10 ASC revenue cycle trends and developments to watch in 2017

2017 is shaping up to be a particularly interesting year in healthcare, one that will likely be full of uncertainty but also opportunity. This extends to the ambulatory surgery center (ASC) industry.

There are numerous trends that could affect ASCs this year, and, subsequently, their bottom line. Here are 10 revenue cycle trends and developments for ASCs to watch.

1. Future of the ACA. The Affordable Care Act (ACA) became a political football in the 2016 election, with the president-elect promising to dismantle the program when he assumes office. Industry experts do not believe this will happen immediately as the new administration will need time to develop a healthcare plan of its own. However, the ACA continues to be plagued by problems of higher premiums and deductibles, as well as a limited number of payers willing to participate.

ASCs — and the entire country, for that matter — will be watching to see how this plays out. Depending upon the direction it goes, there is the potential for changes that may eventually benefit ASCs. One such change could be the easing of restrictions that will encourage carriers to sell insurance across state lines. This could help ASCs located close to state borders to negotiate contracts with new payers. It would also likely lead to increased competition between payers, which may help give ASCs some contract negotiating leverage.

Even if the ACA is repealed, what is not likely to go away any time soon is the patient responsibility for a large portion of services provided. ASCs must have processes in place to secure co-pays and deductibles from patients. Failure to do so could make what should be a money-making procedure into an unprofitable one.

2. New HHS secretary's ASC history. Tom Price (GA-R), the president-elect's choice to serve as the next head of the Department of Health and Human Services (HHS), may be a name that is familiar to many ASCs. Price, an orthopedic surgeon, was an ASC owner before going to Washington. He has been a big advocate for surgery centers during his time serving as a congressman. As the ASC Association notes, Price is a cosponsor of two pieces of legislation that benefit ASCs: the Ambulatory Surgical Center Quality and Access Act and the Electronic Health Fairness Act.

As ASCA states, the ASC Quality and Access Act "... would help eliminate the growing disparity in Medicare payments to ASCs and hospital outpatient departments (HOPDs) by using the hospital market basket instead of the Consumer Price Index for All Urban Consumers to determine the annual inflation updates that ASCs receive. It would also require the Centers for Medicare & Medicaid Services (CMS) to disclose which criteria it uses to deny certain procedures from being performed in ASCs and give ASCs a voice on the Advisory Panel on Hospital Outpatient Payment, which makes recommendations to CMS on various Medicare payment policies."

Price's appointment, if he continues to serve as an ASC champion and help move such legislation forward, has the potential to boost the position of ASCs.

3. Increased migration of procedures to ASCs. A trend for a number of years now, procedures are increasingly leaving the inpatient setting for lower-cost, higher-quality settings, such as ASCs. This will continue in 2017, as CMS and other payers approve payments for outpatient settings. Although total joint replacements, pain management and spine surgeries are at the forefront of this movement, procedures in other specialties are being considered for approval to be performed as outpatient, such as vascular surgery and cardiology. ASCs are well-positioned to capture this volume, but they will need effective coding and billing processes in place to ensure they collect what is rightfully owed to them as they add and perform these new procedures.

4. More device-intensive procedures. Some of the more complex procedures migrating to the outpatient setting, such as those in orthopedics and spine, require the use of implants, and usually expensive ones. If ASCs are planning to add these types of procedures, they will need effective strategies for purchasing implants at a reasonable cost and negotiating their coverage by payers. Reimbursement for device-intensive procedures often include the cost of the implant. ASCs must be aware of what their contracts allow for these procedures as they can vary greatly from payer to payer.

5. Payer use of claims auto-adjudication. Payers are increasingly implementing this process in an effort to lower healthcare costs. As the trend toward higher deductible plans continues, providers are being forced to assume more financial risk and are looking for ways to speed payer reimbursement. Less complex and repetitive procedures, such as some of those performed in ASCs, are the primary focus for this automated claims process that will reduce provider and payer claims' submission costs and increase turnaround times, resulting in faster payer reimbursement.

6. Crackdown on fraud. Since 2007, Medicare Fraud Strike Force teams have charged more than 2,300 defendants with defrauding Medicare of more than $7 billion and convicted approximately 1,800 defendants of felony healthcare fraud offenses, according to the U.S. Department of Health & Human Services.

