The Comprehensive Care for Joint Replacement (CJR) model is a new payment model that the Centers for Medicare and Medicaid Services (CMS) is rolling out as part of its aim to have 50% of all Medicare fee-for-service payments come from alternative payment models by 2018. The CJR will support better care for patients who are undergoing elective hip and knee replacement surgeries—the two most common inpatient surgeries for Medicare beneficiaries. CMS believes that “effective implementation of the CJR model will improve the quality and efficiency of care for Medicare beneficiaries, which is essential to creating a health care system that delivers better care, spends our dollars more wisely, and leads to healthier Americans.”

The Background

In 2014, more than 400,000 Medicare-covered hip and knee replacement surgeries were performed, totalling more than $7 billion in hospitalization costs alone. You’d think that with such a high volume of surgeries, there’d be some level of consistency in terms of quality of care and cost, but that hasn’t been the case: both vary dramatically across providers, facilities, and geographic locations. According to CMS, “the rate of complications like infections or implant failures after surgery can be more than three times higher at some facilities than others, increasing the chances that the patient may be readmitted to the hospital.” Surgery, hospitalization, and recovery costs Medicare anywhere between $16,500 and $33,000.

The Model

Under the CJR model, participating hospitals are financially responsible for the quality and cost of a CJR episode of care. Incentives will be awarded for greater coordination of care across hospitals, physicians, and post-acute care providers, including physical therapists. According to the American Physical Therapy Association (APTA), the hospital will control the payment bundle and be allowed to share the savings—and risk—with collaborating providers.

Per CMS, the episode of care begins when a patient—who eventually will be discharged under MS-DRG 469 (major joint replacement or reattachment of lower extremity with major complications or comorbidities) or 470 (major joint replacement or reattachment of lower extremity without major complications or comorbidities)—is admitted into a participating hospital. It ends 90-days post-discharge—thus allowing for adequate recovery time—and includes all services covered under Medicare Part A and Part B, with certain exclusions.

The CJR model began on April 1, 2016, and will run for five years in 67 geographic areas (scroll through the table below to see them all). According to this APTA slide deck, Medicare estimates that this initiative will result in $153 million in savings.


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The Impact

All total hip and knee replacement procedures for Medicare beneficiaries performed within the designated areas will fall under the CJR—and that includes rehabilitation services performed during the episode of care. If you treat Medicare patients who have had elective primary hip and/or knee replacements—and your practice is located within one of CMS’s chosen geographic areas—you may want to consider marketing yourself to local hospitals as a CJR collaborator, because it could result in increased revenue and potential profit sharing. According to the APTA, similar models are bound to crop up, so even if you’re not practicing within one of these 67 locations, you still may get an opportunity to participate in this type of arrangement.

As the APTA notes in this Contracting Checklist, “contracting will likely be complicated,” and CMS has yet to provide clear guidelines about how hospitals should attribute profit and risk, which means the specifics of any collaborative relationship will depend on the contract with the hospital. So, before you enter into any bundled payment agreement for a collaborative care model, check out this toolkit (also from the APTA). It contains some very important things to consider as you determine whether your practice will benefit from this type of contract—or if you should give the CJR some time to play out before getting involved. These items include:

  1. The background, outcomes, and patient satisfaction ratings of the hospital you’re considering partnering with as well as those of their other collaborators.
  2. Your own patients’ outcomes and satisfaction ratings as well as the cost of providing treatment. (Value = outcomes/cost.)
  3. Your clinic’s risk tolerance, target market, staff capacity, and distance from the hospital.

“No single payment methodology is inherently good or bad,” writes the APTA. “And each has potential to pay you fairly or poorly for the services you deliver. When evaluating payer contracts, select those that make the most sense for your particular practice setting and goals.”

Pros and Cons of Accepting Bundled Payments

Here’s a pro/con list for accepting bundled payments that I adapted from the APTA’s Contracting Checklist:



Could increase business and revenue; more potential referrers

Only applies to a specific market segment

Could lead to practice growth

Could require additional space and/or staff

Potential for profit sharing

Risk of financial liability

Encourages collaboration with care team

Ability to impact collaborators’ performances and collaboration may be limited

Motivates providers and practices to achieve positive outcomes

Must rely on entire care team to achieve positive outcomes

Demonstrates the value of PT

Requires data collection

Enables participation in a brand new care model

Is new, meaning there are bound to be changes and further developments

Affords the opportunity to influence care delivery system

Influence may be limited

Gets providers collecting quality data

Data collection could require additional infrastructure, including IT

Bolsters development of community relationships

Developing and maintaining community relationships requires resources


According to the APTA, “the ability to measurably demonstrate objective results is critical in the pursuit and development of collaborative health care relationships. This will require you to be up-to-date on clinical practice guidelines and protocols as well as to be able to document your adherence to evidence-based practices sufficiently, and share your data with bundle partners.” In other words, whether it’s to become a CJR collaborator or to participate in any one of the other alternative payment models that will be coming down the pipeline, quality data is crucial. (If you’ve been wondering why we’ve spent a lot of time recently writing about outcomes data and our new integrated outcomes tracking tool, this is why. Times are changing; anecdotal evidence isn’t going to cut it anymore.)

For a whole host of other great APTA resources on becoming a CJR collaborator, click here.