Abstract
Introduction
In November 2017, the Center for Medicare and Medicaid Services (CMS) finalized the 2018 Medicare Outpatient Prospective Payment System rule that removed total knee arthroplasty (TKA) procedures from the Medicare inpatient-only (IPO) list of procedures. This action had significant and unexpected consequences.
For several years, CMS has utilized a rule called the “Two-Midnight Rule” to define outpatient status for all procedures not on the IPO list. CMS made TKA subject to the “Two-Midnight Rule” in conjunction with the decision to move TKA off the IPO list. According to the “Two-Midnight Rule,” a hospital admission should be expected to span at least two midnights in order to be covered as an inpatient procedure. If it can be reliably expected that the patient will not require at least two midnights in the hospital, the “Two-Midnight Rule” suggests that the patient is considered an outpatient and is therefore subject to outpatient payment policies. Under prior guidance related to the “Two-Midnight Rule;” however, CMS also states that Medicare may treat some admissions spanning less than two midnights as inpatient procedures if the patient record contains documentation of medical need. The final rule was clear in stating CMS's expectation was that the great majority of TKAs would continue to be provided in an inpatient setting.
Methods
We looked at 3 different levels of the IPO rule impact on TKA for Medicare beneficiaries: a national comparison of fee for service (FFS) inpatient and outpatient classification for 2017 vs 2018; a survey of AAHKS surgeons completed in April of 2019; and an in-depth analysis of a large academic medical center experience. An analysis of change in inpatient classification of TKA patients over time, number of Quality Improvement Organization (QIO) audits, compliance solutions of organizations for the new rule and cost implications of those compliance solutions were evaluated.
Results
Hospital reimbursement averages $10,122 in an outpatient facility (includes implant, other supplies, ancillary staff, etc.) but does NOT include the physician payment. Average hospital reimbursement in the inpatient setting is $11,760. The difference in reimbursement to hospitals varies widely however due to nuances in the CMS reimbursement formula (90th percentile decrease, $6,725 vs 10th percentile $2,048). Physician payments are the same in both settings (avg $1,403). TKA patients not designated for in-patient admissions are not eligible for bundle payment programs thus removing the healthiest, most predictable patients from the program. Patients designated as outpatients are subject to higher out of pocket expenses. Patients may have an annual Medicare Part B Deductible ($185) and a 20% copay as well as prescription and durable medical equipment costs.
A survey of AAHKS surgeons demonstrated that 44.74% were doing inpatient designation only, 17.89% were doing outpatient designation only, 25.53 % designated patients as necessary, and 10% were designated by the hospital. This survey showed that 66/374 (17.65%) of AAHKS responders had undergone a QIO audit as a result of issues with the IPO rule.
An evaluation of a large academic medical center demonstrated that since January 1, 2018, 470/690 (68.1%) of CMS TKA patients left the institution in less than 2 midnights. During this time period the institution was subjected to 2 QIO audits. All CMS patients had been designated as inpatients prior to May 2019.
Conclusions
There are many unintended consequences to the IPO rule application to TKA. Clearly, more study is needed to provide better guidelines to knee replacement surgeons. A well-defined outpatient TKA bundle would allow CMS and TKA surgeons to better serve their patients.
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