3 things to know about the 2027 IPPS proposed rule

By Brian Murphy

The 2027 IPPS proposed rule is out… here’s 3 things I found interesting.

(There are more than 3 things in it… but what do you do with 1586 pages of rules? You limit to three things).

As always with proposed rules, big caveat: All of this is PROPOSED, subject to a comment period, and may change when the final rule is published in August.

 

CJR-X rolling out nationally

The Comprehensive Care for Joint Replacement (CJR) was a smash success, generating a whopping $112.7 million in net Medicare savings across performance years 6 and 7 alone. And CMS said the savings came with no adverse changes in quality of care for CJR participants, as measured by complication rates, mortalities, unplanned readmissions, or ED use.

The CJR was a limited model that ended on Dec. 31, 2024… but is returning with a roar.

The proposed CJR-X is proposed to begin on Oct. 1, 2027. Hospitals would be required to take financial accountability for hip, knee and ankle replacements (the latter is new to the model, not part of the initial CJR), including the surgery itself and the first 90 days of recovery.

In short, here’s how it works: Hospitals would be assessed against a target price set by CMS. Depending on quality and spending performance, the hospital could receive an additional payment from Medicare or be required to repay a portion of the episode spending.

CJR-X is the first mandatory, nationwide test of an episode-based payment model, though some hospital types will be excluded.

What can I say, I’m a fan. I like episode-based payment models that (on paper) reduce care fragmentation, encourage care across settings and drive down readmissions.

 

Sepsis added to HRRP

CMS is proposing to add a hospital 30-day, all-cause, risk-standardized readmission rate following sepsis hospitalization measure to the hospital readmissions reduction program (HRRP) beginning in fiscal year 2029.

As a reminder: HRRP is penalty-only. Hospitals are penalized up to 3% of Medicare payments for higher-than-expected readmission rates for certain conditions, including acute myocardial infarction (AMI), heart failure (HF), pneumonia, COPD, elective total hip/knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG) surgery.

Now you can add sepsis to the list. It will be interesting to see how the new codes (if adopted) for impending sepsis/severe sepsis and the ongoing debate over sepsis-2 vs. sepsis-3 might affect this measure.

 

CC/MCC changes

These seem pretty minor to me as a non-clinician, with a few notables.

Three proposed MCC additions: J4B (pulmonary mycetoma), and abscess codes K6A.01 and K6A.09.

A fair number of proposed CC additions (see Table 6J.I) including a range of M86 osteomyelitis codes, five I42 series cardiomyopathy codes, several ectoptic pregnancy codes. Plus Loeys-Dietz syndrome (Q87.A) and two new BMI codes—Z68.18 (BMI 18.4 or less) and Z68.19 (BMI 18.5-19.9).

Proposed CC deletions include Z68.1(BMI of 19.9 or less) osteomyelitis cardiomyopathy codes—all replaced by more specific codes above. More notable: CMS is deleting a range of housing instability/homelessness Z59 series codes.

No MCC deletions.

 

References

• CMS, 2027 IPPS proposed rule home page: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2027-ipps-proposed-rule-home-page
• CMS, CJR-X (Comprehensive Care for Joint Replacement Expanded) Model: https://www.cms.gov/priorities/innovation/innovation-models/cjr-x
• Norwood, CJR recap: https://www.norwood.com/financial-success-of-comprehensive-care-for-joint-replacement-cjr-model-paved-way-for-team/