Should You Consider Adding Retina to Your ASC

New CMS rules make retina procedures attractive.

BY PRAVIN U. DUGEL, M.D. AND MICHAEL A. ROMANSKY, J.D.

On July 16, 2007, the Centers for Medicare & Medicaid Services (CMS) issued its final regulation establishing a new payment system for ambulatory surgery centers (ASCs). The rule became effective on Jan. 1, 2008. These regulatory changes represent a landmark not only for ASC reimbursement in general but for retinal surgical reimbursement in particular. The new payment system has immediately put retina into the spotlight as the ophthalmic subspecialty to be considered for addition to an existing ASC that is looking to diversify its surgical services. Vitreoretinal surgery is currently undergoing a momentous technological revolution, comparable to the shift from extracapsular cataract surgery to phacoemulsification surgery two decades ago. The performance of vitreoretinal surgery in the ASC offers potent rewards in terms of economics and practice style, but also embodies financial risk. This article examines the risks and rewards of integrating vitreoretinal surgery into an ASC from three points of view: the payer, the physician–owner and the patient.

The Payer

Effective Jan. 1, 2008, virtually every ophthalmic surgical service can be performed in an ASC, and facility payments for vitreoretinal services have increased by 90%-100%. For the first time, ASC payment rates are directly linked to those made to hospital outpatient departments (HOPD). Although the actual percentage will vary from year to year based upon the application of a complex formula, in 2008 ASCs will be paid at about 65% of the reimbursement afforded to hospitals. With the exception of certain office-type lower-intensity services, almost all ophthalmic services will enjoy increases above the 2007 rates.

These rates will be increased each year, starting in 2010, by the Consumer Price Index-Urban (estimated to be 3%, and about a point lower than the Hospital Market Basket index afforded hospitals) and will be recalibrated annually to account for changes in resources consumed to deliver surgical services. ASCs will also receive "pass-through" payments that hospitals are provided for new and innovative drugs and devices.

The new rates will be phased in over the next 4 years, so the gains in ophthalmic surgery will be realized in 25% increments. (Because the new rates are intended to bundle all facility overhead with supplies, ASCs will no longer receive separate payments for surgical adjuvants such as PFO, silicone oil and intraocular gas.) However, importantly, CMS has issued new vitreoretinal surgical codes for vitrectomy with membrane stripping (CPT 67041/67042) and vitrectomy with laser photocoagulation (CPT 67041, 67042/67039/67040) As these are new codes, they will not require a phase-in period but rather have been fully implemented starting on Jan. 1, 2008. The fact that these are the most commonly used vitreoretinal surgical codes at the Spectra Eye Institute (Sun City, Ariz.) and that there is no blend-in period, provides a significant reimbursement advantage as compared to other ophthalmic surgical codes for the ASC (Figure 1).

For the past decade, the Outpatient Ophthalmic Surgery Society (OOSS) and other ASC trade groups have pressed Congress and CMS to mandate the establishment of the new payment system under which ASCs and HOPDs are linked. Michael A. Romansky, J.D., championed this for OOSS. He stated that this provided a number of potential advantages to a system under which ASCs are paid hospital rates, minus a discount: "First, virtually all HOPD rates are higher than those paid to the ASC. Second, hospital costs and charge data are much more accessible and accurate than those which the ASCs are capable of generating. Third, hospitals enjoy annual payment updates, while ASCs rarely receive them. Fourth, ASCs would be entitled to the same additional payments that hospitals receive — for instance, costly and innovative medical devices. Finally, under a system linked to the hospital rates, the ASC and hospital communities would have the same incentive to increase space facility fees, enabling ASCs to ride on coattails of the more extensive and better financed hospital lobbying effort."

Figure 1. Bar graph showing ASC reimbursement trends.

Unfortunately, the new payment system does not allow for surgical adjuvant payments separate and apart from the facility fees.

The Physician-Owner

The technological revolution in vitreoretinal surgery started with the introduction of 25-g sutureless surgery by Eugene DeJuan, M.D., and Mark humayan, M.D., approximately 5 years ago. Although early anxiety abounded, this technology was slowly but steadily adopted, as it not only provided greater surgical efficiency but better patient outcomes. The surgery, in general, required less time and allowed for more patient comfort and quicker recovery. However, some studies suggested that the procedure embodied greater risk of endophthalmitis and, possibly, retinal detachment. Subsequent larger studies in various centers have not confirmed these early trends. Conversion to 25-g surgery has been hampered by complaints of instrument flexibility and decreased flow (It is important to mention here that some surgeons feel that the reduced and more controlled flow is actually an advantage in the 25-g system). The recent introduction of 23-g surgery may provide a more acceptable compromise between the traditional 20-g instrumentation and the 25-g instrumentation. The 23-g surgery provides numerous advantages including a greater ability to deform fibrous tissue into the port, dissect fibrous tissue and direct flow to desired areas of pathology. The increased rigidity of the 23-g instrumentation may also give more of a traditional 20-g feel.

