From: Becker Scott <>
Subject: [Becker's ASC E-Newsletter] Study Claims Physician-Owned ASCs Siphon Referrals of Commercially Insured Patients From HOPDs; N.J. Bill Would Establish Codey Law Exception for ASCs, Impose 2-Year Moratorium on New ASC Licenses; CMS Responds to FAQs About New ASC Payment System
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March 26, 2008
In This Issue
Study Claims Physician-Owned ASCs Siphon Referrals of Commercially Insured Patients From HOPDs
N.J. Bill Would Establish Codey Law Exception for ASCs, Impose 2-Year Moratorium on New ASC Licenses
Becker's ASC Review Paid Subscribers
Now Online: Physician-Owned Hospital Settles Antitrust Suit Against Insurers, Hospitals; Search Hospital Quality Data; IOL Gets New Technology Tag
CMS Responds to FAQs About New ASC Payment System
"Intersection of Healthcare and Wall Street" Planned; ProvationMD Chosen for New Multi-specialty ASC's Documentation; Coverage Expands for On-Q Pump; Accelitech Adds Stereotactic Radiosurgery Leader
Companies to Watch
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Study Claims Physician-Owned ASCs Siphon Referrals of Commercially Insured Patients From HOPDs

Physicians who refer the most patients to physician-owned ASCs disproportionately send privately insured patients there, while sending Medicaid enrollees to hospital outpatient departments, according to a study of referral patterns in the Pittsburgh and Philadelphia metropolitan areas, published March 18 as a Health Affairs Web Exclusive. The Pittsburgh and Philadelphia areas were examined because Pennsylvania has both a large number of physician-owned ASCs and a requirement that all ASCs and HOPDs submit discharge abstracts.

While the study was meant to test the effects of ASC ownership on referral patterns, actual ASC ownership was not considered -- the study used high numbers of referrals to physician-owned ASCs as an indication for ownership, because, the authors say, there are no public records identifying physician-owners of ASCs. As a result, the study authors analyzed the referral patterns of physicians who accounted for the top 50 percent of physician-referrers to each physician-owned ASC, then compared these results with the referral patterns of high referrers to HOPDs and nonphysician-owned ASCs. Researchers found that in calendar year 2003, the top 50 percent of physician-referrers to physician-owned ASCs sent about 55 percent of Medicaid patients to the physician-owned ASC and 45 percent to the HOPD. They sent about 92 percent of commercially insured patients to ASCs, and about 8 percent to HOPDs. The researchers comment:

To summarize, the difference between referring the likely highest-paying payer (commercial/Blue Cross) and the lowest-paying payer (Medicaid) to a hospital outpatient department was thirty-six percentage points for top-referring physicians at physician-owned ASCs. The respective figure for hospital outpatient surgical centers was minus two percentage points, which means that hospital outpatient referrers were actually more likely to send a commercial/Blue Cross patient than a Medicaid patient to a non-hospital facility. For physicians who were top referrers to for-profit ASCs, the difference between commercial/Blue Cross and Medicaid was eighteen percentage points, and that figure was seventeen percentage points at nonprofit ASCs.

We believe that this is a very flawed study for several reasons.

  1. The statistical sample is very small. It solely comprises ASCs in Philadelphia and Pittsburgh, and could not differentiate between physician-owners and non-owners.

  2. It doesn't take into account ownership or non-ownership by physicians whatsoever. It may be that, without any financial tie at all, even if, for example, a hospital operates an HOPD and an ASC, the ASC naturally sees lower-acuity patients; often, this means fewer Medicaid patients.

  3. The study does not examine the practices' patient base as a whole to assess the amount of Medicaid patients in the practice in the first place.

  4. The study doesn't examine whatsoever or take into account differences in patient acuity. As less-acute patients are typically treated in ASCs, this situation might naturally lead to a lower percentage of Medicare and Medicaid patients in ASCs.

  5. In certain specialties such as ophthalmology and gastroenterology, two of the most high-volume specialties for ASCs, Medicare patients make up a large percentage of the patients at ASCs.
  6. The federal safe harbors guard against discrimination against Medicare and Medicaid patients.

