POSTED July 19, 2017
Getting Ready for the CMS Proposal for Outpatient Joint Replacement
What's going on?
Last Thursday, July 13th, CMS released a proposal that will allow Medicare to reimburse for total knee replacement procedures in an outpatient setting (currently Total Knee Replacement is on the inpatient-only list). If the proposal is finalized, starting January 2018, Medicare will pay for total knee replacements (total hip replacements currently open for public comment) in Ambulatory Surgical Centers (ASCs).
Why is this happening?
Outpatient Medicare coverage should not come as a surprise. In July 2016, CMS submitted a request for public comment to remove TKA’s from its inpatient-only list. Since being added to the list in 2000, developments in Arthroplasty procedures and postoperative care have dramatically reduced complications and variability, including average length of stay from 4.6 days to just 2.8 days in 2016. In many leading centers around the country (many of whom are Force clients), same-day or next-day discharge has become the norm.
What impact will it have?
The implementation of this proposal will disrupt the market by raising the level of competition between facilities by further fragmenting the market, and putting downward pressure on costs for an entire episode of care (outpatient fees are 25-40% cheaper than inpatient). Sg2 healthcare analytics and consulting estimates 52% of primary knee replacements will be performed in an outpatient setting by 2026, likely to significantly reduce overall spending on TKA episodes.
A common concern expressed by many is the effect the proposal might have on existing CMS payment methods – CJR and BPCI. After stressing so much importance on bundled care in inpatient settings, does it make sense for CMS to now drive volume out of the hospital? Bundles depend largely on target prices based on historical costs. Since outpatient procedures generally show improved efficiency and cost reduction, target pricing adjustment is likely – otherwise, do not expect substantial changes in bundled payment models.
What are stakeholders likely to do about it?
In an industry where players are historically reluctant to change, there will most likely be initial resistance to the proposal. However, as the probable becomes inevitable, surgeons who perform a high-volume of TKA procedures will have broader alignment alternatives – hospitals and ASC’s. Providers will act quickly and decisively to preserve TJA profit centers and physician relationships by discussing co-management and employment opportunities, while also improving physician experience.
Without proper incentives, surgeons will happily depart from hospital settings to pursue investment in ASC’s. It’s no surprise, with Dr. Tom Price (Orthopaedic Surgeon) at the helm of CMS, that this proposal gives more control to physicians. Now more than ever, it is essential to look towards ways to improve physician experience by any means necessary. If hospitals choose to forgo formal ways of aligning with surgeons, they must be open to adding more flexibility, better facilities, and superior technology to their system of care.