(a) Basis. This subpart implements the expansion of the Comprehensive Care for Joint Replacement (CJR) Model under section 1115A(c) of the Act. Except as specifically noted in this subpart, the regulations under this subpart do not affect the applicability of other provisions affecting providers and suppliers under Medicare FFS, including the applicability of provisions regarding payment, coverage, and program integrity.

(b) Scope. This subpart sets forth the following:

(i) Participation in CJR-X.

(ii) Scope of episodes.

(iii) Pricing methodology.

(iv) Quality measures and quality reporting requirements.

(v) Reconciliation and review processes.

(vi) Data Sharing and other requirements.

(vii) Financial arrangements and beneficiary incentives.

(viii) Medicare program waivers.

(c) Applicability. Except as otherwise specified in this subpart, CJR-X participants are subject to the standard provisions for Innovation Center models specified in subpart A of this part 512 and in subpart K of part 403 of this chapter.

For the purposes of this subpart, the following definitions are applicable unless otherwise stated:

AAPM stands for Advanced Alternative Payment Model.

AAPM option means the advanced alternative payment model option for CJR-X participants that provide their CMS EHR Certification ID and attest to their use of CEHRT in accordance with § 512.615.

ACO means an accountable care organization, as defined at § 425.20 of this chapter.

ACO participant has the meaning set forth in § 425.20 of this chapter.

ACO provider/supplier has the meaning set forth in § 425.20 of this chapter.

Acute care hospital means a provider subject to the prospective payment system specified in § 412.1(a)(1) of this chapter.

Age bracket risk adjustment factor means the coefficient of risk associated with a patient's age bracket, calculated as described in § 512.645(a)(1).

Aggregated reconciliation target price means the sum of the reconciliation target prices for all episodes attributed to a CJR-X participant for the applicable performance year.

Alignment payment means a payment from a CJR-X collaborator to a CJR-X participant under a sharing arrangement, for the sole purpose of sharing the CJR-X participant's responsibility for making repayments to Medicare.

Anchor hospitalization means the initial hospital stay upon admission for a lower extremity joint replacement for which the institutional claim is billed through the inpatient prospective payment system (IPPS).

Anchor procedure means a TKA or THA procedure that is permitted and paid for by Medicare when performed in a hospital outpatient department (HOPD) and billed through the Hospital Outpatient Prospective Payment System (OPPS).

APM stands for Alternative Payment Model as defined in § 414.1305 of this chapter.

Baseline episode spending means the total episode spending by all providers and suppliers associated with a given MS-DRG/HCPCS episode type for all hospitals in a given region during the baseline period.

Baseline period means the 3-year historical period CMS uses to construct the preliminary target price and reconciliation target price for a given performance year.

Baseline year means any one of the three years included in the baseline period.

Benchmark price means the average standardized episode spending by all providers and suppliers associated with an MS-DRG/HCPCS episode type for all hospitals in a defined region during the applicable baseline period.

Beneficiary economic risk adjustment factor means the coefficient of risk associated with a patient's economic status, calculated as described in § 512.645(a)(3).

CCN stands for CMS certification number.

CDI stands for Community Deprivation Index.

CEHRT means certified electronic health record technology that meets the requirements set forth in § 414.1305 of this chapter.

CJR stands for the Comprehensive Care for Joint Replacement Model, that was the Phase I episode-based payment model test by the Innovation Center from April 2016 to December 2024.

CJR-X stands for the Comprehensive Care for Joint Replacement Expanded Model.

CJR-X activities mean any activity related to promoting accountability for the quality, cost, and overall care for CJR-X beneficiaries and performance in the model, including managing and coordinating care, encouraging investment in infrastructure and redesigned care processes for high quality and efficient service delivery, or carrying out any other obligation or duty under the model.

CJR-X beneficiary means a beneficiary who meets the beneficiary inclusion criteria in § 512.620.

CJR-X collaborator means an ACO or one of the following Medicare-enrolled individuals or entities that enters into a sharing arrangement:

(1) Skilled Nursing Facility (SNF).

(2) Home Health Agency (HHA).

(3) Long-Term Care Hospital (LTCH).

(4) Inpatient Rehabilitation Facility (IRF).

(5) Physician.

(6) Nonphysician practitioner.

(7) Therapist in private practice.

(8) Comprehensive Outpatient Rehabilitation Facility (CORF).

(9) Provider of outpatient therapy services.

(10) Physician Group Practice (PGP).

(11) Hospital.

(12) Critical Access Hospital (CAH).

(13) Non-Physician Provider Group Practice (NPPGP).

(14) Therapy Group Practice (TGP).

CJR-X data sharing agreement means an agreement between the CJR-X participant and CMS that includes the terms and conditions for any beneficiary-identifiable data shared with the CJR-X participant under § 512.665.

CJR-X HCC count risk adjustment factor means the CJR-X Hierarchical Condition Category count that is a categorical risk adjustment variable that reflects a beneficiary's overall health status during a 180-day lookback period that groups similar diagnoses into one related category and counts the total number of diagnostic categories that apply to the beneficiary.

CJR-X participant means an acute care hospital located in any of the 50 United States, District of Columbia, or U.S. Territories that initiates LEJR episodes and is eligible to be paid under both the IPPS and OPPS, unless it meets an exception in § 512.610(b).

CJR-X payment means a payment made by CMS only to CJR-X participants, or a payment adjustment made only to payments made to CJR-X participants, under the terms of CJR-X that is not applicable to any other providers or suppliers.

CJR-X reconciliation report means the report prepared after each reconciliation that CMS provides to each CJR-X participant notifying the CJR-X participant of the outcome of the reconciliation.

Clinician engagement list means the list of eligible clinicians or MIPS eligible clinicians that participate in CJR-X activities and have a contractual relationship with the CJR-X participant, and who are not listed on the financial arrangements list, as described in § 512.615(c).

CMS Electronic Health Record (EHR) Certification ID means the identification number that represents the combination of Certified Health Information Technology that is owned and used by providers and hospitals to provide care to their patients and is generated by the Certified Health Information Technology Product List.

Collaboration agent means an individual or entity that is not a CJR-X collaborator and that is either of the following:

(1) A member of a PGP, NPPGP, or TGP that has entered into a distribution arrangement with the same PGP, NPPGP, or TGP in which he or she is an owner or employee, and where the PGP, NPPGP, or TGP is a CJR-X collaborator.

(2) An ACO participant or ACO provider/supplier that has entered into a distribution arrangement with the same ACO in which it is participating, and where the ACO is a CJR-X collaborator.

Composite quality score (CQS) means a score computed for each CJR-X participant to summarize the CJR-X participant's level of quality performance on specified quality measures as described in § 512.635.

CORF stands for comprehensive outpatient rehabilitation facility.

Critical access hospital (CAH) means a hospital designated under subpart F of part 485 of this chapter.

Discount factor means a set percentage included in the preliminary target price and adjusted for quality at reconciliation as described at § 512.645(g).

Distribution arrangement means a financial arrangement between a CJR-X collaborator that is an ACO, PGP, NPPGP, or TGP and a collaboration agent for the sole purpose of distributing some or all of a gainsharing payment received by the ACO, PGP, NPPGP, or TGP.

Distribution payment means a payment from a CJR-X collaborator that is an ACO, PGP, NPPGP, or TGP to a collaboration agent, under a distribution arrangement, composed only of gainsharing payments.

DME stands for durable medical equipment.

Downstream collaboration agent means an individual who is not a CJR-X collaborator or a collaboration agent and who is a member of a PGP, NPPGP, or TGP that has entered into a downstream distribution arrangement with the same PGP, NPPGP, or TGP in which he or she is an owner or employee, and where the PGP, NPPGP, or TGP is a collaboration agent.

Downstream distribution arrangement means a financial arrangement between a collaboration agent that is both a PGP, NPPGP, or TGP and an ACO participant and a downstream collaboration agent for the sole purpose of sharing a distribution payment received by the PGP, NPPGP, or TGP.

Downstream participant means an individual or entity that has entered into a written arrangement with a CJR-X participant, CJR-X collaborator, collaboration agent, or downstream collaboration agent under which the downstream participant engages in one or more CJR-X activities.

Dually eligible beneficiary means a beneficiary enrolled in both Medicare and full Medicaid benefits.

EHR stands for electronic health record.

Eligible clinician means a clinician as defined in § 414.1305 of this chapter.

Episode means all Medicare Part A and B items and services described in § 512.625(b) (and excluding the items and services described in § 512.625(c)) that are furnished to a CJR-X beneficiary during the time period that begins on the date of the beneficiary's admission to an anchor hospitalization or the date of the anchor procedure, as described at § 512.630(c), and ends on the 90th day following the date of discharge from the anchor hospitalization or anchor procedure, as described at § 512.630(d).

Episode type means the subset of episodes that are associated with a given MS-DRG/HCPCS, as set forth at § 512.640(a)(1).

Final normalization factor means the mathematical mean of the benchmark price for each MS-DRG/HCPCS episode type and region divided by the mean of the risk-adjusted benchmark price for the same MS-DRG/HCPCS episode type and region.

Financial arrangements list means the list of eligible clinicians or MIPS eligible clinicians that have a financial arrangement with the CJR-X participant, CJR-X collaborator, collaboration agent, and downstream collaboration agent, as described in § 512.615(b).

Gainsharing payment means a payment from a CJR-X participant to a CJR-X collaborator, under a sharing arrangement, composed of only reconciliation payments, internal cost savings, or both.

HCPCS stands for Healthcare Common Procedure Coding System and means the system used to bill for items and services.

HHA means a Medicare-enrolled home health agency.

High-cost outlier cap means the CMS-applied episode spending cap at the 99th percentile of regional spending for a given MS DRG/HCPCS episode type, region, and baseline year.

Hospital means a hospital as defined in section 1886(d)(1)(B) of the Act.

Hospital discharge planning means the standards set forth in § 482.43 of this chapter.

ICD-CM stands for International Classification of Diseases, Clinical Modification.

Inpatient measure composite quality score means the sum of inpatient quality measure point values capped at 20 points.

Internal cost savings means the measurable, actual, and verifiable cost savings realized by the CJR-X participant resulting from care redesign undertaken by the CJR-X participant in connection with providing items and services to CJR-X beneficiaries within an episode. Internal cost savings does not include savings realized by any individual or entity that is not the CJR-X participant.

IPF stands for inpatient psychiatric facility.

IPPS stands for Inpatient Prospective Payment System, and means the payment system for subsection (d) hospitals as defined in section 1886(d)(1)(B) of the Act.

IRF stands for inpatient rehabilitation facility.

LIS stands for Medicare Part D Low-Income Subsidy.

Lower-extremity joint replacement (LEJR) means any hip, knee, or ankle replacement that is paid under MS-DRG 469, 470, 521, or 522 through the IPPS or HCPCS code 27447 or 27130 through the OPPS.

Low-volume hospital means a hospital identified by CMS as having fewer than 31 LEJR episodes during the applicable baseline period.

LTCH stands for long-term care hospital as defined in section 1861(ccc) of the Act.

Medicare severity diagnosis-related group (MS-DRG) means, for the purposes of this model, the classification of inpatient hospital discharges updated in accordance with § 412.10 of this chapter.

Medicare-dependent, small rural hospital (MDH) means a specific type of hospital that meets the classification criteria specified under § 412.108 of this chapter.

Member of the NPPGP or NPPGP member means a nonphysician practitioner or therapist who is an owner or employee of an NPPGP and who has reassigned to the NPPGP his or her right to receive Medicare payment.

Member of the PGP or PGP member means a physician, nonphysician practitioner, or therapist who is an owner or employee of the PGP and who has reassigned to the PGP his or her right to receive Medicare payment.

Member of the TGP or TGP member means a therapist who is an owner or employee of a TGP and who has reassigned to the TGP his or her right to receive Medicare payment.

