government of 
approximately $189 million over the 3 remaining performance years of 
the model from 2018 to 2020, noting these changes do reduce the 
original CJR estimated savings by approximately $106 million. As 
described in section F of the interim final rule with comment in this 
rule, we anticipate an additional cost due to currently known events 
between $1.5 and $5 million from the extreme and uncontrollable events 
policy we are establishing in this interim final rule with comment. We 
project $2.0 million as a point-estimate for one-time cost associated 
with the extreme and uncontrollable events policy during performance 
year 2. The impact over subsequent years will depend on the number of 
events in CJR regions and the stop-gain and stop-loss limits for that 
year. In Table 8, the overall annualized change in payments (for all 
provisions in this final rule and interim final rule with comment 
period relative to the CJR, EPM and CR models as originally finalized) 
based on a 7-percent and 3-percent discount rate, results in net 
federal monetary transfer from the federal government to participant 
IPPS hospitals of $199.3 million and $239.1 million in 2017 dollars, 
respectively, over the period of 2018 to 2022. Both of these estimates 
of the net transfer would increase by $2 million for the one-time cost 
of the 2017 disaster declarations.

   Table 8--Accounting Statement Changes to Comprehensive Care for Joint Replacement Model and Cancellation of
  Episode Payment Models and CR Incentive Payment Model for Performance Years 2018 to 2022 and CJR Extreme and
                                    Uncontrollable Circumstances Policy 2017
----------------------------------------------------------------------------------------------------------------
                                                                             Units
                                              ------------------------------------------------------------------
           Category               Estimates                     Discount rate
                                                 Year dollar         (%)                 Period covered
----------------------------------------------------------------------------------------------------------------
Costs: *
    Upfront cost of                      0.03            2017               7  -2018 upfront cost.
     regulation ($million).
                              ----------------------------------------------------------------------------------
                                         0.03            2017               3  -2018 upfront cost.
----------------------------------------------------------------------------------------------------------------
From Whom to Whom............              Incurred by IPPS Hospitals as a result of this final rule.
----------------------------------------------------------------------------------------------------------------
Impact of Disaster
 Declaration in 2017:
    One-time cost of Disaster               2            2017               7  -2017 one-time cost.
     Declaration.
                                            2            2017               3  -2017 one-time cost.
                              ----------------------------------------------------------------------------------
From Whom to Whom............         From the Federal Government to 2017 disaster declaration hospitals.
----------------------------------------------------------------------------------------------------------------
Transfers:
    Annualized/Monetized                 48.6            2017               7  2018-2022.
     ($million/year).
                                         52.2            2017               3  2018-2022.
                              ----------------------------------------------------------------------------------
From Whom To Whom............             From the Federal Government to Participating IPPS Hospitals.
----------------------------------------------------------------------------------------------------------------
* The cost includes the regulatory familiarization and completing opt-in templates for up to 80 hospitals to
  join the CJR model.

N. Conclusion

    This analysis, together with the remainder of this preamble, 
provides the Regulatory Impact Analysis of a rule. As a result of this 
final rule and interim final rule with comment period, we estimate that 
the financial impact of the changes to the CJR model will result in a 
reduction to previously estimated savings by $106 million over the 3 
remaining performance years (2018 through 2020) and a financial impact 
of $2 million reduction in savings estimates for the one-time cost 
resulting from the impacts of disaster declaration in 2017 although we 
note that the CJR model will still be estimated to save the Medicare 
program approximately $189 million over the remaining 3 performance 
years. We note that the projected $170 million savings we had estimated 
that the EPMs and CR Incentive Payment Model would generate for the 
Medicare program will not be realized as this final rule and interim 
final rule with comment is cancelling those models.
    In accordance with the provisions of Executive Order 12866, this 
final rule was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 510

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 512

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, under the authority at 
section 1115A of the Social Security Act, the Centers for Medicare & 
Medicaid

[[Page 57103]]

Services amends 42 CFR chapter IV, as set forth below.

PART 510--COMPREHENSIVE CARE FOR JOINT REPLACEMENT MODEL

0
1. The authority citation for part 510 continues to read as follows:

    Authority: Secs. 1102, 1115A, and 1871 of the Social Security 
Act (42 U.S.C. 1302, 1315(a), and 1395hh).


0
2. Section 510.2 is amended by--
0
a. Revising the definition of ``Actual episode payment'';
0
b. Adding, in alphabetical order, definitions of ``Low-volume 
hospital'' and ``Mandatory MSA''.
0
c. Revising the definition of ``Participant hospital''; and
0
d. Adding the definition of ``Voluntary MSA''.
    The revisions and additions read as follows:


Sec.  510.2  Definitions.

