S&P: What are the implications of Medicare's CJR model?

S&P Global Ratings Services has published a report detailing the effects of Medicare's CJR program.

Titled "Medicare's Value-Based Joint Replacement Program is More of a Headwind for Medical Device Companies than for Post-Acute Care Providers," the report briefly outlines S&P's beliefs that the CJR initiative will speed up CMS' and other payers' change in reimbursement structures.

More specifically, the report delves into whether the bundled payment initiative will hurt or harm both medical device companies and post-acute care providers.

"In the near term, we expect reimbursement pressure from the CMS' CJR bundled payment initiative to present only modest headwinds for acute-care hospitals and post-acute care providers because the initiative accounts for only a small portion of their businesses," the report reads.

It also says, "We expect this program to be a more material headwind for medical device companies focused on orthopedic implants, with pressures gradually increasing over the next couple of years as the CJR program progresses." However, S&P doesn't anticipate any orthopedic company downgrades solely based on the CJR model.

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