What OHSU Orthopaedics has learned from CMS episodes of care programs

Why orthopaedics keeps returning to the center of conversations around the Centers for Medicare & Medicaid Services’ episodes of care is not hard to understand. The United States spends more on healthcare as a share of gross domestic product than any other Organization for Economic Cooperation and Development (OECD) nation, yet outcomes do not consistently justify that level of spending. With Medicare facing substantial long-term fiscal pressure, CMS has focused on clinical areas that are high-volume, high-cost, and standardized enough to allow meaningful comparisons across hospitals.

In CMS episodes of care programs, Medicare evaluates the cost and quality of care delivered during an entire treatment episode rather than individual services. Hospitals and clinician partners are financially accountable for resources used from the index procedure through post‑acute care, creating incentives for preoperative optimization, appropriate patient selection, and closer coordination across care settings. Orthopaedics, especially hip and knee replacement, fits that description almost perfectly.

CMS model evolution
Oregon Health & Science University (OHSU) has experienced this evolution across multiple CMS episode models. In 2015, OHSU was required to participate in the then-mandatory Comprehensive Care for Joint Replacement (CJR) model; it later joined the voluntary Bundled Payments for Care Improvement Advanced (BPCI Advanced) model. In 2026, OHSU became subject to the mandatory Transforming Episode Accountability Model (TEAM) based on its hospital profile. Together, these programs show that episode-based payment is no longer a pilot at the margins — it is becoming central to CMS’ effort to move Medicare from paying for volume to paying for coordinated, higher-value care.

What the data show
National results suggest this effort can work. CMS reported that CJR generated $112.7 million in net Medicare savings in performance years six and seven without worsening claims-based quality measures and that BPCI Advanced generated $344 million in savings in model year five, roughly 4% below expected Medicare payments. Peer-reviewed studies have reached similar conclusions. Barnett and colleagues found lower episode spending in CJR without increased complications, and Haas and colleagues likewise showed lower spending (largely through reduced post-acute care use) without worse readmissions, complications, or mortality.

One early lesson is hospitals with high baseline readmissions, heavy use of institutional post-acute care, and inconsistent transitions often have the greatest room to improve. To summarize this somewhat provocatively: In episode models, it is good to be bad at baseline. The point is not that poor performance is acceptable, it is that wide variation in discharge planning, post-acute utilization, and avoidable complications create exactly the waste these models are designed to address.

At OHSU and beyond, one of the most useful ways to think about success has been “days at home.” That metric is intuitive for patients, families, surgeons, nurses, and hospital leaders. If a patient spends nearly all the episode period at home rather than in a readmission, emergency department, or skilled nursing facility, that usually reflects uncomplicated transitions and a successful recovery. It also aligns with what most patients actually want.

What OHSU learned
That kind of result does not happen by accident. At OSHU, dedicated perioperative registered nurse case managers and care navigators are essential. They help set expectations before surgery, coordinate discharge planning, identify barriers early, and reduce the chances that vulnerable patients drift into preventable complications or poorly planned post-acute care. Evidence-based care pathways matter just as much. Standardization reduces unwarranted variation, creates clearer expectations across teams, and makes it easier to recognize when a patient is moving off course.

Preoperative optimization has been another major area of learning. Elective orthopaedic episodes are among the few places in medicine where there is often time to prepare patients thoughtfully rather than reacting after a complication has already occurred. Risk stratification, prehabilitation, nutritional support, nicotine cessation, tighter glycemic control, and careful medical evaluation can all improve the odds of an uncomplicated recovery. The goal is to identify modifiable risk and intervene in ways that genuinely improve outcomes.

Perhaps the most durable lesson, though, is cultural. Episode programs change behavior because they place financial accountability for high-cost, low-quality care on the hospital. That creates attention from hospital leadership. When that attention is productive, it can align administrators, surgeons, nursing leadership, therapy, case management, and post-acute partners around a common goal that fee-for-service payment often failed to create. In the fee-for-service world, more care could mean more revenue; in an episode model, unnecessary or fragmented care becomes a liability.

Surgeon leadership matters
Surgeon engagement, therefore, is not optional. These programs work best when hospitals identify and support surgeon champions and give them the authority to help design pathways, shape optimization strategies, and refine transitions of care. Orthopaedic surgeons understand where care variation is clinically meaningful and where it is simply a legacy habit. If surgeon leadership is absent, bundled payment can devolve into an administrative exercise. If it is strong, it can become a vehicle for care improvement.

There is also an important note of caution. Orthopaedic surgeons and their patients have borne a disproportionate share of CMS experimentation in value-based care, even as physician professional reimbursement continues to trend downward. National orthopaedic organizations have generally supported the goals of episode-based reform, but they have also been right to point out that administrative burden and financial accountability cannot continue to accumulate without meaningful physician payment reform.

As TEAM expands episode accountability across lower extremity joint replacement, surgical hip and femur fracture treatment, spinal fusion, and other procedures, the central lessons from OHSU’s experience are fairly simple: Invest in navigation and coordination. Standardize evidence-based care pathways. Optimize patients before surgery. Measure what matters to patients, including time spent successfully at home. And make sure surgeon leadership is real, not symbolic. Bundled payment models are not perfect, but they have helped push orthopaedics toward a more coordinated, patient-centered model of care. That is a direction worth preserving.

Kathryn Schabel, MD, FAAOS, is professor of orthopaedic surgery, section chief for adult reconstruction, and medical director for Oregon Health & Science University’s episodes of care programs.

References

1. Organization for Economic Cooperation and Development. Health at a Glance 2025. United States health spending as share of GDP and comparative outcomes. OECD; 2025. https://www.oecd.org/en/publications/health-at-a-glance-2025_15a55280-en/united-states_3517f35e-en.html
2. Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. 2025 Medicare Trustees Report. Centers for Medicare & Medicaid Services; 2025. https://www.cms.gov/oact/tr/2025
3. CMS Innovation Center. Comprehensive Care for Joint Replacement (CJR) Model: Evaluation of Performance Years 6 and 7, Findings at a Glance. Centers for Medicare & Medicaid Services; 2025. https://www.cms.gov/priorities/innovation/data-and-reports/2025/cjr-fg-seventhannrpt
4. CMS Innovation Center. Bundled Payments for Care Improvement Advanced: Sixth Evaluation Report, Findings at a Glance. Centers for Medicare & Medicaid Services; 2025. https://www.cms.gov/priorities/innovation/data-and-reports/2025/bpci-adv-ar6-aag
5. Barnett ML, Wilcock A, McWilliams JM, et al. Two-year evaluation of mandatory bundled payments for joint replacement. N Engl J Med. 2019;380(3):252-262. https://www.nejm.org/doi/full/10.1056/NEJMsa1809010
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7. Joynt Maddox KE, Orav EJ, Zheng J, Epstein AM. Association of physician group practice participation in bundled payments with patient selection, costs, and outcomes for joint replacement. JAMA Health Forum. 2021;2(5). https://jamanetwork.com/journals/jama-health-forum/fullarticle/2779694
8. MacMahon A, Rao SS, Chaudhry YP, et al. Preoperative patient optimization in total joint arthroplasty—the paradigm shift from preoperative clearance: a narrative review. Arthroplasty Today. 2022;18(3):418-427. https://pubmed.ncbi.nlm.nih.gov/35846267/