[Federal Register Volume 83, Number 111 (Friday, June 8, 2018)]
[Rules and Regulations]
[Pages 26604-26610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12379]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 510

[CMS-5524-F2]
RIN 0938-AT16


Medicare Program; Changes to the Comprehensive Care for Joint 
Replacement Payment Model (CJR): Extreme and Uncontrollable 
Circumstances Policy for the CJR Model

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

ACTION: Final rule.

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SUMMARY: This final rule finalizes a policy that provides flexibility 
in the determination of episode spending for Comprehensive Care for 
Joint Replacement Payment Model (CJR) participant hospitals located in 
areas impacted by extreme and uncontrollable circumstances for 
performance years 3 through 5.

DATES: Effective July 9, 2018.

FOR FURTHER INFORMATION CONTACT: Heather Holsey, (410) 786-0028. For 
questions related to the CJR model: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    In the 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 and interim final rule with comment period published on 
December 1, 2017 (82 FR 57066 through 57104), we issued an interim 
final rule with comment period in conjunction with the 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. Specifically, we 
finalized an extreme and uncontrollable events policy for the 
performance years 2 through 5 reconciliation and sought comment on 
potential refinements we might make to this policy for future 
performance year reconciliations after performance year 2. The 30-day 
comment period for that rule closed on January 30, 2018. We received 3 
comments on our comment solicitation on potential refinements we might 
make to the extreme and uncontrollable circumstances policy for future 
performance year reconciliations after performance year 2. Those 3 
comments and our responses are discussed in the following paragraphs. 
We also received 4 comments that did not relate to the extreme and 
uncontrollable circumstances policy comment solicitation.

[[Page 26605]]

II. Provisions of the Interim Final Rule With Comment Period and 
Analysis of and Response to Public Comments

A. Overview and Background

    In the interim final rule with comment period published on December 
1, 2017, we established an extreme and uncontrollable circumstances 
policy for CJR performance years 2 through 5 reconciliation to provide 
some flexibility in determining episode spending for CJR participant 
hospitals located in areas impacted by extreme and uncontrollable 
circumstances. While this policy most notably addressed Hurricane 
Harvey, Hurricane Irma, Hurricane Nate, and the California wildfires of 
August, September, and October 2017, we noted that this policy could 
also include other similar events that occur within a given performance 
year, including performance year 2, if those events meet the 
requirements we set forth in this policy. While Hurricane Maria, which 
also occurred in the same timeframe, had and, as of the writing of this 
final rule, continues to have a significant and crippling effect on 
Puerto Rico and the U.S. Virgin Islands, Hurricane Maria was not part 
of the interim final rule with comment period 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 of August, September, and October of 2017 
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.
    As we stated in the interim final rule with comment period, 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 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, a 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 it 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.\6\ 
Although we did not yet have enough data to evaluate these event-
specific effects on CJR episodes at the time of the publication of the 
interim final rule with comment period, we stated that we anticipated 
that at least some CJR participant hospitals might have experienced 
episode cost escalation as a result of hurricane or fire damage and 
subsequent emergency evacuations.
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    \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.
    \6\ http://www.al.com/news/mobile/index.ssf/2017/11/trump_declares_major_disaster.html.
    \7\ Tia Powell, Dan Hanfling, and 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; and 
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.
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    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 loss repayment policy is to incentivize 
providers to manage costs while improving the quality of CJR patient 
care, we noted in the interim final rule with comment period that in 
extreme and uncontrollable circumstances, prudent patient care 
management might 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 supported our assumption that costs can rise during disaster 
situations.\7\
    Prior to January 1, 2018, the effective date of the interim final 
rule with comment period, CJR regulations at Sec.  510.210 did not 
allow cancellation of episodes for extreme and uncontrollable 
circumstances. The CJR regulations at Sec.  510.305 also did 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

