News Alert: Total Knee Replacement Added to PEPPER

The PEPPER now gives hospitals an opportunity to peer behind the curtain and see how they perform relative to others.

In the midst of a pandemic, the Centers for Medicare & Medicaid Services (CMS) has decided the time is right to add a new element to the quarterly Program for Evaluating Payment Patterns Electronic Report (PEPPER). This new target area will report the percentage of total knee arthroplasties that were done under inpatient status.

Amid great controversy, total knee arthroplasty was removed from the Medicare Inpatient-Only List on Jan. 1, 2018, and the moratorium on Recovery Audit Contractor (RAC) audits of those admissions expired on Jan. 1, 2020, although permission for the RACs to audit for status has not yet been granted. Prior to the second pause in the short-stay inpatient audits conducted by the Quality Improvement Organizations (QIOs), many one-day inpatient admissions were audited, and anecdotally, many were denied. This addition to the PEPPER now gives hospitals an opportunity to peer behind the curtain and see how they perform relative to others.

As a reminder, the PEPPER provides not only raw numbers, but also comparative data, allowing hospitals to see how they perform in comparison to hospitals in their Medicare Administrative Contractor (MAC) jurisdiction, their state, and the nation. But it is crucial to note that this comparative data says nothing about whether the hospital is doing things right or wrong, simply where their performance stands in comparison to other hospitals.

As you may recall, when CMS removed total knee arthroplasty (TKA) from the Inpatient-Only List, they stated that they did not expect all surgeries to be performed as outpatient, and in fact, that they “do not expect a significant volume of TKA cases currently being performed in the hospital inpatient setting to shift to the hospital outpatient setting.” At the same time, though, they did not specify what criteria should be used to determine who can have surgery as an inpatient, other than noting that the Two-Midnight Rule, including the exceptions embedded therein, should be used. That created significant confusion and concern, as many high-volume hospitals were not only able to reduce their length of stay to one day, but were also involved in CMS bundled payment programs that only included inpatient admissions. This meant that patients at these hospitals with a one-midnight expectation could only be admitted as inpatients if the physician determined (and documented the determination) that the patient warranted inpatient admission because of their risk.

The timing of this addition to the PEPPER is interesting in that it was first reported in the report for the third quarter of 2020, which includes data from the period from April 1 2020 to July 31, 2020. This corresponds with the peak of the first COVID-19 surge, when many hospitals stopped performing all elective surgery, with joint replacements being one of the first to be cancelled. Fortunately, when a new measure is added to the PEPPER, they include the prior three years of data, so hospitals can see their performance in past quarters.

How should this new PEPPER measure be used? As with other PEPPER measures, hospitals can use the comparative data to determine if their admission pattern is different from others, but they cannot use it to determine if they are getting admission status correct. While the many audit agencies do not access PEPPER directly, they have access to similar data in other databases, so hospitals that are outliers on the PEPPER may end up in the crosshairs of an auditor.

On the other hand, a hospital with a small percentage of inpatient admissions may be missing opportunities for ensuring complaint revenue. In a recent audit of a high-volume hospital, I found many more missed inpatients than inappropriate inpatients. I then met with the orthopedic team, including the surgeons, service line leaders, and physician assistants, and we developed a plan to ensure that every patient was placed in the right status. And as CMS has proposed to eliminate the Inpatient-Only List over the next several years, getting the process right for total joint arthroplasty will set them up for success in the future for all surgeries.  

Now is the time to find out who gets the PEPPER in your facility, and to see how you did. I will be doing a webcast on how to determine status on Dec. 3, so you may want to listen.

Programming Note: Register now to attend the exclusive RACmonitor webcast, “Master the 2021 Inpatient-Only List: Get Surgery Status Determinations Right,” led by Ronald Hirsch, MD, Wednesday, Dec. 3, at 1:30 p.m. Eastern.