Hos­pi­tals wary of CMS plan to cover joint re­place­ments in out­pa­tient cen­ters

Modern Healthcare - - NEWS - By Har­ris Meyer Web ex­clu­sive: Some hos­pi­tals are buy­ing ASCs or form­ing joint ven­tures with sur­geons modernhealth­care.com/hos­pi­talASCs

Many ortho­pe­dic sur­geons and am­bu­la­tory surgery cen­ter op­er­a­tors are de­lighted with the CMS’ mid-July an­nounce­ment that it’s con­sid­er­ing pay­ing for to­tal knee and hip re­place­ment pro­ce­dures in out­pa­tient set­tings. But lots of hos­pi­tal lead­ers are not.

“I did a knee to­day at 7:30 a.m., and the pa­tient left at 12:30 happy and with pain un­der con­trol,” ortho­pe­dic sur­geon Dr. Louis Levitt said late last month; Levitt’s med­i­cal group owns Mas­sachusetts Av­enue Surgery Cen­ter in Bethesda, Md. “If Medi­care ap­proved this, it will be a sub­stan­tial boon to our am­bu­la­tory surgery busi­ness, and physi­cians will get more com­fort­able with the idea.”

Hos­pi­tal lead­ers are wary, how­ever, for both fi­nan­cial and clin­i­cal rea­sons. They fear los­ing sub­stan­tial in­pa­tient rev­enue from to­tal joint pro­ce­dures—one of their big­ger profit cen­ters—to am­bu­la­tory surgery cen­ters, as they’ve pre­vi­ously lost many other sur­gi­cal pro­ce­dures. In ad­di­tion, they and doc­tors on staff aren’t nec­es­sar­ily com­fort­able at this point do­ing the op­er­a­tions in ei­ther hos­pi­tal out­pa­tient de­part­ments or am­bu­la­tory surgery cen­ters.

“We haven’t seen a lot of data that would show per­form­ing those pro­ce­dures in am­bu­la­tory cen­ters with no in­pa­tient stay would re­sult in bet­ter out­comes,” said Sabra Rosener, vice pres­i­dent of gov­ern­ment af­fairs for Uni­tyPoint

Health, which op­er­ates hos­pi­tals and clin­ics in Iowa, Illi­nois and Wis­con­sin.

A CMS de­ci­sion to pay for to­tal joint re­place­ments in out­pa­tient set­tings would speed the mi­gra­tion of th­ese pro­ce­dures out of the hos­pi­tal, ex­perts say. One big fac­tor is it would em­bolden more pri­vate pay­ers to start pay­ing for the op­er­a­tions in am­bu­la­tory set­tings.

“As soon as it’s ap­proved by CMS, then com­mer­cial pay­ers say yes,” said Naya Ke­hayes, prac­tice leader for am­bu­la­tory surgery at ECG Man­age­ment Con­sul­tants. “I’ve got hos­pi­tal CEOs call­ing me and ask­ing how much of their vol­ume is at risk, and what if it to­tally blows up.”

On July 13, the CMS pro­posed to let tra­di­tional Medi­care pay for to­tal knee arthro­plasty in hos­pi­tal out­pa­tient de­part­ments for the 2018 cov­er­age year, re­viv­ing a pro­posal the hos­pi­tal in­dus­try shot down in 2012. Last Au­gust, a CMS ad­vi­sory panel rec­om­mended re­mov­ing to­tal knee pro­ce­dures from the in­pa­tient-only list. Com­ments on the cur­rent pro­posal are due by Sept. 11.

Hip to the con­cept

More sur­pris­ingly, the CMS also sought com­ments on whether Medi­care should pay for to­tal and par­tial hip re­place­ments in both hos­pi­tal out­pa­tient de­part­ments and am­bu­la­tory surgery cen­ters.

Ex­perts said providers should pre­pare for the shift as soon as Jan. 1, 2018, for to­tal knees. “It’s pretty clear that re­gard­less of provider sen­ti­ment, CMS is look­ing to move ahead with this,” said Eric Fon­tana, manag­ing direc­tor of re­search for the Ad­vi­sory Board Co. “For many providers this is go­ing to be a shot across the bow. It will cause them to plan ahead, es­pe­cially with the knowl­edge that if to­tal knee passes, to­tal hip will fol­low closely.”

That would be a jolt for hos­pi­tal man­agers, be­cause most U.S. pa­tients who re­ceive to­tal hip or knee re­place­ments, even those un­der 65 cov­ered by pri­vate in­sur­ance, still are op­er­ated on in an in­pa­tient sur­gi­cal unit. They of­ten spend sev­eral days in a hos­pi­tal bed, then move to a skilled-nurs­ing or re­ha­bil­i­ta­tion fa­cil­ity or re­ceive home health­care.

But that’s chang­ing at an ac­cel­er­at­ing pace, say or­thope- dic sur­geons, hos­pi­tal and am­bu­la­tory surgery cen­ter ad­min­is­tra­tors, and out­side an­a­lysts.

