PEPPER Adds Spice to Reporting of New Regulations

Big news to end the year.

The final Monitor Mondays broadcast of the year is normally when I announce my Hirsch’s Heroes. But this year, it would be inappropriate to single out any individuals, when so many in healthcare go to work every day as heroes – and so many have made the ultimate sacrifice. So let’s hope that next year I will be able to resume the tradition.

Moving on to news, boy was there a lot last week. First, the third-quarter Program for Evaluating Payment Patterns Electronic Report (PEPPER) was released last week, and it was notable for two things. First, it is the first PEPPER issued during the COVID pandemic. I’d urge you to use caution interpreting your report, since the pandemic has clearly affected patient acuity around the county. Second, there is a new measure showing the percentage of total knee arthroplasties done as inpatient. And that data is fascinating in that it shows that at least 20 percent of hospitals in the nation are still doing every knee replacement as inpatient. I will remind you that knee replacement was taken off the Medicare Inpatient-Only list three years ago, so at any time, the Recovery Audit Contractors (RACs) can ask the Centers for Medicare & Medicaid Services (CMS) for permission to start auditing these admissions for proper status and start denying claims. In case you don’t know, the RACs are already approved to audit for medical necessity for both hip and knee replacement, and are actively auditing charts. If there is any bright side to this, I’ll remind you that the status audits can only look back six months, so you will have time to rebill for Part B payment if you are denied.

Speaking of status, by now you probably know that CMS finalized its proposal to eliminate the Inpatient-Only list over the next three years, and started by removing 300 procedures, effective Jan. 1, including all orthopedic and spine procedures. But at the same time, they also have put an indefinite moratorium on denials of these surgeries for improper status. They proposed a two-year moratorium, so it was shocking to see them adopt this much more lenient standard. They have stated that the moratorium will be lifted once at least 50 percent of all surgeries are performed as outpatient. My jaw dropped when I read this – no denials? Really? Well, first, the Quality Improvement Organizations (QIOs) will be able to audit, and although they cannot deny, they will provide education. It is not known if they will follow the probe-and-educate process and repeat audits if they find a high error rate on these surgeries, or report their findings to CMS. Second, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) has added short stays to its work plan, and the OIG can audit anyone at any time – and they love to extrapolate, as the Uniform Program Integrity Contractors (UPICs) are always watching data for patterns of improper payments.

So, what does this mean? As of now, if a surgery is not on the Inpatient-Only List, you have to follow the two-midnight rule. And remember, despite what you may hear, there is more to the two-midnight rule than a patient spending two midnights in the hospital. Finally, on this topic, right now hopefully all of you review all one-day inpatient stays for compliance with the two-midnight rule. You need to decide if you should add one-day inpatient surgeries to this process, and determine which can be billed as inpatient and which should be rebilled to Part B.

CMS also added 266 procedures to the list of surgeries that can be performed at ambulatory surgery centers (ASCs), including things like infusion of cerebral thrombolytic therapy and robotic prostatectomy. I took a look at the approved payments for prostatectomy, and as outpatient at the hospital, the base payment is $8,900, but at the ASC, it only pays a facility fee of $3,800. I am not sure that $3,800 even covers the supplies to use the robot. I’ll also note that the press releases from CMS stress how all these ASC approvals will lower costs for beneficiaries, but they neglect to note that for 150 surgeries, the out-of-pocket costs for patients will be higher in an ASC than at the hospital.

Programming Note: Ronald Hirsch, MD  is a permanent panelist on Monitor Mondays. Listen to his live reporting when Monitor Mondays returns on Monday, Jan. 11, 2021, 10 a.m. EST.