The ASC Insider

Politics and Policy: Surviving and Thriving as an Ophthalmic ASC in the Era of Healthcare Reform

A special series sponsored by Alcon

The members of the Board of Directors of the Outpatient Ophthalmic Surgery Society (OOSS), the client I've served for 27 years, were generally overjoyed with the results of the November 2 elections that resulted in the largest Republican majority since Harry Truman was President. Asked whether this influx of more “physician-friendly” legislators meant good news for the ambulatory surgery center (ASC) community, I did the lawyerly thing and equivocated. Well, the sponsor of our flagship legislation, Rep. Wally Herger (R-Ca), is the likely new Chairman of the House Ways and Means Health Subcommittee. On the other hand, Rep. Kendrick Meek (D-Fla), our lead Democratic sponsor in the House, lost his bid to become Florida's Senator and so we lose him in Congress, as well as a half-dozen other House incumbent ASC supporters who were defeated in their reelection bids.

The simple reality of the ASC world is this — Mike Romansky may stand alone in his belief that the ASC is the hub of the healthcare delivery system. Presidents are elected, reelected or maybe not. The House and Senate shift party leaderships. But the legislative and regulatory issues that drive the ASC industry aren't adjudicated in the White House or the Office of the House Speaker. Our battles are gutted out at the middle-upper levels of the Centers for Medicare and Medicaid Services and with a handful of key Senators, Congressmen, and staff who by virtue of their positions, the influence of their constituents in ASC issues, or their genuine interest in the many benefits offered by surgery centers have become our advocates. And so, a projection of the key issues of 2011 requires a look back at 2010, because we are fighting the same battles. Indeed, the more things change, the more they remain the same.

Healthcare Reform and its Impact on ASCs

In the complex morass known as healthcare reform, where fits the ASC? At a time when public policymakers are searching for meaningful healthcare reform — improving quality and access, while reducing costs — it should be clear that ASCs are a part of the solution. The country's 5,100 surgery centers are doing an exemplary job of expanding their role to meet the surgical needs of the Medicare population, while saving hundreds of millions of dollars annually, and nowhere is this phenomenon more evident than in the ophthalmic ASC, where more than 60 percent of patients elect to have their cataract surgery. We need to do a better job of conveying this message.

Like many providers, the ASC industry was placed on the legislative defensive by Congress' need to garner budget savings to pay for reform. The healthcare reform bill will reduce the 2011 payment rate updates of all providers by a “productivity adjustment” (1.3 percent). We can expect these adjustments to continue in the future. As such, it is imperative that OOSS and the ASC community lobby to secure the highest possible annual ASC updates going forward, so that our increases aren't eaten away by these productivity adjustments.

The House Democratic healthcare reform bills included provisions requiring that ASCs be subject to cost reporting just as hospitals are. OOSS was joined by the entire ASC and ophthalmology communities in objecting to the imposition of this draconian responsibility on ASCs and cost reporting was ultimately rejected in the final reform bill signed by the President. We remain concerned regarding the vast authority of the Independent Payment Advisory Board (IPAB) to set provider payment rates commencing in 2014. OOSS and the ASC industry will be integrally involved in Congressional efforts to revisit components of the healthcare reform legislation.

OOSS believes that the ASC payment and regulatory system needs its own dose of “healthcare reform” in the form of enacting of “The Ambulatory Surgical Center Access Act of 2009.” Among other things, this bill would promote the ability of ASCs to continue to serve Medicare patients by improving facility payments to our centers. This would be accomplished by: eliminating onerous budget neutrality adjustments applied by CMS to ASC rates and providing ASCs an annual inflation update at the higher Hospital Market Basket (used to pay hospitals) rather than the lower Consumer Price Index — Urban (CPI-U). Working with the ASC and the surgical specialty communities, our goal in 2011 will be to secure the passage of this vital legislation.

A (Slighty Improved) Final ASC Payment Rule

On November 1, CMS released its final CY 2011 Medicare ASC payment regulation. As is typically the case, rates for cataract and some other high volume procedures dropped by about 1 percent, while payments for many glaucoma and retina services increased substantially.

In the proposed rule, CMS provided a 1.6 percent inflation update based upon the Consumer Price Update (Urban); however, this was offset entirely by the 1.6 percent productivity adjustment, discussed above, yielding a net zero update for ASCs in 2011. In the coming year, the ASC industry will continue to lobby vigorously for CMS to adopt the higher Hospital Market Basket that is used to calculate Hospital Outpatient Department (HOPD) rates as the factor for establishing the ASC update.

