Reed Smith Client Alerts

Authors: Carol Colborn Loepere

On November 24, 2015, the Centers for Medicare & Medicaid Services (CMS) published a significant final rule that will require hospitals in selected geographic areas to participate in a new Medicare Comprehensive Care for Joint Replacement (CJR1) model beginning April 1, 2016.2 CMS estimates that approximately 800 hospitals will participate in the model, and that about 23 percent of all lower extremity joint replacement (LEJR) episodes nationally will be covered by the program.

In brief, under this model, CMS will provide a “bundled” payment to participant hospitals for an “episode of care” for LEJR surgery, covering all services provided during the inpatient admission through 90 days post-discharge. The bundled payment will be paid retrospectively through a reconciliation process; hospitals and other providers and suppliers will continue to submit claims and receive payment via the usual Medicare fee-for-service (FFS) payment systems, with the reconciliation occurring later. Most hospitals in 67 metropolitan statistical areas (MSAs) will be covered.

CMS intends for this initiative to improve quality of care and reduce costs associated with LEJR procedures by promoting coordination among hospitals, physicians, and post-acute care (PAC) providers from the initial hospitalization through recovery – although hospitals ultimately will be held responsible for the episode spending. CMS is focusing on LEJR procedures for this model because they are high-expenditure, high-utilization procedures in which there is significant variation in spending both for the procedures and the associated PAC. The CJR model is part of a broader CMS initiative that seeks to accelerate the share of Medicare FFS payments that are tied to quality and value, and are reimbursed through alternative payment models.

The final rule is extremely complex, both in terms of the implications for Medicare payment to participant hospitals, and the parameters for relationships between hospitals and other providers that may furnish care to beneficiaries under the model. The following is an overview of the final rule, highlighting significant changes from the July 14, 2015 proposed rule.3

  1. Note that while CMS abbreviated the program name as CCJR in the July 14, 2015 proposed rule, CMS is using the abbreviation CJR in the final rule.
  2. The text of the rule is available at
  3. A Reed Smith analysis of the proposed rule is available at


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