CMS finalized its newest mandatory bundled payment model for hospitals, but the rule also has implications for ASCs that perform outpatient hip and knee replacements for those hospitals’ patients.
The Comprehensive Care for Joint Replacement Expanded Model, or CJR-X, was finalized July 31 as part of the fiscal year 2027 Inpatient Prospective Payment System rule. It requires more than 2,000 acute care hospitals nationwide, those paid under both the inpatient and outpatient prospective payment systems, to take on financial accountability for the cost and quality of hip, knee and ankle replacement episodes beginning Jan. 1, 2028.
Maryland hospitals, hospitals in CMS’ TEAM model, and critical access and rural emergency hospitals are exempt. CMS projects the model will save Medicare $736 million over its first five performance years, ramping from $129 million in year one to $171 million in year five.
CJR-X is triggered by inpatient stays under Medicare severity diagnosis-related groups 469, 470, 521 and 522, and also by outpatient total hip and total knee replacement billed under Healthcare Common Procedure Coding System codes 27130 and 27447, which are the same two codes affected by a separate 20% Medicare Physician Fee Schedule cut orthopedic surgeons are currently opposing. Each episode runs 90 days from discharge or procedure completion and covers all related Medicare Part A and Part B spending, including post-acute care and follow-up visits.
CMS also intends to price low-acuity lower extremity joint replacement episodes on a site-neutral basis, meaning the target price is the same whether the procedure happens in a hospital outpatient department or an ASC. That could reduce a cost advantage ASCs have used to win this volume, since a hospital would no longer save money under the bundle simply by moving a case to a lower-cost site of service.
Accountability under CJR-X sits with the acute care hospital, not the facility performing the procedure. How CMS would attribute an episode when the surgery happens at a freestanding, physician-owned ASC with no ownership tie to a participant hospital is not yet addressed in public materials. What is specified is that hospitals can share reconciliation payments with surgeons and post-acute providers, including ASCs, through gainsharing arrangements permitted under an Anti-Kickback Statute safe harbor, which is the same mechanism built into the original CJR model.
Sean Bak, MD, an orthopedic surgeon at Motor City Orthopedics in Novi, Mich., told Becker’s the model will likely accelerate a trend already underway.
“This will also undoubtedly increase the outmigration of joint replacement to ambulatory surgery centers, which may be appropriate, but there will be increasing burden on the inpatient side to care for higher-acuity patients,” he said.
Under a fixed-price, 90-day bundle, a hospital has a financial incentive to send healthier, lower-risk joint replacement patients to the lowest-cost setting that can safely treat them, while keeping more medically complex patients, who are harder to discharge quickly and more likely to exceed the target price, in the hospital.
Steve Schutzer, MD, an orthopedic surgeon and co-founder of Upswing Health who helped build one of the earliest bundled joint replacement programs, described that dynamic as consistent with the model’s intent, calling CJR-X “a proven cost-containment solution” that “forces collaboration across stakeholders and breaks down silos.”
Ugo Ihekweazu, MD, an orthopedic surgeon at Texas Orthopedic Hospital in Houston, said the incentives may not land evenly, warning that hospitals with stronger post-acute infrastructure “will have an inherent advantage over those without it, which could fuel further point-of-care consolidation.”
For ASCs, that would mean potentially more volume, but on pricing terms negotiated with a hospital partner that is managing its own bundle risk.
CJR-X is arriving alongside separate reimbursement pressure on the same two procedure codes. CPT 27130 and 27447 face a proposed 20% cut to the surgeon’s professional fee under the 2027 Medicare Physician Fee Schedule, on top of an 8% cut that took effect in 2026. Antonia Chen, MD, president of the American Association of Hip and Knee Surgeons and chair of orthopedic surgery at UT Southwestern Medical Center in Dallas, told Becker’s the two policies shift financial pressure toward the surgeon while facility-side savings under the bundle accrue to the hospital.
“The hard part is they’re cutting just the surgeon fee, but the hospital is getting the benefit for the bundle payments,” she said.
Dr. Chen said the mismatch could lead some surgeons to limit Medicare patients, leave Medicare altogether, or increase daily case volume to offset the cut.
“If I normally do six to seven in a day, and now I’m doing 12 or 13 to make up for that 20%, well, the quality is just not going to be as good,” she said.
Any of those outcomes would affect an ASC’s surgeon pipeline, scheduling capacity and case-mix assumptions for the procedures CJR-X is built around.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