Regardless of whether a 25-g system or the 23-g system is used, surgical efficiency can be greatly enhanced, making the procedure an even more potentially attractive service offering of an ASC. The duration of vitreoretinal surgeries, by analysis of the two most common surgical codes built at the Spectra Eye Institute, show a 30% decrease in the duration of surgery. There is, however, a larger cost associated with this new technology. The cost of the 25-g and 23-g disposables are approximately 30% greater than the cost of the traditional 20-g disposables. Spectra studied the effect of the surgical time saving in regards to cost efficiency. Nursing and nursing support personnel accounts for approximately 65% of the variable overhead cost of Spectra. When the surgical staff is properly scheduled, we found a cost efficiency of 150% to 500%. In other words, when the surgical staff is properly utilized, the time savings afforded by the new technology in vitreoretinal surgery means that there is a savings of $105 to $330 per case, depending upon the surgeon's efficiency in the two most common codes billed for vitreoretinal surgery at Spectra. This is a clear savings after all the costs associated with this new technology are accounted for.

The Patient

Over 80% of all vitreoretinal surgeries are currently done in an in-patient hospital setting. Spectra evaluated the time efficiency of an in-patient unit versus an ASC from a patient point-of-view. We reviewed over 100 charts and documented the time required of the patient for pre-admission testing, preop, OR time, turnover and postop. We then tabulated this data and evaluated the median time in each facility. Our studies showed that on average, the patient spent 3 hours and 15 minutes longer in the hospital than in the ASC (Figure 2).

We also evaluated patient safety data over a 3-year period, monitoring vitreoretinal surgeries performed only under local anesthesia at the Spectra Eye Institute. In the last 3 years, we found an average of 10 patients out of approximately 1,600 were rescheduled prior to the retrobulbar anesthetic block. An average of three patients were rescheduled for medical reasons following the retrobulbar block. However, during this 3-year period, no patients required conversion to general anesthesia and no patients had any medical adverse effects based on performing the surgery in an ASC. It should be noted that at the Spectra Eye Institute, only patients over the age of 15 are admitted and patients who have severe medical conditions or latex allergies are not permitted. A dedicated board-certified anesthesiologist is responsible for all patients. The last 5,000 vitreoretinal surgeries in Spectra were evaluated and no cases of endophthalmitis or TASS have been reported. The patient satisfaction surveys were given to all patients; approximately 50% were returned. The most interesting survey examined patients who had an eye operated in a hospital in-patient unit and another eye operated in an ASC; such patients were asked to evaluate comfort, perioperative instructions and perceived outcome. An overwhelming number preferred the ASC (Figure 3).

Figure 2. Chart displays study findings on patient efficiency.

Figure 3. Results of a patient satisfaction survey.

Impact on the Facility

At the Spectra Eye Institute, we compared the two most common vitreoretinal surgical codes (pars plana vitrectomy with membrane stripping and pars plana vitrectomy with membrane stripping and endolaser photocoagulation), with cataract surgery, aqueous shunt surgery and penetrating keratoplasty. Due to the immediate effect of the vitreoretinal codes and without a blend-in period compared to the other ophthalmic codes, the increased reimbursement from 2007 to 2008 is significant: Cataract surgery with intraocular lens implantation, +1%; aqueous shunt, -43%; penetrating keratoplasty, +13%; pars plana vitrectomy with membrane stripping, +54%; pars plana vitrectomy with membrane stripping and endolaser photocoagulation, +36%. (It should be noted that the aqueous shunt is not currently reimbursed in the new CMS regulation. However, OOSS and the ophthalmology community are lobbying CMS heavily to change this unintentional consequence within the next year). When these changes in ASC reimbursement are converted to dollar payment increases, results are equally impressive: cataract with intraocular lens implantation, +$12; aqueous shunt, -$542; penetrating keratoplasty, +$150; pars plana vitrectomy with membrane stripping, +$841; pars plana vitrectomy with membrane stripping and endolaser photocoagulation, +$774.