* * * * *
    Actual episode payment means the sum of standardized Medicare 
claims payments for the items and services that are included in the 
episode in accordance with Sec.  510.200(b), excluding the items and 
services described in Sec.  510.200(d).
* * * * *
    Low-volume hospital means a hospital identified by CMS as having 
fewer than 20 LEJR episodes in total across the 3 historical years of 
data used to calculate the performance year 1 CJR episode target 
prices.
* * * * *
    Mandatory MSA means an MSA designated by CMS as a mandatory 
participation MSA in accordance with Sec.  510.105(a).
* * * * *
    Participant hospital means one of the following:
    (1) During performance years 1 and 2 of the CJR model and the 
period from January 1, 2018 to January 31, 2018 of performance year 3, 
a hospital (other than a hospital excepted under Sec.  510.100(b)) with 
a CCN primary address located in one of the geographic areas selected 
for participation in the CJR model in accordance with Sec.  510.105.
    (2) Beginning February 1, 2018, a hospital (other than a hospital 
excepted under Sec.  510.100(b)) that is one of the following:
    (i) A hospital with a CCN primary address located in a mandatory 
MSA as of February 1, 2018 that is not a rural hospital or a low-volume 
hospital on that date.
    (ii) A hospital that is a rural hospital or low-volume hospital 
with a CCN primary address located in a mandatory MSA that makes an 
election to participate in the CJR model in accordance with Sec.  
510.115.
    (iii) A hospital with a CCN primary address located in a voluntary 
MSA that makes an election to participate in the CJR model in 
accordance with Sec.  510.115.
* * * * *
    Voluntary MSA means an MSA designated by CMS as a voluntary 
participation MSA in accordance with Sec.  510.105(a).

0
3. Section 510.105 is amended by revising paragraph (a) to read as 
follows:


Sec.  510.105  Geographic areas.

    (a) General. The geographic areas for inclusion in the CJR model 
are obtained based on a stratified random sampling of certain MSAs in 
the United States.
    (1) All counties within each of the selected MSAs are selected for 
inclusion in the CJR model.
    (2) Beginning with performance year 3, the selected MSAs are 
designated as either mandatory participation MSAs or voluntary 
participation MSAs.
* * * * *

0
4. Section 510.115 is added to read as follows:


Sec.  510.115  Voluntary participation election.

    (a) General. To continue participation in performance year 3 and 
participate in performance year 4 and performance year 5, the following 
hospitals must submit a written participation election letter as 
described in paragraph (c) of this section during the voluntary 
participation election period specified in paragraph (b) of this 
section:
    (1) Hospitals (other than those excluded under Sec.  510.100(b)) 
with a CCN primary address in a voluntary MSA.
    (2) Low-volume hospitals with a CCN primary address in a mandatory 
MSA.
    (3) Rural hospitals with a CCN primary address in a mandatory MSA.
    (b) Voluntary participation election period. The voluntary 
participation election period begins on January 1, 2018 and ends on 
January 31, 2018.
    (c) Voluntary participation election letter. The voluntary 
participation election letter serves as the model participation 
agreement. CMS accepts the voluntary participation election letter if 
the letter meets all of the following criteria:
    (1) Includes the following:
    (i) Hospital name.
    (ii) Hospital address.
    (iii) Hospital CCN.
    (iv) Hospital contact name, telephone number, and email address.
    (v) Model name (that is, CJR model).
    (2) Includes a certification that the hospital will--
    (i) Comply with all applicable requirements of this part and all 
other laws and regulations applicable to its participation in the CJR 
model; and
    (ii) Submit data or information to CMS that is accurate, complete 
and truthful, including, but not limited to, the participation election 
letter and any quality data or other information that CMS uses in its 
reconciliation processes.
    (3) Is signed by the hospital administrator, CFO or CEO.
    (4) Is submitted in the form and manner specified by CMS.

0
5. Section 510.120 is amended by removing paragraph (b)(4), revising 
paragraph (c), and adding paragraphs (d) and (e) to read as follows:


Sec.  510.120   CJR participant hospital CEHRT track requirements.

* * * * *
    (c) Clinician engagement list. Each participant hospital that 
chooses CEHRT use as provided in paragraph (a)(1) of this section must 
submit to CMS a clinician engagement list in a form and manner 
specified by CMS on a no more than quarterly basis. This list must 
include the following information on individuals for the period of the 
performance year specified by CMS:
    (1) For each physician, nonphysician practitioner, or therapist who 
is not a CJR collaborator during the period of the CJR model 
performance year specified by CMS but who does have a contractual 
relationship with the participant hospital based at least in part on 
supporting the participant hospital's quality or cost goals under the 
CJR model during the period of the performance year specified by CMS:
    (i) The name, TIN, and NPI of the individual.
    (ii) The start date and, if applicable, the end date for the 
contractual relationship between the individual and participant 
hospital.
    (2) [Reserved]
    (d) Attestation to no individuals. If there are no individuals that 
meet the requirements to be reported, as specified in paragraphs (b)(1) 
through (3) or paragraph (c) of this section, the participant hospital 
must attest in a form and manner required by CMS that there are no 
individuals to report.
    (e) Documentation requirements. (1) Each participant hospital that 
chooses CEHRT use as provided in paragraph (a)(1) of this section must 
maintain documentation of their attestation to CEHRT use, clinician 
financial

[[Page 57104]]

arrangements lists, and clinician engagement lists.
    (2) The participant hospital must retain and provide access to the 
required documentation in accordance with Sec.  510.110.