    As discussed in the interim final rule with comment period, for 
purposes of developing a policy to identify hospitals affected by 
extreme and uncontrollable circumstances, we consulted section 1135 of 
the Social Security Act (the Act). That section allows the Secretary to 
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 emergency period. It also allows the Secretary 
to temporarily waive or modify certain Medicare requirements to ensure 
that providers who provide

[[Page 26606]]

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 section 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, as we noted in the interim final rule with comment 
period, 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 Act, for which waivers are available. As we 
stated in the interim final rule with comment period, 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.
    In the interim final rule with comment period, we noted that 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 (that is, an entire 
state) than is directly and immediately affected by the relevant 
emergency. In addition, section 1135(g) of the Act defines the 
emergency area as that area covered by both a Secretarial and a 
Presidential declaration; consequently, the scope of the emergency area 
is not entirely in the Secretary's control.\8\ For purposes of this 
policy, we stated that a narrower geographic scope, rather than the 
full emergency area, 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.
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    \8\ See section 1135(g) of the Act for the definition of 
``emergency area; emergency period''.
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    Therefore, 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 also required that the area be declared as a major 
disaster area under the Stafford Act. 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 the 
Federal Emergency Management Agency (FEMA) website at www.FEMA.gov/disasters.
    For this policy, only major disaster declarations under the 
Stafford Act in combination with issued section 1135 waivers are 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 will 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. As we noted in 
the interim final rule with comment period, 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 
section 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 the policy we established to define extreme and uncontrollable 
circumstances for the CJR model, an area is identified 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.
    As we stated in the interim final rule with comment period, we 
believe Hurricanes Harvey, Irma, and Nate and the California wildfires 
in August, September, and October of 2017 triggered the automatic 
extreme and uncontrollable circumstance policy we adopted in the 
interim final rule with comment period. For the performance year 2 
reconciliation conducted in March 2018, this extreme and uncontrollable 
circumstance policy applies to those CJR participant hospitals whose 
CMS Certification Number (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. The states and territories 
for which section 1135 waivers were issued in response to Hurricanes 
Harvey, Irma, Nate, and the California wildfires (during the fall of 
2017) are Alabama, California, Florida, Georgia, South Carolina, Texas, 
Louisiana, and Mississippi. Section 1135 waivers also were issued for 
Puerto Rico and the Virgin Islands as a result of Hurricane Maria, but, 
as we noted in the interim final rule with comment period, 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 website 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 met the 
criteria for the CJR policy on extreme and uncontrollable circumstances 
in performance year 2 are as follows: \9\
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    \9\ 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.
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     The following counties in Alabama: Autauga, Baldwin, 
Choctaw, Clarke, Dallas, Macon, Mobile, and Washington.\10\
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    \10\ https://www.fema.gov/disaster/4349/designated-areas.
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     The following counties in California: Butte, Lake, 
Mendocino, Napa, Nevada, Orange, Sonoma, and Yuba.\11\
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    \11\ https://www.fema.gov/disaster/4344/designated-areas.
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     All 67 counties \12\ and Big Cypress Indian Reservation, 
Brighton Indian Reservation, Fort Pierce Indian

[[Page 26607]]

Reservation, Hollywood Indian Reservation, Immokalee Indian 
Reservation, and Tampa Reservation in Florida.\13\
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    \12\ https://www.fema.gov/disaster/4337/designated-areas.
    \13\ https://www.fema.gov/disaster/4341/designated-areas.
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     All 159 counties in Georgia.\14\
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    \14\ https://www.fema.gov/disaster/4338/designated-areas.
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     All 46 counties, and the Catawba Indian Reservation in 
South Carolina.\15\
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    \15\ https://www.fema.gov/disaster/4346/designated-areas.
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     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.\16\
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    \16\ https://www.fema.gov/disaster/4332/designated-areas.
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     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.\17\
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    \17\ https://www.fema.gov/disaster/4345/designated-areas.
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    Using these criteria, in the interim final rule with comment 
period, we stated that we were 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 again noted that no CJR participant hospitals were impacted by 
Hurricane Maria. CJR participant hospitals for whom this extreme and 
uncontrollable circumstances policy applies for performance year 2 (and 
subsequent performance years if and when the policy is invoked) receive 
notification 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, in the interim final rule with comment period, we stated that 
this policy is being implemented for the duration of the CJR model, and 
that we are amending the CJR regulations accordingly, as further 
outlined later in this final rule.

