The Comprehensive Care for Joint Replacement Expanded (CJR-X) Model is a mandatory bundled payment model that includes 90-day Medicare lower extremity joint replacement (LEJR) episodes spanning inpatient, outpatient, and post-acute care. CMS has finalized a start date of January 1, 2028, with more than 2,500 hospitals required to participate.
Successfully managing CJR-X episode costs will require hospitals to actively engage orthopedic surgeons and other care partners in redesigning care pathways, reducing unnecessary utilization, and improving outcomes. One of the most effective tools available to accomplish that objective is gainsharing coupled with providing credible performance dashboards on a regular cadence.
Gainsharing allows hospitals to share a portion of positive net payment reconciliation amounts (NPRAs) with eligible collaborating providers when episode performance generates savings while maintaining quality. When structured effectively, gainsharing helps align financial incentives across the care continuum, encourage physician engagement, and create a shared focus on lowering total episode costs without compromising patient outcomes.
How Can Gainsharing Improve Physician Alignment Under CJR-X?
CMS’ approach to gainsharing has evolved significantly over the past decade, incorporating lessons learned from earlier bundled payment initiatives. Under the earlier version of the CJR Model, CMS initially placed caps on gainsharing amounts, which did not allow hospitals to adequately reward physicians for their time and efforts. Those restrictions were eventually lifted, providing hospitals with greater flexibility to reward meaningful contributions to episode performance.
From a strategic perspective, gainsharing can be a powerful physician alignment tool. Both employed and community-aligned physicians often have substantial influence over implant selection, post-acute care utilization, discharge planning, and adherence to evidence-based clinical protocols. Hospitals frequently use employment agreements to signal desired behaviors from employed physicians. For independent physicians, gainsharing can play a similar role when these agreements are strategically designed.
When community-aligned physicians have the opportunity to share in savings created by their investment in performance improvement initiatives, they are more likely to participate in care redesign initiatives, performance improvement meetings, and quality enhancement efforts. In many organizations, gainsharing has become an effective mechanism for strengthening partnerships with independent community surgeons while simultaneously supporting quality and efficiency objectives.
What Are CMS’ Requirements for CJR-X Gainsharing?
Gainsharing is not simply a physician compensation program. Per the 2027 IPPS final rule, CMS requires that gainsharing arrangements support the goals of the CJR-X Model and remain closely tied to actual episode performance. Savings distributed through gainsharing must be derived from positive NPRAs generated by the CJR-X Model itself.
Hospitals cannot create separate pools of money or make arbitrary payments unrelated to episode performance. Instead, gainsharing payments must be directly connected to the difference between CMS target prices and actual episode spending or based on internal cost savings (ICS). Any gainsharing based on ICS requires clearly defined methods and accounting protocols in place to calculate, verify, and document that ICS occurred for audit purposes.
Hospitals must satisfy several foundational requirements before making any gainsharing payments. First, participation must be voluntary. Hospitals cannot compel providers to participate or impose penalties on providers who elect not to participate. Second, gainsharing arrangements must be documented in written agreements that are signed and finalized before services are furnished. Hospitals cannot retroactively establish gainsharing agreements after performance results are known. These agreements should clearly define eligibility criteria, distribution methodologies, quality requirements, and administrative procedures.
Quality safeguards are equally important. CMS requires that gainsharing arrangements incorporate quality measures and minimum performance standards that act as a gate to determine which participating physicians are allowed to share gains. Providers should not be rewarded solely for reducing spending, but for achieving savings while maintaining or improving quality.
What Are the Qualities of an Effective CJR-X Gainsharing Program?
Reliable Metrics
Effective gainsharing programs typically include measures that physicians can reasonably influence, such as metrics linked to:
- Activities that help reduce readmissions and/or complications
- Care coordination activities
- Adherence to standardized pathways
- Other indicators linked to episode performance
Hospitals should select measures that are already being tracked and can be monitored accurately throughout the year. Reliable measurement is essential because physicians are far more likely to engage once they trust the underlying data. Conversely, if the data presented is subsequently determined to be flawed or invalid, it can cause significant damage to physician relationships and alignment with the hospital.
