Healthcare reform marches on — 5 key observations for ASCs on 2015 & beyond

Healthcare reform had a rocky first five years, and the next five are equally uncertain in today's political landscape. Here are five key observations on how future healthcare reform implementation could impact ambulatory surgery centers.

1. The cost containment counsel will convene for the first time. The counsel charged with making recommendations on Medicare payments — with the goal of eliminating waste and overspending — will convene for the first time next year. For the first two years, the counsel can only make changes to physician and ancillary reimbursement as well as drug costs; after 2018, the counsel can also focus on hospitals.

"We don't know who will be on the counsel and there is no direct Congressional oversight," says Tom Mallon, founder and CEO of Regent Surgical Health. "We are exposed to their decision-making, but we don't know who they are or how they will impact reimbursement."

Hospitals receive around $0.40 for every healthcare dollar Medicare spends; ASCs are just 2 percent of Medicare spend. "What they do to us in cutting costs will not be hugely material," says Mr. Mallon.

2. Hospitals will continue to acquire physician practices for the next five years. For the past few years, hospitals have been acquiring physician practices at a high rate as healthcare reform went into effect.

"In anticipation of what healthcare reform will look like, more than what reality may or may not occur, hospitals have acquired physician practices," says Jeffrey Simmons, CDO of Regent Surgical Health. "There are physicians who heretofore were not interested in relationships with hospitals, but now they are partnering because they're afraid they'll be left out otherwise."

But many of the original contracts will come due, and some employed physicians won't renew their contracts. "There will be some who come back into the independent market, but that will be difficult because they don't have their former Medicare numbers or payer contracts," says Mr. Mallon.

3. The Supreme Court and/or a new president could make significant changes to the current healthcare legislation. A decision is expected late spring in the King vs. Burwell case challenging federal subsidies for the health insurance exchanges, which could dismantle a huge portion of the ACA and have a negative ripple effect across the industry. A Republican — or even a new Democrat — as president could also make changes healthcare reform's current trajectory.

"The good news is, ASCs still represent a strong value for Medicare and Medicaid systems," says Mr. Mallon. "We are less at risk than the high cost academic medical centers or high cost regional health systems."

4. Physicians in specialties that can be independent likely will remain so. Five years ago, many cardiologists were independent, but the independent practice became unsustainable today because professional fee reimbursements were cut so significantly. Could other specialists suffer the same fate?

"A mistake was made in a cost study for Medicare reimbursement for physician-owned cath labs and various tests cardiologists owned that enabled them to stay independent despite their professional fees being fairly low," says Mr. Mallon. "That's what pushed the cardiologists into a hospital-employed mode. Unless the cost-containment panel does something similar to orthopedic surgeons or ENT physicians, the groups that want to be employed have already done their deals and the rest want to remain independent as long as they can."

5. ASCs could be part of accountable care organizations in the future. ACOs are still in their infancy in most markets, but the focus on improving quality and lowering costs could make them, or similar initiatives, more pervasive. ASCs could align with hospitals or large medical practice groups that have risk contracts under the new health plans.

"If more ACOs come to fruition, I see ASCs having exclusive relationships with large medical groups that would have ownership or exclusive contracts," says Mr. Simmons. Currently, however, Regent centers haven't been hugely impacted by narrow networks or ACOs.

More articles on surgery centers:
24 statistics on ASC operating expenses per case
3 new joint venture ASCs
4 key statistics on how physicians are being paid

© Copyright ASC COMMUNICATIONS 2020. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Featured Webinars

Featured Whitepapers