ASCs and payers: New best friends?

Medicare and commercial insurance companies have developed new policies over the last year that will drive more surgeries to ASCs. But that doesn't mean payers have made things easy for them.

In 2021, CMS migrated 267 procedures to the ASC-payable list and removed 298 musculoskeletal-related services off the inpatient-only list. CMS aims to eliminate the inpatient-only list by 2024. Many ASC administrators are watching closely to see how CMS, under the Biden administration, proceeds with policies related to ASC coverage.

Raghu Reddy, administrator of SurgCenter of Western Maryland in Cumberland, said commercial payers in his market used Medicare approval as a springboard to develop favorable contracts for total joints and spinal fusions with his center, as it's the only ASC in the community.

"We had a one-hospital system, so shifting those healthy joints to the surgery center did prove a tremendous amount of value-add cost savings to the commercial payers," he said. "That really worked out in our favor, and we're able to negotiate a favorable contract and since then their attitude has been great. We never had real issues with reimbursement or any of the billing issues when it comes to some of these bigger cases."

Commercial payers are reevaluating their processes as well. Empire BlueCross BlueShield in New York updated its policy Jan. 1 to require medical necessity review for certain procedures if they're performed in a hospital outpatient setting instead of an ASC. The company has a 33-page list of procedures covered by its policy, including colonoscopy, cataract surgery and 111 musculoskeletal procedures.

"I believe EBCBS's policy will be overwhelmingly good for the freestanding ASCs in New York, as the hospitals — and those surgeons who utilize the hospital's outpatient departments — will begin to decant their outpatient volume and drive those cases to local ASCs," said Austin Cheng, CEO of Gramercy Surgery Center in New York City.

Blue Cross Blue Shield of Minnesota changed its site-of-service policy in March 2019 to only reimburse ASCs for seven forms of upper and lower GI procedures, unless there isn't an ASC within 25 miles of a hospital.

Humana is also on the forefront of developing agreements with ASCs. The company added 100 centers to its provider network in 2019 through a partnership with SurgCenter Development and expanded its total joint and spine bundled payment program to include more than 75 medical practices, some with surgery centers.

Finally, UnitedHealth Group committed to driving members to the ASC when possible, especially as the company grows its value-based care strategy. The company published a report in December 2020 showing shifting half of routine joint replacements from inpatient hospital settings to ASCs could save $3 billion per year, including $2 billion for privately insured individuals and employers.

"As more acute procedures continue to be approved for outpatient services, we will continue to develop our service lines to meet the opportunities for our patients in bariatrics, cardiology and orthopedic services," said Mike Grant, administrator of Surgery Center of Amarillo (Texas). "Commercial payers are continuing to make advances in implementing pricing structures that provide appropriate reimbursement for the multitude of procedures that are successfully being transitioned to the ASC setting."

Despite the policy changes, many ASCs still see lower pay for procedures, which could drive those surgeries back to hospitals.

"The ASC is recognized as a high-quality, cost-effective site of service, but there is a risk of limited access if the reimbursement creates an unsustainable reality for these providers," Teresa Copeland, the director of managed care for Knoxville-based OrthoTennessee, told Becker's ASC Review.

MedPAC, the organization advising on CMS pay rates, has recommended not increasing pay for ASCs in 2022, despite it being the lowest-reimbursing payer for most procedures. That could make transitioning more complex procedures to ASCs more difficult.

"ASCs have to compete in the same market for labor and pay competitive wages, and suppliers do not charge ASCs less than a hospital [group purchasing organization] for the same supplies," said David Horace, vice president of site development and ministry at St. Louis-based Cardiovascular Centers of America and administrator of Bel-Clair Surgical Center. "Yes, the overhead is lower at an ASC, but to remain viable, an ASC must have an adequate profit margin and cannot price services at the marginal cost to provide services."

Surgeons also report a more complicated prior authorization process that prevents cases from being performed.

"Spine surgery is perhaps most affected at this time with new regulations on spinal cord stimulation and cervical fusion from CMS and proposed changes to United Healthcare's prior authorization process requiring submission of imaging," said Adam Bruggeman, MD, of Texas Spine Care Center in San Antonio. "This will undoubtedly lead to reduced patient access to surgery and delay necessary and appropriate care in the name of profit margins."

Others report large employers are looking to cut out payers and contract directly, which ASCs welcome if they can bundle services.

"We are seeing more employers who want to work directly with providers to ensure that their members get the highest-quality care while avoiding unnecessary tests and procedures," said John Lewis, CEO of Semmes Murphey Clinic in Memphis, Tenn. "We are now providing bundled payment arrangements that are helping employers achieve this by providing predictable, prospective bundled pricing and enhancing the healthcare and benefits experience of their members."

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