MIPS stands for Merit-based Incentive Payment System

MIPS eligible clinician means a clinician as defined in § 414.1305 of this chapter.

Model start date means the start of the Phase II model test on January 1, 2028.

Non-AAPM option means the CJR-X participant's choice to not attest to the use of CEHRT as described in § 512.615.

Nonphysician practitioner means one of the following:

(1) A physician assistant who satisfies the qualifications set forth at § 410.74(a)(2)(i) and (ii) of this chapter.

(2) A nurse practitioner who satisfies the qualifications set forth at § 410.75(b) of this chapter.

(3) A clinical nurse specialist who satisfies the qualifications set forth at § 410.76(b) of this chapter.

(4) A certified registered nurse anesthetist (as defined at § 410.69(b)).

(5) A clinical social worker (as defined at § 410.73(a)).

(6) A registered dietician or nutrition professional (as defined at § 410.134).

NPI stands for National Provider Identifier.

NPPGP stands for non-physician provider group practice and means an entity that is enrolled in Medicare as a group practice, includes at least one owner or employee who is a nonphysician practitioner, does not include a physician owner or employee, and has a valid and active TIN.

Net payment reconciliation amount (NPRA) means the dollar amount calculated in accordance with § 512.650(c).

OIG stands for the Department of Health and Human Services' Office of Inspector General.

OP means an outpatient procedure for which the institutional claim is billed by the hospital through the OPPS.

OPPS stands for the Outpatient Prospective Payment System.

Outpatient composite quality score means the sum of outpatient quality measure points values, capped at 20 points.

Overall composite quality score means the sum of the weighted average of the inpatient measure composite quality score and the outpatient measure composite quality score, capped at 20 points.

PAC stands for post-acute care.

PAC provider is a home health agency (HHA), skilled nursing facility (SNF), inpatient rehabilitation facility (IRF), or long-term care hospital (LTCH), as defined in section 1899B(a)(2) of the Act.

Performance year (PY) means a 12-month period beginning on January 1 and ending on December 31 to align with the calendar year.

Performance year spending means the sum of standardized Medicare claims payments during a performance year for the items and services that are included in the episode in accordance with § 512.625(b), excluding the items and services described in § 512.625(c).

PGP stands for physician group practice.

Physician has the meaning set forth in section 1861(r) of the Act.

Preliminary target price means the CMS-set financial amount provided to the CJR-X participant prior to the start of the performance year, that is subject to adjustment at reconciliation, as set forth at § 512.640.

Prospective normalization factor means the multiplier used by CMS in the preliminary target price calculation to ensure that the average of the total risk-adjusted benchmark price does not exceed the average of the total non-risk adjusted benchmark price, calculated as set forth in § 512.640(b)(6).

Prospective trend factor means the multiplier used by CMS in the preliminary target price calculation to estimate changes in spending patterns between the baseline period and the performance year, calculated as set forth in § 512.640(b)(7).

Provider of outpatient therapy services means an entity that is enrolled in Medicare as a provider of therapy services and furnishes one or more of the following:

(1) Outpatient physical therapy services as defined in § 410.60 of this chapter.

(2) Outpatient occupational therapy services as defined in § 410.59 of this chapter.

(3) Outpatient speech-language pathology services as defined in § 410.62 of this chapter.

Reconciliation payment amount means the amount that CMS may pay to a CJR-X participant after reconciliation as determined in accordance with § 512.650(g).

Reconciliation target price means the target price applied to an episode at reconciliation, as determined in accordance with § 512.645.

Region means one of the nine U.S. census divisions, as defined by the U.S. Census Bureau, with the U.S. territories included in Census Division 9.

Reorganization event means a merger, consolidation, spin-off or other restructuring that results in a new hospital entity under a given CCN.

Repayment amount means the amount that the CJR-X participant may owe to Medicare after reconciliation as determined in accordance with § 512.650(g).

Retrospective trend factor means the multiplier CMS uses in its reconciliation target price calculation to estimate realized changes in spending patterns during the performance year, calculated as set forth in § 512.645(f).

Rural hospital means an IPPS hospital that meets one of the following criteria:

(1) Is located in a rural area as defined under § 412.64 of this chapter.

(2) Is located in a rural census tract defined under § 412.103(a)(1) of this chapter.

Safety net hospital means a hospital in the top 25th percentile in their region for percentage of Medicare LEJR episodes provided to dually eligible beneficiaries during the applicable baseline period.

Sharing arrangement means a financial arrangement between a CJR-X participant and a CJR-X collaborator for the sole purpose of making gainsharing payments or alignment payments under CJR-X.

SNF stands for skilled nursing facility as defined in section 1819(a) of the Act.

Sole community hospital (SCH) means a hospital that meets the classification criteria specified in § 412.92 of this chapter.

Swing-bed hospital means a hospital that meets the definition specified in § 413.114 of this chapter.

TAA stands for total ankle arthroplasty.

TGP or therapy group practice means an entity that is enrolled in Medicare as a therapy group in private practice, includes at least one owner or employee who is a therapist in private practice, does not include an owner or employee who is a physician or nonphysician practitioner, and has a valid and active TIN.

THA means total hip arthroplasty.

Therapist means one of the following individuals as defined at § 484.4 of this chapter:

(1) Physical therapist.

(2) Occupational therapist.

(3) Speech-language pathologist.

Therapist in private practice means a therapist that—

(1) Complies with the special provisions for physical therapists in private practice in § 410.60(c) of this chapter;

(2) Complies with the special provisions for occupational therapists in private practice in § 410.59(c) of this chapter; or

(3) Complies with the special provisions for speech-language pathologists in private practice in § 410.62(c) of this chapter.

TIN stands for taxpayer identification number.

TKA stands for total knee arthroplasty.

(a) General

(1) CJR-X participants, as defined in § 512.605, must participate in CJR-X, except as specified in paragraph (b) of this section.

(2) CJR-X participants will remain CJR-X participants, unless they no longer meet the definition of CJR-X participant, CMS terminates CJR-X, or the CJR-X participant receives notice of termination from CJR-X in accordance with § 512.610(c).

(b) Exclusions. CMS excludes from CJR-X hospitals that meet any of the following criteria:

(1) Is a TEAM participant as defined at § 512.505.

(2) Is located in the State of Maryland.

(c) CJR-X participant termination from CJR-X.

(1) CMS may in its sole discretion terminate a CJR-X participant's participation in the model immediately or upon advance notice if CMS determines:

(i) One or more grounds for remedial action described in § 512.160(a) have occurred with respect to the CJR-X participant; or

(ii) The CJR-X participant's continued participation would be inconsistent with the purposes of CJR-X, the requirements of this part, or applicable law.

(2) If a CJR-X participant receives a notification from CMS of termination from CJR-X and wishes to dispute the termination, it must provide a written notice to CMS requesting review of the termination within 10 calendar days of the notice.

(i) CMS has 30 days to respond to the CJR-X participant's request for review.

(ii) If the CJR-X participant fails to provide timely notification to CMS, the termination is deemed final.

(3) Where a participant is terminated from the CJR-X Model, the participant hospital will remain liable for all negative NPRA generated from episodes of care that ended prior to termination.

(a) APM options. A CJR-X participant may choose either of the following options based on their CEHRT use:

(1) AAPM option. A CJR-X participant selects the AAPM option by attesting in a form and manner and by a date specified by CMS to their use of CEHRT, as defined in § 414.1305 of this chapter, on an annual basis prior to the start of each performance year. In addition to submitting an annual CEHRT attestation, the CJR-X participant must:

(i) Provide their CMS electronic health record certification ID in a form and manner and by a date specified by CMS on annual basis prior to the end of each performance year; and

(ii) Retain documentation of their attestation to CEHRT use and provide access to the documentation in accordance with § 512.135.

(2) Non-AAPM option. CMS assigns the CJR-X participant to the non-AAPM option if the CJR-X participant does not satisfy the requirements set forth in § 512.615(a)(1).

(b) Financial arrangements list. A CJR-X participant with CJR-X collaborators, collaboration agents, or downstream collaboration agents during a performance year must submit to CMS a financial arrangements list in a form and manner and by a date specified by CMS on a quarterly basis for each performance year. The financial arrangements list must include the following:

(1) CJR-X collaborators. For each physician, nonphysician practitioner, or therapist who is a CJR-X collaborator during the applicable performance year:

(i) The name, TIN, and NPI of the CJR-X collaborator.

(ii) The start date and, if applicable, end date of the sharing arrangement between the CJR-X participant and the CJR-X collaborator.

(2) Collaboration agents. For each physician, nonphysician practitioner, or therapist who is a collaboration agent during the applicable performance year:

(i) The name, TIN, and NPI of the collaboration agent and the name and TIN of the CJR-X collaborator with which the collaboration agent has entered into a distribution arrangement.

(ii) The start date and, if applicable, end date of the distribution arrangement between the CJR-X collaborator and the collaboration agent.

(3) Downstream collaboration agents. For each physician, nonphysician practitioner, or therapist who is a downstream collaboration agent during the applicable performance year:

(i) The name, TIN, and NPI of the downstream collaboration agent and the name and TIN of the collaboration agent with which the downstream collaboration agent has entered into a downstream distribution arrangement.

(ii) The start date and, if applicable, end date of the downstream distribution arrangement between the collaboration agent and the downstream collaboration agent.

(c) Clinician engagement list. A CJR-X participant must submit to CMS a clinician engagement list in a form and manner and by a date specified by CMS on a quarterly basis during each performance year. The clinician engagement list must include the following:

(1) For each physician, nonphysician practitioner, or therapist who is not on a CJR-X participant's financial arrangements list during the performance year but who does have a contractual relationship with the CJR-X participant and participates in CJR-X activities during the applicable performance year:

(i) The name, TIN, and NPI of the physician, nonphysician practitioner, or therapist.

(ii) The start date and, if applicable, the end date of the contractual relationship between the physician, nonphysician practitioner, or therapist and the CJR-X participant.

(2) [Reserved]

(d) Attestation to no individuals. A CJR-X participant with no individuals that meet the criteria specified in paragraphs (b)(1) through (3) of this section for the financial arrangements list or paragraph (c) of this section for the clinician engagement list must attest in a form and manner and by a date specified by CMS that there are no financial arrangements or clinician engagements to report.

(e) Documentation requirements. A CJR-X participant that submits a financial arrangements list specified in paragraph (b) of this section or a clinician engagement list specified in paragraph (c) of this section must retain and provide access to the documentation in accordance with § 512.135.

(a) An individual is a CJR-X beneficiary if, based on a 180-day lookback period that ends on the day prior to an anchor procedure or anchor hospitalization, the individual—

(1) Is enrolled in Medicare Parts A and B;

(2) Has Medicare as their primary payer;

(3) Is not eligible for Medicare on the basis of having end stage renal disease, as described at § 406.13 of this chapter;

(4) Is not enrolled in any managed care plan (for example, Medicare Advantage, health care prepayment plans, or cost-based health maintenance organizations);

(5) Is not covered under a United Mine Workers of America health care plan; and

(6) Is in an episode.

(b) The episode is canceled in accordance with § 512.630(e) if at any time during the episode a beneficiary no longer meets all of the criteria in paragraph (a) of this section.

(a) CJR-X participant beneficiary notification—(1) Notification to beneficiaries. Each CJR-X participant must provide written notification to each CJR-X beneficiary of his or her inclusion in the CJR-X Model.

(2) Timing of notification. Prior to discharge from either the anchor hospitalization or the anchor procedure, as applicable, the CJR-X participant must provide the CJR-X beneficiary with a beneficiary notification as described in paragraph (a)(4) of this section.

(3) List of CJR-X beneficiaries who have received a notification. The CJR-X participant must be able to generate a list of all CJR-X beneficiaries who have received such notification, including the date on which the notification was provided to the CJR-X beneficiary, and provide such list to CMS or its designee upon request.

