How will this shift affect your orthopedic program's bottom line? We updated our TJR Outpatient Shift Estimator to account for CMS' 2020 rule updates, and you can use it to forecast the shift's effect on your program's financial performance. The tool now projects how the outpatient shift will affect your THA, in addition to TKA, volumes and revenue. It also now helps you estimate the impact of freestanding competition for TKAs on your program.
To put the impact on your program in context, below are three insights on where the TJR market stands nationally.
1. The approval of TKA for outpatient care in 2018 spurred a significant shift.
In just its first year of outpatient eligibility, some 70,000, or 22%, of Medicare TKA volumes were performed in the HOPD. Meanwhile, inpatient Medicare volumes declined by 36,000, or 13%, from the previous year.
Because Medicare patients are typically older and more comorbid than commercially insured patients, this rapid a shift of Medicare volumes to the HOPD means that offering outpatient joint replacement is now a competitive necessity. Providers that do not offer it will miss out on nearly one-fourth of the Medicare knee market, and likely even more of the commercial knee market.
2. Nearly one-fourth of clinically eligible cases have yet to shift, offering opportunity to well-positioned programs.
As sizable as the immediate shift of Medicare TKA volumes was, it is far from over: 22% of inpatient Medicare TKA volumes are still clinically eligible for outpatient care, according to outpatient eligibility criteria based on diagnosis codes. Meanwhile, 21% of THA cases—now eligible for care in the HOPD as well—are clinically eligible to shift.
This means the outpatient shift of TJR will continue in the coming years as orthopedic programs build their outpatient capability, which takes time. In the near term, programs that can implement the coordinated care pathways and triage protocols necessary to perform TJR in the outpatient setting are well positioned to capture volumes from purchasers pursuing cost savings and convenience. Programs also can reap a near-term margin boost: CMS payment is just 3.5% lower in the HOPD than the inpatient setting, while expenses can be as much as 30% lower in the HOPD for cost-efficient providers.
3. Programs without an ASC strategy face the most risk.
Programs that do not offer TKA in the freestanding setting face the greatest risk now that their outpatient-eligible knee volumes may leak to competitor ambulatory surgical centers (ASCs). This leakage, in fact, could contribute to a 10-20% decline in Medicare TKA revenue. As a result, planners must devise an ASC strategy for TKA to stave off this loss of business—especially since THA may be approved for ASC in the coming years, as well.