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CMS Proposes Joint Replacement Coverage at ASCs

CMS announced on August 5 that they are considering whether to provide coverage for hip and knee replacement surgeries at outpatient surgery centers.

This kind of coverage could further incentivize patients to choose ambulatory surgery centers (ASCs) over traditional hospitals for outpatient procedures, which worries some hospital leaders. Not only could hospitals stand to lose revenue for joint replacement surgeries, a substantial portion of their income, but many doctors do not yet feel comfortable performing some of these operations in outpatient settings.

Just last year, the Advisory Panel on Hospital Outpatient Payment unanimously agreed that CMS should remove total knee replacement from the inpatient only list. However, not all patients are good candidates for outpatient total joint replacement surgeries, and surgeons should take into consideration a patient’s age, BMI, and overall health before opting for outpatient surgery.

It is estimated that demand for joint replacement surgeries will grow 77 percent over the next 10 years, but inpatient joint replacement procedures are projected to account for only 3 percent. Currently only about half of joint replacement patients spend 1-2 days in the hospital while recovering, leading experts to believe that outpatient joint replacements are a respectable option for outpatient surgery centers.

Top 10 Hospitals Performing the Greatest Number of Total Knee Replacements in 2015

Hospital # of Total Knee Replacements Payor Mix: Medicaid Payor Mix: Medicare
 Hospital for Special Surgery  6,300  0.5%  40.3%
 New England Baptist Hospital  3,687  –  43.7%
 Florida Hospital Orlando  3,031 5.8%  29.5%
 Virtua Voorhees Hospital  2,508  2.5%  40.2%
 Orlando Regional Medical Center  2,333 7.9% 15.1%
 Baptist Medical Center  2,173 7.2% 21.5%
 Memorial Hermann Southwest Hospital  2,060 14.2% 23.6%
 Beaumont Hospital – Royal Oak 1,997 4.0% 40.5%
 Christiana Hospital  1,905  26.1% 43.0%
 Rush University Medical Center 1,900  10.5%  32.4%

Fig 1 Data from Definitive Healthcare

Some of the reasons ASC healthcare has become so popular in recent years include competitive pricing, shorter wait times, and easy access compared to traditional hospitals.

In a recent study of pediatric ACL reconstructions by the Orthopedics journal, outpatient surgery centers were found to be more efficient than traditional hospitals with patients waiting for less time before their procedures. Outpatient surgery centers were also more easily able to accommodate add-on procedures than traditional hospital ORs and needed fewer staff members for each procedure.

Top 10 Hospitals Performing the Greatest Number of Partial Hip Replacements in 2015

Hospital # of Partial Hip Replacements Payor Mix: Medicaid Payor Mix: Medicare
 Florida Hospital Orlando 410  5.8%  29.5%
 Memorial Hermann Southwest Hospital 357 14.2% 23.6%
 Methodist Hospital 295 4.8% 27.5%
 New York Presbyterian Hospital – Weill Cornell Medical Center 281 6.3% 26.1%
 Methodist University Hospital 227 8.8% 29.1%
 Norton Hospital 216 1.8% 25.1%
 Baptist Medical Center 209 7.2% 21.5%
 Baylor University Medical Center at Dallas 188 6.9% 31.1%
 Huntsville Hospital 187 19.5% 36.9%
 CHRISTUS Spohn Hospital Corpus Christi – Shoreline 187 3.4% 25.1%

Fig 2 Data from Definitive Healthcare

The top 5,100 ASCs tracked by Definitive Healthcare reported nearly $4.7 billion in combined total Medicare charges in 2015*, while the top 5,100 hospitals reported more than $51 billion in total outpatient Medicare charges. The total net revenue for ASCs could increase dramatically if CMS covered joint replacement surgeries at outpatient facilities as well as at traditional hospitals.

In addition to the rise in independent ASCs, acquisitions and joint ventures between hospitals and ASCs are becoming more common. Rather than wait to examine the effects that ambulatory surgery centers could have on patient volume and revenue, some hospitals have started acquiring or working in conjunction with ASCs in order to keep a portion of the profits and expand their patient services.

Top 10 Hospitals Performing the Greatest Number of Total Hip Replacements in 2015

Hospital # of Total Hip Replacements Payor Mix: Medicaid Payor Mix: Medicare
 Hospital for Special Surgery 4,870 0.5% 40.3%
 New England Baptist Hospital 2,342 43.7%
 Beaumont Hospital – Royal Oak 1,537 4.0% 40.5%
 NYU Langone Medical Center – Tisch Hospital 1,458 8.3% 27.4%
 Orlando Regional Medical Center 1,413 7.9% 5.1%
 Morristown Medical Center 1,400 3.2% 42.0%
 Norton Hospital 1,395 1.8% 25.1%
 Hoag Orthopedic Institute – Irvine 1,349 0.3% 42.6%
 Carolinas HealthCare – Carolinas Medical Center 1,317 24.0% 23.5%
 Swedish Medical Center – First Hill Campus 1,214 8.5% 19.9%

Fig 3 Data from Definitive Healthcare

Other hospitals, however, are unsure of how to proceed when it comes to ASC healthcare. Most payors still do not cover outpatient joint replacements, and it is unclear how well-equipped most outpatient surgery centers are for such procedures.

Currently, there is no CMS data available for knee or hip replacements performed at ambulatory surgery centers.

Further validating the potential of outpatient facilities, CMS has also proposed an increase in ASC healthcare reimbursement for 2018. Under the new proposal ASCs would receive a 1.9 percent reimbursement increase for following quality reporting standards.

*Most recent data available from CMS.

EDIT: An earlier version of this post stated repetitive data in figure 2. It has since been updated.

Visit our blog for more information on CMS Programs and Ambulatory Surgery Centers.

Definitive Healthcare has the most up-to-date, comprehensive and integrated data on over 7,700 hospitals, 1.4 million physicians, and numerous other healthcare providers.  Our database allows subscribers to search inpatient and outpatient procedure analytics by CPT/HCPCS, DRG, and ICD-9 codes.

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