As we have documented on these pages many times over the last three and a half years, the Trump administration’s health care policies represent a significant departure from past practice.
For decades, regardless of the party orientation of the White House, federal health policy, especially Medicare payment policy, has never departed from its core construct: a complicated, centrally planned system designed and implemented by lawyers. The result has been an overly complex and highly prescriptive regulatory regime that rarely keeps pace with the thing it was meant to serve; the health of senior Americans and the people and organizations that support that.
You wouldn’t know it from the ever inarticulate Trump White House but since early 2018, they have been focused on reducing and eliminating many of the rules that protect incumbents and a way of practicing medicine my Great Uncle Billy would have found familiar.
Then came COVID-19
Leveraging the Public Health Emergency, a policy bias toward physician discretion and previous regulatory decisions that dissolved distinctions between ambulatory surgery centers, hospital outpatient departments and physicians’ offices, the Trump administration has released some of it most radical rulemaking to date.
Noting the need for maintaining capacity and access as a result of the Public Health Emergency, CMS has proposed two changes to the hospital outpatient and ambulatory surgery rules:
- Elimination of the Inpatient Only List, phased in over three years
- Revisions to the process for adding procedures to the Ambulatory Surgery Center
Elimination of the Inpatient Only List. This list of procedures is those CMS has, since 2000, believed require an inpatient hospital stay. Over the years, procedures have been removed and added using the annual rulemaking process. Nominations for additions or deletions were generally made by the Outpatient Advisory Panel or in some way got the attention of CMS.
In 2017, CMS started to move more aggressively on eliminating procedures from the IPO list. It proposed removal of Total Knee Replacement from the list that year. In 2019 it added removal of Total Hip Replacement. This year it has proposed eliminating the Inpatient Only List altogether saying, in so many words, physicians and surgeons are in the best position to determine where a procedure should be conducted.
There are about 1,700 procedures on the IPO list, to bring some order to its dissolution, CMS is proposing to phase-out portions over three years. For CY2021, all 266 musculoskeletal procedures would be removed. Subsequent clinical families would be removed in CY 2022 and CY 2023.
The 2020 IPO list can be found here. The musculoskeletal procedures are highlighted in yellow. (If you need spreadsheet format, please let us know)
In 2017, the last year for which CMS has published data, there we about 700,000 procedures performed in the musculoskeletal CPT codes on the IPO list.
Eliminating the IPO list means that the choice of a site of service – either hospital outpatient or inpatient – will be based on a physician’s medical judgement. The importance of eliminating the list, however, is that it liberates most insurers to set restrictions of their own site of service.
Changes to the Ambulatory Surgery Center Covered Procedures List. Potentially more radical than ending CMS’s role as gatekeeper of outpatient surgeries is their second proposal to change the process for adding permitted procedures to the ASC-CPL.
CMS has offered two alternatives to revising the process by which it would permit outpatient procedures to be performed in an ambulatory surgery center:
- Nominating Process. Stakeholders, including medical societies and members of the public, would nominate no later than March 1 procedures for inclusion on the Covered Procedure List
- Elimination of Criteria for Exclusion. CMS would retain general standards for allowing a procedure to be conducted in an ASC but eliminate more specific exclusion criteria
In both cases, the Covered Procedure List for Ambulatory Surgery Centers would expand significantly. Medical societies and practice groups have, in the past, organized to plead for additions during the rulemaking progress. Generally, requests have been rejected as outside the scope of regulatory process. A formal nominating system would give advocates something to organize around much like the citizen petition process at the FDA, with perhaps a few more guardrails.
If CMS moves forward with this alternative, the first nominations would be due March 1, 2021, for proposal in the CY 2022 payment rule.
Eliminating certain criteria for exclusion from the Covered Procedures List could result in as many as 270 procedures being added to the Covered Procedure List in CY 2021, if this approach is adopted in the final rule this fall. General standards for inclusion would remain. These include procedures:
- Not expected to pose a significant safety risk to a Medicare beneficiary when performed at and ASC
- In which standard medical practice dictates that the patient would not require active medical monitoring and care at midnight following the procedure
Five of the general exclusion criteria would be eliminated. These include procedures that:
- Generally result in excessive blood loss
- Require major or prolonged invasion of body cavities
- Directly involve major blood vessels
- Generally emergent or life-threatening in nature
- Commonly require system thrombolytic therapy
The three remaining general exclusions would be those procedures that:
- Are designated as requiring inpatient care
- Can only be reported using an unlisted surgical procedure code
- Are otherwise excluded by code
In the case of the first remaining exclusions, it would need to be modified if CMS goes forward with eliminating the Inpatient Only List beginning in CY 2021
Noteworthy additions to the CPL under both scenarios include total hip replacement and several gynecological procedures. If CMS moves forward with its second proposed alternative, additions to the CPL would include certain cancer related surgeries like mastectomy and biopsy; gynecological procedures like hysterectomy and vaginal delivery; and cardiac procedures like pacemaker insertion. A list of procedures that would be added to the CPL under CMS’s second proposed alternative can be found here.
A physician’s medical judgement will almost always determine the site of service. However, the financial incentives are not to be ignored. Most ASC’s are owned at some level by physicians. Also, not to be ignored are insurer preferences. In 2019, UNH announced that certain procedures, all of them long established as safely performed in an ASC, would be subject to medical review done at an ASC, provided the patient met certain criteria. They renewed and expanded that policy in March.
Finally, although the federal government has said time and again Medicare payment policies do not constitute a recommended standard of care, it is frequently ignored by medical malpractice attorneys, judges and juries. Insurance companies, never sympathetic defendants, have a difficult time convincing a court that mandating an outpatient site of service not supported by Medicare policy is acceptable when things have gone badly.
Accretive to changes to the IPO and CPL are CMS’s payment policies for ASCs. For CY 2019, CMS change the index to which ASCs are paid from CPI-U to the hospital inpatient market basket. Annual Medicare payment updates went from ~1.0% to ~2.5%. Another significant change, especially as it relates to musculoskeletal procedures, was the decision to lower the threshold for device cost from 40 to 30% for device intensive procedures and allow procedures that involve single-use devices in device-intensive procedures. This change allowed ASCs to essentially “pass-through” the device costs to Medicare.
All these changes interconnect and compliment in a way that first permits migration of services to ASCs and then encourages it through higher reimbursement.
The 2020s may be the next golden age of ASCs.
Emily Evans
Managing Director – Health Policy
