Skilled Nursing Facility 3-Day Rule Waiver under the Comprehensive Care for Joint Replacement (CJR) Model

Comprehensive Care for Joint Replacement (CJR) is a relatively new bundled payment model that focuses on reducing costs of Lower Extremity Joint Replacement Services (LEJRS) under MS-DRG 469 and MS-DRG 470 which began operating on April 1, 2016 in 67 geographic regions around the U.S. Payments to participating providers are currently made under Medicare’s prospective payment system. However, all payments related to the care of the beneficiary including the LEJRS procedure and any services provided within 90 days of the hospital discharge are retroactively reviewed to determine if the total expenditures produced any savings to the Medicare program. For instances where the expenditures were less than the CJR target price, providers may qualify for incentives and if they exceeded the target price, participating hospitals may be required to pay back the overages.

One way hospitals will be looking to reduce the overall cost of care provided to the beneficiary is through early discharge from the hospital. Starting January 1, 2017 the CJR model allows skilled nursing providers to waive the 3-day inpatient hospital stay requirement for Medicare coverage. However, this waiver is not applicable to all skilled nursing facilities and is subject to the following requirements:

• The discharge must come from a participating CJR hospital, which can be verified on the Centers for Medicare and Medicaid Services (CMS) website.
• The beneficiary must have been treated for MS-DRG 469 or 470.
• The beneficiary must be enrolled in Medicare Parts A and B, and not enrolled on the basis of End-Stage Renal Disease (ESRD), or participate in any managed care plan, or have any plan primary to Medicare.
• The skilled nursing facility must have a 3 star rating or higher on nursing home compare for at least 7 of the preceding 12 months.

For skilled nursing facilities that meet the above requirements, the billing department will need to include a Treatment Authorization Code 75 to indicate to the Medicare Administrative Contractor (MAC) that the 3-day stay requirement was waived appropriately for the purpose of the CJR model. Please note, this waiver will not apply for swing bed stays or Critical Access Hospitals (CAHs).

For more detailed information on the CJR model and the guidelines for appropriate use of the 3-day waiver, please view the MLN Matters article.

If you have questions regarding the 3-day waiver or how this policy will affect your intake process please contact your Marcum LLP advisor.