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

    In the interim final rule with comment period, we noted that 
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 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. As we stated in the 
interim final rule with comment 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. As we stated in the interim final rule 
with comment period, 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 will 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) of the Act) begins should 
reasonably capture those beneficiaries whose high CJR episode costs 
could be attributed to extreme and uncontrollable circumstances. As we 
stated in the interim final rule with comment period, 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. As we stated in the interim final rule with comment 
period, 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, the extreme and uncontrollable 
circumstances policy we established in the interim final rule with 
comment period only applies 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) of the Act) 
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 we established in the interim final rule with 
comment period applies 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) of 
the Act) begins. As we stated in the interim final

[[Page 26608]]

rule with comment period, 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. As we stated in the interim final rule with comment period, we 
believe that this 30-day window before and after the emergency period 
should ensure that hospitals caring for CJR fracture patients during 
extreme and uncontrollable circumstances are adequately protected from 
episode costs beyond their control.
    In the interim final rule with comment period, we established that, 
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 of the Act, 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) of the Act) 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) of the Act) begins, actual episode payments are capped 
at the target price determined for that episode under Sec.  510.300.
    We codified this new extreme and uncontrollable circumstance policy 
at Sec.  510.305(k). We sought comment on potential refinements to this 
policy for future performance year reconciliations after performance 
year 2.
    Comment: All of the comments we received in response to our comment 
solicitation expressed support for an extreme and uncontrollable 
circumstances policy for the CJR model. All commenters supported the 
application of the policy to episodes with anchor stays beginning on or 
within 30 days before the date of the emergency period. A commenter 
supported the policy as established in the interim final rule with 
comment period and stated that it should apply to future performance 
years beyond performance year 2. Another commenter, who also supported 
the policy, noted that due to the substantial disruptions in the post-
acute care market from significant infrastructure damage, the policy 
could be significantly improved if CMS capped payments for both 
fracture and non-fracture episodes with an anchor hospitalization 
within 30 days before or after the date that the emergency period 
begins. A different commenter, who also supported the policy, urged CMS 
to expand it to include more episodes by developing specific, recovery-
focused criteria, such as the number of patients remaining displaced 
from their homes, the proportion of health care services remaining 
unavailable and distance to comparable services for rural areas to 
determine the end date for episodes. This commenter, who noted that 
extensive damage to infrastructure, housing and post-acute care 
services in Texas due to Hurricane Harvey continue to be substantial in 
certain counties, stated that delaying services to Medicare 
beneficiaries who meet the criteria for LEJR is detrimental to the 
health and well-being of the beneficiaries. This commenter recommended 
that the extreme and uncontrollable circumstances policy for all CJR 
episodes should apply to dates of admission to anchor hospitalization 
that occur 30 days before the emergency period (as defined in section 
1135(g) of the Act) begins and up to 90 days after the date the 
emergency period ends or when health care services has reached 90 
percent of the pre-emergency period level and beneficiary displacement 
issues have been resolved to ensure CJR participants are protected from 
episode costs beyond their control.
    Response: We appreciate the support expressed by commenters for our 
extreme and uncontrollable circumstances policy and agree with 
commenters that it is appropriate for the policy to cover both fracture 
and non-fracture episodes with anchor stays occurring on or within 30 
days before the date of the emergency period. In response to the 
commenter who stated that our extreme and uncontrollable circumstances 
policy should apply to future performance years, we can confirm that it 
does. While we note that recovery efforts from major disasters can take 
extensive time and resources, as we stated in the interim final rule 
with comment period, we continue to believe 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. Although we acknowledge that 
joint replacements can have a substantial impact on quality of life for 
beneficiaries, we are not persuaded by commenters that it is 
appropriate to extend the extreme and uncontrollable events policy to 
non-fracture CJR episodes beginning on or within the 30 days after the 
onset of an emergency period. If lasting infrastructure damage has 
severely crippled post-acute care access and limited offerings in a 
community, we are not convinced that elective surgeries should resume, 
especially for beneficiaries likely to need institutional post-acute 
care, until there is some assurance that that care will be available.
    When we originally finalized the CJR target amounts in the November 
24, 2015 final rule (80 FR 73273), we distinguished between hip 
fracture and non-fracture CJR episodes and pricing in response to 
comments. Commenters on that rule noted that lower extremity joint 
replacement procedures performed as a result of a hip fracture are 
typically emergent procedures (80 FR 73301) which can be more 
clinically complex in nature and more costly to treat due to their 
emergent nature. Therefore, as we stated in the interim final rule with 
comment period, given the frequent emergent nature of fractures, we 
acknowledge that it may not be prudent to postpone major joint surgical 
procedures in many of those CJR cases. Consequently, we believe it is 
appropriate, as was established in the interim final rule with comment 
period, to extend coverage under the extreme and uncontrollable 
circumstances policy to fracture cases occurring on or within 30 days 
after the date of the disaster, and we thank the commenters for their 
support of this policy that covers fracture cases on or within 30 days 
of the emergency period in the extreme and uncontrollable events 
policy.
    In considering the commenter's suggestion that we develop on-going 
specific, recovery-focused criteria, such as the number of patients 
remaining displaced from their homes, the proportion of health care 
services remaining unavailable and distance to comparable services for 
rural areas to determine the end date for episodes we note that it 
would be extremely difficult to establish general criteria that would 
apply broadly to all emergency periods that might trigger the extreme 
and uncontrollable circumstances policy; this type of criteria would 
likely need to be specific to each individual emergency period and 
would therefore be more subjective and less predictable

