Rising staffing and supply costs and a low reimbursement rate from CMS are some of the biggest concerns physicians have surrounding procedure reimbursements.
As part of an ongoing series, Becker's is talking to healthcare leaders who will speak at its 29th annual conference, The Business and Operations of ASCs, on October 26-28, 2023. The following are answers from our speakers.
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Question: What are your biggest concerns regarding procedure reimbursements right now?
Adam Bruggeman, MD. Orthopedic Surgeon at Texas Spine Care Center (San Antonio): Physician reimbursement continues to be a budgetary item for our government, meaning that physicians are not paid based on the actual value of the services they provide, nor see increases based on the cost of providing those services. A recent Medscape survey showed that we are now seeing some of the lowest recorded percentages of surgeons accept Medicare and Medicaid. Health and Human Services Secretary Xavier Becerra stated that lack of physician payment reform is a real threat to how physicians can plan their life forward, and the Medicare Trustees' 2022 Annual Report expressed concern that access will become a significant issue in the long-term. Physicians, at a minimum, need annual increases in reimbursement that reflect the cost of care, such as tying to the Medicare Economic Index.
Alex Andrade. Vice President of Ancillary Operations at DuPage Medical Group (Downers Grove, Ill.): Our industry continues to be challenged with increasing costs as percentage of revenue. The only way to survive is to continuously improve efficiency and the workplace environment. Retain your best trained people and eliminate waste from processes.
Alex Portillo, RN, BSN. Administrator of Manhattan Surgery Center (New York City): My biggest concern is the pushback we're likely to receive from insurance companies continuing to underpay ASCs for procedures when compared to hospitals. As cases are being pushed out of the hospitals and into ASCs, I can see insurance companies counting the uptick in volume to a center as "getting more" reimbursement instead of narrowing the pay disparity between hospitals and ASCs for the same exact case. I'd like to see a more fair reimbursement as ASCs are becoming the standard of care for patients, but I'm sure that's way far off into the horizon.
Alyson Engle, MD. Pain Medicine Physician at Northwestern Medical Group (Chicago): Procedure reimbursements have failed to keep up with inflation and do not reflect the increased work demands of physicians. Insurance company profits soar while physician salaries decline. Less physicians will be inclined to stay in the workforce as the economics do not make sense. This trend is unsustainable for our nation's health and will lead to lower quality care as physicians leave medicine. Many patients are forced to defer treatment, which can lead to higher direct and indirect healthcare costs for the entire country. Less profitable procedures will be cut out of service lines, which can also lead to worse health outcomes.
Andre Blom. Chief Executive Officer of Illinois Bone & Joint Institute (Des Plaines, Ill.): Reimbursement in ASCs is simply not keeping pace with inflationary changes associated with healthcare. More importantly, ASCs are being linked to secondary cost drivers that are not being properly adjusted, such as anesthesia and implant services. There will come a time when lower reimbursements and costs of business can't just keep getting passed on to MDs and owners.
Andrew Lovewell. CEO of Columbia (Mo.) Orthopedic Group: Point blank, my biggest concern is what we are getting paid for our services. At a time when inflation is still of great concern, increased salaries, wages and benefits, and Medicare reducing provider compensation, you start to wonder when a payment reform will happen. The cost curve and reimbursement curves are not being adequately addressed by both payers and the federal government. Running a practice today costs substantially more than it did five years ago, but the reimbursement for services hasn't been increased to offset or equalize the increased costs.
BJ DiMartini. Senior Vice President of Strategy and Business Development at Best Surgeries and Therapies (Cincinnati): Reimbursement rates for different procedures and implants vary widely, which often leads providers feeling that the rates received are not adequate for the costs associated with the procedure. Delayed or denied reimbursements cause a financial strain on providers, disrupts the revenue cycle and requires added resources for appeals. The administrative burden with the reimbursement process is time-consuming and costly, making it particularly difficult for smaller healthcare providers. Regulatory changes regarding reimbursement procedures change frequently, which pressures the providers and staff to keep up with the latest requirements and ensure that they're submitting claims correctly. Fraud and abuse are also concerning by inadvertently submitting incorrect claims or being targeted by fraudulent actors.
Bobby Rouse Jr. Chief Financial Officer of One GI: Broadening of pre-authorization requirements, rates that do not reflect increasing costs of care, and increasing acuity associated with site of care shifts that are not properly reimbursed.
