What the CJX-R Model Means to SNFs Now

Jay Gormley, chief investment officer, COO, Advisory, for Zimmet Healthcare Services Group, sifted through the recent announcement by CMS on its plan to expand its hip, knee, and ankle replacement care model nationwide and found what he termed a “potential significant expansion” for SNFs concerning waivers, the end to the three-day stay requirement, and the role of hospital outpatient departments in potentially triggering a SNF stay without a hospitalization.

First, the background.

The new news is that CMS said beginning in January 2028, most hospitals will be required to participate in the Comprehensive Care for Joint Replacement Expanded (CJR-X) Model, which is part of the Fiscal Year 2027 Inpatient and Long-Term Care Hospital Prospective Payment System Final Rule.

In CJR-X, the episode begins with the qualifying joint replacement (either inpatient or in a hospital outpatient department) and continues for 90 days. CMS then compares the total Medicare spending generated during that period with a predetermined target price, or budget, for the episode.

Gormley said this does not mean the hospital receives one check and then pays the SNF, physicians, home health agency, and other providers. Instead, he said “each provider continues to bill Medicare separately and receives payment under its normal fee-for-service system. The SNF still bills Medicare under PDPM, the physician bills under the physician fee schedule and the home health agency bills under the home health payment system.”

Who Takes the Risk?

The hospital, however, takes the financial risk against the episode target.

If total spending for the surgery and all related care comes in below the target and the hospital meets the applicable quality requirements, the hospital may share in the savings. If spending exceeds the target, the hospital may owe money back to Medicare.

“That means the subordinate providers continue to be paid normally, but their cost and performance become part of the hospital’s economic result. A longer SNF stay, an avoidable readmission or unnecessary post-acute utilization can push the episode over budget, while efficient care, strong transitions and successful community discharge can help the hospital generate savings,” he said.

CJR-X builds on the original CJR model, which began in 2016 and operated in a limited number of metropolitan areas. The TEAM model and CJR-X will operate side-by-side beginning Jan. 1, 2028. TEAM is already mandatory for eligible IPPS hospitals located in 188 selected Core-Based Statistical Areas and currently includes approximately 716 hospitals.

TEAM covers five surgical episode categories, including lower-extremity joint replacement, and holds hospitals accountable for related spending for 30 days following discharge or completion of the outpatient procedure. CMS maintains a current hospital-level participant list because the model also includes certain hospitals that are voluntarily elected to participate.

Participation Details

Gormley said CJR-X will fill in most of the rest of the map. Beginning Jan. 1, 2028, eligible acute-care hospitals paid under both the IPPS and OPPS throughout the 50 states, District of Columbia, and U.S. territories will generally participate in CJR-X unless they are already participating in TEAM.

Maryland is the major geographic exception. Acute-care hospitals located in Maryland will not participate in CJR-X because the state operates under its separate Maryland Total Cost of Care Model, he said. Also, critical access hospitals, which send individuals to SNFs and sometimes have their own SNF swing beds (depending on the state) will be excluded.

In simplified terms, Gormley said the Jan. 1, 2028, landscape will look like this:

• TEAM hospitals will remain in TEAM and will not move into CJR-X.

• Eligible hospitals that are not participating in TEAM will generally enter CJR-X.

• All acute-care hospitals located in Maryland will remain outside both models.

• Note that this is all based on the hospital. If the SNF is located in a CJR-X area, but takes a resident from a TEAM hospital, that resident is in TEAM not CJR-X.

Huge Precedent

To make the CJR-X model work, hospitals will increasingly examine each SNF’s length of stay, readmission rate, emergency department utilization, functional improvement, community-discharge performance, and total Medicare spending, he said.

“A high occupancy rate or a longstanding referral relationship will not be enough if the facility’s patients routinely stay longer, cost more, or return to the hospital more frequently than patients treated by competing providers,” Gormley said. “But there is a huge and important precedent that is also being set here. CJR-X includes qualifying procedures performed in hospital outpatient departments, not merely procedures performed during inpatient admissions.”

An outpatient procedure can therefore initiate a 90-day CJR-X episode even though the beneficiary never had a traditional inpatient hospital stay. This is only for a hospital outpatient department site of service. Standalone Ambulatory Surgery Centers (ASCs) are not included. Including outpatient procedures would ordinarily create a barrier to SNF care.

Gormley stressed it’s a hospital outpatient department within a hospital that is a CJR-X participant, and does not apply to ASCs, even if owned by the hospital. “They have to be a hospital outpatient department and live on that Medicare license in order for it to count,” he said. Another note is that SNFs must be a minimum three-star facility to take part.

He said under traditional Original Medicare rules, a beneficiary generally must complete a medically necessary inpatient hospital stay of at least three consecutive days before Medicare Part A will cover a SNF admission. Observation days and outpatient procedures do not count toward that requirement.

Waivers for Three-Day Stay

Under Gormley’s interpretation of the CJR-X model text and the accompanying information provided by CMS, he said CJR-X addresses the mandatory three-day stay rule through a waiver. The waiver can be used following either a qualifying inpatient anchor hospitalization or a qualifying outpatient anchor procedure.

“While not explicitly stated, this means that an eligible FFS Medicare beneficiary who receives an outpatient hip or knee replacement may enter a Medicare-covered SNF without first completing a three-day inpatient hospital stay, provided the beneficiary otherwise requires skilled care and all waiver conditions are satisfied. This is, as we say, a very big deal,” he said.

Gormley said assuming there is allowance for Medicare FFS admission to a SNF with no stay in a hospital at all could create a new source of potential Medicare SNF volume.

“Two patients may receive essentially the same knee replacement and require the same rehabilitation. One may be admitted to the hospital as an inpatient, while the other receives the procedure on an outpatient basis,” he said.

Rules and the Stay

Under Ordinary Medicare rules, only the inpatient patient could potentially satisfy the three-day requirement. Under CJR-X, both may have a pathway into Medicare-covered SNF care through the waiver, under Gormley’s take on the CMS model.

“And that is a major precedent that SNFs have been seeking for a long time. If successful, it could eventually set the stage for CMS to permit direct admissions from hospital outpatient procedures to SNFs for other procedures and clinical conditions. That, as we say, is a very, very, very big deal,” Gormley said.

Gormley notes: “There is some ambiguity, on page 1943 [of the preprint] in response to a commentator, extending the waiver to beneficiaries receiving outpatient procedures ‘was not proposed’ and was beyond the scope of the rulemaking. That language appears inconsistent with both the surrounding preamble and, more importantly, the actual regulatory text at § 512.695(b)(2), which expressly establishes the waiver for episodes initiated by an anchor procedure.” He also noted that this was his opinion and that we would need to wait for further clarity from CMS.

Codes for CJR-X

CJR-X episodes are triggered by the following Medicare inpatient MS-DRGs and outpatient HCPCS codes: 

• MS-DRG 469: Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity with Major Complications or Comorbidities (MCC), including Total Ankle Replacement 

• MS-DRG 470: Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity without MCC 

• MS-DRG 521: Hip Replacement with Principal Diagnosis of Hip Fracture with MCC 

• MS-DRG 522: Hip Replacement with Principal Diagnosis of Hip Fracture without MCC 

• HCPCS 27447: Total Knee Arthroplasty 

• HCPCS 27130: Total Hip Arthroplasty 

  
  

Questions and comments? Contact Patrick Connole at pconnole@parkplacelive.com.