Knee & Hip Replacements Move from Hospitals to ASCs

The Gist Newsletter and Stratasan have created an excellent analysis of the shift in knee replacements and hip replacements from the hospital inpatient setting to outpatient and ASCs.  

Inpatient total knee replacements have decreased from 100% to 25% between 2017 and today. Inpatient total hip replacements have decreased from 100% to 37% from 2017 and today.  

Meanwhile, outpatient and ASC total knee and total hip replacements have gone from 0% in 2017 to the VAST MAJORITY today.  

Why? Why do so many fewer inpatient orthopedic surgeries happen?  

1. CMS removed knee replacements from its inpatient only list in 2018. Prior to 2018, Medicare would only pay if the surgery was done in the inpatient setting. Likewise, CMS removed total hip replacements from its inpatient only list in 2019.  
2. COVID–The pandemic caused many hospitals to cancel their operating room schedules because of infection and staffing problems and as a result, orthopedic surgeons moved their surgeries to ASCs where the risk of cancelations is lower.  

What are the Implications?  

1. Employers win because ASCs generally have lower facility fees than hospitals, so their joint replacement unit costs will be lower.  
2. Hospitals lose because lucrative commercially insured patients are now having their joint replacement surgeries outside of their hospital system.  
3. Tenet, a for-profit hospital system, is transitioning from being a ‘hospital company’ to being an ASC company and now runs 310 ASCs nationwide… more than any other organization. Tenet’s ASC revenue went from 5% of its total revenue in 2015 to 42% of its total revenue in 2021–an almost 9X increase!  

Employer-sponsored health plans should see more of their total knee and total hip replacements occurring at ambulatory surgery centers because of a change in Medicare payment for a simple reason: LOGISTICS. 

An orthopedic surgeon will typically have several surgeries scheduled each day.  These surgeries will be on patients that have a variety of insurance plans. For example, the surgeon may have three joint replacement surgeries scheduled for the day. The first patient may have Medicare. The second patient may be younger and be on an employer-sponsored health plan. Finally, the third patient may be a Medicare patient again. 

The surgeon wants to perform all three surgeries at the same location to save time. The most valuable and scarce resource that any surgeon has is their TIME. Surgeons will do whatever they can to save time, including scheduling all 3 surgeries for the day at the same location. 

Prior to the Medicare payment change, that location used to be the hospital.  Now that joint replacements have been taken off the inpatient only list, that surgery location is more frequently the ASC. 

ASCs typically have lower facility fees than hospitals. As a result, the employer-sponsored health plan saves… potentially upwards of $50,000 per surgery. 

Coupe Health steers plan members to high quality orthopedic services at cost-effective ASCs through a $0 deductible/copay-only plan design.  

Visit www.coupehealth.com to learn more.

Sources: 

https://mailchi.mp/11f2d4aad100/the-weekly-gist-august-12-2022?e=7b90169bf4