Characteristics of Hospitals Earning Savings in the First Year of Mandatory Bundled Payment for Hip and Knee Surgery

Since April 2016, Medicare has bundled payments for hip and knee surgery at 799 hospitals through the Comprehensive Care for Joint Replacement (CJR) program, which combined payments for hospitalization and postdischarge care in the following 90 days into a single benchmark. CJR incentivizes quality and cost containment by providing retrospective bonus payments that increase as hospitals exceed their quality and cost benchmarks. Initially, Medicare required participation from hospitals in 67 urban markets defined by metropolitan statistical areas (MSAs),¹ favoring MSAs with above-average episode spending and adequate procedural volume. However, Medicare recently indicated that most hospitals in 34 of 67 MSAs are required to continue in the CJR program (mandatory markets) while low-volume hospitals and others in the remaining 33 MSAs could elect to continue or withdraw (voluntary markets).² Given this policy shift and its implications for the national debate about mandatory bundled payment, understanding how different hospitals fared in the first year of CJR is salient for policy makers, clinicians, and health care organizations.