Inpatient Only Procedures (IOP) Now Procedures of Interest (POI) in 2021

Maria Johar, MD 

Physician Advisors across the country are now being asked to provide guidance on the Inpatient Only List for 2021. The list has eliminated nearly 300 procedures and allowed them to be done as outpatients. They also increased the number of procedures approved to be performed in Ambulatory Surgical Centers. Within the next 3 years the list will be eliminated. This change has been included in the final rule by CMS and they are seeking comments from all concerned on the cancellation of this list and regulation all together. 

As leaders we need to review this rule from all angles, the benefits, the risks and the collateral damage or positive impact that might occur from this rule. Physician Advisors always let data drive decisions and we provide recommendations to our clients which are well thought out from all angles, (patient, compliance, surgeon, hospital, revenue staff, etc.) 

Facts: 

History of the IOP list: Procedures were placed on the IOP list that were deemed high risk and required extra care; hence they have traditionally been Inpatient. The way CMS controlled quality for the beneficiaries was by not paying the provider if it was done in an outpatient setting. The Inpatient procedures did not have a time sensitive nature, they could be discharged within the same day of the procedure or the next day, they did not have to spend two midnights to qualify for the Inpatient status. The other non-inpatient only procedures, or typically outpatient procedures could be converted to inpatient due to complications post-surgery, etc. 

With newer and improved technology patients have recovered faster from these procedures. Patients can go home sooner due to improvements in medication management as well as the added resources and innovations in the post-acute world.  

Example of Procedures that came of the IOP list in the recent years: Total hip and knee arthroplasties have been off the list since the last few years, and there has been much debate on how to status the patient in a compliant manner. CMS stated that just because they are no longer on the “inpatient list” does not mean they cannot be inpatients. In fact they recognized that the numbers of inpatient knees and now hips will not change drastically just because the IOP list does not include or mandate them as inpatients.  

CMS clarifies that all these potential procedures do not have to be “Outpatient” but could qualify for inpatient status, if adequate medical documentation and clinical risk is documented. 

We have seen many audits on the TJR and have been  successful in defending these cases as inpatients. Those patients that were a high risk, ASA 4, had a very high BMI, had multiple co-morbid conditions, failed PT/ OT, lived alone in a rural area, required a SNF, and many other pertinent factors that “did” make the patient require a higher intensity of care, did qualify and were approved as Inpatients.

The IOP list is used by certain payors to approve the procedures as inpatients as well. The payors that follow the IOP, e.g. Paramount in Ohio will approve procedures that are on the IOP list as inpatients. There are many Medicaid and Managed Medicare as well as certain commercial and private payors that will follow the IOP list. Connect with your managed care contracting team or preauthorization team to find these plans for your facilities. 

Patients and IOP 

• Patients will have a different set of rights or financial responsibilities when they have the same procedure in 2021 and beyond. 
• Patients are requested to provide payments based on the possible charges prior to the procedures, as point of service collection has increased drastically across the country. 
• Patients are being provided a possible charge for the procedure etc. prior to arrival. 
• Patients will not have discharge appeal rights, or be given the IMM, Important Message of Medicare if they have surgery as outpatient. 
• Patients may be given the MOON, Medicare Outpatient Observation Notice, if after the regular recovery time has elapsed and the patient fails discharge screens but is expected to need less than 2 midnights of care, the patient maybe transitioned into observation status.
• Observation starts at the time of the formal order.  
• Other procedure codes may impact the payments as well. 
• Commercial or Managed Medicare will have different copays for outpatient procedures and inpatient procedures. 
• Patients may have home meds that are being given during the outpatient stay in the recovery room, PACU or floor. 
• If the patient brings their own meds, these can be dispensed by hospital policy or the patients will have to pay for these medications out of their own pocket. 

Compliance and IOP 

• Navigating the IOP every year has been cumbersome. The need to ensure the Electronic Medical Record is updated, and the order is placed prior to discharge has been troublesome. The correct order is necessary to ensure clean claim can be dropped for accurate billing. 
• Ensuring the patient is informed, the documentation is accurate and authorized prior to the procedure has also become a best practice that all have been striving for.
• Coding and CDI are required to peruse the op notes to ensure correct CPT CODES as soon as possible. Changes from the intended procedure need to be captured quickly to ensure the correct and compliant status is charted prior to the patient’s discharge.

