Case Management

More of your questions about knee and hip bundled payments

Case Management Insider, December 22, 2015

Last week, we asked our expert Ronald Hirsch, MD, FACP, CHCQM, vice president, Regulations and Education Group for AccretivePAS in Chicago to answer some questions about the final rule CMS released November 16 that bundles acute-care payments for knee and hip replacement surgeries, the most common type of inpatient surgery for Medicare beneficiaries.

It appears that CMS is attempting to rein in spending and improve quality by using this bundled system. It’s not surprising when you consider that doctors performed more than 400,000 procedures on Medicare patients in 2004, which resulted in $7 billion in associated hospital stays.
But the change has prompted many questions. Here are a few more of Hirsch’s answers to reader questions.

Q: Does this change remove the requirements imposed by the 2-midnight rule or the three-day stay requirement to qualify for post-acute services?

No, this is absolutely not the case. The 2-midnight rule is still in effect. The three-day skilled nursing facility (SNF) rule is only waived starting in year two and only if the patient chooses a three star rated (or better) SNF.

Q: Does this rule eliminate the need to assign patients to inpatient or observation services? Does this mean that we wouldn't have to use InterQual to see if the patient qualifies because we could make up our own rules related to when a patient is ready to move to the SNF or home health?

This is not true. Organizations will still need to assign patients to the correct status, whether inpatient or observation services. Recovery Auditors will still be looking at this area and they can still review for medical necessity and deny payment. Medicare Administrative Contractors will also conduct probe audits on medical necessity. It’s not clear if hips and knees will be added to PEPPER audits in the future as well. It should also be noted that total hip and knee replacements are still on the inpatient-only lis, so all surgeries must be performed as inpatient. Partial knee replacements, on the other hand, are not inpatient-only and should be performed as outpatient. And as outpatient, they will not be part of this program which only includes inpatient admissions.

Got additional questions about the rule and what it means for your organization? Send them to Kelly Bilodeau at and we’ll have our experts answer them.


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