CMS finalizes CJR-X: every eligible hospital takes 90-day hip and knee bundles from Jan. 1, 2028, with gainsharing open to surgeons

The number in the headline of this year’s Medicare hospital inpatient rule is 2.3%, the FY 2027 update to inpatient operating rates [1]. The provision orthopedic practices will live with for longer has no end date at all.

In the final rule published August 4 as CMS-1849-F, CMS expands the Comprehensive Care for Joint Replacement model nationwide as CJR-X, starting January 1, 2028 [1]. It is mandatory for nearly every acute care hospital that does hip and knee replacements, and CMS describes it as an expansion under section 1115A(c) of the Social Security Act, with no fixed completion date [1].

What changed

The 2.3% inpatient update is a 3.2% market basket increase minus a 0.9-percentage-point productivity adjustment, effective October 1, 2026 [1]. Hospitals that fail quality reporting or are not meaningful EHR users get less, down to -0.9% for those that miss both [1]. AHA News put the overall increase in hospital payments at $2.9 billion [2].

CJR-X is the larger structural change. Each participating hospital will be accountable for Medicare Part A and B spending from the joint replacement admission or outpatient procedure through 90 days after discharge, measured against a regional, risk-adjusted target price [1]. Hospitals that come in under the target can earn a reconciliation payment; those that come in over it owe CMS [1]. Episodes are triggered by MS-DRGs 469, 470, 521 and 522 for inpatient stays and by CPT 27130 (total hip) and 27447 (total knee) for hospital outpatient cases [1]. The AHCA/NCAL summary of the rule notes that the inpatient DRGs also capture total ankle replacement and hip replacement after a fracture [3].

CMS finalized most of the April proposal unchanged. The main change was timing: the proposed October 1, 2027 start moved to January 1, 2028, and performance years now follow the calendar year [1]. CMS said commenters had persuaded it that hospitals needed more time to build analytics, hire care managers, engage physicians and set up post-acute partnerships [1].

The original CJR model ran from April 1, 2016, to December 31, 2024, in selected metropolitan areas [1]. CMS says it met the statutory test for expansion and that the CMS Chief Actuary certified a nationwide mandatory version [1]. The agency projects net Medicare savings of about $736 million over the first five performance years, starting with $129 million in 2028 [1].

Who it affects

Hospitals, formally. Participants are acute care hospitals paid under both the IPPS and OPPS in the 50 states, D.C. and the territories [1]. Excluded: hospitals in TEAM, the five-procedure mandatory bundle that started January 1, 2026; Maryland hospitals; critical access hospitals; rural emergency hospitals; and IHS and tribal hospitals [1]. TEAM hospitals are expected to join CJR-X on January 1, 2031, after TEAM ends [1].

Orthopedic surgeons and their groups. The 90-day episode matches the surgeon’s own 90-day global period, and the global fee counts toward episode spending [1]. Surgeons keep billing Medicare fee-for-service; reconciliation happens at the hospital level [1, 3].

Everyone downstream of the operating room. Anesthesia, physical therapy, inpatient rehabilitation, skilled nursing and home health all sit inside the episode, and the rule names physicians, nonphysician practitioners, physician group practices, therapists in private practice, therapy group practices, SNFs, home health agencies and ACOs as eligible “CJR-X collaborators” [1].

Does CJR-X apply to joint replacements done in an ASC?

No. A procedure in an ambulatory surgery center does not trigger an episode, and ASCs cannot participate [1]. Some commenters asked CMS to let ASCs join voluntarily; others warned that surgeon-owned ASCs would draw the healthiest patients away from hospitals and leave hospitals with the costliest cases [1]. CMS said it “considered but did not propose” ASC participation and pointed to a request for information on adding ASCs to TEAM [1]. CMS also declined to adjust target prices for local ASC market share [1].

For surgeons who split cases between a hospital and an ASC, that means the same Medicare patient can fall inside a hospital bundle or outside any bundle depending on where the surgery happens.

What it means for your practice

Gainsharing is optional, and uncapped for physicians. A hospital can sign a written sharing arrangement with your group and pass along part of its reconciliation payment or internal cost savings [1]. CMS kept the original model’s policy of no cap on physician gainsharing [1]. To receive a payment, a collaborator must meet quality criteria written into the arrangement, and a physician group must have billed for a service a member furnished to a CJR-X patient in that performance year [1]. Payments come once a year at most, by check or electronic transfer, and cannot be tied to referrals [1].