  7. BlueCross BlueShield provided funding for this project. Interestingly, the authors of the study worked with the Hospital Association of Pennsylvania and Highmark BlueCross BlueShield to identify physician-owned ASCs, sources that are often antagonistic to physician-ownership.
Spring Group 2nd/4th through July
N.J. Bill Would Establish Codey Law Exception for ASCs, Impose 2-Year Moratorium on New ASC Licenses

A new version of S787 amending the New Jersey Healthcare Practitioner Self-Referral Law (the "Codey Law") was adopted by the New Jersey Senate on March 17. If the bill becomes law, it would establish exceptions under the Codey Law for referrals by physicians to licensed ASCs and to unlicensed (one-OR) surgical practices in which they have an ownership interest, says Michael F. Schaff, Esq., of the law firm of Wilentz, Goldman & Spitzer. The bill would also establish a two-year moratorium on the issuance of licenses for new ambulatory surgical facilities (a grandfather clause is included), beginning Sept. 1.

The new Codey Law exceptions would apply to Ambulatory surgery or procedures requiring anesthesia services that are performed in an ambulatory surgical facility licensed by the New Jersey Department of Health and Senior Services; and any surgery or procedures performed in, and billed in the name of, a "surgical practice." According to the bill, this applies to "an ambulatory surgical facility irrespective of whether such facility is owned solely by practitioners or in conjunction with non-practitioners. All clinically-related decisions at a facility owned in part by non-practitioners shall be made by practitioners and shall be in the best interests of the patient."

In both cases, the exception would require that) the referring physician personally perform the surgery or procedure, that) the physician's remuneration as an owner of the facility or practice is directly proportional to ownership and not to the volume of patients the physician referred to the facility, and that the physician disclose the financial interest to the patient and inform the patient whether the services provided at the facility or surgical practice will be considered to be, and reimbursed at, an out-of-network level by the patient's insurance carrier or other third party payer.

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Now Online: Physician-Owned Hospital Settles Antitrust Suit Against Insurers, Hospitals; Search Hospital Quality Data; IOL Gets New Technology Tag

Physician-owned hospital settles landmark antitrust suit against regional insurers and hospitals. Heartland Spine & Specialty Hospital has reached a settlement with a group of insurers that were the defendant's in the Overland Park, Kan., physician-owned hospital's landmark antitrust suit (Heartland Surgical Specialty Hosp. LLC v. Midwest Division Inc., No. 05-2164). Go here for the full story.

Pa. Web site compiles searchable hospital quality data. A new Web site debuted this week that, for the first time, compiles outcome and quality data from a variety of sources for all Pennsylvania's acute-care hospitals in a single location accessible by the general public. Go here for the full story.

Staar's Affinity Collamer Aspheric IOL gets New Technology designation. The Afinity Collamer Aspheric foldable intraocular lens (Model CQ2015A) has been designated as a New Technology Intraocular Lens (NTIOL) by CMS, Staar Surgical announced. Go here for the full story.

March/April issue now online. The March/April issue of the Becker's ASC Review, featuring pieces of profitable endoscopy, establishing an ASC and the orthopedics and spine device markets, is now online. Download a PDF of the full issue here.

Care Credit
CMS Responds to Frequently Asked Questions
About New ASC Payment System

CMS has issued a document covering 44 answers to frequently asked questions about the new ASC payment system. Questions CMS addresses included what ASC procedures and services are payable when under the revised ASC payment system; CMS begins its response:

Under the ASC payment system, Medicare will make facility payments to ASCs only for the specific ASC covered surgical procedures on the ASC list of covered surgical procedures published in Addendum AA of the OPPS/ASC final rule for the relevant payment year.

In addition, Medicare will make separate payment to ASCs for certain covered ancillary services that are provided integral to a covered ASC surgical procedure.

To read the list of covered ancillary services and get full coverage of CMS's responses to the FAQs, click here.

