Total knee arthroplasty – No longer inpatient only

Effective January 1, 2018, total knee arthroplasty (TKA) was removed from the Inpatient Only List (IPO) and assigned an Ambulatory Payment Classification (APC) payment. The removal from the IPO allows the procedure to be paid as outpatient, but it still must be performed in a hospital.

When removing TKAs from the IOL, Center for Medicare and Medicaid Services (CMS) commented extensively about the change. CMS stressed, “the removal of any procedure from the IPO (Inpatient Only) list does not require the procedure to be performed only on an outpatient basis.” (82 FR 52523). While CMS indicates they don’t expect all procedures to be performed as outpatient, they give no guidance on how hospitals should determine which cases should be performed inpatient. CMS believes “that the surgeons, clinical staff and medical specialty societies who perform…TKA and possess specialized clinical knowledge and experience are most suited to create such guidelines. Therefore, we do not expect to create or endorse specific guidelines or content for the establishment of providers’ patient selection protocols.” (82 FR 52523).

This stance leaves hospitals and health systems responsible for coordinating with their orthopedic surgeons to ensure they are compliantly caring for their TKA patients and billing for medically necessary services. All areas within the hospital and health systems must work in concert to address multiple areas of concern associated with this patient population.

Administration Intervention
Administration is key in facilitating communication between the health system and orthopedic surgeons on their plans for their TKA patients. Orthopedic surgeons have the clinical knowledge required for developing guidelines for inpatient verses outpatient pre-procedure assignments. Further, their cooperation is required for addressing implant costs through standardization and collaboration with vendors.

Revenue Cycle Considerations
Health systems must evaluate how the change will affect its finances. CMS has indicated “we do not expect a significant volume of TKA cases currently being performed in the hospital inpatient setting to shift to the hospital outpatient setting as a result of removing this procedure from the IPO list. At this time, we expect that a significant number of Medicare beneficiaries will continue to receive treatment as inpatients for TKA procedures.” (82 FR 52523), Therefore, health systems should first evaluate how current patients are being treated for TKA procedures.

The system should identify length of stay (LOS) of current patients, assuming cases with LOS greater than two midnights will most likely require inpatient stay under the two-midnight rule. Once percentages have been identified, calculations can be made to determine the financial impact of cases moving from inpatient to outpatient when they do not meet the two-midnight definition. Knowledge of potential financial impact will assist the health system in identifying next steps for developing a plan for proactively addressing the needs of the TKA patient population it serves.

Revenue compliance is also of concern if a high volume of TKA cases are historically noted to be at a two-day LOS. Medical necessity of the two-day inpatient will need to be verified as it may come under closer scrutiny once these cases begin to be reviewed by government entities (MAC, OIG, QIO, RAC, etc.).

Utilization Review Activities
Regardless of the level of care billed for a TKA, utilization review (UR) activities are required to verify medical necessity for the procedure and, under the new rules, verify the accurate level of care assigned for billing purposes. CMS has indicated it expects health systems to develop protocols for proactively identifying level of care based on patients’ projected needs. CMS has never allowed that all patients be treated in the exact same way. Therefore, it is not appropriate for all patients with a zero-to-one-day stay to be outpatient or for all patients to start as an outpatient and admit when their stay crosses a second midnight. Further, if a system’s physicians routinely keep patients over two midnights currently, they do not automatically meet medical necessity for inpatient level of care.

CMS allows cases with less than two midnights to be paid as inpatient if the admitting physician indicates a need for inpatient hospital care in his/her documentation. Additionally, CMS requires physician documentation of patients’ risks and comorbid conditions for any surgeries to identify the requirement for inpatient stay. CMS expects “…Medicare beneficiaries who are selected for outpatient TKA would be less medically complex cases with few comorbidities and would not be expected to require SNF care following surgery” and that “the physician should take the beneficiaries’ need for post-surgical services into account when selecting the site of care to perform the surgery.” (82 FR 52524).

These case specifications must be explored with the orthopedic surgeons to develop protocols for determining patient conditions and needs that allow all care team members to identify the appropriate level of care expected for elective TKA cases. Development and implementation of these protocols require strong coordination between surgeons, utilization review, surgery, anesthesia, scheduling, admitting and billing departments to ensure front-end accuracy and minimal concurrent/post-procedure changes.

Surgical Services
Surgery services have long handled TKAs as inpatient-only cases. They were aware these procedures required inpatient orders prior to the procedures and planned for inpatient beds immediately following recovery. Removal of this procedure from the IOL requires surgical services to coordinate with the surgeon, UR, and financial services to ensure cases are scheduled to the appropriate level of care, orders are obtained and patients are moved through the operative areas efficiently according to the expected care needs of the patient for the planned procedure. Now that the status is not a given, surgical services staff will need to be educated on the protocol for level of care assignments to alert UR of any changes that might occur during or following the procedure that could affect assignment.

In the event a large percentage of TKA cases are moved to the OP arenas, surgical services need to reexamine implant acquisition costs. Outpatient reimbursement can be significantly lower than inpatient reimbursement, and the ability to cover the costs of the implants under OP reimbursement could be at risk. Surgical services leaders and surgeons will need to work together, and if there were prior failures to standardize procedures/products, this may need to be revisited. While the changes discussed under CMS regulations apply to the Medicare patient population, as third-party payors mirror CMS and move TKAs to outpatient also, hospitals will need to ensure implant costs are covered under contract provisions.

Care Coordination and Discharge Planning
Case management process changes are not limited to UR activities. Care coordination and discharge planning functions must be assessed for the TKA patients. Pre-procedure patient education must be coordinated with the surgeon to include identification of expected discharge plans and individual patient needs. Discharge needs will be part of the equation as pre-procedure level of care determinations are created. Case management will also be required to expedite in-hospital discharge planning activities, facilitating pre-procedure plans efficiently for the outpatient case to ensure delays will not extend the hospitalization without medical necessity. Case management must coordinate with post-hospital vendors to facilitate standardized post-procedure care plans, developed by surgeons, to oversee efficient throughput and quality care.

CMS has allowed providers a window of 24 months to implement these activities before they allow RACs to start reviewing TKAs for level of care billing; however, they have not placed such a restriction on any other reviewers (QIO, MAC, OIG, etc.). The sooner hospitals can address these processes, the lower their risk of potential exposure.

Variables that must be considered include pre-procedure physician expectations (co-morbid conditions, anesthesia risks, etc.), unanticipated surgical events (prolonged procedures, excessive bleeding, etc.) and post-procedure complications (pain, thrombosis, etc.). Orthopedic surgeons and health systems will need to develop protocols to prioritize patients for planned inpatient or outpatient procedures, and utilization review processes must be developed to efficiently address changes as indicated. When these key issues are addressed effectively, orthopedic care becomes much more robust and can deliver desired positive quality outcomes.

The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.

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