(4) Content of notification. The beneficiary notification must contain all of the following:

(i) A detailed explanation of CJR-X and how it might be expected to affect the CJR-X beneficiary's care.

(ii) That the CJR-X beneficiary retains freedom of choice to choose providers, suppliers, and services.

(iii) Explanation of how the CJR-X beneficiary can access care records and claims data through an available patient portal, if applicable, and how to share access to Blue Button® electronic health information with caregivers.

(iv) Explanation of the type of beneficiary-identifiable claims data the CJR-X participant may receive.

(v) A statement that all existing Medicare beneficiary protections continue to be available to the CJR-X beneficiary. These include the ability to report concerns of substandard care to Quality Improvement Organizations or the 1-800-MEDICARE helpline.

(vi) A list of the CJR-X collaborators with which the CJR-X participant has a sharing arrangement. This requirement may be fulfilled by the CJR-X participant including in the detailed notification a publicly available web address where the CJR-X beneficiary may access the list.

(b) CJR-X collaborator notice. The CJR-X participant must require every CJR-X collaborator that furnishes an item or service to a CJR-X beneficiary during an episode to provide written notice, to be developed by CMS, to the CJR-X beneficiary that describes general information on the quality and payment incentives under CJR-X, and the existence of the CJR-X collaborator's sharing arrangement.

(1) The notice must be provided no later than the time at which the CJR-X beneficiary first receives an item or service from the CJR-X collaborator during an episode. In circumstances where, due to the CJR-X beneficiary's condition, it is not feasible to provide notification at such time, the notification must be provided to the CJR-X beneficiary or his or her representative as soon as is reasonably practicable.

(2) The CJR-X collaborator must provide to CMS upon request, a list of all CJR-X beneficiaries who received such a notice, including the date on which the notice was provided to the CJR-X beneficiary.

(c) Discharge planning notice. The CJR-X participant must provide the CJR-X beneficiary with a written notice of any potential financial liability associated with non-covered items and services recommended or presented as an option as part of discharge planning, no later than the time that the CJR-X beneficiary discusses a particular post-acute care option or at the time the CJR-X beneficiary is discharged from an anchor procedure or anchor hospitalization, whichever occurs earlier.

(1) If the CJR-X participant knows or should have known that the CJR-X beneficiary is considering or has decided to receive a non-covered post-acute care service or other non-covered associated item or service, the CJR-X participant must notify the CJR-X beneficiary in writing that the item or service would not be covered by Medicare.

(2) If the CJR-X participant is discharging a CJR-X beneficiary to a SNF after an inpatient hospital stay, and the CJR-X beneficiary is being transferred to or is considering a SNF that would not qualify under the SNF 3-day waiver in § 512.695(b), the CJR-X participant must notify the CJR-X beneficiary in accordance with paragraph (b)(1) of this section that the CJR-X beneficiary will be responsible for payment for the items and services furnished by the SNF during that stay, except those items and services that would be covered by Medicare Part B during a non-covered inpatient SNF stay.

(d) Access to records and retention. The CJR-X participant must provide access to the list and notice described in paragraphs (a), (b), and (c), of this section to CMS, or its designees, in accordance with § 512.135.

(a) Lower extremity joint replacement (LEJR) procedures. The MS-DRGs and HCPCS codes included in episodes are as follows:

(1) IPPS discharge under MS-DRG 469, 470, 521, or 522.

(2) OPPS claim for HCPCS codes 27130 or 27447.

(b) Included services. All Medicare Part A and B items and services are included in the episode, except as specified in paragraph (c) of this section. These items and services include, but are not limited to, the following:

(1) Physicians' services.

(2) Inpatient hospital services (including hospital readmissions).

(3) IPF services.

(4) LTCH services.

(5) IRF services.

(6) SNF services.

(7) HHA services.

(8) Hospital outpatient services.

(9) Outpatient therapy services.

(10) Clinical laboratory services.

(11) DME.

(12) Part B drugs and biologic, except for those excluded under paragraph (c) of this section.

(13) Hospice services.

(14) Part B professional claims dated in the 3 days prior to an anchor hospitalization if a claim for the surgical procedure for the same episode type is not detected as part of the hospitalization because the procedure was performed by the CJR-X participant on an outpatient basis, but the patient was subsequently admitted as an inpatient.

(c) Excluded services. The following items, services, and payments are excluded from the episode:

(1) Select items and services considered unrelated to the anchor hospitalization or the anchor procedure for episodes in the baseline period and performance year, including, but not limited to, the following:

(i) Inpatient hospital admissions for MS-DRGs that group to the following categories of diagnoses:

(A) Oncology.

(B) Trauma unrelated to the CJR-X episode.

(C) Organ transplant.

(D) Ventricular shunt.

(ii) Inpatient hospital admissions that fall into the following Major Diagnostic Categories (MDCs):

(A) MDC 02 (Diseases and Disorders of the Eye).

(B) MDC 14 (Pregnancy, Childbirth, and Puerperium).

(C) MDC 15 (Newborns).

(D) MDC 25 (Human Immunodeficiency Virus).

(2) New technology add-on payments, as defined in part 412, subpart F of this chapter for episodes in the baseline period and performance year.

(3) Transitional pass-through payments for medical devices as defined in § 419.66 of this chapter for episodes initiated in the baseline period and performance year.

(4) Hemophilia clotting factors provided in accordance with § 412.115 of this chapter for episodes in the baseline period and performance year.

(5) Part B payments for low-volume drugs, high-cost drugs and biologics, and blood clotting factors for hemophilia for episodes in the baseline period and performance year, billed on outpatient, carrier, and DME claims, defined as—

(i) Drug/biologic HCPCS codes that are billed in fewer than 31 episodes in total across all episodes in CJR-X during the baseline period;

(ii) Drug/biologic HCPCS codes that are billed in at least 31 episodes in the baseline period and have a mean allowed cost of greater than $25,000 per episode in the baseline period; and

(iii) HCPCS codes corresponding to clotting factors for hemophilia patients, identified in the quarterly average sales price file for certain Medicare Part B drugs and biologics as HCPCS codes with clotting factor equal to 1, HCPCS codes for new hemophilia clotting factors not included in the baseline period, and other HCPCS codes identified as hemophilia.

(6) Part B payments for low-volume drugs, high-cost drugs and biologics, and blood clotting factors for hemophilia for episodes initiated in the performance year, billed on outpatient, carrier, and DME claims, defined as—

(i) Drug/biologic HCPCS codes that were not captured in the baseline period and appear in 10 or fewer episodes in the relevant performance year;

(ii) Drug/biologic HCPCS codes that were not included in the baseline period, appear in more than 10 episodes in the relevant performance year, and have a mean cost of greater than $25,000 per episode in the relevant performance year; and

(iii) Drug/biologic HCPCS codes that were not included in the baseline period, appear in more than 10 episodes in the relevant performance year, have a mean cost of $25,000 or less per episode in the relevant performance year, and correspond to a drug/biologic that appears in the baseline period but was assigned a new HCPCS code between the baseline period and the relevant performance year.

(iv) HCPCS codes for new hemophilia clotting factors not included in the baseline period.

(d) CJR-X exclusions list. The list of excluded MS-DRGs, MDCs, and HCPCS codes is posted on the CMS website.

(e) Updating the CJR-X exclusions list. The list of excluded services is updated through rulemaking to reflect any of the following:

(1) Changes to the MS-DRGs under the IPPS.

(2) Coding changes.

(3) Other issues brought to CMS' attention.

(a) Timing of episodes. Episodes initiated on or after January 1, 2028.

(b) Episode attribution. All items and services included in the episode are attributed to the CJR-X participant at which the anchor hospitalization or anchor procedure, as applicable, occurs.

(c) Episode initiation. An episode is initiated by—

(1) A beneficiary's admission to a CJR-X participant for an anchor hospitalization that is paid under a MS-DRG specified in § 512.625(a); or

(2) A beneficiary's receipt of an anchor procedure billed under a HCPCS code specified in § 512.625(a). If an anchor hospitalization is initiated on the same day as or within 3 days of an outpatient procedure for the same episode type at the same CJR-X participant, the episode start date will be that of the outpatient procedure rather than the admission date, and an anchor procedure will not be initiated.

(d) Episode conclusion. (1) An episode ends on the 90th day following the date of the anchor procedure or the date of discharge from the anchor hospitalization, as applicable, with the date of the anchor procedure or the date of discharge from the anchor hospitalization being counted as the first day in the 90-day post-discharge period.

(2) [Reserved]

(e) Cancellation of an episode. The episode is canceled and is not included in the reconciliation calculation as specified in § 512.650 if any of the following occur:

(1) The beneficiary ceases to meet any criterion listed in § 512.620.

(2) The beneficiary dies at any point during the episode.

(3) The episode qualifies for cancellation due to extreme and uncontrollable circumstances. An extreme and uncontrollable circumstance occurs if both of the following criteria are met:

(i) The CJR-X participant has a CCN primary address that—

(A) Is located in an emergency area, as those terms are defined in section 1135(g) of the Act, for which the Secretary has issued a waiver under section 1135; and

(B) Is located in a county, parish, or tribal government designated in a major disaster declaration under the Stafford Act.

(ii) The date of admission to the anchor hospitalization or the date of the anchor procedure is during an emergency period (as defined in section 1135(g) of the Act) or in the 30 days before the date that the emergency period (as defined in section 1135(g) of the Act) begins.

(4) The beneficiary is in a TEAM episode and receives a LEJR procedure at a CJR-X participant during the 30-day post-discharge period after a TEAM anchor hospitalization or TEAM anchor procedure.

(a) Quality measures. CMS calculates the quality measures used to evaluate the CJR-X participant's performance using Medicare claims data or patient-reported outcomes data reported under existing CMS quality reporting programs, including but not limited to the Hospital Inpatient Quality Reporting Program and the Hospital Outpatient Quality Reporting Program. The following quality measures are used for public reporting and for determining the CJR-X participant's CQS as described in paragraph (b) of this section:

(1) For all inpatient episodes: Hospital-level Risk-Standardized Complication Rate following elective primary Total Hip Arthroplasty and/or Total Knee Arthroplasty (CMIT ID #350).

(2) For all outpatient episodes: Hospital Visits within 7 days of Hospital Outpatient Department Surgery (CMIT ID #344, OP-36).

(3) For all inpatient episodes: Hospital Consumer Assessment of Healthcare Providers and Systems Survey (HCAHPS) (CMIT ID #338).

(4) For all outpatient episodes: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Survey (OAS CAHPS) (CMIT #162, OP-46).

(5) For all inpatient episodes: Hospital-Level Total Hip and/or Total Knee Arthroplasty Patient-Reported Outcome-Based Performance Measure (PRO-PM) (CMIT ID #1618).

(b) Calculation of the composite quality score (CQS). CMS calculates an overall composite quality score during reconciliation, capped at 20 points, for each CJR-X participant for the relevant performance year. The overall composite quality score equals the sum of the inpatient measure composite quality score, as described in paragraph (b)(1) of this section, and the outpatient measure composite quality score, as described in paragraph (b)(2) of this section.

(1) CMS calculates the inpatient measure composite quality score by summing the CJR-X participant's quality performance points for all of the following:

(i) The measure identified in paragraph (a)(1) of this section. This measure is weighted at 50 percent of the inpatient composite quality score.

(ii) The measure identified in paragraph (a)(3) of this section. This measure is weighted at 40 percent of the inpatient composite quality score.

(iii) The measure identified in paragraph (a)(5) of this section. This measure is weighted at 10 percent of the inpatient composite quality score.

(2) CMS calculates the outpatient measure composite quality score by summing the CJR-X participant's quality performance points for all of the following:

(i) The measure identified in paragraphs (a)(2) of this section. This measure is weighted at 50 percent of the outpatient composite quality score.