Brian Cole, MD. Managing Partner of Midwest Orthopaedics at Rush, Associate Chair of the Department of Orthopedics at Rush Oak Park Hospital and Professor in the Department of Orthopedics at Medical College (Chicago): At this juncture, one of my biggest concerns regarding reimbursement is an increasingly onerous pre-certification process, which is increasing the time and costs associated with surgical scheduling. Coupled with this concern is the future of Medicare reimbursement, which is coupled with private payer reimbursement at a time where the cost of our talented workforce, anesthesia and supplies continue to rise.
Brian Gantwerker, MD. Neurosurgeon at the Craniospinal Center of Los Angeles: My biggest concern with procedural reimbursements is the repetitive gaslighting by the insurance industry. Patients are being run through a gauntlet of nonsensical arbitrary criteria to get the care they need and paid for. As physicians, we take care of patients, responsibly shepherd them through nonsurgical management and arrive with the patient to the conclusion they need an operation. The insurers then create their set of guidelines, either based on junk science, by cherry picking points out of context in good articles, or by simply lying about their own criteria when it's met. Beyond that, they intentionally refuse to connect authorization to payment. Once surgery is authorized, and a clean claim is submitted with the same codes, that surgery should be paid, line item by line item. The insurance lobby is strong, and their incessant greed and noncompliance with either law or their own guidelines is pushing the medical establishment to the brink. Physicians should not partner with insurers, nor accept buyouts by them, in order to protect our patients. By forming a collective bargaining body, such as a guild, we could potentially create a larger corps in order to resist the decay and dissolution they seem so intent on bringing.
Bruce Feldman. Associate Administrator of SUNY Downstate Medical Center (New York City): The biggest concern regarding procedure reimbursements is the continued decline despite the acuity level going up. As more and more complex procedures shift from the hospital to the ASC arena, procedure costs continue to rise despite insurance carrier reimbursement being cut year after year. This is especially prevalent in the area of orthopedics and joint replacement.
Catherine Retzbach, BSN, RN. Director of ASC Operations at Virtua Health (Marlton, N.J.): Right now, the biggest concern regarding procedure reimbursement is that costs are exceeding the reimbursement. Reimbursement is not keeping up with staff and supply costs. It is hard to take on new procedures when costs are higher than reimbursement.
Chris Shaver, MD. Surgeon at Tennessee Orthopaedic Clinics (Knoxville): In our Southeastern state, the commercial insurance market is the least competitive of any state in the country. Therefore, as ASC owners, our chief concern is always downward adjustments in their fee schedule over time, despite the ever-rising costs of doing business. I am also concerned about the national economy as well. The current iteration of excessive federal spending on the heels of a pandemic has weakened market fundamentals, negatively impacting the healthcare industry in multiple ways. The high tide of inflation effectively undercuts our current level of reimbursement, with CMS adjustments unlikely to keep up. Finally, our business model involves the utilization of multiple physician-owned ASCs. In order to achieve desirable and sustainable margins, we depend heavily on our procedure volume, spinning off ancillary revenue in the form of pathology, anesthesia and even clinical research. Any unexpected discounting of these services threatens the viability of our endoscopy program.
Davis Hurley, MD. CEO of Orthopedic Centers of Colorado (Aurora): Procedure reimbursements are moving lower based on the Medicare fee schedule decreases. This includes everything from surgical codes to physical therapy. This puts more financial pressure on practices as they take on more responsibility and oversight of patients in the outpatient setting. It requires more staffing, time and physician coordination of care to drive costs down. The payer savings need to be shared with the aligned providers to ensure sustained progress in lowering the cost of care. Failure to create appropriate alignment will convince providers to find their own solutions, including opting out of Medicare, limiting visits available, concierge fees, or moving towards a cash-pay-only model. This disconnect needs to change to preserve patient access and high-quality care.
Deena Edwards, BSN, RN. Administrator of the Surgery Center of Southwest Ohio (Moraine): My concerns are the costs of inflation are exceeding the increase in reimbursements. Everything costs more, and prices continue to climb. Staffing, supplies, case costs, benefits and utility expenses are increasing on average 3-7 percent, but reimbursements rates are not increasing at the same rates. In many cases they are decreasing, causing a bigger gap in expenses versus revenues. This makes us look at other ways to save money. Finding a way to cut costs without compromising quality is the key.
