“Until there’s … a federal reform on physicians being able to practice medicine and not the ‘pay-viders’, the board is going to keep fighting the same fight,” said Andrew Lovewell, CEO of Columbia (Mo.) Orthopaedic Group.
Medicare
In November 2024, CMS finalized a 2.83% physician pay cut in its 2025 Medicare hospital outpatient prospective payment system and ASC payment system. The physician fee schedule conversion factor for 2025 is $32.35, down from $33.29 in 2024.
The move follows a trend of declining physician pay. CMS cut overall physician pay by 1.25% for 2024, and, overall, physician reimbursement amounts per Medicare patient decreased around 2.3% between 2005 and 2021 when accounting for inflation.
“We’re just having to fight more every day for the same dollar,” said Mr. Lovewell. “It’s definitely not sustainable to continue to see Medicare force pay cuts on physicians. I mean, they’re just trying to run the independent and private practice groups out of business. If we’re getting hurt by this year’s 2.8% [cut], and Congress had the opportunity to solve it, they didn’t.”
The Consumer Price Index increase, also known as inflation, hit 2.9% in December 2024, the most recent available data by the Bureau of Labor Statistics. This cuts directly into pay increases for specialties that saw pay increases of 3% or less, which includes cardiology, gastroenterology and urology, among other specialties.
Mr. Lovewell said that the “disparity” between compensation and the cost of running a business has positioned physicians and facility managers at the center of conflicts surrounding reimbursement, causing misplaced frustration in healthcare.
“I wouldn’t say we’re the victims, but at the same time, we’re the ones incurring the most cost and most effort to get paid, and we’re not getting a reward for it from the Medicare side,” he added.
Prior authorization
Mr. Lovewell identified prior authorization and claims denials as one of the biggest challenges for his ASC going into 2025, particularly as an independent center without the backing of a health system or private equity investor.
He described a “cyclical” pattern of repeated denials for treatment plans and procedures and frustration among physicians who feel burdened by peer-to-peer reviews and inconsistent communication by payers.
“It’s becoming such a joke that we’re having to deal with all of these hoops to jump through just to take care of patients,” he said. He said that payers often claim that medical records are missing from claims processing, which has led his facility to record every peer-to-peer review call.
“We not only record from a liability standpoint, but we record it also from a financial standpoint,” Mr. Lovewell said. “So the payers come back and say, ‘Well, that surgery is actually denied.’ We can say, ‘Well, no, it’s not. Here’s the recording on the phone. It says it was approved.'”
According to Medscape’s “They’re Awful and Impede Patient Care: Medscape Physicians and Prior Authorization Report 2024,” 61% of physicians said that patients frequently abandoned a recommended treatment due to prior authorizations. According to another survey by the American Medical Association, 85% of physicians said they do not view payer-appointed “peers” as peers at all.
Private equity and other major consolidators
Mr. Lovewell added that the presence of private equity and other major consolidators remain a significant threat for independent ASCs in 2025.
“The next iteration of healthcare is that you’re not going to see very many small groups that exist anymore,” he said. “If you don’t have a group of doctors or physicians that are 100-plus or 200-plus providers, I just don’t think you’re going to see groups exist be below that, because the cost of providing care and the cost of actually running a business is getting so expensive that you have to have economies of scale.”
While private equity activity has slowed in recent months, private equity firms have still demonstrated significant interest in the outpatient market. There were 95 private equity deals involving outpatient centers in 2023, the most of any healthcare subsector, according to the Private Equity Stakeholder Project.
And beyond private equity, other health systems have been steadily consolidating the industry in similar ways.
“If you look at these big health systems, some of them function and act as a PE,” Mr. Lovewell said. “And some of them have PE in the background that people don’t know about. So I think there has to be more corporate transparency when it comes to a lot of that.”