[[Page 26609]]

for providers in the CJR model. We believe the time-based criteria we 
established for this policy are more straightforward and create clear 
guidelines for CJR participant hospitals that may need an advanced, 
predictable understanding of which episodes will be subject to the 
extreme and uncontrollable circumstances policy. We established this 
policy to limit financial liability under the CJR model for participant 
hospitals caring for CJR fracture patients during extreme and 
uncontrollable circumstances where costs can escalate beyond their 
control. While we acknowledge that disaster recovery efforts can be 
prolonged beyond 30-day periods, we believe that care management 
planning is even more essential when communities are recovering from 
major disasters. However, we do not believe that altering the post 
emergency window from 30 to 90 days, as suggested by a commenter, would 
be appropriate, as a longer post emergency window might incentivize 
providers to disengage from the care management the CJR model is 
focused on improving.
    We note a technical correction to the preamble of the interim final 
rule with comment period. In several places we described our extreme 
and uncontrollable circumstances policy as applying when a major 
disaster declaration served as the condition precedent to an section 
1135 waiver. However, this was incorrect, as in several of the events 
to which our policy applies, an emergency declaration under the 
Stafford Act was the condition precedent for the Secretary's exercise 
of the section 1135 waiver authority. For example, the section 1135 
waiver for Hurricane Nate was based on an emergency declaration under 
the Stafford Act, but a major disaster declaration under the Stafford 
Act subsequently was made. The regulation text at 42 CFR 510.305(k), 
which we are finalizing without modification, accurately reflects the 
policy.

III. Provisions of the Final Regulations

    This final rule incorporates the provisions of the interim final 
rule with comment period without changes. Therefore, this extreme and 
uncontrollable circumstances policy, as codified at 42 CFR 510.305(k) 
will apply to CJR participant hospitals that are both 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 that are also located in a county, 
parish, or tribal government designated in a major disaster declaration 
under the Stafford Act.

