Baltimore, Maryland — For years, the moment a Medicare patient left the operating room and headed to a skilled nursing facility, hospitals largely washed their hands of what came next. A new federal proposal would change that — for every hospital in the country.
The Centers for Medicare & Medicaid Services is proposing a mandatory, nationwide expansion of a bundled payment model for hip, knee, and ankle replacements. Under the plan, hospitals would be financially accountable for the quality and cost of care for the full 90 days after surgery — including any time spent in a skilled nursing facility, physical therapy, or home health.
The model is called CJR-X, short for Comprehensive Care for Joint Replacement Expanded. If finalized, it would take effect on October 1, 2027, and would apply to most hospitals paid under Medicare’s inpatient payment system.
Why Nursing Homes Are Paying Attention
Joint replacements are among the most common surgeries in the Medicare program, and a significant share of those patients end up in skilled nursing facilities for post-acute rehabilitation. Under the current system, hospitals have little financial skin in the game once a patient is discharged — which critics say leads to poor hand-offs, weak follow-up, and preventable readmissions.
CJR-X would flip that dynamic. Hospitals would take responsibility for avoiding unnecessary re-hospitalizations and keeping patients on track through recovery. That means they’d have strong incentives to carefully choose which SNFs they refer patients to, stay in close contact with post-acute providers, and ensure care transitions actually work.
“Patients would have a more seamless, better care experience through the CJR-X Model, allowing them to focus on recovery instead of acting as the go-between for their own care,” said CMS Innovation Center Director Abe Sutton.
Built on a Program That Worked
CJR-X isn’t a new idea — it’s an expansion of a model that ran from 2016 to 2024 and delivered real results. The original program generated $112.7 million in Medicare savings while maintaining care quality for over 98,000 joint replacement patients. CMS says CJR-X would carry those lessons forward, with updated payment policies and refinements based on stakeholder feedback.
CMS Administrator Dr. Mehmet Oz framed the move in straightforward terms: “This proposed expansion would better align financial incentives with improved health outcomes—protecting taxpayer dollars while ensuring patients get the care they need before, during, and after surgery.”
Hospitals Push Back
Not everyone is on board. Hospital groups, including the American Hospital Association, criticized the proposal as yet another mandatory burden on an already strained sector. The AHA noted that hospitals are facing rising financial pressures even as CMS proposes inadequate rate updates — and adding mandatory participation in a performance-based model on top of that is a fight the industry isn’t ready for.
CJR-X would be the first mandatory, nationwide test of an episode-based payment model — a significant escalation from the voluntary or limited-geographic models that have been the norm.
For nursing homes, the shift could be an opportunity. Facilities that demonstrate strong outcomes for post-surgical patients — lower readmissions, better functional recovery, smoother transitions — stand to become preferred partners for hospitals under pressure to perform. That’s the same logic driving interest in value-based models like the 10-year LEAD model CMS opened earlier this month.
The proposed rule is open for public comment. A final rule would be expected later this year before the October 2027 start date.