With ad­vances in sur­gi­cal tech­nique, anes­the­sia and pain con­trol, a grow­ing num­ber of sur­geons are mov­ing more of their to­tal joint re­place­ment pro­ce­dures out of the hos­pi­tal, per­form­ing them in am­bu­la­tory surgery cen­ters. Some are send­ing their pa­tients home within a few hours, while oth­ers have their pa­tients re­cover overnight in the surgery cen­ter or hos­pi­tal dur­ing 23-hour stays. Th­ese sur­geons say very few of their pa­tients re­quire skilled nurs­ing, re­hab or home health­care.

More than 200 am­bu­la­tory surgery cen­ters around the coun­try are per­form­ing out­pa­tient joint re­place­ments, ac­cord­ing to Steve Miller, COO of the Am­bu­la­tory Surgery Cen­ter As­so­ci­a­tion, which sup­ports the CMS’ pro­posed rule change. That’s up from about 25 cen­ters do­ing th­ese pro­ce­dures three years ago.

A rel­a­tively small num­ber of Medi­care pa­tients en­rolled in Medi­care Ad­van­tage plans al­ready are hav­ing their joint re­place­ment op­er­a­tions done in am­bu­la­tory cen­ters, Miller said.

“I could do maybe 20% of my Medi­care pa­tients on an out­pa­tient ba­sis, as long as they have the sup­port and struc­ture at home to help them re­cover,” said Dr. Matthew Weresh, a part­ner in the 30-doc­tor Des Moines (Iowa) Or­thopaedic Sur­geons group. He and his col­leagues are pre­par­ing to start do­ing joint re­place­ments in an am­bu­la­tory surgery cen­ter later this year. “It’s a great move by Medi­care.”

An es­ti­mated 25% to 50% of to­tal joint re­place­ments could be done on an out­pa­tient ba­sis, based on pa­tients’ health, weight and home sup­port, ac­cord­ing to the ASCA’s Miller. “There’s more and more com­fort among sur­geons who are com­ing out of res­i­den­cies where they trained to do surg­eries on an out­pa­tient ba­sis,” he said. “The vol­umes are dou­bling year over year.”

One in­di­ca­tor that a sig­nif­i­cant share of Medi­care cases could be done in an out­pa­tient set­ting is that in 2015, the vast ma­jor­ity of the more than 430,000 to­tal knee re­place­ments on Medi­care pa­tients were billed at the lower rate for cases

“I did a knee to­day at 7:30 a.m., and the pa­tient left at 12:30 happy and with pain un­der con­trol. If Medi­care ap­proved this, it will be a sub­stan­tial boon to our am­bu­la­tory surgery busi­ness, and physi­cians will get more com­fort­able with the idea.”

Dr. Louis Levitt (left) Ortho­pe­dic sur­geon

Most ortho­pe­dic sur­geons con­tinue to do their joint re­place­ments in the hos­pi­tal, though many are short­en­ing length of stay to one day or even 23 hours in prepa­ra­tion for per­form­ing the pro­ce­dures on an out­pa­tient ba­sis.

with­out ma­jor com­pli­ca­tions com­pared with those billed for com­pli­cated cases, ac­cord­ing to CMS data. “That means na­tion­ally there’s a big pool of cases that could move out of the hos­pi­tal,” Fon­tana said. “But there’s no cer­tainty of that.”


The pace of change, how­ever, will de­pend on how much the CMS de­cides to pay for out­pa­tient joint re­place­ments, ECG’s Ke­hayes said. The rate set by the agency will sig­nal how much it wants to shift cases to out­pa­tient set­tings. “If they don’t price it high enough, it won’t mat­ter,” she said.

The CMS’ pro­posed in­pa­tient rate for un­com­pli­cated to­tal knee cases for the 2018 cov­er­age year is $12,381, while the pro­posed out­pa­tient rate is $9,913.

Mov­ing more of th­ese pro­ce­dures to out­pa­tient set­tings would pose a ma­jor threat to hos­pi­tal fi­nances, since to­tal joint re­place­ments are one of the largest and most profitable ser­vice lines at many hos­pi­tals, ac­cord­ing to hos­pi­tal ad­min­is­tra­tors and out­side an­a­lysts.

In 2015, the lat­est year for which data are avail­able, more than 658,000 Medi­care ben­e­fi­cia­ries re­ceived a to­tal hip or knee re­place­ment. Mean­while, in 2014, those two pro­ce­dures cost the gov­ern­ment more than $7 bil­lion for the hos­pi­tal­iza­tions alone—over $50,000 per case.

The Amer­i­can Hos­pi­tal As­so­ci­a­tion, which op­posed pay­ing for out­pa­tient joint re­place­ments in the past, hasn’t de­cided how to re­spond to the cur­rent pro­posal.

