
Cartoon – Yin and Yang





The Centers for Medicare and Medicaid Services’ push to move procedures from inpatient to less expensive outpatient care continues, with revenue at risk for lucrative joint replacement starting in 2021.
CMS’s continued push to the outpatient setting has been going on for some time, but the agency has found its sea legs in the recent hospital outpatient prospective payment system proposed rule, according to Stuart Clark, a managing director for The Advisory Board Company, in an August 27 presentation on payment updates.
CMS is slowly phasing out the inpatient only list over the next three years and is adding more services to the ambulatory surgical center list. There’s around 1,400 total codes on the list right now which are expected to be phased out by 2024.
The Centers for Medicare and Medicaid Services’ push to move procedures from inpatient to less expensive outpatient care continues, with revenue at risk for lucrative joint replacement starting in 2021.
CMS’s continued push to the outpatient setting has been going on for some time, but the agency has found its sea legs in the recent hospital outpatient prospective payment system proposed rule, according to Stuart Clark, a managing director for The Advisory Board Company, in an August 27 presentation on payment updates.
CMS is slowly phasing out the inpatient only list over the next three years and is adding more services to the ambulatory surgical center list.
There’s around 1,400 total codes on the list right now which are expected to be phased out by 2024.
For 2021, CMS has added 11 new procedures to the ASC list, including musculoskeletal services and total hip replacement.
WHY THIS MATTERS
Eighty percent of hospital revenue for all services is in joint replacement. At stake is $3.2 billion in revenue for a one-day length of stay.
Per hospital, 12-15 procedures may shift from a one-day stay to outpatient, according to Clark and Shay Pratt, vice president of Strategy and Service Line Research for the Advisory Board.
Hospitals may not see a huge amount of revenue at risk if they can continue to keep the services in-house, but in an outpatient setting.
However, there is less revenue to be made from the move to a lower cost care setting. And an estimated 83% of ambulatory surgical centers are physician-owned.
There is still debate on the efficacy of total hip replacement done as an outpatient service. Commercial payers say ASCs can provide total hip replacement, while opponents say they are not equipped for the service, according to the Advisory Board.
The comment period for the proposed rule is set to close on October 5.
Next year, CMS is expected to add cardiovascular services to the outpatient list, but the volume and revenue is not on as large a scale as joint replacement.
THE LARGER TREND IN TELEHEALTH
In telehealth, CMS is implementing incremental change as its use has increased dramatically during the coronavirus pandemic.
For Medicare reimbursement, 22 services have been added to the telehealth list. Of these, nine codes have been added permanently and 13 are approved through the end of the year in which the public health emergency ends.
Audio-only services are eligible under the public health emergency, but CMS is inviting input on how long they should remain eligible. The agency has said it’s uncertain about the value of an audio-only visit.

Citing financial hardships due to the COVID-19 pandemic, Barnstable, Mass.-based Cape Cod Healthcare will lay off 118 employees and extend salary reductions for executives, according to The Cape Cod Times.
In May, Cape Cod Healthcare furloughed 595 employees due to low patient volume and revenue declines amid the pandemic. Of the workers furloughed, 477 have returned to work, and 118 will be laid off.
Employees affected by the layoffs include eight vice presidents, a nurse, lab workers, environmental service workers and dietary employees.
In addition to the personnel reduction, Cape Cod Healthcare is extending a 10 percent salary cut for its senior executives, according to the report.
Cape Cod Healthcare CEO Michael Lauf told the Times that the layoffs were “an extremely difficult decision to make, as Cape Cod Healthcare values each and every one of our employees.”
Read the full report here.

Northwell Health, a 19-hospital system based in New Hyde Park, N.Y., ended the first half of 2020 with an operating loss despite a revenue increase year-over-year, according to recently released financial documents.
In the six months ended June 30, the health system recorded revenue of $6.3 billion, up from $6.1 billion reported in the same period in 2019.
The health system saw its patient revenue drop 9.7 percent in the first half of the year to $5.1 billion, compared to the same period in 2019. The patient revenue drop was attributed to the COVID-19 pandemic.
Northwell’s expenses climbed in the first six months of this year to $6.6 billion, an increase of about 9.5 percent from the same period in 2019.
The health system recorded an operating loss of $249.6 million.
After accounting for nonoperating gains and losses, the system ended the first half of 2020 with a $329 million net loss. This compares to a net income of $393 million in the first half of 2019.
Northwell Health estimated that the negative financial hit from the COVID-19 pandemic in the six months ended June 30 was about $1.2 billion and attributed most of the financial impact to lower patient volume.
Through Aug. 28, Northwell has received $1.2 billion in grants from the Coronavirus Aid Relief and Economic Security Act. In the six months ended June 30, the health system recorded $754 million of this relief aid as “other operating revenue.”
“While the financial impact estimates noted above have been made using the best available information at the time, the ultimate net impact of the pandemic to Northwell and its financial condition is uncertain,” Northwell Health stated.
Cleveland Clinic ended the second quarter of this year with an operating loss, which the system attributed to financial damage tied to the COVID-19 pandemic.
The 18-hospital system’s revenue declined to $2.3 billion in the second quarter of this year, down from $2.7 billion in the same period a year earlier, according to unaudited financial documents. In the first six months of this year, the health system experienced net patient service revenue shortfalls of more than $830 million, compared to plan, and incurred more than $165 million in COVID-19 preparedness costs.
Cleveland Clinic reported operating expenses of $2.36 billion in the second quarter of this year, up from $2.34 billion in the same period last year.
The hospital system ended the most recent quarter with an operating loss of $201.8 million, compared to operating income of $116.2 million in the second quarter of 2019. Looking at the first six months of this year, Cleveland Clinic reported an operating loss of $241.7 million, compared to operating income of $152.4 million a year earlier.
To help offset financial damage tied to the pandemic in the first six months of this year, Cleveland Clinic recognized $324 million in federal grants made available under the Coronavirus Aid, Relief and Economic Security Act. The health system also applied for and received $849 million in Medicare advance payments, which must be repaid.
After factoring in investment gains of $477.5 million and other nonoperating items, Cleveland Clinic closed out the second quarter of this year with net income of $276.1 million. In the same period a year earlier, the health system posted net income of $256.4 million.