Three mechanisms in the final rule decide what your hospital is paid on every joint replacement episode: the quality gate, risk adjustment, and gainsharing. Here is how each works, sourced to the regulation, ending with the letter that starts the conversation with your administrator.
Every episode's target price carries a discount — CMS's cut off the top. The discount starts at 2.0% and falls with quality performance. That makes quality the only lever in the model that raises your target price.
| Measure | Side | Weight |
|---|---|---|
| THA/TKA complication rate (RSCR) | Inpatient | 50% |
| Hospital visits within 7 days of HOPD surgery (OP-36) | Outpatient | 50% |
| HCAHPS patient experience | Inpatient | 40% |
| OAS CAHPS patient experience | Outpatient | 40% |
| THA/TKA patient-reported outcomes (PRO-PM) | Both | 10% |
Each measure is scored against national percentiles, the two sides are combined by your episode volume, and the result is a composite quality score out of 20. Below the 30th percentile, a measure earns zero.
On 300 episodes at a ~$26,000 target, each point of discount is roughly $78,000 a year. The PRO measure is scored on performance from year one — every request to phase it in was denied — so collection habits built now are the ones you will be paid on.
Your target price is not one regional number. It is adjusted patient by patient, and the adjustment reads the record. A comorbidity that is not documented within the 180-day lookback does not exist for pricing purposes — which means the note is now a financial instrument.
Each is an HCC category with its own payment multiplier, found in claims from the 180 days before the episode:
CMS-HCC (V28) categories, names verbatim from §512.645(a)(6). Click any flag to see the ICD-10-CM codes that map to it.
Example codes shown; the full mapping is in the downloadable reference below. Mappings from the CMS-HCC V28 model ICD-10 crosswalk — confirm against your coder and the current CMS file before building order sets.
The practical move: put the 21 flags into your H&P workflow now. If a condition is real, documented, and coded within the lookback, the target price reflects the patient you're treating. If it isn't, you are being measured against a healthier patient than the one in front of you.
Paste this into your EHR as a dot-phrase (for example .CJRXHCC) and work it into the pre-op H&P. Delete lines that do not apply; a condition goes in the note only when it is real and addressed.
The hospital is the participant. CMS pays or collects from the hospital, not from you. The only way surgeon effort becomes surgeon payment is a sharing arrangement — and the final rule makes that easier than most surgeons assume.
| What the rule says | Why it matters |
|---|---|
| Gainsharing is voluntary, hospital by hospital | Nothing happens unless someone starts the conversation. CMS declined to mandate surgeon sharing. |
| No cap on gainsharing payments to physicians | The 50% cap many surgeons remember from CJR is gone. The ceiling is what you negotiate, at fair market value. |
| Alignment payments capped at 50% / 25% | The caps that remain apply to a different payment type, not to sharing reconciliation gains with physicians. |
| No Stark/AKS waivers — the AKS safe harbor at 42 CFR 1001.952(ii) and Stark value-based exceptions apply | Arrangements must be papered properly from day one. This is a compliance-counsel conversation, not a handshake. |
| Beneficiary technology incentives up to $1,000 per episode | The hospital can fund patient-facing tech — monitoring, engagement — inside the episode. |
The savings CMS reconciles come from decisions surgeons control: patient optimization, implant choice, site of care, discharge disposition. The rule lets the hospital share those gains with you and declines to force it. Which means the surgeons who are paid under CJR-X will be the ones who asked.
Five moves, in order, and the letter that opens the door. The goal of the first meeting is not a signed agreement. It is a shared number and a second meeting.
Personalize the brackets, attach your hospital's exposure snapshot from the opportunity map, and copy your practice administrator. This letter is a template for starting a conversation, not legal advice; any arrangement needs compliance counsel.
Sources. Quality measures, scales and composite: 42 CFR §512.635 as finalized in CMS-1849-F, FY2027 IPPS Final Rule, 91 FR (Aug 4, 2026). Discount ladder and eligibility floor: §512.640(b)(8), §512.645(h). Risk adjustment factors, condition flags, prior-procedure flags, lookback: §512.645(a). Sharing, distribution and downstream arrangements: §§512.670–512.680; beneficiary incentives: §512.685; AKS safe harbor determination: §512.690. Dollar figures in illustrations are program estimates, not rule text. This page is education, reviewed for the AAHKS CJR-X Readiness Program, and is not billing, legal or compliance advice.