(ii) The measure identified in paragraphs (a)(4) of this section. This measure is weighted at 40 percent of the outpatient composite quality score.

(iii) The measure identified in paragraph (a)(5) of this section. This measure is weighted at 10 percent of the inpatient composite quality score.

(c) Quality performance points. CMS calculates quality performance points for each quality measure based on the CJR-X participant's performance relative to the distribution of performance of all hospitals that are eligible for payment under IPPS and meet the minimum patient case or survey count for that measure.

(1) For the measures described in paragraphs (a)(1) and (a)(2) of this section, CMS assigns the CJR-X participant measure value to a performance percentile and then quality performance points are assigned based on the following performance percentile scale:

(i) 10.00 for ≥90th.

(ii) 9.25 for ≥80th and <90th.

(iii) 8.50 for ≥70th and <80th.

(iv) 7.75 for ≥60th and <70th.

(v) 7.00 for ≥50th and <60th.

(vi) 6.25 for ≥40th and <50th.

(vii) 5.50 for ≥30th and <40th.

(viii) 0.00 for <30th.

(2) For the measure described in paragraphs (a)(3) and (a)(4) of this section, CMS assigns the CJR-X participant measure value to a performance percentile and then quality performance points are assigned based on the following performance percentile scale:

(i) 8.00 for ≥90th.

(ii) 7.40 for ≥80th and <90th.

(iii) 6.80 for ≥70th and <80th.

(iv) 6.20 for ≥60th and <70th.

(v) 5.60 for ≥50th and <60th.

(vi) 5.00 for ≥40th and <50th.

(vii) 5.40 for ≥30th and <40th.

(viii) 0.00 for <30th.

(3) For the measure described in paragraph (a)(5) of this section, CMS assigns the CJR-X participant's measure value to a performance percentile and then CMS assigns quality performance points based on the following performance percentile scale:

(i) 2.00 for ≥90th.

(ii) 1.85 for ≥80th and <90th.

(iii) 1.70 for ≥70th and <80th.

(iv) 1.55 for ≥60th and <70th.

(v) 1.40 for ≥50th and <60th.

(vi) 1.25 for ≥40th and <50th.

(vii) 1.10 for ≥30th and <40th.

(viii) 0.00 for <30th.

(d) Exception for hospitals without a measure value.

(1) If the CJR-X participant is without a measure value that would allow CMS to assign quality performance points for that quality measure, CMS assigns the 50th percentile quality performance points to the CJR-X participant for the individual measure.

(2) A CJR-X participant will not have a measure value for—

(i) The measure described in paragraph (a)(1) of this section, if the CJR-X participant does not meet the minimum 25 patient case count.

(ii) The measure described in paragraph (a)(2) of this section, if the CJR-X participant does not meet the minimum 25 patient case count.

(iii) The measure described in paragraph (a)(3) of this section, if the CJR-X participant does not meet the minimum 100 completed surveys.

(iv) The measure described in paragraph (a)(4) of this section, if the CJR-X participant does not meet the minimum 100 completed surveys.

(v) The measure described in paragraph (a)(5) of this section, if the CJR-X participant does not meet the minimum 25 patient case count.

(e) Display of quality measures.

(1) CMS displays quality measure results on the publicly available CMS website that is specific to CJR-X, in a form and manner consistent with other publicly reported measures.

(2) CMS shares quality measures with the CJR-X participant prior to display on the CMS website. Quality measure performance in performance year 1 will be reported in Calendar Year 2029. Subsequent years will be reported in the year following the performance period.

(a) Preliminary target price application. CMS establishes preliminary target prices for CJR-X participants for each performance year of the model as follows:

(1) MS-DRG/HCPCS episode type. CMS uses the MS-DRGs and, as applicable, HCPCS codes specified in § 512.625(d) when calculating the preliminary target prices for each MS-DRG/HCPCS episode type.

(i) CMS determines a separate preliminary target price for each of the MS-DRGs specified in § 512.625(a)(1).

(ii) Preliminary target prices for MS-DRG 470 include HCPCS 27130 and 27447.

(2) Applicable time period for preliminary target prices. CMS calculates preliminary target prices for each MS-DRG/HCPCS episode type and region for each performance year and applies the preliminary target price to each episode based on the episode's date of discharge from the anchor hospitalization or the episode's date of the anchor procedure, as applicable.

(3) Episodes that begin in one performance year and end in the subsequent performance year. CMS applies the preliminary target price to the episode based on the date of discharge from the anchor hospitalization or the date of the anchor procedure, as applicable, and reconciles the episode based on the date of discharge from the anchor hospitalization or the date of the anchor procedure.

(4) Exception for low-volume hospitals. CJR-X participants with fewer than 31 episodes in the applicable baseline period do not receive preliminary target prices for the upcoming performance year and are not eligible for reconciliation for that performance year.

(b) Preliminary target price calculation.

(1) CMS calculates preliminary target prices based on average baseline episode spending for the region where the CJR-X participant is located. The region CMS uses for calculating the preliminary target price corresponds to the U.S. Census Division associated with the primary address of the CCN of the CJR-X participant, and CMS bases the regional episode spending amount on all hospitals within the region, except for those excluded from CJR-X as specified in § 512.610(b).

(2) CMS uses the following baseline periods to determine baseline episode spending:

(i) Performance Year 1: Episodes with anchor hospitalization start dates or anchor procedure dates beginning on or after January 1, 2024 and anchor hospitalization discharge dates or anchor procedure dates between January 1, 2024 and December 31, 2026.

(ii) Performance Year 2 and future performance years: CMS uses the same cadence described in paragraph (i) of this section to roll the baseline period forward a year to construct the baseline period.

(3) CMS calculates the benchmark price as the weighted average of baseline episode spending, applying the following weights:

(i) Baseline episode spending from baseline year 1 is weighted at 17 percent.

(ii) Baseline episode spending from baseline year 2 is weighted at 33 percent.

(iii) Baseline episode spending from baseline year 3 is weighted at 50 percent.

(4) Exception for high episode spending. CMS applies a high-cost outlier cap to baseline episode spending at the 99th percentile of regional spending for each of the MS-DRG/HCPCS episode types specified in § 512.640(a)(1) for each baseline year individually.

(5) Exclusion of incentive programs and add-on payments under existing Medicare payment systems. CMS excludes certain Medicare incentive programs and add-on payments from baseline episode spending by using, with certain modifications, the CMS Price (Payment) Standardization Detailed Methodology.

(6) Prospective normalization factor. Based on the episodes in the baseline period, CMS calculates a prospective normalization factor, at the MS-DRG/HCPCS region level, so that the average of the total risk-adjusted benchmark price does not exceed the average of the total non-risk adjusted benchmark price, by—

(i) Applying risk adjustment multipliers, as specified in § 512.645(a)(1) through (3), to baseline period episodes to calculate the estimated risk-adjusted target price for all performance year episodes; and

(ii) Dividing the mean of the benchmark price for each episode across all hospitals and regions by the mean of the estimated risk-adjusted benchmark price calculated in § 512.640(b)(6)(i) for the same episode types across all hospitals and regions.

(7) Prospective trend factor. CMS determines the prospective trend factor for each MS-DRG/HCPCS episode type and region as the average (arithmetic mean) of the multiplier, as calculated in paragraph (7)(i) of this section, for that MS-DRG/HCPCS episode type and region and the national average for that MS-DRG/HCPCS episode type.

(i) CMS calculates a multiplier for each MS-DRG/HCPCS episode type and region and applies that multiplier to the most recent calendar year of the applicable baseline period. CMS calculates the multiplier using linear regression on the logarithmically transformed average regional spending for each MS-DRG/HCPCS episode type in the baseline years at both the regional and national level.

(ii) CMS exponentiates the coefficient from the linear regression (as described in paragraph (7)(i) of this section) to calculate the estimated annual change (where an exponentiated coefficient of 1 signifies no change) in average regional spending for each MS-DRG/HCPCS episode type from year to year.

(8) Discount factor. CMS applies a discount factor of 2 percent to the CJR-X participant's preliminary target price.

(9) Notification of preliminary target prices. CMS provides written notice, in a form and manner specified by CMS, to the CJR-X participant of its preliminary target prices for each MS-DRG/HCPCS episode type for each region prior to the start of the performance year in which the preliminary target prices apply.

(a) Risk adjustment factors. CMS risk adjusts the preliminary target prices calculated in accordance with § 512.640 at the beneficiary level using the following: a CJR-X Hierarchical Condition Category (HCC) count risk adjustment factor, an age bracket risk adjustment factor, a beneficiary economic risk adjustment factor, and the additional factors specified in paragraph (a)(6) of this section, and at the hospital level using a hospital bed size risk adjustment factor and a safety net hospital risk adjustment factor.

(1) The CJR-X HCC count risk adjustment factor uses five variables, representing beneficiaries with zero, one, two, three, or four or more CMS-HCC conditions based on a 180-day lookback period that begins 181 days prior to the anchor hospitalization or anchor procedure and ends on the day prior to the anchor hospitalization or anchor procedure.

(2) The age bracket risk adjustment factor uses four variables, representing beneficiaries in the following age groups as of the first day of the episode:

(i) Less than 65 years.

(ii) 65 to less than 75 years.

(iii) 75 years to less than 85 years.

(iv) 85 years or more.

(3) The beneficiary economic risk adjustment factor uses two variables, representing beneficiaries that, as of the first day of the episode:

(i) Meet one or more of the following economic measures:

(A) National CDI above the 80th percentile.

(B) Eligibility for the low-income subsidy.

(C) Eligibility for full Medicaid benefits.

(ii) Do not meet any of the three economic measures in paragraph (a)(3)(i) of this section.

(4) The hospital bed size risk adjustment factor uses four variables based on the CJR-X participant's characteristics:

(i) 250 beds or fewer.

(ii) 251-500 beds.

(iii) 501-850 beds.

(iv) 851 beds or more.

(5) The safety net hospital risk adjustment factor is based on the CJR-X participant meeting the safety net hospital definition in § 512.605.

(6) Additional beneficiary level risk adjustment factors represent the presence or absence in beneficiaries, based on a 180-day lookback period that ends on the day prior to the anchor hospitalization or anchor procedure, of each of the following conditions:

(i) Ankle procedure or reattachment, partial hip procedure, partial knee arthroplasty, total hip arthroplasty or hip resurfacing procedure, and total knee arthroplasty.

(ii) Disability as the original reason for Medicare enrollment.

(iii) Prior post-acute care use.

(iv) HCC 17: Cancer Metastatic to Lung, Liver, Brain, and Other Organs; Acute Myeloid Leukemia Except Promyelocytic.

(v) HCC 36: Diabetes with Severe Acute Complications.

(vi) HCC 37: Diabetes with Chronic Complications.

(vii) HCC 48: Morbid Obesity.

(viii) HCC 125: Dementia, Severe.

(ix) HCC 126: Dementia, Moderate.

(x) HCC 127: Dementia, Mild or Unspecified.

(xi) HCC 151: Schizophrenia.

(xii) HCC 155: Major Depression, Moderate or Severe, without Psychosis.

(xiii) HCC 199: Parkinson and Other Degenerative Disease of Basal Ganglia.

(xiv) HCC 224: Acute on Chronic Heart Failure.

(xv) HCC 225: Acute Heart Failure (Excludes Acute on Chronic).

(xvi) HCC 226: Heart Failure, Except End-Stage and Acute.

(xvii) HCC 238: Specified Heart Arrhythmias.

(xviii) HCC 253: Hemiplegia/Hemiparesis.

(xix) HCC 267: Deep Vein Thrombosis and Pulmonary Embolism.

(xx) HCC 280: Chronic Obstructive Pulmonary Disease, Interstitial Lung Disorders, and Other Chronic Lung Disorders.

