Economic Impact of Outpatient Medicare Total Knee Arthroplasty at a Tertiary Care Academic Medical Center.

Background: In January 2018, the Center for Medicare and Medicaid Services (CMS) removed total knee arthroplasty (TKA) from the inpatient-only list. This impacted hospital reimbursement, Comprehensive Joint Replacement (CJR) bundle volumes, and bundle performance. We describe these impacts at an academic teaching hospital.

Methods: We reviewed CJR bundle data provided by CMS and internal databases to identify the shift in CJR TKA episode volume since January 2018, the impact on postacute care (PAC) utilization rates and readmissions, financial impact to the bundle, and impact on hospital reimbursement. We used data provided to CJR participants, internal hospital sources, and the Medicare Limited Data Set.

Results: Between 2017 and 2018, CJR TKA episodes decreased from 91 to 51 (44% reduction). Inpatient PAC utilization was significantly higher in 2018 (20% vs 8%). The 90-day readmission rates increased from 5.5% to 12.7%. Average variance to target dropped from 15% to 5%. Average CMS reimbursement for TKA at our institution in 2019 was $14,823 for inpatients and $9299 for outpatients. We experienced $930,463 in decreased reimbursement from January 2018 to September 2019 as a result of the shift from inpatient to outpatient. In addition, we expect $625,143 in decreased incentive payments as higher functioning and lower cost outpatient TKAs are excluded from CJR.

Conclusion: Although CMS projected a minimal impact on CJR bundle participants, this has not been the case at our institution. We experienced reduced volumes, increased PAC utilization, and a substantial financial impact. We expect a similar outcome when CMS removes total hip arthroplasty from the inpatient-only list.