On July 14, 2015, CMS published a proposed rule to establish a Medicare Comprehensive Care for Joint Replacement (CCJR) model.  Under the proposed rule, CMS would provide a bundled payment to hospitals in selected geographic areas for an episode of care for lower extremity joint replacement (LEJR) surgery, covering all services provided during the inpatient admission through 90 days post-discharge. CMS proposes that the bundled payment would be paid retrospectively through a reconciliation process; hospitals and other providers and suppliers would continue to submit claims and receive payment via the usual Medicare fee-for-service (FFS) payment systems. A participant hospital would have the opportunity to receive a “reconciliation payment” if its actual episode payments were below the target price for the episode, but the hospital would have to repay the difference to CMS if the target price were exceeded (with certain exceptions). CMS estimates that the five-year CCJR model will cover about 25% of all lower extremity joint replacement procedures nationally, and will involve about $2.26 billion in episode spending in 2016, rising to $2.71 billion by 2020. The proposed rule is extremely complex, both in terms of the implications for Medicare payment to participating hospitals and the parameters for relationships between hospitals and other providers that may furnish care to beneficiaries under the model.  Comments regarding the proposed rule are due September 8, 2015.  We are currently preparing an analysis of the rule.