Payments & Quality
How CJR-X Target Prices, Reconciliation And Quality Work
CJR-X preserves Medicare fee-for-service payments during the year, then reconciles each participating hospital’s actual episode spending against a regional, risk-adjusted target price.
Financial performance alone is not enough. Under the model’s quality-first principle, hospitals must reach a minimum composite quality score before receiving reconciliation payments.
The Payment Cycle
1. Fee-for-Service Payments
Hospitals, physicians, and post-acute providers continue billing Medicare under existing payment systems.
2. Annual Comparison
CMS compares actual episode spending with the hospital's risk-adjusted target price after the performance year.
3. Reconciliation
Depending on spending and quality, the hospital may receive an additional payment or repay a portion of episode spending.
Five Quality Measures
- 1. Risk-Standardized Complication Rate following elective primary total hip and/or knee arthroplasty
- 2. Hospital Visits within 7 days of hospital outpatient department surgery (OP-36)
- 3. Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS)
- 4. Outpatient and Ambulatory Surgery CAHPS (OAS CAHPS)
- 5. THA/TKA Patient-Reported Outcome-Based Performance Measure (PRO-PM)
Risk Adjustment
CJR-X uses 29 risk adjusters—substantially more than the original CJR model—to account for hospital and beneficiary complexity. Hospital-level factors include bed count and the share of patients dually eligible for Medicare and Medicaid.
Episode-level adjustment considers age, chronic-condition count, dual eligibility, procedure type, disability as the original reason for Medicare enrollment, prior post-acute utilization, and 21 specific Hierarchical Condition Categories. CMS states these are the same 29 risk adjusters used in TEAM.
Safety-Net and Rural Protection
Qualifying safety-net and rural hospitals receive a 5% stop loss. The protection applies to hospitals with high dual-eligible volume, geographically rural hospitals, Medicare-dependent hospitals, small rural hospitals, and Sole Community Hospitals. Leaders should still model exposure by episode because stop-loss protection limits downside; it does not replace care coordination or quality requirements.
Payment and Quality Questions
How are hospitals paid under CJR-X?
Providers continue to receive normal Medicare fee-for-service payments. After each performance year, CMS compares actual episode spending with the hospital target price and quality performance to determine whether the hospital receives a reconciliation payment or owes Medicare.
Does quality affect CJR-X reconciliation payments?
Yes. CJR-X uses a quality-first principle. A hospital must achieve a minimum composite quality score before it can receive a reconciliation payment.
How does CJR-X protect safety-net and rural hospitals?
CJR-X applies a 5% stop loss to qualifying hospitals, including hospitals with a high share of dually eligible patients, geographically rural hospitals, Medicare-dependent hospitals, small rural hospitals and Sole Community Hospitals.
Last reviewed: August 16, 2026 Primary source: CMS CJR-X Model (cms.gov)