What is CJR-X and Why Should Hospitals Be Paying Attention?

CMS has made one thing clear over the last several years: healthcare reimbursement is steadily moving away from paying for individual services and toward paying for outcomes.

The proposed CJR-X model is the latest example.

CJR-X, short for the Comprehensive Care for Joint Replacement Expanded Model, is proposed to become a new mandatory payment model focused on hip and knee replacement procedures. If finalized, the model would begin on October 1, 2027 and require participation from most acute care hospitals across the country.

While the model specifically targets joint replacement episodes, its implications extend far beyond orthopedics. CJR-X signals where CMS continues to focus its efforts: improving care coordination, reducing unnecessary spending, and holding hospitals accountable for outcomes that occur after patients leave the hospital.

For hospitals, the question is not only whether they understand the regulation. The larger question is whether they are prepared to manage quality, cost, and care coordination across the full patient journey.

Why CMS Is Expanding Episode-Based Care

Joint replacement procedures are among the most common and costly episodes of care covered by Medicare.

A successful surgery is only part of the patient's journey. Recovery often involves skilled nursing facilities, home health agencies, outpatient therapy providers, physician follow-up visits, and other post-acute services. When those transitions are not well coordinated, costs increase and patient outcomes can suffer.

CMS believes hospitals are uniquely positioned to help manage these care transitions. Through CJR-X, the agency aims to encourage stronger coordination across the entire episode of care rather than focusing solely on what happens within the hospital walls.

This is part of a broader shift. Whether through TEAM, accountable care organizations, value-based purchasing programs, or new mandatory payment models, CMS continues to push providers toward accountability across the continuum of care.

What Makes CJR-X Different?

The original Comprehensive Care for Joint Replacement (CJR) model applied only to selected geographic regions. CJR-X would significantly expand participation by mandating participation for all hospitals paid under IPPS and OPPS.

That means bundled payment model reimbursement could become a reality for hospitals across most of the country.

Under CJR-X, hospitals would be accountable for both the quality and cost of care during a 90-day episode. That episode includes the surgery itself and much of the care that occurs after the patient leaves the hospital.

This is why CJR-X should not be treated as a narrow orthopedic initiative or a finance-only issue. The model will require hospitals to understand what happens after discharge, where patients receive care, how much that care costs, and whether patients experience complications, readmissions, or gaps in follow-up.

Why CJR-X Requires More Than a Quality or Finance Team

CJR-X is often discussed as a payment model, so it may seem like something that primarily belongs to finance. At the same time, quality leaders are likely to play a central role in helping their organizations prepare for and manage the new mandate.

In practice, CJR-X reaches well beyond both departments.

At first glance, CJR-X may look like another quality program. It is really a shift in accountability. Historically, hospitals have been reimbursed largely for the services they provide. Under CJR-X, hospitals are accountable for the quality and cost of care across the full 90-day episode, including care that happens long after the patient leaves the hospital.

That means success depends on much more than the surgery itself.

Hospitals will need clear visibility into what happens across the entire episode of care, including:

• Post-acute care utilization
• Readmissions and complications
• Patient experience
• Follow-up care
• Care transitions between providers
• Performance on the CJR-X quality measures

CMS will provide some of this visibility through monthly beneficiary-level files. These files show the claims CMS has received for each beneficiary, giving hospitals a view into spending across post-acute care settings, physician offices, and other providers involved in the episode. To receive these files, hospitals will need to sign a data-sharing agreement with CMS.

For many organizations, the biggest challenge may be building the governance structure needed to act on this information. CJR-X performance will depend on coordination across departments, providers, and care settings. Quality, finance, orthopedics, care management, post-acute partners, data and analytics teams, and executive leadership will all need to work from the same strategy, with shared goals and clear accountability.

Under CJR-X, quality performance and financial performance become inseparable.

Success under CJR-X will require collaboration across multiple teams, including:

• Quality and performance improvement
• Orthopedic service lines
• Care management and discharge planning
• Post-acute care partners
• Data and analytics teams
• Finance teams
• Executive leadership

Organizations that can effectively align these stakeholders and coordinate care across the full patient journey will likely be better positioned to succeed than those focused solely on reducing costs.

How CJR-X Works at a High Level

Under CJR-X, hospitals receive a target price for each of the eligible episodes (associated with specific MS-DRGs and HCPCS) before the performance year begins. The inpatient procedure codes proposed are MS-DRG 469, 470, 521, and 522. The outpatient codes are HCPCS 27130 and 27447.

Here is the basic idea.

A hospital receives a target price for an eligible episode. When a Medicare beneficiary receives a qualifying hip or knee replacement procedure, CMS tracks spending for the surgery and most related care for 90 days after discharge. That spending can include care provided by the hospital, skilled nursing facilities, home health agencies, physician offices, and other providers involved in the patient’s recovery.

CMS then compares the hospital’s actual episode spending against the target price.

If the hospital spends less than the target, it may be eligible to receive a reconciliation payment from CMS. If the hospital spends more than the target, it may owe money back to Medicare.

For example, suppose CMS sets a target price of $30,000 for an MS-DRG 470 episode. If the total cost of the surgery and related 90-day post-discharge care is $27,000, the hospital has performed $3,000 below the target. If the total cost is $33,000, the hospital has exceeded the target by $3,000.

CMS does not evaluate only one episode at a time. At the end of the performance year, CMS adds up the spending for all eligible episodes and compares that total against the hospital’s aggregate target amount.

