CMS has released the Inpatient Proposed Rule. Find it here:
It's in Fed Reg, April 14, 2026, 91:19312 (576pp). 16 mb.
Note: This downloads for me in a locked copy I can't annotate. However, you can "extract all pages" to a new document as re-save, and it will be ok for markup.
See fact sheet:
See press release on the joint program:
There's quite a bit of discussion of an expanded national joint bundled care program, and for those of us dismayed with the 14-day-rule regarding genomics (such as CGP), note that the joint surgery demonstration would include lab tests for up to 919678-0 days (as well as many other services up to 90 days). See p. 19678-79. However, it doesn't withhold line-item payment, it just makes hospitals responsible for high and low costs in their penalties and bonuses, rather like in ACOs now.
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See unrelated press releases about a "Digital Ecosystem Tools" program here and a rapid-authorization for drug program here.
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Here's my Chat GPT question.
Regarding the joint demo, if I read it correctly (around page 19678 19679) they would bundle lab tests (new lab tests) up to 90 days out and bundle "professional services." Does that mean the hospital sets the physician's salary from their DRG payment? That seems nuts. And bundling labs up to 90 days out could include all kinds of labs unrelated to the joint surgery. I'm finding it hard to wrap my head around the proposal !
Answer:
My read is yes, your discomfort is justified, but no, it does not literally mean the hospital simply pays every physician out of the DRG like a hospital-employed salary line item. In the CJR–X section of the proposed FY 2027 IPPS rule, CMS proposes a 90-day LEJR episode and says that all Medicare Part A and Part B items and services are included unless specifically excluded. The included list expressly names physicians’ services and clinical laboratory services.
So the key distinction is episode accountability versus how individual claims are normally paid. The proposal reads like CMS would still observe the usual underlying Medicare payment streams, but then do an annual reconciliation: CMS compares the hospital’s episode spending to a target price, and the hospital can receive a reconciliation payment or owe CMS a repayment. The rule even says surgeon professional payments under the PFS for LEJR already have a 90-day global period, which strongly suggests the physician-fee-schedule layer is still there and the bundle is an overlay for accountability, not a simple replacement of all physician payment with one DRG check.
On the lab issue, your reading is also basically right: the default is broad inclusion. CMS says all Part A and Part B items and services are in, including clinical laboratory services, unless they fall under exclusions. CMS does propose exclusions for some clearly unrelated categories, such as certain inpatient admissions involving oncology, trauma medical, organ transplant, and ventricular shunt, and it says it would post lists of excluded HCPCS codes for Part B services considered unrelated. But the starting point is still very wide, which is why it feels so sweeping.
And the rule itself more or less admits the conceptual problem you noticed. It says shorter episodes would have less spending variability from medical events outside the intended scope, and that conditions unrelated to the joint replacement become more prevalent later in the episode. That is CMS acknowledging, in effect, that a 90-day window can pick up noise and unrelated care.
So I would phrase it this way: the hospital is being made financially accountable for a very broad 90-day Medicare spend envelope around the joint replacement, including physician services and labs unless excluded; that is not the same thing as saying every doctor is paid a salary out of the DRG, but it does create strong pressure on the hospital to manage physicians, post-acute care, and ancillary utilization as if they were all part of one economic unit. That is why the proposal feels so aggressive.
I can also help you draft a tight comment-letter paragraph saying the proposed 90-day inclusion of Part B labs and professional services is overbroad unless CMS sharply improves the exclusion logic for unrelated care.
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So that's like an ACO except for joint surgery. An ACO is responsible for all A-B spending, but the docs submit their Part B claims all year.
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Yes — that is basically the right mental model. It is ACO-like, but episode-based rather than population-based. An ACO is generally responsible for the spending of an attributed population over a longer period, while CJR–X is tied to one triggering event — the joint replacement — and then follows that case for 90 days. CMS says the hospital is the participant and accountable entity, and that the episode includes Medicare Part A and Part B items and services during that period, subject to exclusions.
And yes again: the doctors would still submit their normal Part B claims during the year. The model then sits on top of ordinary FFS payment and CMS does an annual reconciliation comparing actual episode spending to the target price; CMS may pay the hospital, or the hospital may owe CMS. The proposal also contemplates financial arrangements/gainsharing between the hospital and clinicians, which is how the hospital can try to align physician behavior without literally replacing Part B claims with salary-like payment.
So the shorthand is: “ACO logic, but for one surgery episode.” Or even more bluntly: “FFS claims all year, retrospective bundle afterward.”
The part that is making your head hurt is real: the claims are still paid one by one, but the hospital is later judged on the totality of that 90-day spend envelope. That is exactly why it feels both familiar and slightly bizarre.