(xxi) HCC 326: Chronic Kidney Disease, Stage 5.

(xxii) HCC 327: Chronic Kidney Disease, Severe (Stage 4).

(xxiii) HCC 383: Chronic Ulcer of Skin, Except Pressure, Not Specified as Through to Bone or Muscle.

(xxiv) HCC402: Hip Fracture/Dislocation.

(b) Timing and data used for risk adjustment. CMS uses 3 years of baseline period data, as described under § 512.640(b)(2)(i) and (ii), to compute all risk adjustment factors prior to the start of the performance year through a linear regression analysis.

(c) Risk adjustment coefficients. CMS produces exponentiated coefficients through the annual linear regression analysis to determine the anticipated marginal effect of each risk adjustment factor on episode costs. CMS transforms, or exponentiates, these coefficients, and the resulting coefficients are the beneficiary and hospital-level risk adjustment factors, specified in paragraphs (a)(1) through (6) of this section, that CMS uses during reconciliation for the subsequent performance year.

(d) Applying risk adjustment at reconciliation. At the time of reconciliation, CMS risk adjusts the preliminary target prices calculated under § 512.640 by applying the applicable beneficiary level and hospital-level risk adjustment factors specific to the beneficiary in the episode, as set forth in paragraphs (a)(1) through (6) of this section.

(e) Normalization factor update. CMS normalizes the risk-adjusted preliminary target prices at reconciliation so that the average of the total risk-adjusted preliminary target price does not exceed the average of the total non-risk adjusted preliminary target price.

(1) The final normalization factor at reconciliation—

(i) Is the mean benchmark price for each MS-DRG/HCPCS episode type and region divided by the mean risk-adjusted benchmark price for the same MS-DRG/HCPCS episode type and region.

(ii) As applied, cannot exceed ±5 percent of the prospective normalization factor (as specified in § 512.640(b)(6)).

(2) CMS applies the final normalization factor to the previously calculated, beneficiary-level, risk-adjusted preliminary target prices specific to each region and MS-DRG/HCPCS episode type.

(f) Trend factor update. CMS calculates a multiplier for each MS-DRG/HCPCS episode type and region and applies the multiplier at reconciliation to the most recent calendar year of the applicable baseline period. CMS calculates the multiplier as the average regional capped performance year episode spending for each MS-DRG/HCPCS episode type divided by the average regional capped baseline period episode spending for each MS-DRG/HCPCS episode type.

(1) CMS caps the retrospective trend factor so that the maximum difference cannot exceed ±3 percent of the prospective trend factor (as specified in § 512.640(b)(7)).

(2) CMS applies the capped retrospective trend factor to the previously calculated normalized, risk adjusted preliminary target prices specific to each region and MS-DRG/HCPCS episode type, as specified in paragraph (e)(2) of this section.

(g) Payment system changes. CMS revises preliminary target prices, as calculated under § 512.640, when determining reconciliation target prices to account for calendar year and fiscal year payment rule updates that occur after preliminary target prices are determined.

(h) Quality adjustment to discount factor. CMS calculates a composite quality score as specified at § 512.635(b) and adjusts the discount factor specified at § 512.640(b)(8) to calculate the reconciliation target prices, which are compared to performance year spending at reconciliation, as specified in § 512.650(c) as follows:

(1) A CJR-X participant with excellent composite quality scores, defined as composite quality scores greater than or equal to 17.1, receives a 0.0 discount factor.

(2) A CJR-X participant with good composite quality scores, defined as composite quality scores greater than or equal to 12.1 and less than or equal to 17.0, receives a 1.0 discount factor.

(3) A CJR-X participant with acceptable composite quality scores, defined as composite quality scores greater than or equal to 6.1 and less than or equal to 12.0, receives a 2.0 discount factor.

(4) A CJR-X participant with below acceptable composite quality scores, defined as composite quality scores less than or equal to 6.0, receives a 2.0 discount factor and are ineligible to receive a reconciliation payment, as specified in § 512.650(d).

(a) General. Providers and suppliers furnishing items and services included in the episode bill for such items and services in accordance with existing Medicare rules.

(b) Reconciliation process.

(1) Six months after the end of each performance year, CMS performs a reconciliation calculation to establish a reconciliation payment or repayment amount for each CJR-X participant in the applicable performance year as described in paragraph (c) of this section.

(2) For CJR-X participants that experience a reorganization event in which one or more hospitals reorganize under the CCN of a CJR-X participant, CMS performs both of the following:

(i) Separate reconciliation calculations for each predecessor CJR-X participant for episodes where the anchor hospitalization admission or the anchor procedure occurred before the effective date of the reorganization event.

(ii) Reconciliation calculations for each new or surviving CJR-X participant for episodes where the anchor hospitalization admission or anchor procedure occurred on or after the effective date of the reorganization event.

(c) Calculation of the Net Payment Reconciliation Amount (NPRA). CMS compares the reconciliation target prices described in § 512.645 and the CJR-X participant's performance year spending to establish an NPRA for the CJR-X participant for each performance year as follows:

(1) CMS determines the performance year spending for each episode included in the performance year (other than episodes that have been canceled in accordance with § 512.630(b)) for each MS-DRG/HCPCS episode type using claims data that is available 6 months after the end of the performance year.

(2) CMS calculates and applies the high-cost outlier cap for performance year episode spending by applying the calculation described in § 512.640(b)(4) to performance year episode spending for each MS-DRG/HCPCS episode type.

(3) CMS applies the adjustments specified in § 512.645 to the preliminary target prices calculated in accordance with § 512.640 to determine the reconciliation target prices for each MS-DRG/HCPCS episode type.

(4) CMS aggregates the reconciliation target prices determined in accordance with paragraph (c)(3) of this section for all episodes included in the performance year (other than episodes that have been canceled in accordance with § 512.630(b)).

(5) CMS aggregates the adjusted performance year spending amounts determined in paragraphs (c)(1) through (2) of this section and subtracts the resulting amount from the aggregated reconciliation target price amount determined in paragraphs (c)(3) through (4) of this section.

(6) CMS applies stop-loss and stop-gain limits to the amount calculated in paragraph (c)(5) of this section as follows:

(i) Limitation on loss. For CJR-X participants, except as provided in paragraph (d)(3) of this section, the repayment amount for a performance year cannot exceed 20 percent of the aggregated reconciliation target price amount calculated in paragraph (c)(4) of this section for the performance year. The post-episode spending calculation amount in paragraph (c)(7) of this section is not subject to the limitation on loss.

(ii) Limitation on gain. For CJR-X participants, the reconciliation payment amount for a performance year cannot exceed 20 percent of the aggregated reconciliation target price amount calculated in paragraph (c)(4) of this section for the performance year. The post-episode spending amount calculated in paragraph (c)(7) of this section is not subject to the limitation on gain.

(iii) Additional limitation on loss for certain hospitals. The repayment amount for the following types of CJR-X participants as defined at § 512.605, cannot exceed 5 percent of the aggregated reconciliation target price amount calculated in paragraph (c)(4) of this section:

(A) Medicare-dependent, small rural hospital (MDH).

(B) Rural hospital.

(C) Safety net hospital.

(D) Sole community hospital (SCH).

(7) CMS calculates the post-episode spending amount. If the average post-episode spending amount for a CJR-X participant in the performance year being reconciled is greater than 3 standard deviations above the regional average post-episode spending amount for the performance year, then the post-episode spending amount that exceeds 3 standard deviations above the regional average post-episode spending amount for the performance year is subtracted from the NPRA for that performance year.

(d) Reconciliation payment amount or repayment amount.

(1) Excluding CJR-X participants that receive a below acceptable composite quality score, as specified in § 512.645(h), if the amount calculated in paragraph (c) of this section is positive, CMS pays the CJR-X participant a reconciliation payment equal to the amount described in paragraph (c) of this section.

(2) If the amount calculated in paragraph (c) of this section is negative, the CJR-X participant for the applicable performance year must pay to CMS a repayment equal to the amount described in paragraph (c) of this section.

(e) CJR-X reconciliation report. CMS issues each CJR-X participant a CJR-X reconciliation report for the performance year. Each CJR-X reconciliation report contains the following:

(1) The total performance year spending for the CJR-X participant.

(2) The CJR-X participant's reconciliation target prices.

(3) The CJR-X participant's reconciliation amount.

(4) The CJR-X participant's composite quality score calculated in accordance with § 512.635(b).

(5) The CJR-X participant's quality-adjusted reconciliation amount.

(6) The stop-loss and stop-gain limits that apply to the CJR-X participant.

(7) The CJR-X participant's NPRA.

(8) The CJR-X participant's post-episode spending amount, if applicable.

(9) The reconciliation payment amount or repayment amount for the performance year, if applicable.

(a) The CJR-X Model does not replace any existing Medicare incentive programs or add-on payments. The CJR-X payments are independent of, and do not affect, any incentive programs or add-on payments under existing Medicare payment systems.

(b) [Reserved]

(a) General. CMS prorates items and services included in the episode that extend beyond the episode so that only those portions of the items and services that were furnished during the episode are included in the calculation of the actual episode payments.

(b) Proration of items and services. CMS prorates payments for items and services that extend beyond the episode for the purposes of calculating both baseline episode spending and performance year spending using the following methodology:

(1) Non-IPPS inpatient items and services. Non-IPPS inpatient items and services that extend beyond the end of the episode are prorated according to the percentage of the actual length of stay (in days) that falls within the episode.

(2) Home health agency items and services. Home health agency items and services paid under the Medicare prospective payment system in accordance with part 484, subpart E of this chapter that extend beyond the episode are prorated according to the percentage of days, starting with the first billable service date and through and including the last billable service date, that occur during the episode.

(3) IPPS items and services. IPPS items and services that extend beyond the end of the episode are prorated according to the MS-DRG geometric mean length of stay, using the following methodology:

(i) The first day of the IPPS stay is counted as 2 days.

(ii) If the actual length of stay that occurred during the episode is equal to or greater than the MS-DRG geometric mean, the full MS-DRG payment is allocated to the episode.

(iii) If the actual length of stay that occurred during the episode is less than the MS-DRG geometric mean length of stay, the MS-DRG payment amount is allocated to the episode based on the number of inpatient days that fall within the episode.

(4) If the full amount of the payment is not allocated to the episode, any remainder amount is allocated to the post-episode spending calculation (defined in § 512.650(c)(7)).

(a) General. Subject to the limitations on review in § 512.170, the CJR-X participant may submit a notice of calculation error for one or more calculations involving a matter related to payment, reconciliation payment amounts, repayment amounts, the use of quality measure results in determining the composite quality score, or the application of the composite quality score during reconciliation.

(b) Requirements.

(1) If the CJR-X participant identifies a calculation error as described in paragraph (a) of this section, the CJR-X participant must submit written notice of the error, in a form and manner specified by CMS, within 30 days of the issuance of the reconciliation report.

(2) If the CJR-X participant does not provide timely written notice of calculation error, CMS deems the CJR-X reconciliation report to be final 30 days after it is issued and proceeds with the payment or repayment processes as applicable.

(3) Only CJR-X participants may use this calculation error process.

(c) Process.

(1) If CMS determines the timely error notice meets the requirements of this section and contains sufficient information to substantiate the request, CMS issues an initial determination in writing within 30 days of receipt to either confirm that there was an error in the calculation or verify that the calculation is correct.

(2) CMS reserves the right to extend the time for providing its initial final determination upon written notice to the CJR-X participant.

(3) If the request is not compliant with the requirements of this section or requires additional information—

(i) CMS contacts the CJR-X participant to request additional information in a form and manner as specified by CMS;

(ii) The CJR-X participant must respond within 10 days of CMS' request for additional information in a form and manner as specified by CMS; and

(iii) If a CJR-X participant does not respond in accordance with paragraph (c)(3)(ii) of this section, then the reconciliation report is deemed final.