For example, if a hospital has 100 MS-DRG 470 episodes during the performance year and the target price is $30,000 per episode, the hospital’s aggregate target amount is $3,000,000. If actual spending across those episodes is $2,500,000, the hospital has generated $500,000 in potential savings. Hooray!

But hold it right there. There are two parts to this equation. To receive those savings, the hospital also has to perform well on quality.

Why Quality Scores Matter to Financial Performance

Under CJR-X, CMS will evaluate hospital performance on several quality measures, including:

1. Hospital-Level RSCR Following Elective Primary THA and/or TKA
2. HCAHPS Survey
3. Hospital-Level THA/TKA PRO-PM
4. Hospital Visits Within 7 Days of HOPD Surgery, also known as OP-36
5. OAS CAHPS Survey

CMS will compare hospital performance on these measures against other hospitals nationwide. Based on that performance, hospitals will receive points that contribute to a Composite Quality Score, or CQS.

The maximum CQS is 20 points. Hospitals must score at least 6.1 points to receive any reconciliation payment for underspending.

That means a hospital could reduce episode spending and still receive no payment if its quality score is too low.

Using the earlier example, the hospital generated $500,000 in potential savings. If the hospital does not meet the minimum CQS threshold, it does not receive that payment.

If the hospital does meet the threshold, the amount it can keep depends on its quality performance.

• A CQS of 6.1 to 12.0 points would result in a 2% quality discount.
• A CQS of 12.1 to 17.0 points would result in a 1% quality discount.
• A CQS of 17.1 points or higher would allow the hospital to keep the full reconciliation payment, subject to applicable stop-gain limits.

Stop-gain and stop-loss limits are the final part of the calculation. For most hospitals, those limits are 20% of the aggregate target price. For some hospitals with special designations, such as safety net hospitals, the limit may be 5%.

In the example above, the hospital’s aggregate target amount was $3,000,000. A 20% stop-gain or stop-loss limit would be $600,000. That means even if the hospital generated more than $600,000 in savings, its payment would be capped at $600,000. The same logic applies in reverse if the hospital overspends.

Once final reconciliation is complete, CMS either sends the hospital a payment or bills the hospital for the amount owed.

Why Quality Leaders Should Be Leading the Conversation

CJR-X creates a clear opportunity for quality leaders to become strategic drivers of organizational performance.

The reason is simple: the model’s financial outcomes are directly tied to quality outcomes.

A hospital can reduce spending, manage post-acute utilization, and perform well against its target price. But without acceptable performance on the CJR-X quality measures, the hospital may lose some or all of the financial reward it earned.

That puts quality leaders in an important position.

Quality leaders already understand measure performance, regulatory requirements, performance improvement, and cross-functional collaboration. Those capabilities are central to CJR-X readiness. This model requires more than reporting results after the fact. It requires organizations to identify performance gaps early, align teams around shared goals, and turn quality data into operational action.

In many hospitals, quality leaders may be among the most qualified people to help lead CJR-X readiness efforts. As reimbursement becomes more dependent on outcomes, quality leaders have an opportunity to move from compliance reporting to strategic leadership.

Why Hospitals Should Start Paying Attention Now

Even though CJR-X remains proposed, organizations that wait may find themselves playing catch-up.

The hospitals most likely to succeed under CJR-X will be those that begin building readiness well before the first performance year begins. That preparation goes beyond understanding the regulation itself.

Organizations should begin evaluating three key areas:

Governance

Who is responsible for CJR-X readiness within your organization? Are quality, finance, orthopedics, care management, and executive leadership working from the same strategy, with clear roles, shared goals, and regular communication?

Care Coordination

Where are patients being discharged after surgery, and how is that information being tracked? What is the process for scheduling follow-up care with the patient’s primary care provider? How often are patients contacted after discharge, and how does your team decide which patients need outreach, when they need it, and who is responsible for making contact?

Quality Performance

How is your organization performing on the quality measures included in CJR-X? Which areas need improvement, and what specific initiatives should be put in place to help your organization achieve ab excellent Composite Quality Score?

Organizations that answer these questions now will be better positioned to thrive under this new payment model.

How Medisolv Can Help

Preparing for a mandatory payment model like CJR-X requires more than understanding the regulation. Hospitals need to understand their financial risk, identify performance gaps, and build a strategy that aligns quality, finance, care management, and operational teams.

That's where Medisolv's Advanced Quality Improvement (AQI) Model Readiness Services can help.

Our advisory services team works alongside hospitals to assess readiness for emerging CMS initiatives like CJR-X, TEAM, and other value-based care models. We help organizations evaluate current performance, identify areas of opportunity, understand potential financial implications, and develop actionable plans to prepare for implementation.

Whether you're just beginning to evaluate CJR-X or looking to build a more comprehensive episode-of-care strategy, our experts can help you move from regulatory awareness to organizational readiness.

AQI Model Readiness Services can help your organization:

• Understand your exposure and potential risk under new CMS payment models
• Evaluate quality and utilization trends that may impact performance
• Assess care coordination and post-acute care strategies
• Identify operational gaps before implementation begins
• Develop a roadmap for long-term success in value-based care

The Bigger Picture

CJR-X is not just another CMS program.

It represents another step in Medicare's long-term transition toward value-based care, where reimbursement is increasingly tied to the total patient experience rather than individual encounters.

For quality leaders, finance teams, and healthcare executives, the message is becoming difficult to ignore: success will depend not only on delivering excellent care inside the hospital, but also on understanding what happens after patients leave.

CJR-X may focus on joint replacements today, but the lessons hospitals learn preparing for this model will likely influence how they approach future value-based care initiatives for years to come.