Owners of existing ASCs may have open time and may be considering adding vitreoretinal surgery. We posited a hypothetical question If there was a free hour to fill at the Spectra Eye Institute, what subspecialty would be most profitable? In considering this question, we studied the median number of cases of all specialties in 1 hour. Based on chart review, we found that the median number of cases was: three cataract surgeries with lens implantation per hour, two retina surgeries (pars plana vitrectomy with membrane stripping, CPT 67041 or pars plana vitrectomy with membrane stripping and endolaser photocoagulation, CPT 67041/67040) per hour, one aqueous shunt per hour and one penetrating keratoplasty per hour. We calculated the entire case cost per case including all disposable items, graft tissue, device cost and personnel overhead. (It is important to note that only the two most commonly used vitreoretinal codes were considered. These two codes are used in over 65% of surgeries at the Spectra Eye Institute. Other surgeries that may be more or less intensive were not considered.) Given these parameters, at Spectra, an efficient vitreoretinal surgeon appears to be more profitable than the cataract surgeon, the glaucoma surgeon or the cornea surgeon. (Figures 4-6). We also tried to ascertain the tipping point for profitability for vitreoretinal surgery if our hypothetical calculations are extended to vary the retina surgeries alone and keep all the other subspecialties constant. We found that the vitreoretinal surgeon would still be more profitable than the glaucoma surgeon and the cornea surgeon if he performed one surgery per hour, but that the cataract surgeon in this scenario would be the most profitable. The tipping point occurred when the vitreoretinal surgeon performed one case every 2 hours. In this scenario, vitreoretinal surgery would not be profitable to the ASC. At the Spectra Eye Institute, we use these calculations as rough measures for surgical efficiency. These calculations may or may not be applicable elsewhere depending upon the variations in case mix and surgeon efficiency.

Figure 4. Inter-specialty profit difference based on CE+IOL.

Figure 5. Inter-specialty profit difference based on aqueous shunt.

Figure 6. Inter-specialty profit difference based on PKP.

Should I Consider Adding Retina to My ASC?

In making this assessment, one must consider the cost of bringing vitreoretinopathy into an ASC. Figure 7 lists the skeletal requirements for vitreoretinal instrumentation. Figure 8 gives a range-itemized cost for the equipment. The setup cost ranges from $180,000 to $240,000.

What about the disposable costs? At the Spectra Eye Institute, we have studied the cost of disposable retina packs as a percentage of the total case expense. Over the last 3 years we have found that the cost of disposable packs range from 4% to 8% of the total case cost. We concluded from this analysis that there was little need whatsoever to cut costs in our disposables as these amounted to only a fraction of our total overhead cost for the case. We have concluded that meaningful savings must be accrued from more efficient scheduling and use of personnel since labor accounts for over 60% of the total overhead. This reinforced our intuitive sense that we could provide the very best equipment for patient care and still be profitable as long as we managed our overhead efficiently.

One of the major obstacles to inviting vitreoretinal surgeons into an existing ASC is the perceived need to stay open late into the evening for emergency cases. After reviewing a year's worth of late surgical cases, we determined that 4 extra hours were required by two nurses and one surgical technician. Given these metrics, the surgery was not profitable for the ASC based on cost alone. However, considerations other than cost are relevant, such as patient and surgeon convenience. To be sure, there are certain vitreoretinal surgeries that would be considered an emergency such as a macula-on retinal detachment or endophthalmitis. A surgeon who is without partners or one who travels to distant locations may not be able to accommodate such patients in regular hours. Therefore, for the sake of patient care, an ASC may be required to remain open in the evening on occasion. However, if an ASC partners with a larger group of vitreoretinal surgeons, then such emergencies may be managed by the surgeon who has block time in the ASC that day. This would certainly make for a better patient care, improved surgeon practice style and enhanced ASC profitability. It is very important to discuss the ASC's policy and intentions in detail with the vitreoretinal surgeon prior to commencing a partnership so that misunderstandings do not occur and patients do not get caught in the middle. It is also important for the ASC owner to understand that if he expects the vitreoretinal surgeon to loyally bring all his surgeries to the ASC, he may not have the leverage to use the hospital he has abandoned for late cases.

The Bottom Line

Our experience at Spectra provides evidence that the ASC is an efficient environment for the vitreoretinal surgeon as well as the patient. Changes in technology, the proliferation of ophthalmic and multispecialty ASCs through out the country, and an improved reimbursement climate have created a "perfect storm" for the addition of vitreoretinal services to the offerings of the ASC — that is, under the right circumstances. Unlike cataract surgery, vitreoretinal surgery has a very large window of efficiency and cost. The surgeon most suited for the ASC will value efficiency, understand economics, and be surgically confident and willing to embrace new technology. If you are able to find such a surgeon, then vitreoretinal surgery may represent a tremendous opportunity for your ASC. Likewise, if you are such a surgeon, you may wish to seek out the appropriate ASC and join its medical staff or invest in the facility. Otherwise, a dose of patience is prescribed. As new technology for microincisional surgery is adapted and taught, the next generation of vitreoretinal surgeons will embrace surgical efficiencies and become viable and enthusiastic partners in the delivery of higher quality, patient-centered, cost-effective vitreoretinal care in the ASC. OM

Pravin U. Dugel, M.D., Managing partner, Retinal Consultants of Arizona, Phoenix, Ariz. and Founding Partner, Spectra Eye Institute, Sun City, Ariz.
Michael A. Romansky, J.D., Washington Counsel and Vice President of Corporate Development, Outpatient Ophthalmic Surgery Society (OOSS), Washington, D.C.