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Inpatient or Outpatient? Medicare Rule Sows Knee Replacement Confusion

Analysis  |  By Alexandra Wilson Pecci  
   November 08, 2018

Many hospitals are instructing surgeons to schedule all Medicare total knee arthroplasties as outpatient procedures.

Confusion and a lack of guidance about Medicare knee replacement rules has caused many hospitals to treat all Medicare beneficiaries undergoing total knee arthroplasty (TKA) as outpatients, according to a survey by the American Association of Hip and Knee Surgeons.

That's the unintended consequence of removing TKA from the Medicare inpatient-only (IPO) list of procedures in the 2018 Medicare Outpatient Prospective Payment System final rule, the AAHKS says.

According to the survey, which was published in the Journal of Arthroplasty, 59.5% of surveyed AAHKS members said that their hospitals have instructed them that all Medicare TKAs should be scheduled as outpatient procedures.

CMS noted in its rule that just because a procedure has been taken off the IPO list "does not require the procedure to be performed only on an outpatient basis" and that physicians should use their expertise to determine which patients should have the procedure performed as an inpatient or as an outpatient.

However, the two-midnight rule and a lack of clear admission documentation expectations have caused some hospitals to take a reactionary approach to the change.

The Journal of Arthroplasty article also says that "some local Medicare Advantage contractors began to expect outpatient status for all or most TKA cases."

In addition to possible patient safety issues to treating all Medicare beneficiaries as outpatients for their TKAs, the survey also revealed the rule's documentation, billing, and administrative consequences:

  • 49.8% of respondents said that if the patient was admitted, but did not stay a second midnight, they would be treated as outpatients
  • 43.4% reported that the hospital will seek a change in status to inpatient for patients who stay less than 2 midnights
  • 40.5% have been asked to use proscribed documentation to justify that change
  • 30.4% of surgeons say that their patients have incurred added personal cost related to their TKA being billed to CMS as an outpatient procedure
  • 76.1% say that the issue has become an administrative burden

The authors say that it's AAHKS's position that "CMS needs to provide more specific expectations concerning the needed language justifying admission or exempt TKA from the 2-midnight rule to mitigate the unintended confusion demonstrated by hospitals and some payers that has resulted from the removal of TKA from the Inpatient-Only list."

With more than 1 million procedures performed annually, hip and knee replacements have long been an area where hospitals have sought to improve their financial performance.

"Organizations that are thinking about their revenue cycle tend to be especially focused on how well they can do with hips and knees," David Bates, MD, chief of general internal medicine at Brigham and Women's Hospital and director for the Center for Patient Safety Research and Practice, told HealthLeaders last month.

Alexandra Wilson Pecci is an editor for HealthLeaders.

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