CJR-X at-a-glance: CMS’s mandatory joint replacement payment model

The proposed mandatory nationwide model was released April 10

On April 10, CMS released the FY 2027 Inpatient Prospective Payment System and Long-Term Care Hospital PPS proposed rule, unveiling one of the most consequential Medicare payment policy shifts in more than a decade: the Comprehensive Joint Replacement Expanded (CJR-X) Model. Embedded within the proposed rule, CJR‑X signals CMS’ intent to move episode‑based payment for lower extremity joint replacement (LEJR) from a targeted demonstration into a mandatory nationwide requirement.

If finalized, the CJR‑X model would take effect on Oct. 1, 2027, fundamentally reshaping how LEJR care is financed, coordinated and managed across the country.

Under the proposal, most acute care hospitals would be required to assume financial accountability for 90‑day LEJR episodes of care, beginning with the index procedure and extending through post‑acute recovery. Unlike prior initiatives that included LEJR episodes, participation would not be voluntary, time‑limited or regionally contained.

What is the CJR‑X model?

The CJR‑X model is CMS’ proposed nationwide expansion of the Comprehensive Care for Joint Replacement (CJR) bundled payment model. It would mandate participation for acute care hospitals that are paid under both the IPPS and the Outpatient PPS, with some exclusions, requiring hospitals to manage the cost and quality of a defined 90‑day LEJR episode of care under a bundled payment framework.

What distinguishes CJR‑X from prior CMS payment models is its permanence and scope. The model is:

• mandatory without an option to voluntary opt-in;

• potentially permanent, not a time‑limited demonstration; and

• designed as an ongoing national payment model, absent future rulemaking changes.

By proposing CJR‑X as a standing requirement rather than a pilot, CMS is making a clear policy statement: episode‑based payment for LEJR is no longer experimental. It is expected to be a standard payment policy for hospitals.

Who must participate in the CJR‑X mandatory joint replacement model?

If finalized, the CJR‑X model would apply to most acute care hospitals nationwide, with limited exclusions. In addition, hospitals that previously avoided the original CJR model and those not currently participating in the Transforming Episode Accountability Model (TEAM) would be required to enter a mandatory joint replacement bundled payment program for the first time.

For these organizations, CJR‑X represents more than a policy update. It introduces a real financial timeline, new operational demands and exposure to reconciliation risk tied to episode performance. More broadly, CJR‑X marks a significant escalation in CMS payment policy: the first nationwide, mandatory bundled payment model for a major surgical procedure.

Hospitals without prior episode-based payment experience will need to rapidly build capabilities in physician alignment, post-acute care coordination, quality performance management and episode-level analytics to succeed under the model.

How the CMS CJR-X model works: Mandatory 90-day LEJR bundles

At its core, CJR-X follows much of the same bundled payment framework as the three-year extension to the original Comprehensive Care for Joint Replacement (CJR) model, along with some methodological enhancements from TEAM but applies it as a mandatory nationwide requirement. Under CJR‑X, eligible acute care hospitals will be held financially accountable for all Medicare spending associated with a LEJR episode, beginning with the inpatient hospital stay or outpatient hospital procedure and extending through the 90 days following discharge.

At the end of a performance year, CMS would compare a hospital’s actual Medicare episode spend against regional target prices. Hospitals that spend below the target and meet applicable quality thresholds would be eligible to receive a reconciliation payment from Medicare, while hospitals with episode spending above the target may be required to repay a portion of the excess costs.

The procedures included in the CJR-X bundle payment model would include inpatient and outpatient hip replacement, inpatient and outpatient knee replacement, and inpatient ankle replacement.

How does CJR‑X differ from the original CJR model?

While the CJR‑X model is structurally rooted in the original Comprehensive Care for Joint Replacement (CJR) model, the differences between CJR‑X and CJR reflect a fundamental shift in CMS payment policy. The original CJR model functioned as a contained demonstration of episode‑based payment for LEJR, while CJR‑X is positioned as a permanent mechanism for delivering that payment approach at scale.

CJR‑X differs from the original CJR model in both intent and expectation. As a Phase I model, CMS’ goal in the original CJR model was to test a new payment policy design and generate evidence toward its effectiveness related to cost and quality performance. In contrast, the CJR-X model is considered a Phase II model. The payment policy design has already proven effective and will now be applied to a larger scope of episodes through the proposed national expansion.

Rather than testing whether bundled payments can improve cost and quality performance, CMS is using CJR‑X to operationalize LEJR episode‑based payment as a standard financing model for Medicare patients. This transition elevates bundled payment for LEJR from a pilot concept to an expected condition of hospital participation in Medicare for these procedures. CJR‑X represents CMS’ directional commitment to episode‑based payment for LEJR as an enduring feature of the Medicare program.

The critical difference between CJR‑X and CJR: Mandatory nationwide scale

As noted by CMS in “Innovation Insight: Comprehensive Care for Joint Replacement (CJR) Model Generates Savings to Medicare,” the original CJR model initially ran in 67 Metropolitan Statistical Areas (MSAs), later reduced to 34 mandatory MSAs, with approximately 323 hospitals participating in its final years.

CJR-X, as proposed, would be the first nationwide mandatory episode-based payment model tested by CMS. Most acute care hospitals paid under both IPPS and OPPS would be required to participate. That is a categorically different universe of affected institutions, and it means that many hospitals facing this model may have little to no prior experience managing 90-day LEJR episodes with accountability for care coordination and Medicare episode spend.