TY--Physicians Endo 3x
"Intersection of Healthcare and Wall Street" Planned; ProvationMD Chosen for New Multi-specialty ASC's Documentation; Coverage Expands for On-Q Pump; Accelitech Adds Stereotactic Radiosurgery Leader

"Intersection of Healthcare and Wall Street" event planned for April 23. McGuireWoods' "Intersection of Healthcare and Wall Street" event is planned for April 12. We are featuring as keynote speakers Harry Kraemer, the former CEO of Baxter Healthcare, and Brian Cressey, the founder of mega private equity fund Cressey and Co. We also have outstanding presentations on a range of healthcare niches and areas including hospitals, dialysis, healthcare real estate and more. The one-day event is held at the Trump Tower in Chicago. If interested, please e-mail Scott Becker or Amy Nolan; you can view the agenda here.

Hawthorn Medical Associates selects ProVation software for multi-specialty ASC documentation. Wolters Kluwer Health, a leading global provider of information for healthcare professionals and students, announced that Hawthorn Medical Associates has selected ProVation Medical software for multi-specialty nursing and physician procedure documentation and coding. The software will be installed at a brand new surgery center opening next month, and will be used to document GI, general surgery, orthopedic, ENT and urologic procedures. ProVation MD software for multi-specialty procedure documentation and coding compliance replaces dictation/transcription and streamlines the coding and billing process. Driven by deep medical content, ProVation MD allows clinicians to quickly and completely document medical procedures and apply the appropriate CPT and ICD codes, as well as CCI edits. ProVation MultiCaregiver software delivers multispecialty perioperative documentation, streamlining workflow by intelligently reusing data at various points while automatically retrieving data from multiple IT systems. Hawthorn Medical is the largest multi-specialty medical group practice in greater New Bedford, Mass., and will soon complete construction on a 29,629 square-foot addition to its main medical building. The addition will house the new ASC, offices and exam rooms.

More insurers cover On-Q pain pumps. I-Flow Corp. announced Monday that it has secured new contracts with insurance companies to cover its On-Q pain pump for patients having outpatient surgery. ON-Q is already covered by Medicare to treat post-surgical pain under the hospital outpatient payment system. Procedures performed in the hospital are also reimbursed. The new contracts mean that 57 million patients are now covered for the post-op pain control device.

Accelitech expands, adds experienced stereotactic radiosurgery industry leader. Accelitech, a developer of stereotactic radiosurgery programs in conjunction with physicians and hospitals, has announced the appointment of stereotactic radiosurgery industry leader Maria Freed to the position of Vice President, Program Services. Ms. Freed will lead Accelitech's deployment and optimization services, which support Accelitech-affiliated sites in effectively deploying new SRS technologies and implementing successful SRS programs through proven project management structures. In addition, Ms. Freed will head Accelitech's optimization consulting services that provide Accelitech's hospital and physician clients the tools and guidance necessary to maximize the performance of their SRS programs.

TY--MedHQ 5x
Companies to Watch

We are delighted to highlight the following companies in this week's E-Weekly. For more information and full list of ASC resources, go here.

Access MediQuip. Access MediQuip is the largest and most experienced provider of outsourced implantable device management solutions to the healthcare industry. For a complete profile, go here; or, for more information, please call at (877) 985-4850 or visit us online.

ZChart. ZChart's EMR, designed exclusively for ASCs, was developed by dozens of healthcare professionals -- administrators, office staff, nurses and physicians -- at multi-specialthy outpatient surgery centers. For a complete profile, go here; or, contact Tom Felstad at 866-924-2787 or visit

Galil Medical. Galil Medical is leading a new era of minimally invasive cryotherapy solutions that enhance patient quality of life. For a complete profile, go here; or, learn more about Galil at

Practice Partners. Practice Partners is a privately held, Birmingham, Ala.-based company recently capitalized by HealthCor Partners that specializes in de novo and turn-around situations. For a complete profile, go here; or, E-mail Larry Taylor or visit Practice Partners online.

Marshall Erdman & Associates. As an integrated provider, Marshall Erdman & Associates offers service from facility conception to completion, including advance planning, development, design and construction. For a complete profile, go here; or, for more information, visit

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