Citizenship Requirements
Many successful programs also incorporate “citizenship” requirements as a condition of eligibility for gainsharing. Examples include attendance at a minimum number of CJR-X governance/model education meetings, participation in a certain number of performance improvement initiatives, and minimum case-volume thresholds. These provisions help ensure that gainsharing rewards providers who have made a meaningful contribution to improving episode performance.
Funds-Flow Methodology
Hospitals also need a carefully designed funds-flow methodology. Leadership (both executive and clinical), legal counsel, and compliance teams should work together to determine how much of the NPRA will be distributed via gainsharing, how much the hospital will retain, and whether a reserve will be established to offset future repayment obligations or adverse performance years.
Many organizations retain a portion of savings to support program administration and create financial stability. Typically, based on our experience helping clients establish gainsharing agreements, hospitals and health systems retain between 30% and 70% of the savings earned. Hospitals also commonly withhold a percentage of the gainsharing pool to protect against future losses or recoupments. Whatever methodology the hospital selects, it should be explicitly described in the participation agreement and supported by clear documentation and audit trails.
Transparent Communication
Perhaps the most important operational lesson is communication. Hospitals should not wait until reconciliation payments arrive to discuss performance. Instead, they should provide participating physicians with regular updates regarding episode spending, quality performance, and gainsharing eligibility throughout the year. Monthly or quarterly scorecards help providers understand how their actions affect results and reduce the likelihood of disputes when distributions are calculated. Consistent transparency helps build trust, reinforce accountability, and keep providers focused on continuous improvement.
How Can a VBE Support Physician Alignment in CJR-X & Beyond?
For some hospitals, CJR-X gainsharing may also provide a starting point for a broader value-based enterprise (VBE) approach to physician alignment. Gainsharing creates an important economic connection between CJR-X performance and participating physicians, but financial incentives alone do not redesign care. A VBE can “plus up” the gainsharing arrangement by adding the long-term physician alignment infrastructure and incentives needed to create and sustain results.
Elements of an effective VBE include physician-led governance, defined value-based activities, accountable workgroups, balanced performance measures, credible dashboards, quality safeguards, and a regular process for identifying and acting on variation. In a VBE model, physicians are not simply informed of performance or rewarded after savings occur; they help shape the clinical and operational changes intended to improve performance throughout the episode.
A CJR-X-focused VBE could begin with the same opportunities that support gainsharing, such as focus on patient optimization, pathway adherence, discharge planning, post-acute utilization, readmissions, and complications. At the same time, the VBE can also address related sources of enterprise value, such as implant and supply variation, length of stay, throughput, documentation, and care-transition reliability. This makes CJR-X the catalyst for a reusable physician alignment platform rather than a standalone payment initiative.
Gainsharing can remain an important component of the economic model, while the VBE helps organize the governance, accountability, measurement, and improvement work that systematically creates value. Any organization considering this approach should define the target patient population, value-based purposes, participant responsibilities, performance measures, funds flow, and monitoring requirements in collaboration with qualified healthcare regulatory counsel.
How Forvis Mazars Can Help With CJR-X Gainsharing
As hospitals prepare for mandatory participation in CJR-X, they should view gainsharing as a strategic investment in physician engagement. Organizations that develop legally compliant agreements, establish meaningful quality measures, implement transparent funds-flow methodologies, and maintain ongoing communication with participating providers will help position themselves to achieve both superior patient outcomes and financial success.
In an environment where episode-based accountability continues to expand, gainsharing can provide a powerful economic foundation for physician alignment. Hospitals seeking to take that alignment further may consider pairing gainsharing with a VBE operating model that organizes physician leadership, governance, performance measurement, and continuous improvement around the full episode of care.
At Forvis Mazars, our value-based care team has extensive experience supporting hospitals in alternative payment models like CJR-X, and our physician services team helps hospitals and health systems design and implement innovative compensation and operating models like VBE. If you have any questions about CJR-X gainsharing or would like assistance, please reach out to our team today.