Elisa Auguste. Administrator of Precision Care Surgery Center (East Setauket, N.Y.) and Board Member of the New York Association of ASCs (Albany): My biggest concern with procedure reimbursements is that they are not increasing at the same rate as the expenses involved in treating patients. In a world where hourly staffing rates and basic supply cost are at an all-time high, healthcare providers are struggling to keep up. Operating rooms are forced to shut down and cases are shifted elsewhere. The goal is to provide high quality care for all patients, but what happens when a healthcare provider is no longer able to afford to do so?
Gina Hartman, RN. Director of Operations at Rockford (Ill.) ASC: Procedural approval from private payers and workers' compensation are big concerns. It can be overwhelming for patients who are told "this is an approved procedure" versus a pre-authorization or pre-determination. It can delay scheduling of the procedure and increase administration workloads.
Harel Deutsch, MD. Co-Director of the Rush Spine Center (Chicago): What we are finding is that an increasing number of seniors are choosing Medicare Advantage plans. Medicare Advantage plans are health insurance plans offered by private insurance companies that are contracted with Medicare. These plans provide an alternative way to receive Medicare benefits instead of traditional fee-for-service Medicare. The Medicare Advantage plans often deny common procedures for technicalities or for no reason. The procedures would have been covered under normal Medicare. We are working to educate patients in the Medicare population about some of the disadvantages of Medicare Advantage.
Jason Goodwin, RN. Associate Professor of Nursing at Sacramento City College (Calif.): My biggest concerns are the continuing goods and medication supply chain problems affecting our surgery centers and hospitals. My colleagues tell me that out of stock and unavailable items continue to wreak havoc on their ability to operate in the black. Case costing, value analysis and safety are all hindered by these problems, not to mention labor costs. It is continuing to get incrementally harder.
Jayesh Dayal, MD. Anesthesiologist at White Flint Surgery (Rockville, Md.): As a standalone ASC, we seem to have no negotiating power with any of the insurers and seem to be at the bottom of the procedure reimbursement rungs. The larger health systems, with access to hospital outpatient department rates and private-equity owned ASCs, with their nationwide heft, seem to be able to negotiate enviable rates for the same procedures. The days of standalone ASCs are numbered and we will be forced to sell or partner with these consolidators for survival, defeating the whole concept of physician autonomy and pride of ownership that motivates physicians to undertake ASC ownership in the first place.
Jeff Dottl. Principal at Physicians Surgery Centers (Ventura, Calif.): My biggest concern is probably the same as a lot of other people … how long will the cost curve stay below the revenue curve? We know that it hasn't for a lot of ASCs across the country. Disposable and implant vendors can raise costs at their pleasure. Commercial and government payers take a lot of time to react, if at all. And then there's staffing costs (including the cost of employee health insurance).
John Prunskis, MD. CEO and Medical Director of the Illinois Pain & Spine Institute (Elgin): The biggest concern regarding procedure reimbursements now is that with Medicare cutting physicians pay yet again this year to 4.2 percent, there are patients with lower-paying insurance plans that will not have access to interventional pain care because the cost of performing the procedure exceeds what the reimbursement is. This will unfortunately continue to fuel the opioid narcotic epidemic. Additionally, with physicians having increased financial loan and business obligations to pay due to unprecedented inflation and student loans, the Medicare reimbursement cuts are putting a burden on physicians who risked their lives during COVID-19 to provide medical care. During COVID, we frequently saw the phrase "Heroes Work Here," regarding medical personnel. Heroes aren't going to be able to work here much longer with the continued reimbursement cuts.
Joseph D'Agostino. Administrator at Advanced Surgery Center Perimeter and Gwinnett Advanced Surgery Center (Snellville, Ga.): My biggest current concerns regarding procedure reimbursement are the continuous declining payment amounts, increasing accounts receivable duration and accountability for payers as a whole. Going forward, my biggest concerns are, as we transition to a value-based care system, this new system will need to be designed correctly to be effective with its impact to healthcare; otherwise, reimbursement and patient outcomes will suffer.
Kayla Schneeweiss-Keene, BSN, RN. ASC Administrator of Mann Cataract Surgery Center (Houston): My biggest concerns regarding procedure reimbursements right now are the lack of increase to reimbursements to meet the demands of the surgery centers. Inflation is making its mark everywhere. We are seeing salaries increase to meet demands of the market and supply cost increases. As administrators know, these variables flow into multiple levels of the center, making it tough to cut costs.
