As previously reported, CMS has published its final rule to establish a Medicare Comprehensive Care for Joint Replacement (CJR) model that establishes a bundled payment framework for acute care hospitals for lower extremity joint replacement surgery (LEJR) episodes of care in selected geographic areas. The CJR initiative is particularly significant given that it is the first bundled payment model in which providers will be required to participate. If the model is determined to be successful, CMS could expand the program nationally, or apply mandatory bundled payments to other procedures. CMS intends for this initiative to improve quality of care and reduce costs associated with LEJR procedures by promoting coordination among hospitals, physicians, and post-acute care (PAC) providers from the initial hospitalization through recovery – although hospitals ultimately will be held responsible for the episode spending. CMS believes that the CJR model can benefit the Medicare program and its beneficiaries by improving care coordination and care transitions; encouraging provider investment in infrastructure and redesigned care processes to improve the efficiency and quality of service delivery; and incentivizing higher value care across an episode of care. It remains to be seen, however, whether the payment provisions and framework for collaboration among providers will be sufficient to support the type of system transformation that CMS envisions. The final rule is extremely complex, both in terms of payment methodology and the parameters for relationships between hospitals and other providers that may furnish care to beneficiaries under the model. Reed Smith has prepared a detailed analysis of the final rule, which is available here.