The Centers for Medicare & Medicaid Services (CMS) has proposed payment changes related to surgery, including joint replacement procedures.

  • CMS proposes to update 2018 payment rates and quality provisions.
  • CMS seeks to cancel episodic payment models and revise the Comprehensive Care for Joint Replacement Model.
  • CMS sought comments on how to improve payment accuracy to ASCs.

The Centers for Medicare & Medicaid Services (CMS) proposed several surgery payment changes in recent months, suggesting that Department of Health and Human Services (HHS) Secretary Tom Price is following through on his stated goals of rolling back regulatory burdens for doctors.

The changes include a July 13, 2017, proposed rule pertaining to the Hospital Outpatient Prospective Payment System (HOPPS) and Ambulatory Surgical Center Payment System. The change updates 2018 payment rates and quality provisions and also starts “a national conversation about improving the healthcare delivery system” to make Medicare less bureaucratic and complex.1

In August, CMS proposed cancelling episode payment models and the cardiac rehabilitation incentive payment model and to rescind regulations governing those models. In addition, CMS called for revisions to the Comprehensive Care for Joint Replacement Model.2

CMS also asked for comments on how to improve payment accuracy to ASCs, noting concerns about the difference between hospital outpatient payments relative to ASC payments. ASCs receive 56% of what their hospital-based outpatient counterparts receive in 2017. CMS proposed removing total knee arthroplasty, partial hip arthroplasty, and total hip arthroplasty from the inpatient-only list, making them eligible for coverage in a hospital outpatient department.1

Like some other ASCs, Mississippi Valley Surgery Center in Davenport, IA, has been performing joint replacement surgeries for commercial-covered lives for more than a decade. If CMS were to lift its rule requiring inpatient stays for Medicare patients needing total joint replacements, then ASCs could expand their services to more patients. This is a possibility, especially with CMS leaning toward removing inpatient-only status for total knee and hip surgeries, says Michael Patterson, FACHE, president and CEO of Mississippi Valley Health’s Mississippi Valley Surgery Center.

“Not every patient would be clinically appropriate [for ambulatory surgery], but I predict somewhere around 30-40% of Medicare-age patients could safely have total joint replacement in an ASC,” Patterson says. “That’s the big news in all of these changes.”

Secretary Price’s focus on surgeries and reducing regulatory hurdles could lead to even more good news for ASCs.

“CMS proposed to put total joint replacements on a list of what outpatient hospital surgery centers could perform, and that’s the first step for a procedure to be eligible for coverage in an ASC,” says Marian Lowe, MBA, senior vice president of strategy at United Surgical Partners International in Addison, TX. “The agency asked for comments about whether total joint replacements were appropriate for ASCs. I suspect the comments will cut in both directions, given the various stakeholder perspectives on these procedures moving out of the hospital setting and the rates at which the agency has proposed to pay for these procedures. When you think of a Medicare population, there are a lot of people who have comorbidities and who would be inappropriate in an ASC setting, and, yet, there also are many individuals for whom the ASC would be appropriate.”

CMS’ changes to total joint replacement and incentive payment models appear to be philosophically aligned with Secretary Price’s goals.

“To me, this change is a longstanding reflection of signals Secretary Price sent, dating back to his time in Congress, where he thought these demonstrations should primarily be on a voluntary vs. a mandatory basis,” Lowe notes.

Still, it’s unlikely the joint procedures will be put on Medicare’s ASC list before 2019, she predicts.

“CMS will need to be cognizant of the cost of implants and the capital investments that go into a facility to make that procedure possible in an ASC, and they’ll need to establish pricing to recognize the cost of the implants,” Lowe adds.

Orthopedic surgeons are entrepreneurial, and they could find better patient care solutions, if given the opportunity, Patterson offers.

“They can find ways to care for patients in an optimal way, and a lot of them feel like that does not include care in a hospital,” he says. “It could be care in an ASC.”

