10 Things Hospital Leaders Need to Know About CJR-X

On July 31, 2026, the Centers for Medicare & Medicaid Services (CMS) finalized the Comprehensive Care for Joint Replacement Expanded Model (CJR-X). Once implemented, this model will be the first nationwide mandatory episode-based payment model for lower extremity joint replacement, testing hospitals’ ability to manage care beyond their walls.

Originally scheduled to begin in October 2027, CJR-X will now take effect January 1, 2028. However, while this extension does give hospitals additional time to prepare, it doesn’t diminish the urgency. Participating hospitals will still face financial accountability from the outset, making it essential to understand potential exposure, evaluate care delivery practices and implement strategies to manage costs and quality across the entire care episode.

Ready or not, CJR-X is the future of value-based care. With that in mind, here are 10 considerations to help hospital leaders prepare for the transition and implementation.

1. January 2028 changes the timeline, not the urgency.

Starting January 1, 2028, CJR-X will expand to all eligible hospitals nationwide, with limited exceptions. More than 2,200 hospitals paid under both the Inpatient Prospective Payment System (IPPS) and the Outpatient Prospective Payment System (OPPS)will be required to participate.

Unlike models that offer a transition period before downside financial risk begins, CJR-X introduces two-sided risk at launch. This makes it critical that hospitals develop and implement their readiness strategies well before January 2028. Preparation includes evaluating preoperative optimization, surgical care pathways, discharge planning and post-acute care coordination.

2. CMS measures episodes, not individual procedures.

Each episode is triggered by inpatient or outpatient lower extremity joint replacement including eligible hip, knee and ankle procedures defined by specific CMS trigger codes. It also covers all related Medicare Part A and Part B spending for 90 days post-discharge. 

This extended period of accountability represents an important change for hospitals accustomed to managing patients at their own facilities. Under CJR-X, financial performance depends not only on the procedure and hospital stay but also on the use and coordination of care throughout recovery.

Hospitals need greater visibility into patient utilization beyond their own facilities to understand how care delivered after discharge affects episode spending.

3. Clinical variation becomes financial variation. 

Because hospitals are accountable for spending across the entire episode, variation inclinical practice can result in significant financial implications. Differences in pre-operative preparation, surgical protocols, discharge planning and post-acute utilization can contribute to unnecessary costs and inconsistent outcomes.

Standardizing care pathways can help hospitals reduce avoidable variation while ensuring treatment remains appropriate for each patient’s clinical needs. This begins before surgery, with assessments that evaluate and consider patients’ health status, functional capabilities and potential barriers to recovery.

Discharge planning should also account for the patient’s home environment, available support systems and anticipated rehabilitation needs. Establishing consistent approaches to home health services, physical therapy, follow-up appointments and patient monitoring can help support recovery and avoid unnecessary utilization.

The objective is to establish evidence-based care pathways that balance clinical needs, patient safety and financial stewardship, not to deliver standardized and uniform care to every patient.

4. Quality scores directly affect financial performance.

CJR-X introduces a Composite Quality Score (CQS) drawn from existing Hospital Inpatient Quality Reporting (IQR) and Outpatient Quality Reporting (OQR) programs. This score determines eligibility for reconciliation payments and effective discount rates. In other words, stronger quality performance can reduce the discount applied to a hospital’s target price and increase its opportunity to earn reconciliation payments.

The quality components are:

1. Risk-Standardized Complication Rate (RSCR) for THA/TKA

2. Hospital visits within seven days of hospital outpatient department (HOPD) Surgery

3. Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey

4. Outpatient and Ambulatory Surgery CAHPS (OAS CAHPS) Survey

5. Patient-Reported Outcome Performance Measure (PRO-PM)

The significance of quality performance extends beyond the orthopedic service line. Several measures reflect broader hospital performance, including patient experience and outpatient surgical care. This means efforts to improve quality and patient safety can directly influence financial results under CJR-X.

5. Post-acute utilization matters.

The 90-day post-discharge period represents one of the more significant opportunities for hospitals to manage episode spending. The use of skilled nursing facilities, inpatient rehabilitation and other post-acute services can greatly influence whether episode costs remain below target prices.

Hospital leaders should evaluate opportunities to transition clinically appropriate patients to lower-cost settings, including home health or outpatient rehabilitation, while maintaining the continuity and quality of care. This requires understanding which patients need more intensive services and which can recover safely with support in their community and home.

Effective post-acute care depends on coordinated discharge planning and strong relationships with high-performing providers, while respecting patients’ freedom to choose their post-acute provider. Care navigators and case managers can help ensure patients receive appropriate services throughout recovery, monitoring their progress and intervening when issues arise to prevent avoidable complications or readmissions.

The goal is to ensure patients receive the right care, in the right setting, at the right time — not just finding ways to reduce post-acute spending.

