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Importance: Changes in financial incentives have led to more patients being discharged home than to institutional forms of postacute care, such as skilled nursing facilities (SNFs), after elective lower extremity total joint replacement (LEJR)., Objective: To evaluate the association of this change with hospital readmissions, surgical complications, and mortality., Design, Setting, and Participants: This cohort study used cross-temporal propensity-matching to identify 104 828 adult patients who were discharged home following LEJR between 2016 and 2018 (after changes in financial incentives) and 84 121 adult patients discharged to institutional forms of postacute care (eg, SNFs) between 2011 and 2013 (before changes in financial incentives). A difference-in-differences design was used to compare differences in outcomes between these groups to a propensity-matched group of patients discharged to institutional postacute care in both periods. Data were collected from Pennsylvania all-payer claims database, which includes all surgical procedures and hospitalizations across payers and hospitals in Pennsylvania. Data were analyzed between August 2019 and February 2020., Exposures: Type of postacute care (home, including home with home health vs institutional postacute care, including SNF, inpatient rehabilitation facilities, and long-term acute care hospitals)., Main Outcomes and Measures: Main outcomes were 30- and 90-day hospital readmissions, LEJR complication rates, and mortality rates., Results: Of 189 949 patients, 113 981 (60.0%) were women, and 83 444 (43.9%) were aged 40 to 64 years. The rate of discharge home increased from 63.6% (54 097 of 85 121) in 2011 to 2013 to 78.4% (82 199 of 104 828) in 2016 to 2018. In the adjusted difference-in-differences comparison, matched patients discharged home in 2016 to 2018 had significantly lower 30-day (difference, -2.9%; 95% CI, -4.2% to -1.6%) and 90-day (difference, -3.9%; 95% CI, -5.8% to -2.0%) readmission rates compared with similar patients sent to institutional postacute care in 2011 to 2013. Surgical complication and mortality rates were unchanged. Results were similar across payers and across hospital bundled payment participation status., Conclusions and Relevance: In this cohort study, increases in discharges home following LEJR surgery did not seem to be associated with increased harm during a period in which changes in financial incentives likely spurred observed changes in postacute care.