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It's one thing to bundle E&M visits of the same surgeon for his patient for 90 days. [we've done that for decades]. But lots of Medicare patients have LOTS of illnesses so it seems really hard to bundle them all to the ortho sugery!! Patient might have renal transplant or whatever or stroke.
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Exactly. That is the conceptual strain in the model. CMS is not just bundling the surgeon’s own postoperative E&M work inside the usual 90-day global period. It is proposing an episode that includes all Medicare Part A and Part B items and services during the 90-day window unless specifically excluded. CMS even says the hospital would be responsible for managing the beneficiary during that episode, including the post-discharge period.
And CMS seems to know this is a real problem. In the proposal, CMS expressly says that shorter episodes have less spending variability from medical events outside the intended scope, and that conditions unrelated to the joint replacement become more prevalent later in the episode. That is basically CMS admitting the exact concern you are raising: many Medicare patients have multiple illnesses, and by day 45, 60, or 90, some spending may be drifting away from the orthopedic episode itself.
CMS’s answer is not to narrow the episode to only orthopedic follow-up care. Instead, its answer is to keep the episode broad and then create exclusions for certain categories. The proposal says CMS would exclude Part A and B items and services tied to certain hospital admissions and readmissions, including categories such as oncology, trauma medical admissions, organ transplant, and ventricular shunts, plus several listed MDCs. CMS also says it would post excluded HCPCS lists for Part B services furnished during episodes after discharge.
So for your examples, a renal transplant-type hospitalization sounds more like the kind of thing CMS is trying to carve out through the organ transplant exclusion. But your broader point still stands, because the proposal does not say “anything medically unrelated is excluded.” It says the episode is broadly inclusive, with certain specified carve-outs. That means some clearly non-orthopedic spending may still sit inside the 90-day episode unless it falls on an exclusion list.
That is why the model feels more aggressive than the surgeon’s ordinary 90-day global package. The surgeon’s global period is a familiar professional-payment concept. CJR-X is broader: it uses that same 90-day period as a policy logic, but then overlays hospital accountability for a much wider envelope of A and B spending.
A crisp way to say it in a comment letter would be: CMS is moving from bundling orthopedic aftercare to assigning hospitals financial accountability for a frail beneficiary’s broader 90-day medical reality, and the proposed exclusion logic may not be granular enough to prevent unrelated comorbidity spending from distorting episode performance.
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Tempting to comment, "YOU'RE NUTS!" Do they have any idea now, what % of the 90 day care is related to the joint surgery? For a few patients 100% cause they have no other problems. But for some patients maybe 20% cause they have a medical problem list 20 lines long.
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Basically: yes, they know this is a problem, but I do not see in the proposal a clean quantified answer like “X% of 90-day spend is truly joint-related and Y% is unrelated comorbidity care.” What they do show is more indirect.
First, CMS says why it likes LEJR as an episode at all: using 2021 Medicare claims data from BPCI Advanced, LEJR was the highest-volume, highest-cost surgical episode, with 204,160 episodes, $5.01 billion total cost, and more than 40% of spending in the post-acute period. That tells you CMS sees a lot of the opportunity in the recovery/PAC window, not just in the index admission.
Second, CMS also pretty openly concedes your objection. It says shorter episodes would show less spending variability from medical events outside the intended scope, and that conditions unrelated to the joint replacement become more prevalent later in the episode. That is almost exactly your point about the frail Medicare patient with a twenty-line problem list.
Third, the rule does not pretend every service during the 90 days is orthopedic. In discussing the post-episode policy, CMS says beneficiaries may receive a “wide variety of related (and unrelated) services during episodes,” and it even worries hospitals might delay care until after the episode whether the service is related or unrelated. That is CMS acknowledging that the episode envelope inevitably contains both kinds of care.
So my reading is: CMS has a macro-level view, not a patient-level “relatedness percentage.” They know LEJR episodes have a big post-acute spending tail and that this is where savings have historically come from. They also know that by later days in the 90-day window, unrelated medical noise rises. But in this proposal they seem to deal with that problem mainly by exclusions and carve-outs, not by offering a numeric estimate of what share of the 90-day spend is actually causally tied to the joint replacement.
That makes your instinct a very fair comment point. A polite version would be:
“CMS acknowledges that unrelated conditions become more prevalent later in the 90-day episode, yet the proposal does not appear to quantify the share of 90-day spending that is clinically attributable to the LEJR itself versus unrelated comorbidity care. CMS should provide such analysis, stratified by patient complexity, and consider whether broader exclusion logic or a shorter duration is warranted for medically complex beneficiaries.”
That is much stronger than “you’re nuts,” while still saying nearly the same thing.