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 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 section V. (Regulatory Impact Statement) of 
this final rule.

V. Regulatory Impact Statement

    We have examined the impact of this rule 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 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), 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 rule does not reach the economic threshold and thus is not 
considered a major rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
less than $7.5 million to $38.5 million in any 1 year. Individuals and 
states are not included in the definition of a small entity. We are not 
preparing an analysis for the RFA because we have determined, and the 
Secretary certifies, that this final rule will not have a significant 
economic impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 604 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area for Medicare 
payment regulations and has fewer than 100 beds. We are not preparing 
an analysis for section 1102(b) of the Act because we have determined, 
and the Secretary certifies, that this final rule will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 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 2018, that 
threshold is approximately $150 million. This rule will have no 
consequential effect on state, local, or tribal governments or on the 
private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has Federalism 
implications. Since this regulation does not impose any costs on state 
or local governments, the requirements of Executive Order 13132 are not 
applicable.
    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. It has been 
determined that this final rule is not a ``significant regulatory 
action'' and thus does not trigger the aforementioned requirements of 
Executive Order 13771.
    In the December 1, 2017 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 circumstances policy for performance year 2 (82 FR 
57096). 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

[[Page 26610]]

II.B. of this final rule 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 website 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 was 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 was 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 indicated that the impact of capping the 
actual episode payments at the episode target prices based on the 2017 
extreme and uncontrollable circumstances policy could result in a 
decrease to the CJR model estimated savings ranging between $1.5 to 
$5.0 million for performance year 2, quantifying the dollar impact for 
that year based on a point estimate of $2 million. We also noted that 
this performance year 2 projected impact was mitigated by the 5 percent 
stop-loss/stop-gain levels applicable to performance year 2 and added 
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. The performance year 2 savings estimates did 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 website.
    For purposes of assessing the impact of finalizing this policy for 
performance years 3 through 5, we note that we are unable to accurately 
or reasonably model an impact due to our inability to predict future 
disaster events. It is entirely possible future years could be 
completely free of major disasters and emergencies that might qualify 
as triggering events under the extreme and uncontrollable circumstances 
policy. Likewise, it is entirely possible that future years could have 
many more significant disaster events that might qualify as triggering 
events for the extreme and uncontrollable circumstances policy. In the 
absence of any future knowledge of potential disasters that might 
qualify as events that would invoke the extreme and uncontrollable 
circumstances policy, we are assuming that the performance year 2 
extreme and uncontrollable circumstances $1.5 to $5 million range 
estimate, quantified using a 2 million dollar point estimate, can be 
extrapolated across the remaining 3 performance years of the CJR model 
since we modeled this using knowledge of actual 2017 events. 
Extrapolating the $2 million per year across performance years 3 
through 5 results in an estimated cost of $6 million which could 
potentially net against savings predicted for the CJR model. We note 
that extrapolating the range estimate could make the impact of this 
policy for the remaining 3 years of the model as low as $4.5 million or 
as high as $15 million. However, we again reiterate that this 
assumption may be inaccurate as this $2 million per year figure was 
based on an estimate of known events in 2017 on modeled payments for 
performance year 2. Specifically, future years could be disaster free 
or could experience more frequent and destructive disasters, either of 
which could render this impact estimate incorrect. However, in absence 
of future knowledge we believe this extrapolation estimate can be used 
to approximate an impact for this extreme and uncontrollable 
circumstances policy for performance years 3 through 5 of the CJR 
model.
    In accordance with the provisions of Executive Order 12866, this 
final rule was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 510

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

    For the reasons set forth in the preamble, the interim final rule 
published in the December 1, 2017 Federal Register (82 FR 57066), is 
adopted as final without change.

    Dated: May 14, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: May 16, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-12379 Filed 6-7-18; 8:45 am]
 BILLING CODE 4120-01-P