0
6. Section 510.210 is amended by revising paragraph (b) to read as 
follows:


Sec.  510.210   Determination of the episode.

* * * * *
    (b) Cancellation of an episode. The episode is canceled and is not 
included in the determination of NPRA as specified in Sec.  510.305 if 
any of the following occur:
    (1) The beneficiary does any of the following during the episode:
    (i) Ceases to meet any criterion listed in Sec.  510.205.
    (ii) Is readmitted to any participant hospital for another anchor 
hospitalization.
    (iii) Initiates an LEJR episode under BPCI.
    (iv) Dies.
    (2) For performance year 3, the participant hospital did not submit 
a participation election letter that was accepted by CMS to continue 
participation in the model.

0
7. Section 510.300 is amended by revising paragraphs (b)(6) to read as 
follows:


Sec.  510.300   Determination of quality-adjusted episode target 
prices.

* * * * *
    (b) * * *
    (6) Exclusion of incentive programs and add-on payments under 
existing Medicare payment systems. Certain incentive programs and add-
on payments are excluded from historical episode payments by using, 
with certain modifications, the CMS Price (Payment) Standardization 
Detailed Methodology used for the Medicare spending per beneficiary 
measure in the Hospital Value-Based Purchasing Program.
* * * * *

0
8. Section 510.305 is amended by revising paragraphs (d)(1) and 
(e)(1)(i) and adding paragraph (k) to read as follows:


Sec.  510.305   Determination of the NPRA and reconciliation process.

* * * * *
    (d) * * *
    (1) Beginning 2 months after the end of each performance year, CMS 
does all of the following:
    (i) Performs a reconciliation calculation to establish an NPRA for 
each participant hospital.
    (ii) For participant hospitals that experience a reorganization 
event in which one or more hospitals reorganize under the CCN of a 
participant hospital performs--
    (A) Separate reconciliation calculations (during both initial and 
subsequent reconciliations for a performance year) for each predecessor 
participant hospital for episodes where anchor hospitalization 
admission occurred before the effective date of the reorganization 
event; and
    (B) Reconciliation calculations (during both initial and subsequent 
reconciliations for a performance year) for each new or surviving 
participant hospital for episodes where the anchor hospitalization 
admission occurred on or after the effective date of the reorganization 
event.
* * * * *
    (e) * * *
    (1) * * *
    (i) Determines actual episode payments for each episode included in 
the performance year (other than episodes that have been canceled in 
accordance with Sec.  510.210(b)) using claims data that is available 2 
months after the end of the performance year. Actual episode payments 
are capped at the amount determined in accordance with Sec.  
510.300(b)(5) for the performance year or the amount determined in 
paragraph (k) of this section for episodes affected by extreme and 
uncontrollable circumstances.
* * * * *
    (k) Extreme and uncontrollable circumstances adjustment. (1) The 
episode spending adjustments specified in paragraph (k)(2) of this 
section apply for a participant hospital that has a CCN primary address 
that meets both of the following:
    (i) Is located in an emergency area during an emergency period, as 
those terms are defined in section 1135(g) of the Act, for which the 
Secretary has issued a waiver under section 1135; and
    (ii) Is located in a county, parish, or tribal government 
designated in a major disaster declaration under the Stafford Act.
    (2)(i) For a non-fracture episode with a date of admission to the 
anchor hospitalization that is on or within 30 days before the date 
that the emergency period (as defined in section 1135(g) of the Act) 
begins, actual episode payments are capped at the target price 
determined for that episode under Sec.  510.300.
    (ii) For a fracture episode with a date of admission to the anchor 
hospitalization that is on or within 30 days before or after the date 
that the emergency period (as defined in section 1135(g) of the Act) 
begins, actual episode payments are capped at the target price 
determined for that episode under Sec.  510.300.


0
9. Section 510.410 is amended by adding paragraph (b)(1)(i)(G) to read 
as follows:


Sec.  510.410   Compliance enforcement.

* * * * *
    (b) * * *
    (1) * * *
    (i) * * *
    (G) Failing to participate in CJR model-related evaluation 
activities conducted by CMS or its contractors or both.
* * * * ** * *

0
10. Section 510.605 is amended by revising paragraph (c)(2) to read as 
follows:


Sec.  510.605   Waiver of certain telehealth requirements.

* * * * *
    (c) * * *
    (2) CMS waives the payment requirements under section 1834(m)(2)(B) 
of the Act to allow the distant site payment for telehealth home visit 
HCPCS codes unique to this model.
* * * * *

PART 512--[Removed and Reserved]

0
11. Part 512 is removed and reserved.

    Dated: November 22, 2017.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: November 28, 2017.
Eric D. Hargan,
Acting Secretary, Department of Health and Human Services.
[FR Doc. 2017-25979 Filed 11-30-17; 8:45 am]
 BILLING CODE 4120-01-P