Downside sharing is capped. If the hospital owes CMS, it can pass part of the repayment to collaborators through “alignment payments.” Collaborators other than ACOs can be asked for no more than 25% of the hospital’s repayment, and all collaborators together for no more than 50% [1]. The hospital’s own exposure is limited by a 20% stop-loss and stop-gain for most hospitals and a 5% stop-loss for safety net, rural, Medicare-dependent and sole community hospitals [1].

QP status depends on the hospital. CJR-X has an Advanced APM option for hospitals that attest to using certified EHR technology [1]. Clinicians on that hospital’s financial arrangement or clinician engagement list can be assessed for Qualifying APM Participant status; if the hospital does not attest, they are not [1]. Becoming a QP still takes 75% of Part B payments or 50% of Medicare patients through Advanced APM entities from January 1 to August 31 [1].

New tools for post-discharge care. CJR-X waives the originating-site rules so patients can get telehealth at home during the episode, with four new home-visit E/M G-codes modeled on 99212-99215 that CMS will publish before the first performance year [1]. Up to nine post-discharge home visits by licensed clinical staff under a physician’s general supervision are payable for patients who do not qualify for home health, and the SNF three-day stay rule is waived within 30 days of discharge [1].

Your office will be asked for survey data. One of the five CJR-X quality measures is the hip and knee patient-reported outcome measure, which compares survey scores before surgery with scores after recovery [1]. Hospitals have had to report it in the Hospital IQR Program since July 1, 2025, and CMS acknowledged that hospitals that do not employ their surgeons may struggle to get post-discharge surveys [1]. The other measures are a complication rate, hospital visits within 7 days of outpatient surgery, HCAHPS and the outpatient surgery CAHPS survey [1].

Patients will also hear about you. Each hospital must give every CJR-X patient written notice of the model and name any collaborator as a “financial partner of the hospital for the purposes of participation in CJR-X” [1].

What to do now

1. Find out where each of your hospitals stands. A TEAM hospital is outside CJR-X until 2031; a non-TEAM hospital paid under IPPS and OPPS is in from January 1, 2028 [1].
2. Read sharing arrangements closely. Check the quality criteria, how much of a repayment the hospital could pass to you and the documentation the hospital will keep [1].
3. Ask about EHR attestation. It determines whether CJR-X counts toward your QP calculation [1].
4. Agree on who collects outcome surveys. The measure needs a survey before surgery and another after recovery, and CMS says hospitals will have to coordinate that with surgeons and other providers involved in post-discharge care [1].
5. Watch the November 2027 target prices. CMS will send preliminary regional target prices by the end of November before each performance year, built on three baseline years with a 2% discount [1].

The policy fight

Hospitals lost most of their arguments. “We are disappointed CMS failed to make meaningful improvements to its expanded joint replacement bundled payment program,” said Joanna Hiatt Kim, AHA vice president of payment policy, who also called the 2.3% update “another inadequate update to inpatient payment rates” [2]. Commenters had asked CMS to delay the model, drop it, or wait for TEAM results, and one called a mandatory model with no end date unlawful [1]. CMS replied that section 1115A(c) lets it expand a model’s duration and scope through rulemaking, and it rejected the claim that a hospital could “lose reimbursement on every eligible LEJR patient” with no floor, pointing to the stop-loss limits [1].

Post-acute providers read the rule differently. AHCA/NCAL told members that nursing facilities would keep working with hospitals as collaborators and highlighted the three-day stay waiver [3]. The American Academy of Physical Medicine and Rehabilitation, which filed comments in June raising concerns about the expansion, said it was still analyzing the rule and would follow up on CJR-X and TEAM “in the coming weeks” [4].

The discount was another dispute. CMS cut it to 2% from the 3% used in CJR and BPCI Advanced, saying 3% would not be sustainable nationally and would ratchet prices down over time [1]. CMS has also said the savings left in joint replacement are not unlimited and that it may later shift the model’s focus toward holding spending steady [1].