Medicare Program to Pay for TKAs On An Outpatient Basis

February 8, 2018
Rick Gawenda

The Centers for Medicare and Medicaid Services, on November 1, 2017, finalized their proposed rule to remove total knee arthroplasty (TKA) from the inpatient procedure only (IPO) list and allow Medicare beneficiaries to have their knee replaced on an outpatient basis beginning with dates of service on and after January 1, 2018. This procedure will be paid under the outpatient prospective payment system (OPPS).

Removal of the TKA from the IPO list does not preclude a Medicare beneficiary from having a TKA as an inpatient. The decision whether to have a TKA as an inpatient or an outpatient will be the combined decision of the Medicare beneficiary and their physician.

So what does this mean if the Medicare beneficiary requires physical therapy services in order to go home after having their knee replaced on an outpatient basis? The Centers for Medicare and Medicaid Services (CMS) has assigned the TKA procedure to C-APC 5115 with a status indicator (SI) of J1 for payment purposes. J1 indicator means all covered Part B services on the claim are packaged with the primary J1 service for the claim, except services with OPPS SI=F,G, H, L and U; ambulance services; diagnostic and screening mammography; all preventive services; and certain Part B inpatient services. To view what services are included in SI F, G, H, L and U, click here.

As you review the list, you will see that physical therapy is not included in the services listed in SI F, G, H, L and U. Physical therapy, along with occupational therapy and speech therapy, is listed under SI A. In addition, physical therapy was not specifically listed above as being excluded in the services packaged under the SI of J1. So the question I am receiving is when a Medicare beneficiary has a TKA on an outpatient basis and is seen by a physical therapist (PT) in order for them to be able to go home, are the physical therapy services included in the APC payment or should they be billed separately as outpatient physical therapy under a physical therapy plan of care? This is a must read article for hospitals who are having Medicare beneficiaries have a TKA as an outpatient in 2018.

Per CMS, payment for outpatient department services that are similar to therapy services is

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  1. Thank you for this timely information. Can you clarify if this applies to all outpatient therapy departments including private practice and hospital outpatient departments? Thank you.

    1. I’m not sure how a private practice would go into a hospital and see a TKA on the same day as the TKA replacement to treat them so they could be discharged home from the hospital.

      1. Well, no – but private practices do sometimes see TKAs for pre-op training. I think the Q might have been geared toward that scenario. Would a patient’s inclusion in the C-APC program negate payment for pre-operative services through private practice? (hoping/thinking not, but worth checking). Thanks for asking Katherine, thanks for clarification Rick.

        1. My hope is private practices are not doing pre-op training, but doing rehab or prehab. If the latter, this is skilled therapy services and would be billed as outpatient physical therapy and would not be part of the hospital APC payment for the TKA.

  2. Rick, I think what us private practice folks are asking is say we see a patient a week before their outpatient TKA and we instruct them in exercise, gait training and distribute a walker, how would this apply?

    1. To me, this is not pre-op but perhaps prehab and would be skilled therapy services. These services would be separately billable and would not be part of the APC payment for the TKA.

  3. Regarding the billing aspect…Since the payment for the services provided by the PT are included in the C-APC 5115 payment and not billed separately as OP PT are they subject to minute calculation rule?

  4. If we evaluated and billed the patient pre-op, set plan of care, G codes, ect…could we just then schedule post op return visits / treatments, since in most cases there will not be a major change in status. If there were to be a major change of statues could we just perform a re-eval to rest the POC and G-codes?

    1. I would assume there would be a significant change in the patients status post-op TKA compared to their status prior to the TKA.

      1. They will still have a diagnosis of knee pain or arthritis, and have expected loss of range of motion, pain and function. Could potentially be a little worse than pre-op but expected. Otherwise it appears we need to charge the patient and evaluation pre-op and post-op which is what we are trying to prevent to keep the cost down. Otherwise it seems we need to give away free services pre-op if we want to have the patient educated anr psychologically / physically prepared for Same Day Surgery. What are others doing?

        1. If you are doing prehab (therapy prior to the TKA), then the documentation and billing is the same. If providing PT the same day as the Medicare patient had the TKA, then the PT would be bundled into the APC payment for the TKA and not separately billed.

  5. We are seeing many of the spine surgeries being performed in our hospital under outpatient surgery status like the TKA surgeries. Would the same rule apply in that PT/OT services are bundled and not billed separately?

    1. If your hospital is being paid for the surgery under an APC, this would include all services provided that day and this would include therapy services.

  6. Thank you for this article. If a patient has an outpatient surgery (like TKA or RCR) at a physician’s outpatient surgery center, then seen in their outpatient therapy clinic before going home, does this apply? Would there still be no reimbursement for the therapy (Eval or gait training)? Thank you!