(d) Reconsideration request. A CJR-X participant who wishes to dispute an initial determination made in accordance with paragraph (c) of this section may invoke the reconsideration review process under § 512.190.

(a) General. CMS shares certain beneficiary-identifiable data as described in paragraphs (b), (c), and (e) of this section and certain regional aggregate data as described in paragraph (d) of this section with CJR-X participants regarding CJR-X beneficiaries and performance under the model, consistent with applicable law.

(b) Beneficiary-identifiable claims data. CMS shares beneficiary-identifiable claims data with CJR-X participants as follows:

(1) CMS makes available certain beneficiary-identifiable claims data described in paragraph (5) of this section for CJR-X participants to request for purposes of conducting health care operations work that falls within paragraph (1) or (2) of the definition of health care operations at 45 CFR 164.501 regarding their CJR-X beneficiaries.

(2) A CJR-X participant that wishes to receive beneficiary-identifiable claims data for its CJR-X beneficiaries must:

(i) Submit a formal request for the data on an annual basis in a manner and form and by a date specified by CMS, indicating their selection of summary beneficiary-identifiable data, raw beneficiary-identifiable data, or both, and attest that—

(A) The CJR-X participant is requesting claims data of CJR-X beneficiaries who would be in an episode during the baseline period or performance year, as a HIPAA covered entity.

(B) The CJR-X participant's request reflects the minimum data necessary, as set forth in paragraph (c) of this section, for the CJR-X participant to conduct health care operations work that falls within the first or second paragraph of the definition of health care operations at 45 CFR 164.501.

(C) The CJR-X participant's use of claims data will be limited to developing processes and engaging in appropriate activities related to coordinating care, improving the quality and efficiency of care, and conducting population-based activities relating to improving health or reducing health care costs that are applied uniformly to all CJR-X beneficiaries, in an episode during the baseline period or performance year, and that these data will not be used to reduce, limit or restrict care for specific Medicare beneficiaries.

(ii) Sign and submit a CJR-X data sharing agreement, as defined in § 512.605, with CMS as set forth in paragraph (e) of this section.

(3) CMS shares this beneficiary-identifiable claims data with a CJR-X participant in accordance with applicable privacy and security laws and established privacy and security protections.

(4) CMS omits from the beneficiary-identifiable claims data any information that is subject to the regulations in 42 CFR part 2 governing the confidentiality of substance use disorder patient records.

(5) The beneficiary-identifiable claims data will include, when available, the following:

(i) Unrefined (raw) Medicare Parts A and B beneficiary-identifiable claims data for CJR-X beneficiaries in an episode during the 3-year baseline period and performance year.

(ii) Summarized (summary) Medicare Parts A and B beneficiary-identifiable claims data for CJR-X beneficiaries in an episode during the 3-year baseline period and applicable performance year.

(6) CMS makes available the beneficiary-identifiable claims data for retrieval by CJR-X participants at the following frequency:

(i) Annually, at least one month prior to every performance year for baseline period data, based on the baseline periods described in § 512.640(b)(2).

(ii) As frequently as monthly during the performance year and for up to 6 months after the performance year for performance year data.

(c) Minimum necessary data. The CJR-X participant must limit its request for beneficiary-identifiable data under paragraph (b) of this section to the minimum necessary Parts A and B data elements which may include, but are not limited to the following:

(1) Medicare beneficiary identifier (ID).

(2) Procedure code.

(3) Sex.

(4) Diagnosis code.

(5) Claim ID.

(6) The from and through dates of service.

(7) The provider or supplier ID.

(8) The claim payment type.

(9) Date of birth and death, if applicable.

(10) Tax identification number.

(11) National provider identifier.

(d) Regional aggregate data.

(1) CMS shares regional aggregate data for the 3-year baseline period and relevant performance year with CJR-X participants as follows.

(i) CMS shares 3-year baseline period regional aggregate data annually at least 1 month before the relevant performance year, based on the baseline periods described in § 512.640(b)(2).

(ii) CMS shares performance year regional aggregate data as frequently as a monthly basis during the applicable performance year and for up to 6 months after the relevant performance year.

(2) Regional aggregate data will—

(i) Be aggregated based on all Parts A and B claims associated with episodes in CJR-X for the U.S. Census Division in which the CJR-X participant is located;

(ii) Summarize average episode spending for episodes in CJR-X in the U.S. Census Division in which the CJR-X participant is located; and

(iii) Be de-identified in accordance with 45 CFR 164.514(b).

(e) CJR-X data sharing agreement.

(1) A CJR-X participant who wishes to retrieve the beneficiary-identifiable data specified in paragraph (b) of this section, must complete and submit, on at least an annual basis, a signed CJR-X data sharing agreement, as defined in § 512.605, to be provided in a form and manner and by a date specified by CMS, under which the CJR-X participant agrees:

(i) To comply with the requirements for use and disclosure of this beneficiary-identifiable data that are imposed on covered entities by the HIPAA Privacy Rule (45 CFR part 160 and subparts A and E of part 164), HIPAA Breach Notification Rule (45 CFR subpart D of part 164) and the requirements of the CJR-X set forth in this part.

(ii) To comply with additional privacy, security, breach notification, and data retention requirements specified by CMS in the CJR-X data sharing agreement.

(iii) To contractually bind each downstream recipient of the beneficiary-identifiable data that is a business associate of the CJR-X participant to the same terms and conditions to which the CJR-X participant is itself bound in its CJR-X data sharing agreement with CMS as a condition of the business associate's receipt of the beneficiary-identifiable data retrieved by the CJR-X participant under the CJR-X.

(iv) That if the CJR-X participant misuses or discloses the beneficiary-identifiable data in a manner that violates any applicable statutory or regulatory requirements or that is otherwise non-compliant with the provisions of the data sharing agreement, CMS may deem the CJR-X participant ineligible to retrieve beneficiary-identifiable data under paragraph (b) of this section for any amount of time, and the CJR-X participant may be subject to additional sanctions and penalties available under the law.

(2) A CJR-X participant must comply with all applicable laws and the terms of the CJR-X data sharing agreement in order to retrieve the beneficiary-identifiable data.

(a) General. (1) A CJR-X participant may enter into a sharing arrangement with a CJR-X collaborator to make a gainsharing payment, or to receive an alignment payment, or both. A CJR-X participant must not make a gainsharing payment to a CJR-X collaborator, or receive an alignment payment from a CJR-X collaborator, except in accordance with a sharing arrangement.

(2) A sharing arrangement must comply with the provisions of this section and all other applicable laws and regulations, including the applicable fraud and abuse laws and all applicable payment and coverage requirements.

(3) CJR-X participants must develop, maintain, and use a set of written policies for selecting individuals and entities to be CJR-X collaborators.

(i) These policies must contain criteria related to, and inclusive of, the quality of care delivered by the potential CJR-X collaborator and the provision of CJR-X activities.

(ii) The selection criteria cannot be based directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the CJR-X participant, any CJR-X collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a CJR-X participant, CJR-X collaborator, collaboration agent, or downstream collaboration agent.

(iii) A selection criterion that considers whether a potential CJR-X collaborator has performed a reasonable minimum number of services that would qualify as CJR-X activities, as determined by the CJR-X participant, will be deemed not to violate the volume or value standard if the purpose of the criterion is to ensure the quality of care furnished to CJR-X beneficiaries.

(4) If a CJR-X participant enters into a sharing arrangement, its compliance program must include oversight of sharing arrangements and compliance with the applicable requirements of CJR-X.

(b) Requirements. (1) A sharing arrangement must be in writing and signed by the parties, and entered into before care is furnished to CJR-X beneficiaries under the sharing arrangement.

(2) Participation in a sharing arrangement must be voluntary and without penalty for nonparticipation.

(3) The sharing arrangement must require the CJR-X collaborator and its employees, contractors (including collaboration agents), and subcontractors (including downstream collaboration agents) to comply with all of the following:

(i) The applicable provisions of this part 512 (including requirements regarding beneficiary notifications in § 512.622, access to records in § 512.135(b), record retention in § 512.135(c), and participation in any evaluation, monitoring, compliance in § 512.130, and enforcement activities performed by CMS or its designees in § 512.160).

(ii) All applicable Medicare provider enrollment requirements at § 424.500 of this chapter, including having a valid and active TIN or NPI, during the term of the sharing arrangement.

(iii) All other applicable laws and regulations.

(4) The sharing arrangement must require the CJR-X collaborator to have or be covered by a compliance program that includes oversight of the sharing arrangement and compliance with the requirements of CJR-X that apply to its role as a CJR-X collaborator, including any distribution arrangements.

(5) The sharing arrangement must not potentially or actually negatively impact beneficiary access, beneficiary freedom of choice, or quality of care.

(6) The board or other governing body of the CJR-X participant must have responsibility for overseeing the CJR-X participant's participation in CJR-X, its arrangements with CJR-X collaborators, its payment of gainsharing payments, its receipt of alignment payments, and its use of beneficiary incentives in the CJR-X Model.

(7) The specifics of the agreement must be documented in writing and must be made available to CMS upon request (as outlined in § 512.150).

(8) The sharing arrangement must specify the following:

(i) The purpose and scope of the sharing arrangement.

(ii) The obligations of the parties, including specified CJR-X activities and other services, to be performed by the parties under the sharing arrangement.

(iii) The date range for which the sharing arrangement is effective.

(iv) The financial or economic terms for payment, including the following:

(A) Eligibility criteria for a gainsharing payment.

(B) Eligibility criteria for an alignment payment.

(C) Frequency of gainsharing or alignment payments.

(D) Methodology and accounting formula for determining the amount of a gainsharing payment or alignment payment.

(9) The sharing arrangement must not do either of the following:

(i) Induce the CJR-X participant, CJR-X collaborator, or any employees, contractors, or subcontractors of the CJR-X participant or CJR-X collaborator to reduce or limit medically necessary services to any Medicare beneficiary.

(ii) Restrict the ability of a CJR-X collaborator to make decisions in the best interests of its patients, including the selection of devices, supplies, and treatments.

(c) Gainsharing payment, alignment payment, and internal cost savings conditions and restrictions.

(1) Gainsharing payments, if any, must—

(i) Be derived solely from reconciliation payment amounts, or internal cost savings, or both;

(ii) Be distributed on an annual basis (not more than once per calendar year);

(iii) Not be a loan, advance payment, or payment for referrals or other business; and

(iv) Be clearly identified as a gainsharing payment at the time it is paid.

(2) Gainsharing payment eligibility-

(i) To be eligible to receive a gainsharing payment, a CJR-X collaborator must meet quality of care criteria for the performance year for which the CJR-X participant accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment. The quality of care criteria must be established by the CJR-X participant and directly relate to the episode.

(ii) To be eligible to receive a gainsharing payment, or to be required to make an alignment payment, a CJR-X collaborator other than ACO, PGP, NPPGP, or TGP, must have directly furnished a billable item or service to a CJR-X beneficiary during an episode that was attributed to the same performance year for which the CJR-X participant accrued the internal cost savings or earned the reconciliation payment amount or repayment amount that comprises the gainsharing payment or the alignment payment.

(iii) To be eligible to receive a gainsharing payment, or to be required to make an alignment payment, a CJR-X collaborator that is a PGP, NPPGP, or TGP, must meet the following criteria:

(A) The PGP, NPPGP, or TGP, must have billed for an item or service that was rendered by one or more PGP member, NPPGP member, or TGP member, respectively to a CJR-X beneficiary during an episode that was attributed to the same performance year for which the CJR-X participant accrued the internal cost savings or earned the reconciliation payment amount or repayment amount that comprises the gainsharing payment or the alignment payment.

