August 09, 2017
3 min read

CMS proposal represents critical initiative to provide best care possible

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Anthony A. Romeo, MD
Anthony A. Romeo

The Federal Register recently published a CMS notice about potential changes to the inpatient-only list for surgical procedures. CMS has proposed the removal of total knee arthroplasty from the inpatient-only list. In addition, CMS asked for comments on the removal of partial and total hip arthroplasty from the inpatient-only list and its addition to the ambulatory surgery center covered surgical procedures list.

According to the CMS proposal, in 2018 appropriately selected Medicare patients who would benefit from total knee arthroplasty (TKA) will have the option of having the procedure performed in an outpatient setting. More than 400,000 TKA and total hip arthroplasty (THA) procedures are performed on Medicare patients each year.

Outpatient TKA and THA has been performed for almost 2 decades by innovative surgeons, but the CPT codes have remained on the CMS inpatient-only list. Some surgeons have worked around this requirement for Medicare patients by performing surgery in the hospital, admitting patients to the hospital, and then discharging later the same day. Once CMS officially removes TKA from the inpatient-only list, it is likely all insurance companies will allow TKA to be performed in the outpatient setting. During the next few years, it is also anticipated that CMS will remove the inpatient-only list status of other total joint arthroplasty (TJA) procedures, including shoulder and elbow, as well as many routine spine procedures.

Tipping point

This decision is a tipping point for orthopedic surgical services and the entire ambulatory surgery center service (ASC) line. This relatively small shift in hospital-based procedures has created a seismic shift in the outlook for hospitals and hospital-based care. For decades, hospitals have regarded inpatient surgical services as the key component for financial stability and revenue. The most lucrative part of surgical service lines is typically orthopedic care, with an average of $2.7 million of revenue per orthopedic surgeon based on a Merritt-Hawkins survey of hospital chief financial officers.

The landscape for the future of surgical care, especially orthopedic care, will be disrupted by the removal of joint replacement procedures from the CMS inpatient-only list. Ambulatory surgery centers are not a new concept, having been around for more than 40 years. There are more than 5,000 Medicare-certified ASCs in the United States and the number continues to increase, however, ASCs are often restricted by outdated state laws on the certificate of need (CON). These laws have biased the entire surgical facility development in favor of hospitals, not free-standing ASCs. Currently, 15 states do not have CON requirements. This disruptive shift in orthopedic care will also drive several other overdue initiatives, including having surgical procedures reimbursed at the same level no matter where these are performed.

Value-based care

With the future of health care trending toward value-based care, there is no better value-based proposition for orthopedic care than to move routine procedures from the hospital inpatient setting to the ASC environment. With the removal of TKA from the CMS inpatient-only list in 2018, with THA most likely no later than 2019 and other joint replacement and spine procedures shortly thereafter, orthopedic care in the United States will enhance its value and reduce costs for the overall health care system.


One important issue remains with the CMS proposal. CMS plans to take a step-wise approach to approving outpatient TKA. In 2018, it is likely that Medicare patients will be approved for care in the hospital outpatient environment, but not in the free-standing ASCs. After approving reimbursement in the hospital outpatient setting and monitoring outcomes and patient safety, CMS will make the decision to approve these procedures in the ASC payment system. This archaic approach fails to recognize the evidence-based science that has confirmed properly selected patients for TJA will have similar or less 90-day readmission rates and complications as hospital-based surgical patients. The approach is highly unlikely to provide additional data that are discordant from what is already known. Clinical care, patient safety monitoring and research has superseded the political process, which has been impaired by many influential forces both within and outside orthopedics.

CMS appears to be listening to private insurance patients’ and physicians’ satisfaction with value-based and cost-effective care. A strong effort from the leadership of the American Academy of Orthopaedic Surgeons (AAOS) will help persuade CMS to rapidly approve the transition. Additional procedures, which may be better suited for ASCs, such as routine THA and total shoulder arthroplasty, should be removed as soon as possible from the CMS inpatient-only list for the benefit of patients and improved value to the health care system.

I strongly urge you to contact the leadership of the AAOS Office of Government Relations to share your views. These critical initiatives will protect and improve our ability to provide the best health care possible. This is part of an essential political process and requires our full support. You can call the AAOS office at 202-546-4430, email or follow on Twitter at @AAOSAdvocacy.

Disclosure: Romeo reports he receives royalties, is on the speaker’s bureau and a consultant for Arthrex; does contracted research for Arthrex and DJO Surgical; receives institutional grants from AANA and MLB; and receives institutional research support from Arthrex, Ossur, Smith & Nephew, ConMed Linvatec, Athletico and Miomed.