• Michael R Richards, Jonathan A Seward, and Christopher M Whaley.
• Hankamer School of Business, Baylor University, 1 Bear Pl, Waco, TX 76798. Email: Michael_Richards@baylor.edu.
• Am J Manag Care. 2021 Mar 1; 27 (3): 104108104-108.

ObjectivesTo examine changes in hospital outpatient surgery trends and case mix for Medicare and privately insured patients needing total knee arthroplasty (TKA) following Medicare's removal of TKA from its Inpatient Only list on January 1, 2018.Study DesignA retrospective analysis of all hospital discharge records in Florida from 2012 through 2018.MethodsWe tracked inpatient vs outpatient performance of TKAs at the state and hospital levels. We also combined our primary data with physician practice organization information to assess variation in the policy response according to physician-hospital ownership status. Supplementary analyses examined policy-induced changes in inpatient TKA case mix.ResultsWe observed an immediate shift of roughly 15% of Medicare TKA cases to the outpatient setting. Importantly, there was a simultaneous near doubling of the number of TKAs performed as a hospital outpatient procedure among privately insured patients younger than 60 years. Hospitals allocated a similar proportion of TKA cases to the outpatient setting across the 2 payer groups, and we found evidence of selection against the potentially riskiest Medicare TKA patients for outpatient delivery. Vertically integrated orthopedic physicians retained their Medicare and privately insured TKA cases within the inpatient (higher-cost) setting.ConclusionsMarket and financial pressures are encouraging more outpatient care delivery; however, the speed of transition is dictated, in part, by regulatory constraints. Our results suggest that Medicare policy may influence surgical treatment approaches for Medicare and privately insured patients. Spillover implications need to be considered when weighing future Medicare regulatory decisions.

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