Terminology Matters – Site of Service and Status

Sudden reversals from CMS on the Inpatient-Only List and Ambulatory Surgical Center Covered Procedures List have infused confusion into the payment process for providers.

As most know, in the 2022 Outpatient Prospective Payment System (OPPS) Final Rule, the Centers for Medicare & Medicaid Services (CMS) finalized its proposal to keep the Inpatient-Only List (IOL) and added back most of the procedures they removed at the start of 2021. They also reversed course on their handling of the Ambulatory Surgical Center Covered Procedures List (ASC CPL) and removed most of the procedures they added in 2021. In both instances, CMS cited uncertainty of the safety of performing these surgeries as outpatient in the case of the IOL, and at an ASC in the case of the ASC CPL.

This move has caused even more confusion than existed prior to the decision. In a recent article in Becker’s ASC Review, one ASC administrator was quoted as saying, “there is so much uncertainty with the decision process of CMS that could lead to procedures that have been proven to be safely done in an ASC, to be moved back to the IPO.” Another noted, “moving procedures back to the inpatient-only list shows a failure on CMS’s part.”

But that is not what happened. CMS did indeed reverse course. But the Inpatient-Only List and the ASC Covered Procedures List are separate and distinct. Procedures that are on the IOL require that the patient be admitted as an inpatient in order for CMS to pay for the surgery. According to CMS, surgeries remain on the list until it is determined that the surgery can be safely performed in the hospital as outpatient. Surgeries on the ASC CPL are those CMS has determined are safe to be performed at an ASC, meeting the standards they have set.

When CMS determined that they should not have added the nearly 300 surgeries to the ASC CPL and reversed course, they did not add those surgeries back onto the Inpatient-Only List; they simply removed them from the ASC CPL. These procedures can still be performed as outpatient, but it must be done in the hospital. Physicians can also admit such patients as inpatients based on the Two-Midnight Rule, if appropriate. These processes, although both part of the OPPS guidelines, are separate and distinct.

Now, from the ASC standpoint, the outcome is the same in that as of Jan. 1, 2022, these surgeries cannot be performed in an ASC – and the ASC administrators are rightfully upset about this. But their improper use of terminology can lead to more confusion. As surgical and pain management techniques improve, the amount of time required for a patient to remain in a medical facility has lessened. Patients used to remain hospitalized for 10 days following a total joint arthroplasty, but now, select Medicare patients can have that surgery at an ASC and be discharged home at the end of the day. Procedures like angioplasty of the leg can now be performed in physician offices.

To understand the terminology, one must differentiate between site of service and status. Site of service describes the physical location where the surgery will be performed. Surgeries can be performed in three locations: the hospital, an ASC, or a physician office. Each of these locations varies in the length of time the patient may stay in the facility for recovery and the ability of the facility to respond to patient care needs, especially in an emergency. For traditional Medicare patients, physicians can use the Physician Fee Schedule (PFS) and the ASC Covered Procedures List to determine if the planned procedure can be performed in those settings. If a procedure has a facility payment rate on the PFS, it can be performed in a physician office. If the surgery is on the ASC CPL, it can be performed in the ASC.

Each year, CMS evaluates surgeries to determine the proper designation. They review surgeries on the IOL to determine if any can move off the list and be performed as outpatient in the hospital. They review surgeries that are currently approved to be performed as outpatient at the hospital to determine if any are safe to be performed at an ASC, and they determine if any surgeries on the ASC CPL are safe to be performed in a physician office.

As opposed to site of service, patient status determines if payment for a service will be made from Medicare Part A for inpatient care or Part B for outpatient care. For patients treated at ASCs or physician offices, there is no option, as all patients are outpatients. But within the hospital, patients can be treated under either inpatient or outpatient status.

Status is, for the most part, a payment issue. For the patient having surgery at the hospital, there is no difference in the care provided or the patient’s safety if they are classified as inpatient or outpatient. The patient will receive care from the same surgeon, with the same supplies, in the same operating room, and can remain in the hospital for recovery as long as is deemed necessary. The outpatient surgery patient will not have access to their Part A skilled nursing facility (SNF) for rehabilitation, if necessary, as that requires three inpatient days (outside of the COVID-19 waiver provisions), but if the patient needs more than two hospital days, they should have been admitted as an inpatient.

In summary, while there are three potential sites of service – hospital, ASC, and physician office – there are four site-of-service/status options: inpatient hospital, outpatient hospital, outpatient ASC, and outpatient physician office. The two lists have very different purposes. Surgeries on the IOL must be performed as inpatient in order to be paid, but surgeries on the ASC CPL can be performed at an ASC, at the hospital as outpatient, or at the hospital as inpatient. Removing a surgery from the ASC CPL does not mean it now must be performed as inpatient in the hospital, but simply that it must be performed in the hospital in whatever status is appropriate for the patient.

Programming Note:

Listen to Dr. Ronald Hirsch as he makes his rounds every Monday on Monitor Mondays, sponsored by R1RMC.