(B) The PGP, NPPGP, or TGP, must have contributed to CJR-X activities and been clinically involved in the care of CJR-X beneficiaries during the same performance year for which the CJR-X participant accrued the internal cost savings or earned the reconciliation payment amount or repayment amount that comprises the gainsharing payment or the alignment payment. A non-exhaustive list of examples where a PGP, NPPGP, or TGP might have been clinically involved in the care of CJR-X beneficiaries includes—

(1) Providing care coordination services to CJR-X beneficiaries during or after inpatient admission;

(2) Engaging with a CJR-X participant in care redesign strategies, and performing a role in implementing such strategies, that are designed to improve the quality of care for episodes and reduce episode spending; or

(3) In coordination with other providers and suppliers (such as PGP members, NPPGP members, or TGP members the CJR-X participant; and post-acute care providers), implementing strategies designed to address and manage the comorbidities of CJR-X beneficiaries.

(iv) To be eligible to receive a gainsharing payment, or to be required to make an alignment payment, a CJR-X collaborator that is an ACO must meet the following criteria:

(A) The ACO must have had an ACO provider/supplier that directly furnished, or an ACO participant that billed for, an item or service that was rendered to a CJR-X beneficiary during an episode that was attributed to the same performance year for which the CJR-X participant accrued the internal cost savings or earned the reconciliation payment amount or repayment amount that comprises the gainsharing payment or the alignment payment; and

(B) The ACO must have contributed to CJR-X activities and been clinically involved in the care of CJR-X beneficiaries during the performance year for which the CJR-X participant accrued the internal cost savings or earned the reconciliation payment amount or repayment amount that comprises the gainsharing payment or the alignment payment. A non-exhaustive list of ways in which an ACO might have been clinically involved in the care of CJR-X beneficiaries could include—

(1) Providing care coordination services to CJR-X beneficiaries during or after inpatient admission;

(2) Engaging with a CJR-X participant in care redesign strategies and performing a role in implementing such strategies that are designed to improve the quality of care and reduce spending for episodes; or

(3) In coordination with providers and suppliers (such as ACO participants, ACO providers/suppliers, the CJR-X participant, and post-acute care providers), implementing strategies designed to address and manage the comorbidities of CJR-X beneficiaries.

(3) The methodology for accruing, calculating, and verifying internal cost savings will be determined by the CJR-X participant. The methodology—

(i) Must be transparent, measurable, and verifiable in accordance with generally accepted accounting principles (GAAP) and Government Auditing Standards (The Yellow Book).

(ii) Used to calculate internal cost savings that reflect the actual, internal cost savings achieved by the CJR-X participant through the documented implementation of CJR-X activities identified by the CJR-X participant and must exclude—

(A) Any savings realized by any individual or entity that is not the CJR-X participant; and

(B) “Paper” savings from accounting conventions or past investment in fixed costs.

(4) The amount of any gainsharing payments must be determined in accordance with a methodology that is based solely on quality of care and the provision of CJR-X activities. The methodology may take into account the amount of CJR-X activities provided by a CJR-X collaborator relative to other CJR-X collaborators.

(5) For a performance year, the aggregate amount of all gainsharing payments that are derived from reconciliation payment amounts must not exceed the amount of that year's reconciliation payment amount.

(6) No entity or individual, whether a party to a sharing arrangement or not, may condition the opportunity to make or receive gainsharing payments or to make or receive alignment payments directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the CJR-X participant, any CJR-X collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a CJR-X participant, CJR-X collaborator, collaboration agent, or downstream collaboration agent.

(7) A CJR-X participant must not make a gainsharing payment to a CJR-X collaborator if CMS has notified the CJR-X participant that such CJR-X collaborator is subject to any action by CMS, HHS or any other governmental entity, or its designees, for noncompliance with this part or the fraud and abuse laws, for the provision of substandard care to CJR-X beneficiaries or other integrity problems, or for any other program integrity problems or noncompliance with any other laws or regulations.

(8) The sharing arrangement must require the CJR-X participant to recoup any gainsharing payment that contained funds derived from a CMS overpayment on a reconciliation payment amount or was based on the submission of false or fraudulent data.

(9) Alignment payments from a CJR-X collaborator to a CJR-X participant may be made at any interval that is agreed upon by both parties, and must not be—

(i) Issued, distributed, or paid prior to the calculation by CMS of a repayment amount;

(ii) Loans, advance payments, or payments for referrals or other business; or

(iii) Assessed by a CJR-X participant in the absence of a repayment amount.

(10) The CJR-X participant must not receive any amounts under a sharing arrangement from a CJR-X collaborator that are not alignment payments.

(11) For a performance year, the aggregate amount of all alignment payments received by the CJR-X participant must not exceed 50 percent of the CJR-X participant's repayment amount.

(12) The aggregate amount of all alignment payments from a CJR-X collaborator to the CJR-X participant may not be greater than with respect to a CJR-X collaborator—

(i) Other than an ACO, 25 percent of the CJR-X participant's repayment amount; or

(ii) That is an ACO, 50 percent of the CJR-X participant's repayment amount.

(13) The amount of any alignment payments must be determined in accordance with a methodology that does not directly account for the volume or value of past or anticipated referrals or business otherwise generated by, between or among the CJR-X participant, any CJR-X collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a CJR-X participant, CJR-X collaborator, collaboration agent, or downstream collaboration agent.

(14) All gainsharing payments and any alignment payments must be administered by the CJR-X participant in accordance with generally accepted accounting principles (GAAP) and Government Auditing Standards (The Yellow Book).

(15) All gainsharing payments and alignment payments must be made by check, electronic funds transfer, or another traceable cash transaction.

(d) Documentation requirements.

(1) CJR-X participants must—

(i) Document the sharing arrangement contemporaneously with the establishment of the arrangement;

(ii) Post (and update on at least a quarterly basis) on a publicly available web page on the CJR-X participant's website the following:

(A) Accurate lists of all current CJR-X collaborators, including the CJR-X collaborators' names and addresses as well as accurate historical lists of all CJR-X collaborators.

(B) Written policies for selecting individuals and entities to be CJR-X collaborators as required by § 512.670(a)(3).

(iii) Maintain, and require each CJR-X collaborator to maintain, contemporaneous documentation with respect to the payment or receipt of any gainsharing payment or alignment payment that includes all of the following, at a minimum:

(A) Nature of the payment (gainsharing payment or alignment payment).

(B) Identity of the parties making and receiving the payment.

(C) Date of the payment.

(D) Amount of the payment.

(E) Date and amount of any recoupment of all or a portion of a CJR-X collaborator's gainsharing payment.

(F) Explanation for each recoupment, such as whether the CJR-X collaborator received a gainsharing payment that contained funds derived from a CMS overpayment of a reconciliation payment or was based on the submission of false or fraudulent data.

(2) The CJR-X participant must keep records of all of the following:

(i) A process for determining and verifying its potential and current CJR-X collaborators' eligibility to participate in Medicare.

(ii) A plan to track internal cost savings.

(iii) Information on the accounting systems used to track internal cost savings.

(iv) A description of current health information technology, including systems to track reconciliation payment amounts, repayment amounts, and internal cost savings.

(v) A plan to track gainsharing payments and alignment payments.

(3) The CJR-X participant must retain and provide access to, and require each CJR-X collaborator to retain and provide access to, the required documentation in accordance with § 512.135.

(a) General. (1) An ACO, PGP, NPPGP, or TGP, that is a CJR-X collaborator and has entered into a sharing arrangement with a CJR-X participant may distribute all or a portion of any gainsharing payment it receives from the CJR-X participant only in accordance with a distribution arrangement.

(2) All distribution arrangements must comply with the provisions of this section and all other applicable laws and regulations, including the fraud and abuse laws.

(b) Requirements. (1) All distribution arrangements must be in writing and signed by the parties, contain the effective date of the agreement, and be entered into before care is furnished to CJR-X beneficiaries under the distribution arrangement.

(2) Participation in a distribution arrangement must be voluntary and without penalty for nonparticipation.

(3) The distribution arrangement must require the collaboration agent to comply with all applicable laws and regulations.

(4) The opportunity to make or receive a distribution payment must not be conditioned directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the CJR-X participant, any CJR-X collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a CJR-X participant, CJR-X collaborator, collaboration agent, or downstream collaboration agent.

(5) The amount of any distribution payments from an ACO, from an NPPGP to an NPPGP member, or from a TGP to a TGP member, must be determined in accordance with a methodology that is solely based on quality of care and the provision of CJR-X activities and that may take into account the amount of such CJR-X activities provided by a collaboration agent relative to other collaboration agents.

(6) The amount of any distribution payments from a PGP must be determined in accordance with a methodology that is solely based on quality of care and the provision of CJR-X activities and that may take into account the amount of such CJR-X activities provided by a collaboration agent relative to other collaboration agents.

(7) A collaboration agent is eligible to receive a distribution payment only if the collaboration agent furnished or billed for an item or service rendered to a CJR-X beneficiary during an episode that was attributed to the same performance year for which the CJR-X participant accrued the internal cost savings or earned the reconciliation payment amount that comprises the gainsharing payment being distributed.

(8) With respect to the distribution of any gainsharing payment received by an ACO, PGP, NPPGP, or TGP, the total amount of all distribution payments for a performance year must not exceed the amount of the gainsharing payment received by the CJR-X collaborator from the CJR-X participant for the same performance year.

(9) All distribution payments must be made by check, electronic funds transfer, or another traceable cash transaction.

(10) The collaboration agent must retain the ability to make decisions in the best interests of the patient, including the selection of devices, supplies, and treatments.

(11) The distribution arrangement must not do either of the following:

(i) Induce the collaboration agent to reduce or limit medically necessary items and services to any Medicare beneficiary.

(ii) Reward the provision of items and services that are medically unnecessary.

(12) The CJR-X collaborator must maintain contemporaneous documentation regarding distribution arrangements in accordance with § 512.135, including all of the following:

(i) The relevant written agreements.

(ii) The date and amount of any distribution payment(s).

(iii) The identity of each collaboration agent that received a distribution payment.

(iv) A description of the methodology and accounting formula for determining the amount of any distribution payment.

(13) The CJR-X collaborator may not enter into a distribution arrangement with any individual or entity that has a sharing arrangement with the same CJR-X participant.

(14) The CJR-X collaborator must retain and provide access to, and must require collaboration agents to retain and provide access to, the required documentation in accordance with § 512.135.

(a) General. (1) An ACO participant that is a PGP, NPPGP, or TGP and that has entered into a distribution arrangement with a CJR-X collaborator that is an ACO, may distribute all or a portion of any distribution payment it receives from the CJR-X collaborator only in accordance with a downstream distribution arrangement.

(2) All downstream distribution arrangements must comply with the provisions of this section and all applicable laws and regulations, including the fraud and abuse laws.

(b) Requirements. (1) All downstream distribution arrangements must be in writing and signed by the parties, contain the effective date of the agreement, and be entered into before care is furnished to CJR-X beneficiaries under the downstream distribution arrangement.

(2) Participation in a downstream distribution arrangement must be voluntary and without penalty for nonparticipation.

(3) The downstream distribution arrangement must require the downstream collaboration agent to comply with all applicable laws and regulations.

(4) The opportunity to make or receive a downstream distribution payment must not be conditioned directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the CJR-X participant, any CJR-X collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a CJR-X participant, CJR-X collaborator, collaboration agent, or downstream collaboration agent.

(5) The amount of any downstream distribution payments from an NPPGP to an NPPGP member or from a TGP to a TGP member must be determined in accordance with a methodology that is solely based on quality of care and the provision of CJR-X activities and that may take into account the amount of such CJR-X activities provided by a downstream collaboration agent relative to other downstream collaboration agents.

(6) The amount of any downstream distribution payments from a PGP must be determined in accordance with a methodology that is solely based on quality of care and the provision of CJR-X activities and that may take into account the amount of such CJR-X activities provided by a downstream collaboration agent relative to other downstream collaboration agents.

