Updated on: May 24, 2019

CMS Hints at Outpatient Total Knee Bundle

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Original story posted on: May 15, 2019

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    Total Knee Arthroplasty: The Status Controversy Continues

Adding TKA to the BPCI appears to be more involved than anticipated.

As reported by the American Hospital Association and other organizations, starting in 2020, the Centers for Medicare & Medicaid Services (CMS) will be adding outpatient total knee arthroplasty (TKA) to the list of episodes in the Bundled Payment for Care Improvement (BPCI) advanced program.

The current BPCI advanced program includes 29 inpatient episodes of care and three outpatient episodes, so adding TKA to the program shouldn’t be difficult. However, when taking a closer look, it appears that doing so will not be so simple.

The financial aspects of this program raise the first question. The basis of the BPCI program is that savings are shared if less money is spent by CMS for each episode of care, compared to the baseline spending amount set based on historical spending.

For many years, the current BPCI advanced outpatient episodes of percutaneous cardiac intervention, defibrillator placement, and spine procedures excluding fusion have all been performed as outpatient procedures on select patients. With TKA, there are many scheduled procedures performed electively, wherein there is plenty of opportunities to prepare for the procedure and adjust the patient/care plan to optimize spending. This leads me to question how CMS will determine the target price for outpatient TKA. Over the last year and a half, there has been much confusion and consternation regarding how to determine the status of TKAs. Some hospitals have taken a very conservative approach, and performed almost all TKAs as outpatient procedures, whereas others took CMS at their word and performed the vast majority of surgeries as inpatient procedures. This means that CMS doesn’t have much data on what the average outpatient having a TKA performed will cost during the 90-day period that begins with the surgery. If the majority of the TKAs that have been performed as outpatient since 2018 are very low-risk with very healthy patients, the historical spending numbers will be skewed to underestimate the average 90-day spending amount. Without a fair and equitable goal, it will be difficult for providers to spend less than that amount and become eligible for sharing in the savings.

It is also unclear what will happen to patients whose surgery starts as outpatient, with an expectation of a one-day stay, but then experience a complication or delay in recovery that results in the stay being longer than two midnights. If the delay is minor and unlikely to affect overall spending, the orthopedist may choose to not admit the patient as an inpatient in order to preserve the patient’s surgery within the program. That could have adverse effects on hospital finances, since an admission order is needed for the stay to be billed as inpatient with the resultant higher payment (DRG compared to APC), along with additional payments for medical education, disproportionate share payment, and other quality payment programs that accompany every DRG payment.

The addition of outpatient TKA to BPCI advanced does not change the inpatient lower extremity total joint arthroplasty BPCI advanced bundle, which includes both hip and knee arthroplasty. Therefore, if an orthopedist is participating in the outpatient TKA program and chooses to remain in the inpatient bundle in order to continue sharing savings with hip arthroplasty, the TKA patients who end up in DRG 469 and 470 will be high-cost, high-resource use patients who did not qualify for outpatient surgery or received services as outpatients, but developed a complication that warranted inpatient admission.

The addition of outpatient TKA as a BPCI advanced bundles also raises the question of what CMS will do with the target prices in the inpatient bundle. A large-scale shift of TKA patients to outpatient will result in a higher average cost, leaving only total hip arthroplasty and high-cost TKAs as inpatient services, therefore creating more difficulty when it comes to hitting spending targets.

The final consideration for orthopedists and hospitals is the fate of total joint arthroplasty at ambulatory surgery centers (ASCs). As of 2017, CMS has allowed Medicare Advantage providers to allow total joint arthroplasty at ASCs, despite the lack of data on the safety of joint arthroplasty in Medicare beneficiaries in that setting. In the 2019 Outpatient Prospective Payment System (OPPS) Final Rule, CMS indicated that the organization was asked to allow joint arthroplasty at ASCs; however, they decided not to make this change for the 2019 calendar year.

If CMS does choose to allow total joint arthroplasty at ASCs in 2020, does it make sense for an orthopedist who operates in an ASC and plans to administer TKAs to Medicare recipients to also enroll in the outpatient BPCI advanced program for the same surgery? There are financial and logistical considerations that need to be considered, especially since CMS will not release proposed changes to the ASC list until July.

Enrollment for the 2020 year begins soon, and I’m sure that potential participants hope that CMS will release additional details in regard to total joint arthroplasty and ASCs soon.

Ronald Hirsch, MD, FACP, CHCQM

Ronald Hirsch, MD, FACP, CHCQM is vice president of the Regulations and Education Group at R1 Physician Advisory Services. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute-care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the Advisory Board of the American College of Physician Advisors, a member of the American Case Management Association, and a Fellow of the American College of Physicians. Dr. Hirsch is a member of the RACmonitor editorial board and is regular panelist on Monitor Mondays.

The opinions expressed are those of the author and do not necessarily reflect the views, policies, or opinions of R1 RCM, Inc. or R1 Physician Advisory Services (R1 PAS).

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