Baltimore, Maryland — Federal regulators are proposing to revive and expand a bundled payment program for joint replacements — a model that, last time around, pushed care away from nursing homes and toward cheaper alternatives. This time, it would be mandatory for hospitals nationwide.
The Centers for Medicare & Medicaid Services announced the proposed CJR-X model on April 10, describing it as a nationwide expansion of the original Comprehensive Care for Joint Replacement program. The original CJR ran from 2016 through the end of 2024, and by CMS’s own accounting, generated an estimated $112.7 million in net Medicare savings across more than 98,000 knee and hip replacement patients. A substantial portion of those savings came from reducing costly post-acute care — including skilled nursing facility stays.
That history is precisely why the industry is watching the proposal closely.
What CJR-X Would Actually Do
Under the proposed model, hospitals would be held financially responsible for all care tied to a joint replacement procedure — from the day of surgery through the first 90 days of recovery. That includes any skilled nursing facility services the patient receives during that window. If a hospital’s spending for a given patient’s episode runs below a target price, the hospital keeps the difference. If it runs above, the hospital owes money back to Medicare.
That structure creates a powerful incentive for hospitals to steer patients toward lower-cost post-surgical settings — whether that’s home health, outpatient physical therapy, or shorter nursing home stays. Under the original CJR program, industry reports showed a measurable shift away from skilled nursing care in favor of those alternatives.
CMS is also proposing to waive the three-day inpatient hospital stay requirement — the rule that currently requires Medicare patients to be hospitalized for at least three days before Medicare will cover a skilled nursing facility stay. Eliminating that guardrail could mean some patients bypass nursing homes entirely, moving straight from the hospital to home-based rehabilitation.
The Scale Is Different This Time
What makes CJR-X more significant than its predecessor is the scope. The original program was mandatory only for hospitals in selected geographic markets. CJR-X would be mandatory for virtually all hospitals nationwide — making it the first episode-based payment model in traditional Medicare to operate at that scale. Hospitals participating in the related TEAM model would initially be exempt, but the proposal still represents a sweeping expansion of bundled payment into the mainstream.
CMS has proposed a start date of October 1, 2027, giving the industry roughly 18 months to prepare.
The agency says it has built in more guardrails this time — 29 risk adjusters, compared to just three in the original program, plus a 5% stop-loss provision for hospitals serving large numbers of dual-eligible patients. Whether those adjustments are enough to protect access to nursing home care for patients who genuinely need it remains an open question.
For operators already navigating prior authorization denials and shorter stays driven by Medicare Advantage plans, the return of CJR adds another layer of financial uncertainty. Nursing home leaders who’ve been monitoring CMS’s evolving value-based care models have long flagged that episode-based payment puts SNF referrals at risk — and CJR-X makes that risk concrete again.
Comments on the proposed rule are expected to open in the coming weeks. The proposal was announced alongside a broader set of CMS payment rules for the 2027 fiscal year.