(7) A downstream collaboration agent is eligible to receive a downstream distribution payment only if the downstream collaboration agent furnished an item or service to a CJR-X beneficiary during an episode that is attributed to the same performance year for which the CJR-X participant accrued the internal cost savings or earned the reconciliation payment amount that comprises the gainsharing payment from which the ACO made the distribution payment to the PGP, NPPGP, or TGP that is an ACO participant.

(8) The total amount of all downstream distribution payments made to downstream collaboration agents must not exceed the amount of the distribution payment received by the PGP, NPPGP, or TGP from the ACO.

(9) All downstream distribution payments must be made by check, electronic funds transfer, or another traceable cash transaction.

(10) The downstream collaboration agent must retain his or her ability to make decisions in the best interests of the beneficiary, including the selection of devices, supplies, and treatments.

(11) The downstream distribution arrangement must not do either of the following:

(i) Induce the downstream collaboration agent to reduce or limit medically necessary services to any Medicare beneficiary.

(ii) Reward the provision of items and services that are medically unnecessary.

(12) The PGP, NPPGP, or TGP must maintain contemporaneous documentation regarding downstream distribution arrangements in accordance with § 512.135, including the following:

(i) The relevant written agreements.

(ii) The date and amount of any downstream distribution payment.

(iii) The identity of each downstream collaboration agent that received a downstream distribution payment.

(iv) A description of the methodology and accounting formula for determining the amount of any downstream distribution payment.

(13) The PGP, NPPGP, or TGP may not enter into a downstream distribution arrangement with any PGP member, NPPGP member, or TGP member who has—

(i) A sharing arrangement with a CJR-X participant.

(ii) A distribution arrangement with the ACO that the PGP, NPPGP, or TGP is a participant in.

(14) The PGP, NPPGP, or TGP must retain and provide access to, and must require downstream collaboration agents to retain and provide access to, the required documentation in accordance with § 512.135.

(a) General. CJR-X participants may choose to provide in-kind patient engagement incentives including but not limited to items of technology to CJR-X beneficiaries in an episode, subject to the following conditions:

(1) The incentive must be provided directly by the CJR-X participant or by an agent of the CJR-X participant under the CJR-X participant's direction and control to the CJR-X beneficiary during an episode.

(2) The item or service provided must be reasonably connected to medical care provided to a CJR-X beneficiary during an episode.

(3) The item or service must be a preventive care item or service or an item or service that advances a clinical goal, as listed in paragraph (c) of this section, for a CJR-X beneficiary in an episode by engaging the CJR-X beneficiary in better managing his or her own health.

(4) The item or service must not be tied to the receipt of items or services outside the episode.

(5) The item or service must not be tied to the receipt of items or services from a particular provider or supplier.

(6) The availability of the items or services must not be advertised or promoted, except that a CJR-X beneficiary may be made aware of the availability of the items or services at the time the CJR-X beneficiary could reasonably benefit from them.

(7) The cost of the items or services must not be shifted to any federal health care program, as defined at section 1128B(f) of the Act.

(b) Technology provided to a CJR-X beneficiary. CJR-X beneficiary engagement incentives involving technology are subject to the following additional conditions:

(1) Items or services involving technology provided to a CJR-X beneficiary may not exceed $1,000 in retail value for any one CJR-X beneficiary during any one episode.

(2) Items or services involving technology provided to a CJR-X beneficiary must be the minimum necessary to advance a clinical goal, as listed in paragraph (c) of this section, for a beneficiary in an episode.

(3) Items of technology exceeding $75 in retail value must—

(i) Remain the property of the CJR-X participant; and

(ii) Be retrieved from the CJR-X beneficiary at the end of the episode, with documentation of the ultimate date of retrieval. The CJR-X participant must document all retrieval attempts. In cases when the item of technology is not able to be retrieved, the CJR-X participant must determine why the item was not retrievable. If it was determined that the item was misappropriated (if it were sold, for example), the CJR-X participant must take steps to prevent future beneficiary incentives for that CJR-X beneficiary. Following this process, documented, diligent, good faith attempts to retrieve items of technology will be deemed to meet the retrieval requirement.

(c) Clinical goals of CJR-X. The following are the clinical goals of CJR-X, which may be advanced through CJR-X beneficiary incentives:

(1) Beneficiary adherence to drug regimens.

(2) Beneficiary adherence to a care plan.

(3) Reduction of readmissions and complications following an episode.

(4) Management of chronic diseases and conditions that may be affected by the CJR-X procedure.

(d) Documentation of CJR-X beneficiary incentives. (1) CJR-X participants must maintain documentation of items and services furnished as beneficiary incentives that exceed $25 in retail value.

(2) The documentation must be established contemporaneously with the provision of the items and services with a record established and maintained to include at least the following:

(i) The date the incentive is provided.

(ii) The identity of the CJR-X beneficiary to whom the item or service was provided.

(3) The documentation regarding items of technology exceeding $75 in retail value must also include contemporaneous documentation of any attempt to retrieve technology at the end of an episode, or why the items were not retrievable, as described in paragraph (b)(3) of this section.

(4) The CJR-X participant must retain and provide access to the required documentation in accordance with § 512.135.

(a) Application of the CMS-sponsored model arrangements safe harbor. CMS has determined that the Federal anti-kickback statute safe harbor for CMS-sponsored model arrangements (42 CFR 1001.952(ii)(1)) is available to protect remuneration furnished in CJR-X in the form of the sharing arrangement's gainsharing payments and alignment payments that meet all safe harbor requirements set forth in 42 CFR 1001.952(ii) and § 512.670, in the form of the distribution arrangement's distribution payments that meet all safe harbor requirements set forth in 42 CFR 1001.952(ii) and § 512.675, and in the form of the downstream distribution arrangement's distribution payments that meet all safe harbor requirements set forth in 42 CFR 1001.952(ii) and § 512.680.

(b) Application of the CMS-sponsored model patient incentives safe harbor. CMS has determined that the Federal anti-kickback statute safe harbor for CMS-sponsored model patient incentives (42 CFR 1001.952(ii)(2)) is available to protect CJR-X beneficiary incentives that meet all safe harbor requirements set forth in 42 CFR 1001.952(ii) and 512.685.

(a) Waiver of certain telehealth requirements—(1) Waiver of the geographic site requirements. Except for the geographic site requirements for a face-to-face encounter for home health certification, CMS waives the geographic site requirements of section 1834(m)(4)(C)(i)(I) through (III) of the Act for episodes being tested in CJR-X solely for services that—

(i) May be furnished via telehealth under existing Medicare program requirements; and

(ii) Are included in the episode in accordance with § 512.625(e).

(2) Waiver of the originating site requirements. Except for the originating site requirements for a face-to-face encounter for home health certification, CMS waives the originating site requirements under section 1834(m)(4)(C)(ii)(I) through (X) of the Act for episodes to permit a telehealth visit to originate in the beneficiary's home or place of residence solely for services that—

(i) May be furnished via telehealth under existing Medicare program requirements; and

(ii) Are included in the episode in accordance with § 512.625(e).

(3) Waiver of selected payment provisions. (i) CMS waives the payment requirements under section 1834(m)(2)(B) of the Act so that the facility fee normally paid by Medicare to an originating site for a telehealth service is not paid if the service originated in the beneficiary's home or place of residence.

(ii) CMS waives the payment requirements under section 1834(m)(2)(A) of the Act to allow the distant site payment for telehealth home visit HCPCS codes unique to CJR-X.

(4) Other requirements. All other requirements for Medicare coverage and payment of telehealth services continue to apply, including the list of specific services approved to be furnished by telehealth.

(b) Waiver of the SNF 3-day rule—(1) Episodes initiated by an anchor hospitalization. CMS waives the SNF 3-day rule for coverage of a SNF stay within 30 days of the date of discharge from the anchor hospitalization for a beneficiary who is a CJR-X beneficiary on the date of discharge from the anchor hospitalization if the SNF is identified on the applicable calendar quarter list of qualified SNFs at the time of the CJR-X beneficiary's admission to the SNF.

(2) Episodes initiated by an anchor procedure. CMS waives the SNF 3-day rule for coverage of a SNF stay within 30 days of the date of service of the anchor procedure for a beneficiary who is a CJR-X beneficiary on the date of service of the anchor procedure if the SNF is identified on the applicable calendar quarter list of qualified SNFs at the time of the CJR-X beneficiary's admission to the SNF.

(3) Determination of qualified SNFs. CMS determines the qualified SNFs for each calendar quarter based on a review of the most recent rolling 12 months of overall star ratings on the Five-Star Quality Rating System for SNFs on the Nursing Home Compare website.

(i) Qualified SNFs are rated an overall of 3 stars or better for at least 7 of the 12 months.

(ii) Qualified SNFs include providers furnishing SNF services under swing bed agreements, which will not be subject to the star ratings requirement.

(4) Posting of qualified SNFs. CMS posts to the CMS website the list of qualified SNFs in advance of the calendar quarter.

(5) Financial liability for non-covered SNF services. If CMS determines that the waiver requirements specified in paragraph (b) of this section were not met, the following apply:

(i) CMS makes no payment to a SNF for SNF services if the SNF admits a CJR-X beneficiary who has not had a qualifying anchor hospitalization or anchor procedure.

(ii) In the event that CMS makes no payment for SNF services furnished by a SNF as a result of paragraph (b)(5)(i) of this section, the beneficiary protections specified in paragraph (b)(5)(iii) of this section apply, unless the CJR-X participant has provided the beneficiary with a discharge planning notice in accordance with § 512.622(c).

(iii) If the CJR-X participant does not provide the beneficiary with a discharge planning notice in accordance with § 512.622(c)—

(A) The SNF must not charge the beneficiary for the expenses incurred for such services;

(B) The SNF must return to the beneficiary any monies collected for such services; and

(C) The CJR-X participant is financially liable for the expenses incurred for such services.

(4) If the CJR-X participant provided a discharge planning notice to the beneficiary in accordance with § 512.622(c), then normal SNF coverage requirements apply and the beneficiary may be financially liable for non-covered SNF services.

(6) Other requirements. All other Medicare rules for coverage and payment of Part A-covered services continue to apply except as otherwise waived in this part.

(c) Waiver of direct supervision requirement for certain post-discharge home visits—(1) General. CMS waives the requirement in § 410.26(b)(5) of this chapter that services and supplies furnished incident to a physician's service must be furnished under the direct supervision of the physician (or other practitioner) to permit home visits as specified in this section. The services furnished under this waiver are not considered to be “hospital services,” even when furnished by the clinical staff of the hospital.

(2) General supervision of qualified personnel. The waiver of the direct supervision requirement in § 410.26(b)(5) of this chapter applies only in the following circumstances:

(i) The home visit is furnished during the episode to a CJR-X beneficiary who has been discharged from an anchor hospitalization or anchor procedure.

(ii) The home visit is furnished at the CJR-X beneficiary's home or place of residence.

(iii) The CJR-X beneficiary does not qualify for home health services under sections 1835(a) and 1814(a) of the Act at the time of any such home visit.

(iv) The visit is furnished by clinical staff under the general supervision of a physician or non-physician practitioner. Clinical staff are individuals who work under the supervision of a physician or other qualified health care professional, and who are allowed by law, regulation, and facility policy to perform or assist in the performance of a specific professional service, but do not individually report that professional service.

(v) No more than 9 visits are furnished to the CJR-X beneficiary during the episode.

(3) Payment. Up to 9 post-discharge home visits per CJR-X episode may be billed under Part B by the physician or nonphysician practitioner or by the CJR-X participant to which the supervising physician has reassigned his or her billing rights.

(4) Other requirements. All other Medicare rules for coverage and payment of services incident to a physician's service continue to apply.