News Alert: Is Humana Putting Profits Before Patient Safety?

Late last week a case management colleague distributed an insurance company memo that had been sent to her hospital to a Recovery Audit Contractor- (RAC)-related user group. This memo required a double-take to ensure that it was not five months old, because it should have been distributed on April Fools’ Day. While apparently it is not a joke, I am sure hoping it represents a misunderstanding between an insurance company and the Centers for Medicare & Medicaid Services (CMS).

This memo came from Humana and included a list of 145 surgeries from the inpatient-only list. It notifies providers that CMS has clarified that the Medicare inpatient-only list only applies to fee-for-service Medicare. It goes on to state that for Humana Medicare Advantage (MA) patients, any of the surgeries on that list may now be performed at ambulatory surgery centers (ASCs). Among the surgeries they are now allowing at ASCs are carotid artery stenting, total knee and hip replacements, hip fracture repair, cervical spine fusion, and open laparotomy for ruptured peritonitis, to name a few.

While most utilization review staff are aware that the inpatient-only list (often referred to as addendum E) only applied to traditional Medicare, I don’t think anyone ever thought that being excluded from following the inpatient-only list also meant that MA plans could move these surgeries to ASCs – especially freestanding ASCs not on a hospital campus.

The difference between a surgery performed as inpatient or outpatient in a hospital is strictly a payment issue; an inpatient surgery is coded using ICD-10-PCS, and a DRG is paid when an outpatient surgery is billed with a CPT code and is paid as an APC. The patient gets the same surgery done by the same surgeon with the same resources used and the same services available in the case of a complication or the need for extending the recovery past the planned recovery time, but the cost is much lower for the payer, and the payment to the hospital is less.

On the other hand, there is a significant difference between performing a surgery in a hospital and in a freestanding ASC – not in payment for the service, but in safety for the patient. If something goes seriously wrong in a surgery center, it is unlikely that the proper resources and personnel will be available to manage it, and 911 will need to be called to transfer the patient to a hospital. The staffing in the evenings is also often limited, with most ASCs not having a physician on site after hours. If the patient requires assessment by a physician, one would not be immediately available as in a hospital. And since ASCs are limited to 24-hour stays, if the patient’s recovery lasts more than 24 hours, the patient will need to be transferred to a hospital.

As a matter of fact, CMS is bound by federal regulations that describe those surgeries that can be performed in an ASC. The Medicare Claims Processing Manual, 42 CFR 416.166, states that “the surgical codes that are included on the ASC list of covered surgical procedures are those that have been determined to pose no significant safety risk to Medicare beneficiaries when furnished in ASCs and that are not expected to require active medical monitoring at midnight of the day on which the surgical procedure is performed (overnight stay).” I will note that a different section of the code, 42 CFR 416.2, refers to “duration of services” that does not exceed 24 hours, rather than ending at midnight, but there is no ambiguity about the safety risk to the beneficiary.

While the inpatient-only list designates those surgeries that must be performed as inpatient procedures on fee-for-service Medicare patients, there is also addendum AA, which designates those surgeries that may be performed in ASCs. So if a surgery is not on the inpatient-only list and not on addendum AA, it must be performed in a hospital and may never be performed on a Medicare beneficiary in an ASC.

So what happened here? I suspect that Humana and CMS had an incomplete conversation. While CMS appears unconcerned about how much a hospital is reimbursed by an MA plan for a surgery (and therefore, CMS is free to allow the inpatient-only list to be ignored for MA beneficiaries), I do not think they ever thought that Humana would take that to mean that Humana could independently determine which surgeries could be performed in an ASC and which require a hospital. CMS should be equally concerned about the safety of both fee-for-service Medicare beneficiaries and MA beneficiaries.

That is not to say that many of these surgeries may be safe to perform on Medicare beneficiaries in an ASC, only that CMS has not fully evaluated the option. And of course, surgeries that are approved for ASCs do not always have to be performed in an ASC; if the physician determines that the patient’s condition and expected recovery will require a hospital setting, the surgery can be performed there.

It seems appropriate for CMS to clarify that Humana is free to allow any surgery on the inpatient-only list to be performed and paid as outpatient, but if the surgery is not on addendum AA, then Humana may not allow that surgery to be performed at an ASC. At that point, Humana is free to follow the procedures followed by all others and submit a request for CMS to evaluate individual procedures for addition to addendum AA. Payment is one thing; safety is quite another.