Medicare Payment to ASCs: Big Trends & Impact Factors

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Operating RoomThere were 5,344 Medicare-certified ambulatory surgery centers in the United States in 2011, the most recent year for which MedPAC released data, a jump from 4,033 centers in 2004. Traditionally, Medicare and government payers are among the lowest reimbursing payers for surgery centers, and ASCs are reimbursed currently at a lower rate than hospitals and hospital outpatient departments.

Additional anxieties over Medicare payment rates, and its ability to pay, were raised earlier this year with the threat of sequestration, and government shut down continues to loom over Washington today. A report from Provista shows that 50 percent of ASCs were re-examining their expenses in wake of sequestration, but 72 percent of the survey respondents were confident their centers would be able to adapt to the change.

"We need to focus on the fact that we are the low cost provider and we can save Medicare money," said Matt Searles, partner with Merritt Healthcare. "We can show policy makers that it's possible to continue moving cases into the ASC setting, but if they aren't reimbursing enough, Medicare patients won't be viable in the ASCs and will have to move back to the higher-cost hospital settings."

This past year, MedPAC recommended closing that gap between ASCs and HOPDs, meaning ASCs would receive higher reimbursement rates. If the push to equalize reimbursements persists, ASCs would lose their edge as the "lower cost provider" when compared with the HOPD setting.

How this potential equalizer would impact ASCs remains to be seen. CMS has, however, proposed increasing Medicare reimbursement rates for 2014 by 0.9 percent, projecting total Medicare payments next year to reach $3.8 billion. CMS is currently accepting public comment on the rule and will be publishing the final rule Nov. 1.

Surgery center administrators and clinical leaders are also scrambling to meet the proposed four quality measures for the CMS quality reporting program. These measures are scheduled to impact payments in 2016, but data from ASCs will be collected starting next year through QualityNet.

With all these changes and the threat of continued reimbursement decline, more physicians than ever are choosing not to deal with Medicare requirements. According to a recent report in the Wall Street Journal, around 9,539 physicians opted out of Medicare in 2012, which tripled the number from 2009.

"Doctors are always looking for other opportunities to deliver healthcare that doesn't rely on Medicare or insurance companies," said Lee Lasris, a board-certified health law attorney and founding partner of Florida Health Law Center in Davie. "To the extent that services can be delivered in the ASC, there are other opportunities for surgeons to bring in higher acuity cases. Surgeons can invest in surgery centers as well, but you have to be careful of regulatory compliance."

The most frequently performed Medicare procedure in ASCs is the cataract surgery with IOL insert, followed by an upper GI biopsy, according to MedPAC.

Earlier this year, CMS published chargemaster data from hospitals for top procedures, igniting controversy as local and national news media compared prices and sought an explanation for the difference. Since the chargemaster data represents what the hospital bills — not necessarily what it actually receives — for a treatment, the usefulness of this data is questionable. However, some in the ASC industry feel surgery centers have benefited for price transparency and stand to gain if more prices are made public.

"Price transparency will be better for healthcare overall. It's going to create an open market and competitive environment where just because you are the most expensive doesn't mean you have the best quality," says Jeff Blankinship, president and CEO of Surgical Notes. "That's a real concept that will be more prevalent in healthcare. You are going to find out that in the future, surgery prices will be more competitive on both the consumer and provider side."

Time will tell whether physicians and ASCs stick with Medicare, and reaction to these changes varies by marketplace. Medarva at Stony Point Surgery Center in Richmond, Va., has a policy of accepting every patient, regardless of their payor, and is able to maintain profitability despite treating a considerable number of Medicare and Medicaid cases. In some markets, surgery centers have considered dropping government payer cases, but CEO Bruce Kupper doesn't see that in the future for Medarva.

"I think if we are going to be a full service ASC we have no choice but to take Medicare patients," Mr. Kupper said. His center is able to take on a large volume of Medicare and Medicaid patients. "The population is growing too fast and they have too many needs for us not to take Medicare anymore. In our particular situation, we believe strongly in providing charitable care and we take those patients on willingly."

More Articles on Surgery Centers:
11 ASC Administrators on the Biggest Challenges in Their Surgery Centers

5 Options for ASC Administrators to Communicate Best With Surgeons

How ASCs Can Thrive Through Teamwork: Q&A With Administrator Joseph DeMarco


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