In its July 13 proposal to take total knee replacements off the inpatient only list, CMS has effectively opened the door for total knee arthroplasty to become an outpatient service.
Potential implications of such a shift include a significant payment rate reduction, given the much lower reimbursement for procedures in the outpatient setting, well as an interactive effect on volumes eligible for CMS's Comprehensive Care for Joint Replacement (CJR) bundled payment model. In addition, competition for those procedures deemed clinically appropriate to remain in the inpatient setting likely would intensify.
The uncertainty about the future direction of payment for total joint procedures creates a complicated—and evolving—strategic challenge for health systems. That said, the changes will not happen overnight. Following the removal of partial knee arthroplasty in 2005 from the inpatient only list, the shift to outpatient has been steady but slow; in 2015, 48% of all Medicare cases involving partial knee arthroplasty were performed on an outpatient basis.
For many organizations, there are still meaningful opportunities to reduce costs while improving quality performance for total joint procedures in the near term. Moreover, many of the lessons learned can inform improvements in the outpatient setting. To pinpoint the most leveraged areas for reducing care variation, it is useful to take both a horizontal view ("Do we understand and address every step of the patient journey from pre-admission to post-acute care?") and a vertical view ("For the performance measures that show the greatest variation, how can we design and implement consistent, better clinical processes to improve outcomes?").
Manage the full patient journey
Although many hospitals already have developed standard clinical pathways for joint replacement, many organizations also are expanding their view horizontally across the continuum to address the full spectrum of opportunities to streamline care and discharge total joint replacement patients more quickly. This effort includes moving beyond routine diagnostic testing and basic questioning to conducting an assessment of patients' home environments and support systems to minimize the potential for accidents and readmissions.
These organizations also are going much deeper to ensure that patients—especially those with physical or environmental risk factors (e.g., obesity, poor mobility, multiple chronic conditions)—are maintaining better physical conditioning through exercise and physical therapy designed to improve strength and mobility, thereby promoting faster and more successful recovery.
It's not just about soliciting better information from patients; the information sharing is a two-way street. Some organizations employ patient navigators who hold presurgical education sessions in which they introduce the care team, teach patients about the procedure and recovery process, and help patients set appropriate expectations. These patient navigators often continue to engage patients across the full episode, ensuring adherence to protocols and processes during the inpatient stay, and even acting as a resource after discharge to address patient questions and concerns and prevent unnecessary emergency department visits and readmissions.
Dive deep on variation
In addition to taking a broader, "horizontal" view of patient care across the full episode, it's important to look closely at the "vertical" opportunities and specific drivers of variation. By understanding the differences in how individual physicians and other staff provide care to similar patients, especially during the inpatient stay, health systems gain insight into the most impactful areas for redesigning and standardizing clinical processes around best practice care standards.
It is essential then also to drill down on the variation in quality and outcomes measures across orthopedic surgeons and their support teams and understand how these variances affect cost. Although negotiating better prices with vendors on implants is important for reining in costs in the inpatient setting (especially in the short term), organizations are taking a much deeper look at the total direct variable costs and new quality metrics, including the percentage of patients who are transferred to home or home health and the rate of deep vein thrombosis, among others.
Organizations that succeed at reducing these variances identify data sharing and transparency as key to building physician awareness and effecting change. At one institution, leadership began sharing data on intraoperative costs per case, including line-item detail of supply costs, with their orthopedic surgeons. There was a variance exceeding $3,000 per case across the patient population. When presented with the data, surgeons discussed among themselves how their practices differed from those of their peers, and they saw opportunities to learn from one another and adopt best practices. As a first step, they agreed to make changes in their supply utilization, which decreased the variance by more than $400 per case by reducing the quantity of bone cement, the amount of sealant, usage of antibiotic bone cement, and even supplies that were opened and unused during a case. This success set the stage for further discussions on how to standardize processes for better cost and quality outcomes. Taken together, the horizontal and vertical approaches uncover new and meaningful opportunities to reduce care variation and cost and quality outcomes for patients.
This article previously appeared on the hfm Healthcare Finance Blog.
Join our discussion on changes to hospital outpatient and ASC payments in 2018
Join us Nov. 10 to hear about CMS's changes to hospital outpatient payment rates, structure of outpatient payment, and outpatient quality reporting.
Horizontal vs. Vertical: Two ways to identify clinical variation
There are many opportunities to reduce care variation in hospitals today—but how should you prioritize those opportunities?
You should start by examining variation in two ways: "horizontal" and "vertical." A horizontal approach focuses on the use of costly resources across multiple conditions, while a vertical approach analyzes performance within a particular condition or patient population to develop a consensus-based standard.
Our infographic gives an example of each approach and explains the challenges of a horizontal approach versus the benefits of a vertical one.