Surgeon and IOP 

• The surgeon and their offices are constantly being bombarded with changes and differences between payors, they need to find and share medical documentation for the procedure as well as the correct approval / order for the procedure. 
• The surgeon would need to put a brief op note post procedure and the full op note may follow, which on review may require a change in hospitalization status based on the CPT code. 
• Joint ventures, bundled payments and readmission penalties are impacting every service line, with surgeons feeling this change the most. 

Hospitals and IOP 

• Elective procedures used to be the biggest revenue generating service line until the arrival of ambulatory surgical centers. Many procedures have shifted to the outpatient setting, which has taken the low risk patients out of the hospital’s demographics. See references below 
• The hospital may receive the outpatient procedures for the very high-risk patients, with high resource consumption and lower reimbursements. 
• As more of these procedures move to the outpatient setting, the productivity measures for hospitals are impacted for the ancillary services. The hospitals calculate their staffing/ productivity based on inpatients for nurses. Once the patients move into the observation or outpatient settings the staffing ratios cause an imbalance on financial models and budgets.
• Value based contracts are underway, and these will need to be clarified for the survival of the health systems. 

Revenue and IOP 

• There has been a significant drop for the procedures that are now outpatient. Total knee arthroplasty saw a differential of about $7,000-$9,000 when they changed from inpatient to outpatient depending on the market.
• Increased staffing and careful oversight will be necessary as each year the IOP will be changing and all the payor policies for these procedures will need to be reviewed with the surgical and preauthorization teams.  
• Increased staff training and oversight of these claims to ensure clean claims as well as denial prevention strategies are deployed are key for survival for any health system. 

Physician Advisors and IOP 

• Physician Advisors must understand and negotiate the complexities of these changes, and its impact to the list of stakeholders above. 
• The IOP list is to be eliminated in 3 years, the ramifications will need to be understood and researched for the spinal procedures as well as the hips/ knees and shoulders today as they lay the foundation for the other procedures in the future. 
• The cases reviewed in the next two to three quarters will provide a path of what is to come in the next few years as the IOP List is shortened every year.

As physician advisors we hope to understand the impact of the presence or absence of the Inpatient only list. We are the subject matter experts that must provide a balanced and data driven perspective to CMS during the comment period. We need to measure and monitor the impact for our facilities and educate the stakeholders. Please remember to set aside cases as you review these surgical cases, think what would or could happen to the stakeholders if the IOP existed or if did not in 2026. 

The American College of Physician Advisors and the Government Action Committee will seek your opinion in the third quarter of this year. We hope to send out a survey and collect your insights and feedback and will announce the results and the possible collective directive and suggestions to CMS at the virtual NPAC 2021 in October. 

References 

• https://www.cms.gov/files/document/12220-opps-final-rule-cms-1736-fc.pdf 
• https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/jointreplacement-ICN909065.pdf
• https://www.cms.gov/medicaremedicare-fee-service-paymentascpaymentasc-regulations-and-notices/cms-1736-cn 
• https://med.noridianmedicare.com/web/jea/provider-types/opps/addendum-a-b-instructions 
• https://med.noridianmedicare.com/web/jea/provider-types/opps/opps-payment-status-indicators 
• https://www.acep.org/administration/reimbursement/reimbursement-faqs/observation-care-payments-to-hospitals-faq/ 
• https://www.cms.govOutreach-and-EducationMedicare-Learning-Network-MLNMLNMattersArticlesdownloadsMM9486.pdf 
• https://www.ascassociation.org/asca/federalregulations/medicarepayments/facilityfee/exclusioncriteria 
• https://www.beckersasc.com/asc-news/cms-finalizes-asc-rules-for-2021-with-278-asc-payable-additions.html 

Dr. Maria Johar is Lead Physician Advisor for Ensemble Health Partners.