5 Financial Implications Healthcare Reform Will Have on ASCs From Andrew Hayek of the ASC Advocacy Committee

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Andrew Hayek, president and CEO of Surgical Care Affiliates and chairman of the ASC Advocacy Committee, discusses five key ways the healthcare reform law will affect ASCs.

1. New payment adjustment results in flat reimbursement. CMS will begin applying a new mechanism, called the "productivity adjustment" that will reduce annual payment updates for most healthcare providers. This mechanism goes into effect for ASCs in 2011, and it will reduce future annual updates by an estimate of labor productivity improvement in the general economy, generally one to two percent. For 2011, ASCs would have received a 1.6 percent update (based on the consumer price index), but the productivity adjustment is also 1.6 percent, resulting in no update. This new mechanism, which applies to many categories of healthcare providers, will keep Medicare reimbursement roughly flat for ASCs each year into the future.

2. Colonoscopy coinsurance waiver drives preventive care but removes patient incentive for low-cost care. Medicare patients will no longer pay co-insurance for screening colonoscopies, a step meant to encourage more preventive care. While this is positive overall for ASCs and the patients they serve, the waiver also applies to hospital outpatient departments. This will effectively eliminate the patient's incentive to seek lower-cost care in the ASC setting.

3. Payment will eventually be tied to quality measures. HHS has been directed to create a plan by the end of 2011 to implement "value-based purchasing" (pay for performance) for ASCs. The ASC Advocacy Committee and the ASC Quality Collaboration (ASCQC) will work with Medicare in designing this new system. Medicare's first value-based purchasing program will come online for end-stage renal disease providers next year, and the reform law pushes the agency to develop similar systems for other providers. There are 1,200 ASCs across the country that have already begun voluntary reporting of quality measures through the ASCQC, which has developed six quality measures that have received endorsement from the National Quality Forum, an independent organization widely recognized as an authority for establishing quality measures in health care. The ASCQC is working on additional measures that could also be the basis for payment incentives for ASCs performing at high levels. The results are published quarterly at www.ascquality.org. Generally, the expectation is that Medicare will use ASCQC's work as a starting point for its value-based purchasing plan.

4. ACOs may benefit surgery centers. Most of the structure and processes for accountable care organizations (ACOs) is still being created, but the central premise of ACOs is clear: to improve quality and reduce cost for their assigned population. Because ASCs are paid 42 percent less than the HOPD rate (the difference rises to 44 percent next year), ACOs have an incentive to shift surgical volume from the HOPD setting to ASCs in order to create cost savings and trigger incentive payments to the ACOs.

5. New Independent Payment Advisory Board could favor ASCs. The new Independent Payment Advisory Board (IPAB) will have broad authority over Medicare payment and policy, and its mandate is to dramatically reduce the rate of growth of Medicare cost. The implementation of the IPAB in the next several years will create significantly more downward pressure on reimbursement generally throughout the healthcare system. In this context, the ASC industry will have the opportunity to demonstrate that it provides outstanding clinical quality at a lower cost, and, therefore, the best payment policy is to encourage more migration of outpatient surgical cases from the HOPD setting to the ASC setting.

Learn more about the ASC Advocacy Committee.

Learn more about the ASC Quality Collaboration.

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