Total Knee Replacement: The Inpatient-Only List and the Two Midnight Rule, Patient Impact, Length of Stay, Compliance Solutions, Audits, and Economic Consequences

In November 2017, CMS finalized the 2018 Medicare Outpatient Prospective Payment System rule that removed TKA from the Medicare inpatient-only (IPO) list. This action had significant and unexpected consequences. We looked at 3 levels of the IPO rule impact on TKA for Medicare beneficiaries: a national comparison of FFS inpatient and outpatient classification for 2017 vs 2018; a survey of AAHKS surgeons completed in April 2019; and an in-depth analysis of a large academic medical center experience. An analysis of change in admission classification of patients with TKA over time, number of QIO audits, compliance solutions for the new rule, and cost implications of those compliance solutions were evaluated. Hospital reimbursement averages $10,122 in an outpatient facility but does not include the physician payment. Average hospital reimbursement in the inpatient setting is $11,760. The difference in hospital reimbursement varies widely (90th percentile decrease, $6725 vs 10th percentile $2048). Physician payments are the same in both settings (avg $1403). Patients with TKA not designated for inpatient admissions are not eligible for bundle payment programs. Patients designated as outpatients are subjected to higher out-of-pocket expenses. Patients may have an annual Medicare Part B Deductible ($185) and a 20% copay as well as prescription and durable medical equipment costs. An AAHKS survey demonstrated that 45.08% were with inpatient designation only, 17.62% were with outpatient designation only, 25.39% were designated as necessary, and 10.1% were designated by the hospital. This survey showed that 66 of 374 (17.65%) patients had undergone a QIO audit as a result of issues with the IPO rule. An evaluation of an AMC demonstrated that since January 1, 2018, 470 of 690 (68.1%) of CMS patients with TKA left in less than 2 midnights. The institution was subjected to 2 QIO audits. There are many unintended consequences to the IPO rule application to TKA.