Combating fraud will continue to be a high a priority for the government in 2017, which is why ASCs must ensure they comply with proper coding and billing requirements or face serious penalties. This is true regardless of whether these business office functions are performed in-house or outsourced. If an ASC chooses to outsource its billing and/or coding, it will want to verify that its revenue cycle management partner uses experienced and certified ASC billers and coders, ASC-specific software and that they have a written and active compliance plan in place. Even unintentional coding and billing mistakes can lead to fraud charges.

7. Continued focus on bundled payments. As reimbursement gradually shifts from reimbursement based on fee-for-service toward pay-for-performance as part of the increased emphasis on value-based care, one payment method receiving some of the most attention is bundled payments. It has already been implemented by CMS and some private payers, resulting in lower reimbursement rates for hospitals in some specialties. The intent is to continue this process until all hospital reimbursement is based on this model. Eventually, it is expected that this will trickle down to HOPDs and ASC joint ventures as well.

There are some ASCs scattered throughout the country that have negotiated bundled payments with payers and self-insured employers. But despite significant buzz about bundled payments over the past few years, adoption has been slow. It will be interesting to see if, in 2017, payers and self-insured employers, often working with third-party administrators, encourage more ASCs to consider this model.

Fortunately, bundled payments are intended to reward those providers that deliver low-cost, high-quality care — concepts ASCs have been at the forefront of for decades. ASCs were developed to provide quality surgical care in a more cost-effective manner than hospitals are able to achieve. This premise has proven to be extremely successful. In 1988, there were roughly 1,000 ASCs. That figure presently exceeds 5,000, and the number of ASCs in the United States is now almost equal to the number of hospitals.

8. Growth in joint ventures between ASCs and hospitals. It wasn't long ago that hospitals were actively trying to halt or at least stunt the growth of ASCs. Now many hospitals are exploring ways to partner with existing ASCs or physicians to build new ASCs. This is because ASCs and hospitals are much better aligned than they were in the past, and because of the growing value of surgery centers.

The migration of procedures away from the inpatient setting is forcing hospitals to take a closer look at their outpatient plan. While building new hospital outpatient departments (HOPDs) is one strategy they can consider, new site-neutral payment rules may decrease the benefits of operating an HOPD. An ASC joint-venture partnership can provide hospitals with ownership in a setting where they can direct lower-acuity, lower-reimbursing procedures while still capturing a portion of the revenue. Performing procedures in the ASC can also help keep costs lower than they would likely be in an HOPD.

Existing ASCs that enter into a joint venture with a hospital could eventually see a boost in their managed care contract rates thanks to their hospital partners' relationships with payers in the market.

9. Health plan mergers. Over the past few years, there has been an increase in health plan consolidation, which has reduced competition between payers and, in some markets, severely limited the number of potential payer partners for ASCs.

Two major potential mergers are presently in limbo: Aetna/Humana and Anthem/Cigna. As CFO recently noted, a court ruling on the Department of Justice's challenge to these mergers is expected soon. ASCs will want to pay attention to the outcome as it may set the tone for more or fewer of such mergers during the year.

10. Health plan and ASC mergers. On January 9, it was announced that OptumCare, UnitedHealth Group's health-services arm, had agreed to acquire Surgical Care Affiliates (SCA). While payer acquisition of ASCs is not new, this is the most substantial acquisition of ASCs by a health plan to date. According to SCA, the company operates 205 surgical facilities, including ASCs and surgical hospitals, many in affiliation with 105 health systems. The transaction is expected to close during the first half of 2017.

What will this mean for the ASC industry? Time will tell, but it would not be surprising to see other health plans become more aggressive in their efforts to acquire ASC management and development companies as well as individual ASCs. It will be interesting to see what position these health plans take when negotiating contracts with ASCs they do not own, particularly those that share markets with ASCs they do own. It will also be interesting to see how the health plan owner of ASCs uses (or perhaps the better word is "leverages") the contract information of competing health plans that it gains access to through the acquisition.

Caryl Serbin, RN, BSN, LHRM, is president and founder of Serbin Medical Billing (SMB), an ASC revenue cycle management company. SMB's primary objectives are to provide the best coding, billing and accounts receivable management services available to ambulatory surgery centers (hospital joint-venture, corporate-owned or independent) and anesthesia providers. Serbin has been a leader in the ASC industry for 30 years. She was the founder of the first ASC-specific billing company.

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