“We’re still in the early stages of talk­ing to our mem­bers,” said Joanna Hi­att Kim, the AHA’s vice pres­i­dent for pay­ment pol­icy. She noted continuing con­cerns due to the preva­lence of chronic con­di­tions and lim­i­ta­tions on daily liv­ing ac­tiv­i­ties among se­niors, as well as the chal­lenge of manag­ing pain.

In its July rule, the CMS rec­og­nized that only a se­lect group of to­tal joint pa­tients could po­ten­tially be op­er­ated on in an out­pa­tient set­ting. On to­tal knee arthro­plasty, the CMS wrote that “we ex­pect providers to care­fully de­velop ev­i­dence-based pa­tient se­lec­tion cri­te­ria to iden­tify pa­tients who are ap­pro­pri­ate can­di­dates.”

On to­tal and par­tial hip re­place­ment, the CMS wrote that “pa­tients with rel­a­tively low anes­the­sia risk and with­out sig­nif­i­cant co­mor­bidi­ties who have fam­ily mem­bers at home who can as­sist them may likely be good can­di­dates” for an out­pa­tient pro­ce­dure.

Bun­dles threat­ened

If and when the CMS ap­proves pay­ment for out­pa­tient joint re­place­ment, hos­pi­tals par­tic­i­pat­ing in Medi­care’s manda­tory and vol­un­tary bun­dled-pay­ment pilot pro­grams for in­pa­tient to­tal joint re­place­ments have an­other big fi­nan­cial con­cern. They won­der whether the CMS will ad­e­quately ad­just those bun­dled pay­ments to re­flect that their in­pa­tient surgery units will be left with sicker, higher-cost pa­tients while health­ier pa­tients shift to out­pa­tient set­tings that aren’t part of the bun­dled-pay­ment pro­gram.

That’s an is­sue for the nearly 800 hos­pi­tals in 67 mar­kets around the coun­try par­tic­i­pat­ing in the Cen­ter for Medi­care and Med­i­caid In­no­va­tion’s manda­tory Com­pre­hen­sive Care for Joint Re­place­ment pro­gram for to­tal knees and hips, which started in April 2016. They now are re­ceiv­ing pay­ments for the first six months of the pro­gram if they met cost-sav­ing and qual­ity tar­gets. The CMS de­clined to dis­close any re­sults.

Hun­dreds more hos­pi­tals around the coun­try are par­tic­i­pat­ing in the in­no­va­tion cen­ter’s vol­un­tary Bun­dled Pay­ments for Care Im­prove­ment pilot for to­tal knees and hips.

“You’d be mov­ing the eas­i­est cases out of in­pa­tient, and then your av­er­age ex­penses will look a lot higher,” the AHA’s Kim said. “CMS needs to take ac­tion to make sure hos­pi­tals aren’t pe­nal­ized. We’re trou­bled they didn’t say­ing any­thing about that.” The CMS de­clined a re­quest for an in­ter­view. Most ortho­pe­dic sur­geons con­tinue to do their joint re­place­ments in the hos­pi­tal, though many are short­en­ing length of stay to one day or even 23 hours in prepa­ra­tion for per­form­ing the pro­ce­dures on an out­pa­tient ba­sis. Still, those surg­eries are be­ing billed at hos­pi­tal in­pa­tient rates, rather than sig­nif­i­cantly lower am­bu­la­tory surgery rates. So pay­ers aren’t reaping the full sav­ings.

The shift is driven by pa­tients’ and pay­ers’ de­sire to re­duce costs, in­crease con­ve­nience and sat­is­fac­tion, and lower the risk of hos­pi­tal-ac­quired in­fec­tions.

Sur­geons say do­ing joint re­place­ments on an out­pa­tient ba­sis cuts costs by as much as half, although re­im­burse­ment is also lower. Randy Gross, ad­min­is­tra­tor of the Mas­sachusetts Av­enue Surgery Cen­ter in Bethesda, said in­sur­ers have told him they’re pay­ing his cen­ter 40% to 50% less for to­tal joint re­place­ments than they’re pay­ing for in­pa­tient pro­ce­dures.

John Vas­sos, 55, of Po­tomac, Md., had his right hip re­placed at the physi­cian-owned Mas­sachusetts Av­enue cen­ter last De­cem­ber. He was pleas­antly sur­prised when his sur­geon, Dr. Gautam Si­ram, first told him am­bu­la­tory surgery was an op­tion. His pri­mary-care physi­cian, how­ever, was un­com­fort­able with the idea. “I don’t like stay­ing in the hos­pi­tal,” said Vas­sos, 55, who said he hates catheters and wor­ried about the risk of hos­pi­tal-ac­quired in­fec­tions.

Af­ter the op­er­a­tion, he was walk­ing with­out crutches within a few days. He now does 5-mile runs and plays ten­nis with­out pain. He’s even look­ing for­ward to hav­ing his left hip re­placed soon by Si­ram. “I can’t even tell you how easy it was,” said Vas­sos, who runs his own com­pany sell­ing of­fice equip­ment. “I re­ally en­joyed the ex­pe­ri­ence.”

Source: The Ad­vi­sory Board, CMS

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