We've received a number of questions about CMS's recent proposal to remove total knee arthroplasty (TKA) from the inpatient-only list. If finalized, the proposal would allow TKA procedures to be covered by Medicare in the hospital outpatient department in CY 2018.
Change would trigger an outpatient shift of some TKA cases
Inpatient stays involving TKA procedures typically fall into one of two MS-DRGs covering lower extremity joint replacements: 469 (with major complications and comorbidities) and 470 (without major complications and comorbidities). Examination of CMS's MEDPAR inpatient claims indicates that, among hospitals with 11 or more cases of MS-DRG 469 and 470, there were nearly 281,000 inpatient Medicare FFS TKA cases in FY 2016. About 98% of these cases were assigned to lower-complexity MS-DRG 470, while just 2% fell into higher-complexity MS-DRG 469.
Cases assigned MS-DRG 469 would likely be too complex to be performed outpatient, but some cases that fall into lower-severity MS-DRG 470 would be eligible for the outpatient setting.
Some hospitals have asked whether they should expect all of their TKA cases that are assigned MS-DRG 470 to immediately shift outpatient. The answer is: probably not.
While 470 TKA cases are coded as "without major complications and comorbidities," many of these cases would likely be sufficiently complex to require an inpatient level of care. Nonetheless, if CMS finalizes the proposal to remove TKA from the IPO list, the agency would work from a new baseline assumption that TKA procedures should be performed outpatient unless inpatient status is medically necessary. To get reimbursed for inpatient 470 TKA cases, hospitals would have to ensure they have sufficient documentation.
If CMS finalizes the proposal, it would suspend RAC review of TKA cases for the following two years to allow hospitals to acclimate. However, after that grace period, RAC reviews for TKA would resume, and providers could face increased scrutiny of TKA cases.
How many cases could shift outpatient?
The Financial Leadership Council reviewed the nearly 275,000 TKA cases that fell into MS-DRG 470 to see which of these cases could potentially have been performed appropriately in the outpatient setting.
We considered cases that met exclusion criteria outlined by Kort et al. in a recent literature review of TKA outpatient eligibility. Our analysis excluded cases with patients aged 80 and older and excluded cases where patients' claims contained diagnosis codes contraindicating outpatient eligibility (ICD-10 codes indicating history of falling, cognitive impairment, diabetes, high BMI (>30), ESRD, and certain chronic heart/kidney/liver/lung conditions). We found that 49% of the examined TKA cases assigned MS-DRG 470 could potentially be eligible for the outpatient setting.
To see the full analysis, along with estimates of TKA cases that could be eligible for outpatient shift at short-term acute care hospitals across the country, see our TKA Outpatient Shift Modeler.
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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.