“Surveyors Getting Feisty,” or, the New Medicare Conditions for Coverage

No development in Washington has generated more confusion for ophthalmic surgery centers than the new Medicare ASC Conditions for Coverage. And the vitriol will not subside in the near term. In 2009, for the first time in the quarter-century since Medicare started certifying ASCs, CMS issued new Medicare regulations governing a multitude of issues, including physical structure, quality assurance, and governing body and management, to name a few. Very controversial, however, were new requirements that have the effect of limiting the ability of ASCs to schedule and perform surgery on the same day. The new rules essentially mandate that the ASC must provide the patient with verbal and written notice of his or her rights (including disclosure of physician financial interests or ownership in the ASC; advanced directives; rights of property and person; privacy; confidentiality of records) “prior to the date of the procedure, i.e. the patient's registration or admission to the ASC.” There is an exception permitting surgery on the same day if the referring physician indicates in writing that it is “medically necessary” for surgery to be conducted that day; however, CMS makes it clear that same-day cases are expected to be rare and that frequent occurrences may represent noncompliance with advance notice requirements. Repealing this rule remains a top ophthalmic ASC priority in 2011.

This issue represents just the tip of the iceberg for our facilities. Surveyors have bigger things on their minds and this is causing great consternation within the ASC community. Forty million dollars in economic stimulus recovery funds have been made available to state health agency surveyors, under contract with CMS, to conduct unannounced “validation” surveys of hundreds of ASCs across the country to assess compliance with Medicare conditions for coverage, with a special emphasis on infection control and sterilization practices. OOSS is providing guidance to ASCs across the country regarding compliance with these new and complex regulations; however, given the significant change in regulations, compliance among facilities has been spotty. We are also working with ASCRS and the AAO to ensure that CMS, private accreditation body, and manufacturing industry sterilization guidelines appropriately accommodate the special needs and circumstances of facilities that process ophthalmic instruments.

Physician, Heal Thyself

For years, policymakers like Representative Pete Stark (D-Ca) and the hospital industry have taken aim at physician ownership of healthcare facilities. The healthcare reform legislation enacted this year likely sounded the death knell for new surgical and specialty hospitals. However, I don't expect that Congress — particularly with a new Republican majority — will legislate federal limits on physician ownership of ASCs. After all, there are almost as many ASCs in the nation today as there are hospitals. We have an impeccable record with respect to quality and patient satisfaction. Under the new ASC payment system in which surgery centers are paid a percentage of the rates paid to the HOPD, the government and the patient save money literally every time a case is performed in an ASC rather than a hospital. In fact, the Office of the Inspector General has established an ASC investment safe harbor, under which a facility is deemed to be per se legal if certain conditions are met.

However, I am more sanguine about our prospects of battling the hospital community at state and local levels. Over the past several years, we have seen state hospital associations succeed in persuading legislators and regulators at state and local levels to impede the development of ASCs through myriad approaches, including bans on self-referral, ASC provider taxes, and more rigorous Certificate of Need and licensure laws. We must remain mindful of these activities and be prepared — these battles are truly about the survival of the ASC.

Looking at 2011: Are the Battles Worth Fighting?

Let's reflect on an important point: For the practice with a surgery center, is the ASC the most profitable component of your organization? Throughout the years of Medicare reimbursement havoc, while your professional fees dropped year after year, wasn't it remarkable that ASC facility fees for cataract surgery gradually rose or remained stable, (and, indeed, under the new payment system that OOSS helped design, fees for retina and glaucoma services have increased dramatically)? Hasn't the list of services for which facility fees are provided expanded to include virtually every ophthalmic code? Going back 20 years, haven't we beaten back every effort by the hospital industry to curtail physician ownership of ASCs?

We are fortunate that the ASC offers the Medicare beneficiary, the government, and the surgeon a magnificent product. However, in an era of competition from every corner for every dollar, this isn't enough. The ophthalmic ASC community — working with AAO and ASCRS, with the ASC Association and state ASC groups, with our allies in the device industry — will need to develop sound data-driven policy positions and lobby at the professional and grassroots levels like never before. We will need to support financially those political candidates that are aligned with our interests. In 2011, in an era of reform of the healthcare delivery system, in a time of radical political upheaval, it will be incumbent upon progressive ophthalmologists to do all of these things if we are to build on the accomplishments discussed above and meet the challenges of 2011.

Michael A. Romansky JD, is Washington Counsel and Vice President of Corporate Development at the Outpatient Ophthalmic Surgery Society in Washington, DC.