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Medicare's new would move 266 procedures -- including dozens of amputation, replantation, and bone graft surgery codes -- out of the federal "inpatient only," or IPO, reimbursement list so they could be performed in a hospital outpatient department.

If the rule is finalized by the Centers for Medicare & Medicaid Services, beneficiaries undergoing those procedures would generally have an option to leave the facility the same day, or before two midnights have elapsed, to complete their recovery at home.

CMS also is pushing to entirely eliminate the list, which now contains 1,740 procedures, "we no longer believe there is a need ... to identify services that require inpatient care."

Rather, "the physician should use his or her clinical knowledge and judgment, together with consideration of the beneficiary's specific needs," to determine whether an inpatient or outpatient setting is more appropriate, the agency said, saying that "emerging new technologies" are making it safe for these operations to be performed outside of an acute care setting.

The remaining 1,474 codes would be phased out over the next several years if the rule is approved.

But approving this rule as is, which would take effect Jan. 1, 2021, also could delay care and pave the way for many unintended consequences that may not be in the patient's best interest.

That's the opinion of the American Academy of Orthopaedic Surgeons, which called the proposed change "drastic" and said it could increase the burden on physicians to appeal health plan denials, and make it tougher for doctors to make sure the patient's surgery takes place in the safest, most appropriate setting, which may be more expensive.

Orthopedists Are Nervous

AAOS members are worried that the rule could pave the way for health plans to use less expensive surgical settings as the default sites for such procedures and require lengthy appeals and prior authorization paperwork to override those defaults.

"Sometimes contesting those denials is easy, but sometimes it can take months," said Joseph A. Bosco, III, MD, AAOS president, who called the process a series of "onerous hoops." The resulting delay can carry its own form of harm.

The AAOS said that's what happened when total knee and hip replacement procedures were removed from the IPO in recent years. Health plans interpreted the rule as requiring that beneficiaries must have these procedures as outpatients, going home the same day or early the next.

"In pushing forward such a drastic change, CMS may exacerbate many of the unresolved issues that our surgeons continue to face as a result of hip and knee arthroplasty being recently removed from the Inpatient Only list," the AAOS said in a statement.

"Payers, including Medicare Advantage and commercial carriers, often misinterpret the policy change to mean that these procedures must be performed exclusively in the outpatient setting."

Bosco, vice chair of NYU Langone Health's department of orthopedic surgery, emphasized that physicians and surgeons must consider each patient's environment and social support concerns during their recovery at home, especially if a post-surgical complication might arise.

But health plans may not always think about that or be aware of those considerations, he said.

"You have an 80-year-old woman or man who lives in a five-story walk-up in New York, and they have no family or friends that can take care of them," he said. "To expect that person to go home the same day after a hip or knee replacement and take care of themselves and make it up five flights of stairs and be independent -- it's not tenable. No surgeon I am aware of would allow that patient to go home to an apartment on the fifth floor if they can't make it up the stairs."

"Kind of Crazy"

A second concern is the high level of complexity and risk in many of the 266 procedures that CMS thinks could be done safely in an outpatient setting, Bosco noted. Given today's surgical tools and skills, some are just too dangerous for an outpatient setting.

"If a person in New York gets run over by the subway and gets his foot amputated, you're going to reattach that foot on an ambulatory basis? I don't think so," he said.

"That's kind of crazy that you would consider doing a hand reimplantation, or if a person, God forbid, has their arm amputated as an outpatient, and upper extremity from shoulder to elbow? It's silly."

"These are major large procedures, after which the patients need intensive monitoring in an inpatient setting."

Bosco acknowledged that times can change and probably will. Decades ago, surgeons couldn't imagine performing an outpatient hip replacement, while today such surgeries are more routine.

"In 30 years, will we be doing hand transplants or replants safely if our patients are outpatients? I don't know. But I can tell you nowhere in the near future will we able to do so."

The bottom line, he said, is that it would be fine to entirely eliminate the IPO list, which was established 20 years ago, but only if "the physician is unencumbered, and is allowed to make that decision, again, along with consultation with the patient, on where the procedure should take place."

ASCs Left Out for Now

CMS is not proposing that those codes would be reimbursed in ambulatory surgical centers, at least not yet. But historically, many codes that have been removed from the IPO have been added to the ASC payable list one or two years later.

None of the codes currently on the IPO list in 2020 are eligible to be added to the ASC payable list for 2021. However, Kara Newbury, director of government affairs for the Ambulatory Surgical Center Association, which represents 5,800 Medicare-certified ASCs nationally, said in an ASCA that "ASCA will certainly advocate strongly for those codes that our members tell us are safe and should be eligible for the ASC payable covered procedure list moving forward."

"CMS has acknowledged that many of these codes are not only being done in hospital outpatient departments already on private payer cases, but also in the ASC setting," she said.

The ASCA hopes that will be the next step for Medicare beneficiaries too, and CMS will eliminate the two payment silos separating reimbursement for ASCs and hospital outpatient departments. They also hope that commercial payers take a cue from the removal of these 266 codes from the IPO list and approve payment for ASCs to take some of them on.

IPO Needs Fixing

Ted Mazer, MD, a past president of the California Medical Association, and a San Diego otolaryngologist, acknowledged that some health plans may push to drive some cases to the outpatient ambulatory surgical center. But on the other hand, "the fact is, the list of procedures required to be inpatient is way out of date with respect to safety. It needs to be revised. The physician should decide the appropriate site of service."

While this proposed list of 266 procedures that would be dropped from the IPO list all involve the musculoskeletal system, Mazer encountered a similar problem with some neck procedures that "are completely safe as outpatient surgery, whether at a hospital or an ASC."

Yet, he said, he is told by hospital administration and payers, "I must schedule and treat as an inpatient (because it's on the IPO list). That needs to be changed."

Mazer suggested that perhaps regulations could be developed, at least for Medicare Advantage plans and for commercial payers with help from state regulatory oversight, that would require a plan to justify a decision to override a physician's preference for site of service. Such rules, he said, should include anti-retaliation protections for physicians who might feel pressure to follow plan rules.

Because so many of the procedures scheduled to be cut Jan. 1 involve orthopedic surgeries, it's not surprising the AAOS was the first to weigh in. But other major stakeholders are still studying the proposal.

The American Hospital Association and the California Hospital Association, whose members see many procedures moving to physician-owned surgery centers, said they had not had time to form an opinion on the rule and could not comment. Likewise, the American College of Surgeons and the American Medical Association was still digesting the proposed rule.

The rule could have other ramifications as well: an impact on the beneficiary's pocketbook.

If finalized, some stakeholders told CMS that the new rule would mean that if a procedure is now an outpatient surgery, falling under Part B instead of Part A, beneficiaries would pay 20% of their cost in co-payments. Currently, Part A, or hospital care, requires the patient to pay a deductible of $1,408 for each benefit period up to a 60-day hospital stay.

But CMS says in its proposed rule that those procedures that might be separately billed would be grouped as a single episode of care and capped at the applicable Part A deductible amount, so the patient may not have to pay more.

are due no later than 5 p.m. ET on Oct. 5.

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