Penalties and Rewards for Safety Net vs Non–Safety Net Hospitals in the First 2 Years of the Comprehensive Care for Joint Replacement Model

Medicare’s Comprehensive Care for Joint Replacement (CJR) model is a 5-year bundled payment reform that was mandated for about 700 hospitals in 67 Metropolitan Statistical Areas to improve quality and lower costs of care for fee-for-service beneficiaries undergoing hip and knee replacements. In year 1 (2016), hospitals spending below Medicare’s quality-adjusted target price earned back the difference between the target price and their actual spending (reward).¹ Beginning with year 2 (2017), hospitals exceeding the target price repaid Medicare for excess spending (penalty).

The CJR model does not account for worse outcomes and higher costs of socially vulnerable patients.² We assessed whether safety net hospitals, which serve disproportionately large numbers of these vulnerable patients, were more likely to be penalized and less likely to consistently receive rewards compared with hospitals that serve few vulnerable patients (non–safety net hospitals).