1) The target price is a combination of hospital-specific data and aggregate regional hospital data, and it will change over time.
Each hospital receives a set of target prices for LEJR episodes, calculated from both hospital-specific data and regional hospital data for each clinical episode. For the first two years, the target price is calculated by blending 2/3 of the hospital specific rate and 1/3 of a regional episode rate. In year three, the target price is calculated by blending 1/3 of the hospital-specific rate and 2/3 of a regional episode rate. In years four and five, the target price is entirely based on regional episode payments. According to the CJR final ruling, the gradual transition from hospital-specific target pricing to regional target pricing facilitates competition between hospitals in the same region to provide the best care at the lowest cost.
Hospitals who are able to keep their average cost per LEJR episode under the assigned target price will receive cost savings in the form of a reconciliation payment, and those who are over the assigned target price will be writing a check to CMS.
Although a hospital’s financial gains are ultimately dependent upon the performance of surrounding hospitals (data which you do not have access to review), the focus needs to be on accurate data compilation and interpretation from the participating hospital’s own data in order to identify overutilization of care.