CMS Proposes to Reverse Decision on 2021 Inpatient-Only List; Orthopedists Hope Total Joints Are Next

Jonathan Gelber

August 10, 2021

The Centers for Medicare & Medicaid Services (CMS) may backtrack on removing procedures from its inpatient-only list (IPO).

CMS is proposing to halt the planned elimination of the IPO list and, after clinical review, return the services that were removed in 2021 back to the list, beginning in 2022. This decision may pave the way for reversing previous decisions to remove total hip arthroplasty (THA) and total knee arthroplasty (TKA) from the IPO.

In 2018, CMS removed TKAs from its list of procedures that required patients to be designated as inpatients following the procedure. THAs were added to the list in 2020.

By 2021, nearly 300 surgical procedures had been removed from the IPO, meaning they could be performed either as an inpatient or an outpatient procedure. It was expected that all procedures on the IPO would be removed by 2023.

This decision has created significant confusion and administrative burden on physicians, hospitals, and patients.

Although some patients who undergo total joint replacement can be discharged the same day as their surgery, many more require a short hospital stay for medical observation, treatment, physical therapy, or placement in skilled nursing facilities.

Those patients who stay in the hospital after their procedure may still be designated as outpatients per CMS's "two-midnight rule." That rule says any patient who stays in the hospital for less than two midnights can be deemed an outpatient.

The use of the terms "outpatient" and "inpatient" often confuses both surgeons and patients, who typically consider outpatients to be patients who go home the same day as the procedure.

The designation has financial implications ― hospitals may be reimbursed less if a patient is designated as an outpatient and yet still requires 2 or more days of inpatient medical treatment.

Surgeons are expected to predict which patients will require more than two midnight's worth of care, solely on the basis of preexisting medical conditions. They are then expected to justify to the insurance payor why the patient requires inpatient admission status.

Dr A. J. Yates

The removal of total hip and knee replacements from the IPO may be a classic case of a decision that has unintended consequences. In 2018, A. J. Yates, MD, chief of orthopedics at the University of Pittsburgh School of Medicine, Pittsburgh, Pennsylvania, and colleagues authored an article that was published in the Journal of Arthroplasty in which they described just such a case of confusion regarding TKAs.

For the article, titled "The Unintended Impact of the Removal of Total Knee Arthroplasty From the Center for Medicare and Medicaid Services Inpatient-Only List," the authors surveyed members of the American Association of Hip and Knee Surgeons (AAHKS). They found that nearly 60% of hospitals instructed their surgeons to classify all total knee replacements as outpatient procedures, even though CMS previously assumed that most total joint procedures would still be done on an inpatient basis. This decision seemed to stem from their understanding of the two-midnight rule.

Dr James Huddleston

In 2020, James Huddleston, MD, a total-joint-replacement surgeon at Stanford University Medical Center and chair of the AAHKS Health Policy Council, and colleagues authored a follow-up survey to the 2019 study on total knee replacements. The results, published in The Journal of Arthroplasty, demonstrated continued confusion following the additional removal of total hip surgeries from the IPO list.

In the updated study, 81% of the respondents reported that changes to IPO status increased their practice's administrative burden. More than half of the surgeons (54%) reported a need to obtain preauthorization or to appeal a denial of preauthorization for a total joint replacement to be performed as an inpatient procedure.

Another unintended consequence of the IPO removal revolves around where surgeries can be performed. CMS hoped the move would provide more freedom for patients and doctors and thus lower costs by utilizing independent ambulatory surgical centers (ASCs) or hospital-based outpatient departments (HOPDs).

Many surgeons and hospitals, however, do not have access to ASCs and thus require use of the same hospitals they have always used. For some patients, especially elderly patients requiring prolonged care, this may result in higher out-of-pocket expenses.

In outpatient settings, Medicare typically doesn't cover facility fees, some prescriptions drugs provided to hospitalized patients, or postoperative treatments, such as blood transfusions.

Now, in an apparent reversal, CMS is proposing not only to halt the expected elimination of the IPO list but also to add the services that were previously removed in 2021 back onto the list, beginning in 2022.

In light of this decision, Yates hopes CMS will reconsider its decision on total hip and knee surgeries. "Ideally, CMS would recognize that the concerns that led to this reversal apply to total hip and knee arthroplasty as well," Yates told Medscape Medical News. "It has also led to commercial Medicare Advantage payers insisting that almost all Medicare age–eligible patients should only be authorized for outpatient total joint replacement."

He said he would like to see the two-midnight rule eliminated altogether. "Ideally, their next step would be to exempt THA/TKA from the two-midnight rule with the proviso that, if the procedure is successfully completed with true outpatient status in an ASC or HOPD, it will be billed as such," he said.

Huddleston echoed Yates's sentiments. He told Medscape, "The members of the American Association of Hip and Knee Surgeons applaud CMS' decision to place many orthopaedic procedures back on the IPO list until appropriate data are available to demonstrate that these procedures are safe to be performed in the outpatient and ambulatory surgery center settings."

Like Yates, he hopes the confusion of the past can be overcome. "The unintended confusion created by CMS' actions regarding the IPO list over the last several years has consumed scarce resources that could have had more valuable impact in other areas of healthcare. While this decision won't affect primary hip and knee replacement, we remain committed to the principles that, one, healthcare reform, especially in the value-based arena, should be led by physicians; and two, the physician is the most qualified stakeholder to determine site of service."

Yates and Huddleston report no relevant financial relationships.

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