This is not a minor operational adjustment. It requires a fundamentally different approach to physician alignment, clinical workflows, post-acute care coordination, data infrastructure and financial planning.

What’s new in the CMS CJR‑X model: Three key design changes

Hospitals that participated in the original CJR model should not assume CJR-X is more of the same. Several design elements are materially more sophisticated.

1. Risk adjustment is significantly more complex

The original CJR model used three risk adjustment factors. CJR-X will use 29, similar to the target price methodology in TEAM. This expanded methodology is designed to produce regional target prices that are more accurately adjusted to reflect the clinical complexity of a hospital’s patient population. As a result, understanding your target price and the factors that influence it requires substantially more analytical work than it did under the original model.

2. The quality framework has been updated

CJR-X includes an expanded quality composite score with both inpatient and outpatient measures. Quality performance gates a hospital’s ability to receive reconciliation payments, so quality measurement is not a secondary concern. It directly determines whether financial performance translates into revenue.

3. Stop-loss protection for safety-net, rural, Medicare dependent and sole community hospitals

The proposed rule includes a 5% stop-loss cap for qualifying safety-net, rural, Medicare dependent and sole community hospitals, limiting downside exposure for institutions serving higher-risk populations. Hospitals should review whether they meet the qualifying criteria. All other hospitals have a 20% stop-loss cap. Every hospital has a 20% stop gain limit.

Why CMS is expanding the CJR model now?

In the CMS CJR Innovation Insight findings, the CJR model generated $112.7 million in savings to Medicare while maintaining quality for over 98,000 knee and hip replacement patients across 323 hospitals in 2021–2023. CMS cited that evidence base directly in the CJR-X proposal.

The policy signal is clear: CMS views episode-based payment for LEJR as an approach that has been tested, that has produced results and that can be scaled. CJR-X is not a pilot. It is CMS treating the original model’s evidence as proof of concept and moving to broader deployment.

Hospital finance and strategy leaders should treat CJR-X as durable policy, not an experiment that might quietly disappear. That doesn’t mean it will be finalized exactly as proposed. The rulemaking process will almost certainly produce modifications. Even so, the directional commitment from CMS is clear.

The 18‑month preparation window before CJR‑X begins on Oct. 1, 2027

The proposed model start date is Oct. 1, 2027. The final rule is expected to be published by early August 2026.

That gives hospitals roughly 18 months of lead time from the proposed rule to model launch. Building clinical engagement, operational workflows, post-acute care relationships, data infrastructure and internal performance tracking required to succeed in a 90-day episode model takes time, often more than organizations expect. Hospitals that waited to prepare for the original CJR model spent the first performance years catching up rather than optimizing.

What hospital leaders should be doing right now: Four immediate CJR‑X actions

1. Engage your orthopedic surgeons early

Physician alignment is not optional in an episode model. Identify a clinical champion to create buy-in, drive care redesign and ensure collaboration. Surgeons control discharge decisions, implant selection and care protocols, all of which affect episode costs. The hospitals that struggled in the original CJR model often did so because the financial accountability was hospital-level while the clinical decisions remained entirely physician-driven. Closing that gap requires trust, shared data and time.

2. Understand your LEJR episode volume and spending

Before you can model CJR-X financial exposure, you need a clear picture of where you stand today. Important questions include:

• How many hip, knee and ankle procedures does your facility perform annually?

• What does your current post-acute care utilization look like, including skilled nursing facility length of stay, home health visits and readmissions?

• What does your actual Medicare episode spend look like relative to your region?

3. Assess your post-acute care network

Post-acute care utilization is typically the largest driver of actionable Medicare episode spend. Hospitals that succeeded in the original CJR model almost universally had strong discharge planning processes and preferred post-acute provider relationships. If those don’t exist, building them takes time.

4. Don’t wait on analytics

Target price modeling, episode performance analysis and quality performance indicator tracking require data infrastructure and partnerships that don’t appear overnight. If your hospital doesn’t have that infrastructure in place or relationships with trusted vendors, building it now, rather than after the model begins, gives you a meaningful head start.

What comes next

The 60-day public comment period for the FY 2027 IPPS and LTCH PPS proposed rule will close on June 9. CMS will review public comments before finalizing the model design.

DataGen will publish analysis of the proposed rule’s key technical provisions in the weeks ahead, including a deeper look at the target price methodology and the quality measurement framework. When the final rule is published later this summer, we will follow with detailed analysis of any changes from the proposed rule and updated guidance on what they mean operationally.

For hospitals that want to begin modeling their CJR-X exposure before the final rule, DataGen’s analytics team is available for an introductory conversation.

How DataGen helps hospitals succeed under the CJR‑X model

DataGen is not approaching CJR-X as a new product launch. We bring more than 13 years of experience supporting at-risk hospitals in bundled payment arrangements, including eight years of direct CJR model experience to a policy environment we know well.

DataGen built analytics and expert support for hospitals navigating numerous Medicare bundled payment initiatives. Our support for the original CJR model began before the model launched in April 2016 through its conclusion in December 2024. We tracked every design change, performance year and policy signal that shaped that model. We understand the analytical methodology, the quality framework and the operational realities of managing 90-day LEJR episodes with financial accountability.

CJR-X is a larger, more complex version of a model we’ve lived with for nearly a decade. That experience is the asset we bring to this work; hospitals working with DataGen don’t have to start from scratch. Contact us to see how we can help in advance.