Price and others want a market-based drive in innovation in care vs. CMS dictating policy for practice, which could be why CMS is rolling back aspects of the Comprehensive Care for Joint Replacement Model, he says.

“Surgeons are closest to the patient,” Patterson explains.

Surgeons see patients prior to surgery, understand their disease progression, and know firsthand what the patient needs to recover mobility.

“If we put in strict guidelines, then that’s all doctors will do, but it may not be what they think is best for their patient,” Patterson says.

When it comes to total joint replacement surgeries, several healthcare advances have made this a more feasible option for ASCs. For example, studies have shown that early ambulation helps patients recover more quickly from surgery. Pain management practices have improved, giving patients enough early relief that they can get out of bed and move around post-surgery.3,4

“Clinical and technological advances in the [ASC] setting, in general, have made moving these types of complex procedures into that setting possible,” Lowe says.

A chief impetus for moving more complex surgeries into the ambulatory surgery setting is efficiency — improvements in both cost and quality.

“We do one thing, and we do it really well, and that’s surgery,” Patterson says. “Hospitals are multimodal, large facilities that are there to care for a gamut of patient conditions, from oncology to obstetrics to trauma, neurology, pediatrics, internal medicine, and chronic diseases like diabetes, COPD, and CHF.”

ASCs become experts on their sole focus of performing surgical procedures, he adds.

“The majority of surgeons want what’s best for their patients,” Patterson says. “Surgery centers were not about a financial gain; they’re about control over how surgeons do their work, and that’s the number one reason why [ASCs] came into being — surgeons wanted control over how they spend their days.”

CMS’ proposal to reduce the number of areas that have to participate in the CMS Innovation Center’s Comprehensive Care for Joint Replacement Model and to make all mandatory participation voluntary might produce a negligible impact, Lowe and Patterson suggest.

It’s doubtful CMS’ move will dramatically shift the pace of change that is largely driven by what is happening with non-Medicare patients, Lowe says.

“It’s always difficult for CMS to set up a new demonstration program and the infrastructure to evaluate the impact,” she explains. “I think the primary trend you can read into what happened with the CJR demonstration is a trend toward models that are more likely voluntary in nature.”

The CMS demonstration projects involving joint surgeries had invested considerable time, talent, and technology to develop what’s needed to implement a comprehensive care model. But even if it showed a cost savings, it’s questionable whether the savings offset the cost of implementation, Patterson says.

Secretary Price, who was an orthopedic surgeon before serving in Congress, understands what surgeons need. The CMS changes he’s proposed, which would give surgeons more flexibility in how to innovate, reflect his belief that surgeons will know what works best. “I think this change will allow those surgeons that really want to innovate to have the flexibility to innovate in how they care for their total joint replacement patients,” Patterson says.

“This is especially true if CMS approves to have total joints done on a Medicare patient in an [ASC],” he adds.


  1. Centers for Medicare & Medicaid Services. CMS proposes hospital outpatient prospective payment system and ambulatory surgical center payment system changes for 2018, and releases a request for information (CMS-1678-P). Available at: http://go.cms.gov/2ufcc6k. Accessed Aug. 28, 2017.
  2. Regulations.gov. Medicare program: Cancellation of advancing care coordination through episode payment and cardiac rehabilitation incentive payment models; changes to comprehensive care for joint replacement payment model (CMS-5524-P). Available at: http://bit.ly/2xb7Yfz. Accessed Aug. 28, 2017.
  3. Pelt CE, Anderson MB, Pendleton R, et al. Improving value in primary total joint arthroplasty care pathways: Changes in inpatient physical therapy staffing. Arthroplast Today 2016;3:45-49.
  4. Argenson JN, Husted H, Lombardi A Jr, et al. Global Forum: An international perspective on outpatient surgical procedures for adult hip and knee reconstruction. J Bone Joint Surg Am 2016;98:e55.