• Home
  • Practice Pointers

CJR—What Is it and How Could it Affect My Practice?

By Rick Gawenda, PT

The Comprehensive Care for Joint Replacement (CJR) model is a new initiative from the Centers for Medicare & Medicaid Services (CMS) that aims to support improved and more efficient care for Medicare beneficiaries undergoing total knee replacements (TKR) or total hip replacements (THR). CMS implemented the CJR model in 67 geographic areas defined by metropolitan statistical areas (MSAs) beginning on April 1, 2016, for hospitals paid under the Inpatient Prospective Payment System (IPPS) and will continue until December 31, 2020. MSAs are counties associated with a core urban area that has a population of at least 50,000. Non-MSA counties (no urban core area or urban core area of less than 50,000 population) were not eligible for selection.1, 2

Screen Shot 2016-06-20 at 1.10.02 PM

Participation is mandatory for approximately 800 hospitals in those 67 geographic areas, and hospitals outside of the 67 geographic areas are not able to participate in the CJR model. Hospitals participating in model 1 or Phase II of models 2 or 4 of the Bundled Payments for Care Improvement (BPCI) initiative for lower extremity joint replacements are not eligible to participate in CJR. The CJR model does not apply to Medicare Advantage plans or critical access hospitals (CAHs) since CAHs are not reimbursed under IPPS.1, 2

The episode of care for a TKR or THR begins with admission to a participant hospital and is ultimately discharged under MS-DRG (Medicare Severity-Diagnosis Related Group) 469 (major joint replacement or reattachment of lower extremity with major complications or comorbidities) or MS-DRG 470 (major joint replacement or reattachment of lower extremity without major complications or comorbidities) and ends 90 days postdischarge in order to cover the complete period of recovery for beneficiaries. The day of discharge is counted as the first day of the 90-day bundle.1

The episode includes all related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries, with the exception of certain exclusions. Services included in the CJR model are

  • Physicians’ services
  • Inpatient hospital services including readmissions
  • Inpatient psychiatric facility services
  • Long-term care hospital services
  • Inpatient rehabilitation facility services
  • Skilled nursing facility (SNF) services
  • Home health agency services
  • Hospital outpatient services
  • Outpatient therapy services
  • Clinical laboratory services
  • Durable medical equipment
  • Part B drugs
  • Hospice2

Providers of outpatient therapy services, SNF Part A services, inpatient rehabilitation facilities, and home health services will be reimbursed under their normal payment method (i.e., Medicare Physician Fee Schedule for outpatient physical therapy, SNF Prospective Payment System (PPS) for Part A stays, etc.). Medicare beneficiaries retain the freedom of choice to choose services and providers and can choose providers that are outside of the 67 geographic areas. Whether or not a Medicare beneficiary’s episode of care is part of the CJR model will always be determined by the location of the hospital where they had the hip or knee replaced and is not based on location of post-acute services.1 Every year during the approximate five performance years of this model, CJR hospitals will receive separate episode target prices for MS-DRGs 469 and 470. CMS will also use a simple risk stratification methodology to set different target prices for patients with hip fractures within each MS-DRG. CMS determines the target price based on the hospital’s historical performance (DRG + 90 days postdischarge spend for a rolling three-year period) and on the expenditures of other hospitals in the region.1


At the end of a model performance year, actual spending for the episode (total expenditures for related services under Medicare Parts A and B that include outpatient physical therapy) is compared to the Medicare target episode price for the responsible hospital. Depending on the participant hospital’s quality scores and episode spending performance, the hospital may receive an additional payment from Medicare if the total expenditures were below the target price or be required to repay Medicare for a portion of the episode spending if the total expenditures were above the target price. This payment structure gives hospitals an incentive to work with physicians, home health agencies (HHAs), skilled nursing facilities, outpatient therapy, and other providers to make sure beneficiaries receive the coordinated care they need with the goal of reducing avoidable hospitalizations and complications.1

The CJR model will allow participant hospitals to enter into financial arrangements with certain types of providers and suppliers (SNFs, long-term care hospitals, HHAs, inpatient rehabilitation facilities, physician and nonphysician practitioners, and outpatient therapy providers). Those arrangements will allow participant hospitals to share, subject to the limitations outlined in the rule, with these third-party providers and entities (called Collaborators) the following: reconciliation payments, internal cost savings, and the responsibility for repayment to Medicare.1, 2

So how does the CJR model impact physical therapy services and the physical therapist in private practice (PTPP)? There is the potential for PTPPs to lose current referrals if their costs or outcomes are not favorable. Hospitals who must participate in the CJR model may contact PTPPs who have a reputation for positive outcomes and can demonstrate cost containment, to enter into a financial arrangement to provide physical therapy to its patients who had a TKR or THR and to share in the financial reward, or possibly the financial responsibility for repayment to the Medicare program.

The good news for Collaborators is that CMS places a limit on how much financial risk a CJR hospital is allowed to share with Collaborators. A CJR hospital must retain at least 50 percent of its total risk, meaning that if the hospital owes CMS a repayment, it cannot share more than 50 percent of that repayment responsibility with Collaborators. Additionally, it cannot share more than 25 percent of its responsibility with any single CJR Collaborator.1, 2

As of the writing of this article, the CJR model was implemented on April 1, 2016. However, on March 23, 2016, Representatives Tom Price (R-GA) and David Scott (D-GA) introduced a bill named the Healthy Inpatient Procedures Act of 2016 (H.R.4848). This bill would delay the implementation of CJR until January 1, 2018.3 To read the text of the bill, go to www.congress.gov/bill/114th-congress/house-bill/4848/text.

CMS has a web page devoted to CJR that can be accessed at https://innovation.cms.gov/initiatives/cjr. American Physical Therapy Association (APTA) has a web page dedicated to CJR as well. The APTA CJR web page contains extensive information on both the nuts and bolts of the program, and the considerations physical therapists (PTs) should weigh when making practice decisions. To access the web page, go to www.apta.org/CJR/.4

Watch for future articles on CJR concerning collaborative agreements, examples of reconciliation payments, and other topics regarding CJR pertinent to the practice of physical therapy.


1. Centers for Medicare & Medicaid Services, Comprehensive Care for Joint Replacement Model. Accessed April 2, 2016. https://innovation.cms.gov/initiatives/cjr.

2. Federal Register, Medicare Program; Comprehensive Care for Joint Replacement Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services, November 24, 2015. Accessed April 2, 2016. www.federalregister.gov/articles/2015/11/24/2015-29438/medicare-program-comprehensive-care-for-joint-replacement-payment-model-for-acute-care-hospitals.

3. H.R.4848, Healthy Inpatient Procedures Act of 2016. Accessed April 2, 2016. www.congress.gov/bill/114th-congress/house-bill/4848/text.

4. American Physical Therapy Association, Comprehensive Care for Joint Replacement Model (CJR). Accessed April 2, 2016. www.apta.org/CJR.

Copyright © 2018, Private Practice Section of the American Physical Therapy Association. All Rights Reserved.