6. Two-sided risk makes understanding exposure essential.

All CJR-X participants subject to financial reconciliation face two-sided risk from the start. For most hospitals, both the stop-loss and stop-gain caps are set at 20 percent of the aggregate reconciliationtarget price.

However, qualifying rural hospitals, Medicare-dependent small rural hospitals (MDH), sole community hospitals (SCH) and safety net hospitals benefit from a reduced 5 percent stop-loss cap while retaining the full 20 percent stop-gain cap.

These provisions establish limits on potential losses and gains, but they do not eliminate financial exposure. Assessing potential risk before implementation can help leaders determine where to focus improvement efforts, allocate resources and establish realistic financial performance goals.

7. Historical performance data reveals risks and opportunities.

CJR-X sets target prices at the Census Division level, not at the individual hospital level, meaning performance is benchmarked against regional peers. The discount factor is 2 percent, reduced from 3 percent in the original CJR model, a reflection of already-achieved spending reductions.

Target prices also incorporate adjustments for patient complexity and certain hospital characteristics. This makes it important for organizations to understand how the methodology applies to their patient populations.

A comprehensive review of historical episode spending and usage patterns can help hospitals identify potential financial exposure and opportunities for improvement. This analysis should examine procedure costs, post-acute care utilization, readmissions, rehabilitation patterns and variation across physicians and care settings.

By comparing historical performance with anticipated CJR-X target prices, hospitals can start to identify where avoidable spending occurs — and which changes may have the greatest impact on financial results. These insights can also help inform clinical redesign efforts and establish a baseline for measuring progress as implementation approaches.

8. Physician engagement can’t wait until go-live.

Successfully managing episode-based care requires physicians and other clinicians to be actively involved in developing and implementing strategies that improve quality, standardize care and reduce unnecessary utilization.

Early physician engagement also can help secure support for evidence-based care pathways and changes within the clinical practice. Building that support requires helping physicians understand how their clinical decisions influence episode spending and, ultimately, the healthcare organization’s financial performance.

Physician champions can be particularly effective in advancing these efforts. When respected clinical leaders are engaged in care redesign and performance improvement, hospitals can encourage broader adoption of new approaches and strengthen accountability across care teams.

Hospital leaders should begin these conversations well before implementation, allowing clinicians to help shape the strategies for which they will ultimately be responsible for deploying.

9. Mandatory doesn’t have to mean unmanageable. 

Although CJR-X participation is mandatory for most eligible hospitals, leaders can take proactive steps to manage financial risk by identifying opportunities to reduce unnecessary spending while maintaining high-quality patient care.

CMS has also incorporated steps — certain Medicare waivers, data-sharing arrangements and provisions for qualifying hospitals — that provide greater flexibility in managing care delivery. Understanding how to use these resources in compliance with their conditions can help organizations develop strategies appropriate to their patient populations and operational needs.

Rather than treating CJR-X as another regulatory requirement, hospital leaders should approach the new model as an opportunity to strengthen operational performance. Hospital leaders can’t control whether they participate, but they can influence how they perform.

Plan for permanence. Unlike prior models, CJR-X has no specified termination date. This signals a lasting structural shift in how Medicare pays for joint replacements.

10. Bundled-payment experience can shorten the learning curve.

Hospitals with experience in bundled payments or other value-based care arrangements may already have a head start. Their established care coordination practices and relationships with post-acute providers can provide a foundation for meeting CJR-X requirements without building entirely new programs.

For organizations with less experience, this preparation period offers an opportunity to strengthen these capabilities and gain greater visibility into episode spending. Developing the ability to track patients throughout recovery will be particularly important as financial accountability extends beyond the hospital.

Regardless of their starting point, hospital leaders should assess their existing capabilities and address gaps that could affect their ability to manage the full episode of care.

Preparing for CJR-X Starts Now

Preparation today shapes CJR-X performance tomorrow. The delayed implementation of CJR-X gives hospitals additional time to prepare for a fundamental shift in accountability for lower extremity joint replacement care. But the opportunity to prepare should not be mistaken for a reason to postpone action. 

By January 2028, hospitals should have the processes and capabilities in place to manage financial risk from the outset. The goal isn’t to be ready when CJR-X begins. It’s to be positioned for success before Day One.

Understand Your CJR-X Readiness

Determining where you stand today is the first step toward managing CJR-X financial risk. Premier can help you evaluate historical episode performance and identify opportunities for improvement,as you and your organization prepare for the model to take effect.

This article is provided for general informational purposes only and does not constitute legal, regulatory, financial or reimbursement advice. Information is based on the CJR-X final rule as of November 2, 2026, and is subject to change. Organizations should consult the applicable CMS rules and their own advisors.

Take the next step toward readiness with Premier's CJR-X solutions.