Mark Hood. Chief Executive Officer of Spine Team Texas (Rockwall): I have two main concerns regarding procedure reimbursement. First, reimbursements continue to decline every year. This makes it very difficult to pay for increasing supply and salary costs. Second, in many cases, payers lag behind in covering new procedures made possible by improvements in technology. This means patients often cannot experience the benefits of technological advances.
Mark McDonald, MD. Orthopedic Surgeon at Orthopaedic Institute of Ohio (Lima): Standardization of implants is the best strategy to offset inevitable shrinking reimbursements. It's also an incredible way to improve quality in the operating room with less mistakes, since there are fewer implants for the team to master.
Melissa Rice. Administrator of Ravine Way Surgery Center (Glenview, Ill.): The biggest concerns for our center right now are with the rising costs of supplies, medications and implants that the percent of actual profit is shrinking with the Medicare fee schedule barely increasing their rates to assist in covering these rising costs.
Michael Graziano. Administrator of Clifton (N.J.) Surgery Center: Reimbursement rates for procedures are not keeping up with inflation and other rising costs. Additional financial pressures can potentially impact the quality and accessibility of care. Providers may be forced to reduce staff, delay investments in equipment and technology, or even close service lines. With no systematic change in sight, rising costs and stagnant reimbursement will continue to have a significant impact on the financial viability of healthcare facilities.
Michael Patterson. President and Chief Executive Officer of Mississippi Valley Health (Davenport, Iowa): Overall reimbursement is not keeping up with healthcare inflation. We have multiple issues occurring, which are driving the cost of care up without a corresponding increase in reimbursement. One of those being supply chain issues and access to the needed supplies and equipment at a cost that makes it tenable to provide care under the current reimbursement rates. Another significant issue is the cost of labor, which has seen a sharp incline in recent years, and in order to ensure high quality care and have enough staff to safely care for the different types of care, most healthcare entities have had to adjust, and in some cases, it makes it impossible to continue to provide care under the current reimbursement models. When inflation affects almost every aspect of your business without a corresponding increase on the revenue side, then difficult decisions will be made, and in some instances, patients will be affected by either diminished or eliminated access to health services. The other significant issue affecting reimbursement is the variability in the system depending on where care is given and received. Site-neutral payments are under significant scrutiny, and in some instances, it does make sense to eliminate the variability in payment, while in other situations I believe it will hinder access. At the end of the day, we have to change the overall model from "winners and losers." What I mean by that is we can no longer promote or tolerate a system in which we make significant money on some procedures and lose money on others. We need to look at this through a different lens and ensure enough payment to ensure continued access and appropriate margins on all healthcare services and not just hope that we make enough on the winners to compensate for the losers, because that system is wrought with impending issues that will affect the overall health of our healthcare system.
Nathan Sheridan. Director of Radiology at Advanced Cardiac and Vascular Amputation Prevention Centers (Grand Rapids, Mich.): My biggest concern regarding procedure reimbursements right now is the alarming trend of those reimbursements decreasing year after year. By reducing reimbursement and putting more financial strain on outpatient facilities, it hinders the ability of these facilities to grow and reach more patients. The benefits of performing procedures in the outpatient setting rather than a hospital are well known, and by reducing access to this type of care, the patients inevitably end up being the most adversely affected. I sincerely hope the course is corrected soon, so more patients can continue receiving high-quality care in an environment that is much more comfortable for them.
Nyleen Flores. Administrator of Total Surgery Center (Naples, Fla.): Implant bundling and the rising costs and surcharges being placed on all items is impactful on procedure reimbursement rates. Additionally, the 2 percent Medicare sequestration has created a significant impact on all reimbursement.
Omar Khokhar, MD. Partner at Illinois GastroHealth (Bloomington): Declining reimbursements is a constant pressure from payers in the traditional fee-for-service approach. We need to rethink our approach and look at value-based models. For example, if the ASC and payer can agree on a screening strategy in a defined population, we can then risk stratify "average" and "high-risk" and then deploy stool testing and colonoscopy resources appropriately. Going forward, it has to be less about the "number" of procedures we do, but rather who we are doing them on, so that we utilize colonoscopy more effectively to catch early lesions in a more at-risk subset of the population.
Pankaj Vashi, MD. Department Head of Gastroenterology and Nutrition at City of Hope Chicago (Zion, Ill.): My major concern regarding procedure reimbursement is continued increase in costs of doing procedures and denials from payers with decreasing payments especially by government payers. The only way ASCs can survive is by increasing efficiency and volume and maintaining quality care.
