Has moving TKA off the CMS inpatient-only list affected bundled payment programs?
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Bundled payments will continue
It is my understanding that in 2020 the Hospital Outpatient Prospective System rate reimbursement will be $11,899.38 for TKA (CPT code 27447). The final 2020 Ambulatory Payment Classification base rate for CPT code 27447 will be $8,609.17. A ligament reconstruction (CPT code 27429), in comparison, has a reimbursement of $10,717.80. It is my understanding that these rates do not include the professional fee, which is between $1,350 and $1,450 for a TKA. Thus, the reimbursement for a Medicare outpatient TKA is approximately $10,000 including the professional fee. Most orthopedic groups that perform outpatient TKAs state that the average cost including all direct, indirect and variable expenses is approximately $9,000 unless fixed costs are not included in the analysis or if prosthetic costs are reduced significantly. This is not, as yet, a bundled payment reimbursement. If that were the case, it would be imperative for the group to have a “stop loss insurance policy” that would cover the costs of an “unintended complication” in the first 90 days postoperatively. Commercial bundles for TKA typically vary between $18,000 and $27,000. Thus, there is a significant amount of difference between the hospital reimbursement, the Hospital Outpatient Prospective System rate and the ASC base rate for a TKA. Unless a significant number of TKAs with good outcomes at a low cost are ensured, I am not convinced Medicare outpatient ASC TKA is going to become popular among surgeons who have an ownership interest in ASCs. However, bundled payment commercially based outpatient TKA will continue to increase due to the improved profitability and desirability of providing this procedure in optimized patients.
Jack M. Bert, MD, is an adjunct clinical professor at the University of Minnesota School of Medicine, orthopedic surgeon at Woodbury Bone & Joint Specialists Ltd. and Cartilage Restoration Center of Minnesota, CEO of MDDirect and Senior Editor, Business of Orthopedics for Orthopedics Today.
Disclosure: Bert reports no relevant financial disclosures.
Surgeons should decide on surgery location
The removal of TKA from the inpatient-only list had many impacts on patients, physicians and hospitals. No specific criteria by which patients should be classified as outpatient or inpatient have been developed. The result has been that hospitals and physicians have been left to make these decisions on their own with limited guidance. Private insurers have taken the opportunity to impose their own criteria, often without accounting for physician input, which CMS had stated was essential. This classification can impact reimbursement and may engender an increase in number of same-day surgeries, as well as efforts by some to provide more efficient or, in some cases, a decreased amount of services to patients after total joint arthroplasty in order to try to maintain a positive margin for these patients, regardless of their inpatient or outpatient classification. The best practice affords surgeons to work with their patients to make the decision on where the surgery occurs and how they are cared for afterward.
James D. Slover, MD, is a professor in the department of orthopedic surgery at NYU Langone Health in New York.
Disclosure: Slover reports he receives research support from Biomet and Smith & Nephew; is a paid consultant for Horizon Pharma; and is a paid presenter or speaker for Pacira.
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