CJR Model Policy Changes Boosted Penalties for Safety-Net Hospitals

Safety-net hospitals and hospitals with high Black and Hispanic populations received disproportionate penalties under the Comprehensive Care for Joint Replacement (CJR) bundled payment model between 2016 and 2019, indicating that policy changes may have furthered health inequities.

The CJR model is a mandatory Medicare bundled payment model in which hospitals receive a target spending price for joint replacement episodes that occur between admission and 90 days after discharge. Hospitals receive a bonus if they reduce spending below their target and a financial penalty if they fail to do so.

The model implemented two policy changes between 2016 and 2019. First, Medicare allowed hospitals in lower spending areas to exit the model after 2017 and only required hospitals in the 34 highest-cost markets to participate. Second, Medicare shifted from hospital-specific targets to multihospital shared targets, lowering spending targets for high-risk hospitals.

The JAMA Health Forum study used Medicare data from 2016 to 2019, 2017 inpatient claims, and data from the 2018 American Hospital Association Survey to determine if the policy changes had health equity implications, specifically for safety-net hospitals and those treating high shares of Black and Hispanic patients.

Between 2016 and 2019, 735 hospitals participated in the CJR model, resulting in 2,161 hospital-years of participation. The highest participation year was 2017, with 702 hospitals, and the lowest was 2018, with 389 hospitals.

The share of hospitals that received penalties under the model increased each year. In 2017, 23.1 percent of mandatory participants, or 162 hospitals, were penalized, including 39.3 percent of safety-net hospitals and 41.4 percent of hospitals with high Black and Hispanic populations.

After low-cost hospitals could leave the model in 2018, 44.5 percent of mandatory participants were penalized. This included 69.7 percent (62) of safety-net hospitals and 64.4 percent (58) of hospitals with high shares of Black and Hispanic patients.

In 2019, over half of mandatory participants were penalized (52.8 percent), including 87.9 percent (80) of safety-net hospitals and 71.7 percent (66) of hospitals with high Black and Hispanic populations.

Safety-net facilities and those with high Black and Hispanic populations required to participate in the CJR model in 2019 had higher probabilities of being penalized than non-safety-net hospitals and hospitals with lower Black and Hispanic populations, the study noted.

The lower spending benchmarks introduced before 2019 may have been less attainable for these hospitals because their patient populations have greater health needs generated from systemic barriers to care that lead to high spending.

“Regional benchmarks in CJR may inadvertently serve an institutionalized function of penalizing the safety-net hospitals,” researchers wrote. “Policymakers should ensure that hospitals receive achievable spending benchmarks to avoid widening disparities in care.”

A study from June 2021 revealed similar findings about the CJR model widening racial and socioeconomic health disparities. The data suggested that the model could be causing hospitals to avoid joint replacement surgeries for non-Hispanic Black patients due to their perceived higher health risks that could lead to increased spending.