Randy Reynolds. Senior Vice President of Development at HealthCrest Surgical Partners (Edmond, Okla.): Inflation has negatively impacted the profit margin of ASCs. Any meager increases attained in reimbursements from payers related to procedures being performed are grossly inadequate to offset the higher labor and supply costs being incurred. Thus, more cases are required to be performed each month to generate the same level of profitability for the surgery center. In markets where those additional cases are not available for pursuit, the surgery center will struggle at best.
Ravi Bashyal, MD. Vice Chair of Patient and Provider Experience and Director of Outpatient Hip and Knee Replacement Surgery at NorthShore University HealthSystem (Chicago): My biggest concern when I see decreasing reimbursements for historically successful surgeries such as total hip and total knee replacement is patient access and care. These procedures provide patients with outstanding pain relief, mobility and return to work as well as activities of daily living that they enjoy. Total hip replacement has been described as the "operation of the century" due to its high rates of patient satisfaction and successful outcomes. The continued devaluation of these procedures will force providers to limit access to these surgeries for many patients. In the face of rising inflation, and standard cost of living increases, let alone skyrocketing costs for supplies and healthcare staffing, it is financially unsustainable to continue to perform surgeries that are not able to support and cover these costs. With both public and private payers continuing to decrease reimbursement, I fear they are putting their own financial interests and budgets ahead of what is best for our patients.
Richard White, MD. Orthopedic Surgeon at Fitzgibbons Hospital (Marshall, Mo.): Unpredictability and inconsistency of reimbursement rates from different insurance companies, as well as the increasing trend towards value-based care. This is in addition to patient concerns for increasing out-of-pocket expenses and complexity of policy requirements.
Rizwana Thanawala, MD. Gastroenterologist at Florida Digestive Health Specialists (Lake City): Procedure reimbursement woes begin from the time of scheduling as more and more insurances are requiring prior authorizations for procedures, and we are seeing more requests to send procedure notes before payment is processed.
Ronald Shealy, MD. Otolaryngologist at Northern Regional Hospital (Mount Airy, N.C.): The basis for all reimbursement is Medicare. They tend to drop reimbursement on procedures that have a high or increasing utilization rate, while the risk/difficulty/disposable pricing for the procedure does not change. This should be a concern for all because of the fixed pricing structure for ASC payment.
Severko Hrywnak, MD, DPM. CEO of Advanced ASC (Chicago): The ongoing lag of reimbursement being behind the costs to run a procedure, the disparity between ASC reimbursement and hospital outpatient departments, the trend to keep reducing reimbursement and the pre-certification process that permits a procedure but after the procedure is done, a reason is then given of why it is not being covered.
Sheila Thompson, RN. Practice Administrator of Twin Cities Pain Clinic (Edina, Minn.): I think overall, the biggest concerns we have faced recently is when payers do not require a prior authorization up front and then deny the claim on the back end. It is not fair to the patient who desperately wants treatment, or the provider as they risk nonpayment. The payers need to refocus on what is best for the patient and rely on the providers to examine and document this information, so as to give the payers the evidence of why something is ordered to treat the patient.
Thomas Campanella. Healthcare Executive in Residence at Baldwin Wallace University (Berea, Ohio): The American Hospital Association is one of the most powerful lobbying groups in D.C. AHA has a long track record of pushing legislation, regulations and payment policies that limit competitive forces that negatively impact hospitals' market share. ASCs are among those competitive forces, so consequently, I am concerned about both the number of allowable procedures in the ASC setting as well as the level of reimbursement.
Thomas Moshiri, MD. Chief Business Officer at Arizona Pain Relief (Scottsdale): One of the biggest issues we face as business owners and practitioners is that CMS continues to cut reimbursement rates, and commercial carriers follow suit. We are trying to remain profitable in an economy where inflation has resulted in skyrocketing cost of staffing, medical supplies, vendor expenses, etc. Reimbursements from clinical care and procedures have gone in the opposite direction, resulting in an inverse relationship. This dynamic has created a very slim profit margin, which will disappear entirely if this trend continues. This will result in a reduction in the availability of quality care, or create a cash-based system where those who can afford to pay cash will get better service while those that rely on commercial and government plans will have delayed access to care.
Todd Currier. Administrator of Bend (Ore.) Surgery Center: My biggest concern involving reimbursements is related to the lack of recognition of associated rising costs of operations. Staffing and supply chain shortages have led to rising costs for personnel and procurement of supplies. The rapid increase in these costs have not been reflected by Medicare, nor insurance carriers.