CJR-X final rule: What hospitals need to know about CMS' expanded joint replacement model

On July 31, the Centers for Medicare & Medicaid Services (CMS) recently finalized the Comprehensive Care for Joint Replacement Expanded (CJR-X) Model, marking a major expansion of Medicare's episode-based payment strategy.

Finalized through the FY 2027 Inpatient Prospective Payment System (IPPS) Final Rule , CJR-X builds on the success of the original Comprehensive Care for Joint Replacement (CJR) Model, which generated over $100 million in Medicare savings from October 2021 to December 2023 while maintaining quality outcomes.

Beginning Jan. 1, 2028, most acute care hospitals will be required to participate in CJR-X. The model is designed to improve care coordination and accountability across lower extremity joint replacement (LEJR) episodes, including hip, knee and ankle replacement procedures.

What is CJR-X?

CJR-X is CMS' nationwide expansion of the original CJR bundled payment model. Participating hospitals will be accountable for the quality and cost of care delivered during a 90-day episode following a joint replacement procedure. The model includes services delivered during hospitalization and throughout post-acute recovery, such as physical therapy and rehabilitation.

CMS developed CJR-X to address fragmented care that can occur before and after joint replacement surgery. By aligning financial incentives around the entire episode of care, the agency aims to reduce avoidable complications, improve patient outcomes and lower unnecessary Medicare spending.

How the CJR-X model builds on the original CJR program

The original CJR model operated from 2016 through 2024 and demonstrated that hospitals could reduce episode spending while maintaining quality performance. Based on those results, CMS is expanding the program nationally through CJR-X.

The CJR-X final rule includes:

• mandatory participation for over 2,000 eligible acute care hospitals nationwide;

• accountability for Medicare spending during a 90-day LEJR episode;

• inclusion of inpatient hip, knee and ankle replacement procures and outpatient hip and knee replacement procedures;

• enhanced risk-adjustment methodology and an updated quality measurement framework; and

• continued emphasis on value-based care, bundled payments and episode-based reimbursement.

Hospitals that participated in the original CJR model may find the framework familiar, but the expanded scope, updated quality measures and more sophisticated risk-adjustment approach make preparation essential.

Why the CJR-X final rule matters

In a press release announcing the program's expansion, CMS described CJR-X as the first expanded mandatory test of an episode-based payment model. Under the model hospitals, physicians and post-acute care providers will be incentivized to coordinate care more effectively throughout the surgical journey. Patients will continue to have the freedom to choose their providers while benefiting from a more coordinated approach to care.

CMS Administrator Dr. Mehmet Oz stated that the expansion is intended to help improve health outcomes while better aligning Medicare payment incentives with quality and accountability. Hospitals can review the full announcement in the CMS nationwide expansion press release.

Preparing for CJR-X implementation

Although CJR-X does not begin until January 2028, hospitals should begin assessing how the model may impact their financial performance and operational strategy. Areas to evaluate include:

• historical LEJR episode performance;

• post-acute care utilization patterns;

• readmission and complication rates;

• quality measure performance;

• regional variation in episode spending; and

• potential exposure under CMS target pricing methodologies.

Organizations that proactively analyze their orthopedic service lines and care coordination programs may be better positioned to succeed under the expanded Medicare bundled payment model.

The future of Medicare episode-based payment models

The CJR-X model represents another significant step in CMS' ongoing shift toward value-based care and bundled payment arrangements. By expanding a proven model nationwide, CMS aims to strengthen accountability for joint replacement episodes while encouraging collaboration among hospitals, physicians and post-acute providers.

For healthcare leaders, the CJR-X final rule highlights the importance of understanding episode-based payment models, quality performance and care coordination strategies before implementation begins on Jan. 1, 2028. Additional details, frequently asked questions and model updates are available through the official CMS CJR-X Model resource center.

If your team is preparing for CJR-X, DataGen’s CJR-Xcellence℠ can help compare episode performance, identify cost variation and model financial exposure.